Authorized Economic Operator Research Articles

The value of international standards certification: Evidence on export and firm performance from a security enforcement on borders

Globally, economic growth is promoted through regional economic integration, and governments actively try to improve the security and efficiency of international trade and border management by optimizing the conditions for international trade. The World Trade Organization (WTO) introduced the Authorized Economic Operator (AEO) certification system to improve the efficiency of customs clearance and to ensure the security of the global supply chain. Using a sample of Taiwanese-listed firms that attained AEO certification from 2009 to 2018, this study investigates the influence of AEO certification on their export sales and corporate performance. The empirical results show that AEO-certified firms increase their ratio of export sales and the scope of export destination regions. However, AEO-certified firms can not improve their operating and market performance significantly, except for low-performance firms in the accreditation year. This study also uses the two-stage least square regressions (2SLS) method and the propensity score matching method to conduct the regression analysis. The regression results are consistent with the main findings. The findings can be used for reference by firms seeking to expand international trade and by governments to promote the country’s international trading.

“Assess in advance, control where required”. Risk, privatisation and data in EU customs security

ABSTRACT International relations and security studies scholars have produced groundbreaking analyses that shed light on the control of transnational human mobility, which emerges as a central governmental problematisation that security apparatuses in the EU and elsewhere deal with. However, scholars tend to pay less attention to non-human, cargomobilities. In this paper, I explore how cargomobilities are controlled by focusing on two case studies: the EU’s Authorised Economic Operator (AEO) programme and the Import Control System (ICS2). Both initiatives support the operationalisation of the principle “assess in advance, control where required”, which lies at the core of the EU’s common framework for customs risk management. While the AEO programme requires the outsourcing of advance security controls to trusted economic operators involved in supply chains (e.g. manufacturers, exporters, carriers and importers), the ICS2 allows customs authorities to perform risk analysis through the automated processing of pre-loading cargo data. Borrowing conceptual tools from actor-network theory and governmentality research, I develop an associational understanding of risky cargo, investigate the rationalities that inform the control of cargomobilities in the EU, and attend to both the hi- and low-tech tactics through which these rationalities materialise within the AEO programme and ICS2.

Proposals for Improving Legal Regulation of the Institute of Authorized Economic Operator

The article discusses current issues related to the development of the institution of an authorized economic operator (hereinafter — AEO) in Russia. The study is devoted to the analysis of the regulatory framework, and also analyzes the current state of affairs. the purpose of the article is to identify problems that require discussion and deeper research in order to improve the regulation of the AEO institution; formulating conceptual proposals for its development and involving in this institute companies that really need simplifications when carrying out customs operations for conducting foreign trade activities. This study is based on the methodological approaches of domestic scientists to the problems of development of economic institutions. When conducting the study, the method of comparative analysis of legislation regulating the AEO institution was used; An analysis of scientific literature and existing data from open AEO Registers was carried out. Methods of scientific knowledge, system analysis (deduction, induction, analysis, synthesis), graphic and statistical methods, systems approach were used; methods of monographic, statistical and comparative analysis, generalization and interviews were used. results and scientific novelty of the study. The work focuses on the study of the terms underlying the AEO institution. According to the author, the term should more accurately reflect the purpose and essence of its creation. The legal regulation of the AEO institution requires a new rethinking, with prospects for the development of the institution, as laid down in the standards of the World Customs Organization, from the understanding of AEOs as national companies that have a number of simplifications when performing customs operations, to the understanding of AEOs as organizations — links in the supply chain of products between AEOs of other countries, provided they all meet trade and safety standards. A set of proposals for the development of the AEO Institute has been formed. Conclusions. The proposals concern clarification of terminology and proposals for improving the regulatory framework, in particular the development of simplifications. The federal customs services of the EAEU countries may use the provisions of this article when developing legal regulation for the development of the AEO institution. The degree of elaboration varies from a conceptual idea to the proposal of specific amendments to articles of laws.

