CUSTOMS INFORMATION PAPER (10) 81

Authorised Economic Operators(AEO)

Who should read: / All AEOs and businesses interested in applying for AEO status
What is it about: / Use of the AEO reduced data elements in the Import Control System (ICS) and NCTS
Changes to the AEO Self Assessment Questionnaire for businesses applying for AEO from 1.1.2011.
An update on progress towards mutual recognition with Japan, the USA and China
Confirmation of the benefits of AEO status when applying for a transit guarantee waiver or reduction of the guarantee amount.
When effective: / Date of issue
Extant until/ Expires / Until further notice

1. Background

Authorised Economic Operator (AEO) status within the EU was introduced by Council Regulation 648/2005 and implemented by Commission Regulation 1875/2006 which took legal effect on 1 January 2008.

Previous papers issued on this subject are JCCC Papers (07)25,(07)46 and Customs Information Papers (08)21,(08)29,(08)80(09)53, (09)83, (10)43 and (10)51.

2.Use of the AEO reduced data elements in the Import Control System (ICS) and NCTS

Due to ongoing technical difficultiesthe functionality for AEOs to use reduced data elements within ICS will not initially be available when ICS is implementedin the UK– see also CIP (10) 74.Work is continuing to develop the appropriate functionality and we will update affected parties as soon as details of its planned availability are confirmed. However, in the meantime, AEOs will need to be aware that they should not use the special circumstances indicator ‘E’ and the reduced data sets until further notice. Use of the special circumstance indicator ‘E’ for ICS or NCTS to claim the reduced data set within either system will result in the rejection of the declaration.

3. Changes to the AEO self assessment questionnaire for businesses applying for AEO from 1.1.2011

As advised in CIP (10)43, we would like to remind businesses that applications for AEO submitted after 1 January 2011 must be completed using the revised AEO application form and the new self assessment questionnaire. These forms will be available from the AEO page of the HMRC website and will also be accessible via the Businesslink site.

Due to budgetary constraints it is not cost effective to modify the existing Businesslink on line interactive application tool at this time. Therefore this tool will be withdrawnfor the time being. Instead HMRC will be taking an opportunity over the next 6-12 months to undertake a strategic review of all the application processes for Customs authorisations. The intention is to look at the feasibility of introducing a simplified application process which takes into account future Customs changes in the Modernised Code.

4. Update on progress towards mutual recognition with Japan, the USA and China

Japan

Following the completion of the mutual recognition agreement with Japan in June, the EU and Japan have been finalising arrangements to exchange AEO data to enable the benefits to be delivered. All existing AEOF and AEOS certificate holders will be contacted shortly by the European Commission to obtain their consent to release the required data to the Japanese authorities. Following this exercise the European Commission expect to exchange the data in February 2011 to enable the agreement to be implemented from 1 March 2011. AEOs trading with Japan will also be notified of a separate Japanese identification code. This code should be used by their business partners in customs declarations in Japan to enable the Japanese authorities to identify their EU AEO status and entitlement to benefits under mutual recognition. HMRC has also written to the major UK exporters to Japan to advise them of this important change and the benefits of obtaining AEO status to reduce inspections and controls on their goods when they are being imported into Japan.

USA

The EU and USA have agreed a further work Programme during 2010-11 to exchange experience and best practice of the US Customs Trade Partnership Against Terrorism (CT-PAT) and EU AEO schemes. This Programme envisages the work will be completed and a mutual recognition agreement implemented by 31 October 2011.

China

A similar work Programme is being developed for the negotiations between the EU and China and we expect the detail of this Programme to be agreed by the end of 2010.

5. Confirmation of the benefits of AEO status when applying for a transit guarantee waiver or reductionof the guarantee amount

Under the proposed changes in the Modernised Customs Code in 2013 a new requirement to have a guarantee in place for customs special procedures has been proposed. This has been linked to the AEO criteria.

For transit purposes guarantee waivers and guarantee reductions will only be granted to businesses that are AEOs or meet certain AEO criteria. In preparation for this, HMRC has carried out a review of the requirements for transit guarantee waivers and reductions of the guarantee amount against the AEO criteria. As a result of that review we can confirm that, with the exception of the requirement to have sufficient experience in the use of the transit procedure and command of the transport operations (Annex 46b of Commission Regulation 2454/93), all the other requirements for a guarantee waiver or reduction are met by the AEO customs simplifications criteria. Therefore HMRC can confirm that, provided businesses that have AEOC or AEOF statuscan satisfy the sufficient experience and command of transport operations criteria for transit, these AEOs will be entitled to qualify for a transit guarantee waiver or guarantee reduction. To qualify for sufficient experience applicants must have:

a. At least six months experience in transit procedures to qualify for a reduction to 50% of the reference amount.

b. One years experience for a reduction to 30% of the reference.

c. Two years experience for a guarantee waiver

Examples of how the principal can demonstrate that he is in command of his transport operations include:

a. Carrying out the transport operation himself and applying high standards of security

b. Using a carrier with whom he has had long-standing contractual relations and who provides a service which meets high standards of security or

c. Using an intermediary contractually bound to a carrier who provides a service which meets high standards of security.

However, if placing goods listed in Annex 44c under the transit procedure the following conditions apply:

a. At least six months experience in the capacity of a Principal to use a comprehensive guarantee (at least 100% of the reference amount)

b. One years experience for a reduction of the reference amount by 50%

c. Two years experience for a reduction of the reference amount by 70%.

Note: A comprehensive guarantee waiver is not available to place those goods, listed in Annex 44c, under the transit procedure

It should be noted that under current rules businesses that do not have AEO status will still be able to apply for a guarantee reduction or waiver but need to have their eligibility examined before any of these may be granted.

6. Contacts

AEO Team, 10thFlr West, Alexander House,

21 Victoria Avenue,

Southend-on-Sea, Essex SS99 1AA

Email:

AEO Web page:

Link to AEO web page

Issued on the 30 November 2010by the JCCC SecretaryHMRC, Excise, Customs Stamps & Money Directorate.

If you have a question about the content of this paper please use the details provided in the Contacts section. For general HMRC queries speak to the Customs Helpline on Tel 0845 010 9000.

For comprehensive guidance on international trade regulation, as well as advice on market information and business growth visit the Business Link website.