Customs Procedures become increasingly attractive to companies with higher exposure to duties as their business grows through expansion or as they try to enter new markets. Customs Procedures can greatly reduce the duty burden on a company, ensuring that duties are paid when goods are sold as opposed to when they are brought into the European Union or simply not paid because a destination outside the Union has been found for the goods.
The introduction of the Authorized Economic Operator (AEO) program in the European Union in 2008 brought exponential growth in this supply chain security program that has slowed as it has matured and the pool of non-AEO traders has declined. That growth curve is documented in this EU AEO valid Authorizations per year chart.
Acquiring an authorization, or as some would say, a certification proves that you have mastered a particular ability. You have spent time studying, understanding, and developing a skill set and are now authorized to apply that skill. You work towards these certifications throughout your life -- be it your Boy/Girl Scout badges, school diplomas, or your driving license.
On January 1, 2022, the Regional Comprehensive Economic Partnership (RCEP) came into force. RCEP members have a total population of 2.27 billion, a Gross Domestic Product (GDP) of 26 trillion US dollars, and a total export value of 5.2 trillion US dollars, accounting for about 30% of the global economy. After RCEP takes effect, more than 90% of the trade in goods among RCEP members will finally achieve 0% tariff.
Objective of the AEO Program
Apart from revenue collection, Trade Security and Trade Facilitation are important areas for customs agencies around the world. In order to secure and facilitate the trade, the World Customs Organisation (WCO) has adopted the SAFE framework of standards in 2005, which includes the Authorized Economic Operator Program (AEO Program) as one of three key pillars. India, as a member of the WCO, has adopted the AEO Program through the Customs Act, 1962.
