The benefits offered to Japanese Authorized Economic Operators (hereafter “AEO”s) are characterized in a wide variety of ways. In recent years, the number of benefits has developed gradually, reflecting opinions and feedback from AEO participants.

Additionally, the administrative procedures that previously burdened the participators have been adjusted.

Evolving Administration Policy for the AEO Program

On March 31^st, 2021, the Administration Policy for the AEO Program was issued by the Ministry of Finance. This is a notice that seems to have changed the direction of the AEO program.

The notice was issued in response to opinions from AEOs that the scope of obligations under the AEO program was unclear, that the program was not easy, and that the benefits were small and difficult to utilise.

The main objective of establishing the Administration Policy is to ensure that Customs, through continuous monitoring of the status of Customs procedures and cargo security operations, ensures the proper and reliable implementation of AEO compliance while respecting the voluntary efforts made by AEOs. From this perspective, the notice clarifies the policy of Customs administration to further promote voluntary efforts by AEOs.

Since AEOs are capable of self-management and self-improvement, in operating the AEO program, Customs will not conduct detailed reviews or provide guidance.

The following points have been established as the Administration Policy:

1. Confirmation of ability to perform duties

The verification of the AEO’s ability to perform its operations and compliance with laws and regulations shall be determined by comprehensively considering the information provided to or understood by Customs.

2. Handling of improper cases

In the event of a serious incident, the AEO is required to report it to Customs without delay. In such cases, if the AEO has developed and effectively implemented measures to prevent recurrence, these measures shall be considered by Customs in determining whether the AEO has sufficient capacity to perform its duties.

For minor cases of impropriety, reporting is not required on a case-by-case basis. Self-management and self-improvement (efforts to prevent recurrence) are conducted, and the status of such efforts shall be reviewed during an internal audit.

3. Internal audit by AEOs

The results of internal audits and recommendations for improvement, as well as the status of efforts to prevent recurrence as described above, is requested to be provided to Customs on a regular basis.

Customs will assess the status of the AEO’s operations and, if necessary, advise the AEO to review its procedures and operations or improve its internal audit methods.

4. Post-audit by Customs

Based on the results of the confirmation by Customs, the timing and content of the post-audit shall be reviewed, and in principle, the audit shall be conducted within 5 years from the most recent date.

The implementation of some or all of the items subject to the post-audit can be carried out by utilizing information and communication technology, such as a web meeting system, if necessary.

Pinpointing the Benefits

Starting April 1^st, 2021, AEO Customs Brokers, AEO Exporters, and AEO Importers who file Customs declarations by themselves can file a Carnet Declaration to any designated Custom office. Previously, the Carnet Declaration could be filed only to the Customs office with jurisdiction over the warehouse where the cargo located.

Similarly, as of April 1^st, 2021, AEO Customs Brokers, AEO Exporters, and AEO Importers can use simplified procedures with respect to duty reduction/exemption for goods imported or exported for the purpose of processing or repair. In some cases, photographs, catalogues, and other documents that were required at the time of import and export will no longer be necessary.

Although the AEO benefits may be specific, such as filing a Carnet and duty reduction/exemption for items needing further processing and repair, it can be said that the AEO benefits are steadily increasing and that Customs is trying to listen specific needs of the AEO participators. 

Future Prospects

What is the next step in the creation of AEO benefits? On October 5^th, 2023, the Customs and Tariff Subcommittee of the Council on Customs, Tariff, Foreign Exchange, and other Transactions was held. One of the agenda items was the recent Tariff policy and Customs administration. It was noted in the minutes that "the treatment of security for the extension of the due date of AEO import duty declaration under the AEO program is being considered for relaxation".

In the distributed materials from the Subcommittee, on the page of main requests for Tariff revision in 2024, there was a requested item for "Relaxation in the treatment of provision of security for extension of the due date of AEO import duty declaration under the AEO program only when it is deemed necessary for Customs preservation".

The Japan Tariff Association points out that since AEO importers import a large number of goods, the security (guarantee fee to obtain a guarantee from a bank or insurance company) for using the extension of the due date system is expensive. However, there is currently no difference between AEOs and non-AEOs with respect to the provision of security for the extension of payment due date under Article 9-2 of the Customs Act.

Accordingly, there will be a wide and varied menu of AEO benefits in Japan. It requires professional skill to assess which benefits can be applied to the company under AEO programs.

Tradewin has tremendous years of experience assisting in similar programs in a variety of industries and geographies around the world. Tradewin Japan, with a certification holder of Registered Customs Specialist, is also fully capable with the accumulated experience and know-how to best support you.