Overview of AEO Certification:
The Authorized Economic Operator (AEO) program, initiated by Indian Customs department aims to facilitate trade and strengthen the security of the global supply chain. It aligns with the World Customs Organization (WCO) SAFE Framework of Standards and offers businesses involved in International Trade such as Importers and Exporters various benefits including expedited customs processing. In exchange, businesses must meet stringent compliance, safety and security requirements. The program provides a three-tier certification system for Exporters and Importers, comprising AEO T1, AEO T2 and AEO T3 with AEO T3 being the highest level of accreditation. Each tier offers increasing levels of facilitation to status holders.
The Key benefit of AEO is Mutual Recognition Agreements (MRAs). These agreements serve as the International extension and connecting link between the domestic AEO programs of various countries. MRAs acts as an equalizer that harmonize the minor differences to allow for seamless facilitation in terms of benefits and processes for movement of goods across borders for the domestic AEO accredited entities. Mutual recognition of AEOs is a major element of the WCO SAFE framework to strengthen end-to-end security of supply chain and to multiply benefits for traders at a global level.
Under MRAs, two customs administrations agree to:
- To recognize the AEO issued by other countries.
- To provide reciprocal benefits to AEOs of the other countries entity.
Indian Customs has collaborated with several foreign customs administrations to align with their Authorized Economic Operator Programs, which effectively allows Indian Customs to Internationalize the core principles of the program and provide benefits to Indian trade at the International level.
The benefits of Mutual Recognition Agreements (MRAs)
- Lower Risk Score:
All the AEO certified companies and customs authorities are trusted members of the trade community as they have passed the verified security standards. This makes the AEO Exporters and Importers get a lower risk score from partner customs, leading to fewer checks pointers during Import process. - Better Risk Assessment:
AEO certification from one country is recognized by the other, this helps the customs to assess risk more effectively and quickly. - Less Repetition of Checks:
The AEO traders are not required to go through multiple security checks in different countries. Once a company is validated by it’s home customs authority that validation is accepted by other partner countries, reducing extra work. - Common Security Standards:
MRAs ensure countries follow similar security standards. If a company meets the security rules in one country, it also meets the rules in other MRA partner countries. This makes it easier for businesses to follow and document security practices. - More Transparency:
MRAs create clear and consistent rules for security checks, making trade processes more open and trustworthy.