АВТОРИЗОВАНИЙ ЕКОНОМІЧНИЙ ОПЕРАТОР: ШЛЯХИ РОЗВИТКУ, ЙОГО ВПЛИВ НА ПРОЦЕСИ ПРИ МИТНОМУ ОФОРМЛЕНІ, РИЗИКИ ЗАСТОСУВАННЯ

Goal. To identify development pathways for Authorized Economic Operators (AEO), assess their impact on customs clearance processes, and analyze application risks. Method. The theoretical and methodological basis of the research comprises fundamental and modern studies by foreign and domestic experts in the field of Authorized Economic Operators (AEO). The analysis of AEO's impact on customs clearance processes is based on methods of analysis and synthesis, induction and deduction. The research on AEO development pathways and the assessment of their application risks employs the methodology of scientific abstraction, allowing for the identification of key trends and promising directions for further improvement of customs procedures. Results. Current trends in international trade demand the adaptation of supply chain security tools by customs administrations. Authorized Economic Operators (AEO) are becoming key players in this process, offering new opportunities for optimizing customs operations. The implementation and development of AEO contribute to cost reduction, shortened customs clearance time, and increased transparency of trade operations. However, the use of AEO entails certain risks, particularly related to cybersecurity and potential abuses. Key principles of partnership between customs authorities and businesses that have obtained or seek to obtain AEO status have been identified. The dynamics of obtaining AEO status by enterprises in Ukraine have been analyzed, indicating that the current state of the AEO program in Ukraine has significant development potential, promoting increased efficiency in international trade and reduced administrative barriers.Scientific novelty. The current state of the trade industry and its development prospects were analyzed. The main organizational structures of trade business structures existing at the current stage of development were analyzed. Scientific Novelty. The main stages of the process for obtaining Authorized Economic Operator status have been analyzed, and the main customs risks that require careful management and control by customs authorities have been identified. This includes continuous improvement of risk assessment and verification procedures, as well as close cooperation with AEO program participants to ensure the safety and efficiency of international trade. Practical Significance. Key directions for improving the authorization process for enterprises under the Authorized Economic Operators program have been formulated.

Authorized economic operator certification and export stability: Evidence from China's firms

AbstractThis study examines the impact of the Authorized Economic Operator (AEO) certification on export stability. Using a new and unique dataset on AEO certification, combined with the Chinese Customs Enterprise Database and Chinese Industrial Enterprise Database from 2002 to 2013, we find that AEO certification has a positive impact on export stability by employing a staggered difference‐in‐differences empirical strategy. It reduces the likelihood of export failure, enabling certified firms to achieve higher efficiency and maintain competitive advantages in trade risks. The negative effect of AEO certification on export failure is prominent in firms exporting products with higher prices, more physical inspection, and higher requirements of customs clearance time. Along with AEO adoption, certified firms perform better in export stability than non‐certified ones.

Facilitations for Trust & Check Operators

The figure of the ‘Trust and Check Trader’ identified by the reform proposal of the Union Customs Code presented by the European Commission sets as basic requirements those of the current Authorised Economic Operator (AEO), providing, however, for a more transparent relationship between the former and the customs authorities, with the latter being able to access the information systems of this new category of trusted subjects, in exchange for a significant series of facilitations in customs operations. If the applicants for the new status are willing to submit to the necessary verifications and to allow access to their information systems, the draft Regulation provides for many advantages, some currently provided for AEOs and others introduced exclusively for Trust and Check Traders. AEO, Benefits, Facilitations, Controls, Trust, Check, Traders, Information

Recent Customs Reforms in Brazil

Brazil has been actively addressing the challenges posed by the rapid growth of e-commerce within its customs framework, focusing on enhancing efficiency while maintaining control over trade flows. Two notable strategies employed by Brazil is the utilization of cutting-edge technology of artificial intelligence (AI) and a Trusted Trader Scheme, known as Authorized Economic Operator (AEO) program. This scheme acknowledges compliant and reliable economic operators, granting them a status that comes with various benefits, particularly in the realm of customs procedures. In addition, the application of automated risk analysis, often integrated with AI, has also revolutionized customs procedures in Brazil. Customs, Reforms, Brasil, Artificial Intelligence, Trusted Trade Program

The Ambitious Customs Reform Package Proposed by the EU Commission

The EU Commission has presented to the European legislator (Parliament and Council) a proposal for the reform of the Union Customs Code (UCC) (as well as amendments of several other legal acts). The main features of the reform are: the creation of an EU Customs Data Hub (which will gradually replace the IT import and export clearance systems of the EU Member States), and of an EU Customs Authority responsible, inter alia, for this data hub and risk analysis based on the data thus made available, a shift from the responsibility and financial liability of the socalled declarant (who lodges the customs declaration or on whose behalf it is lodged) to the concept of a (deemed) importer as the person responsible not only for import duties but for all fiscal and non-fiscal compliance aspects (even if other persons, such as carriers or holders of storage facilities, have provided at least part of the required information to the data hub), including the responsibility for a self-assessment of import duties, an extension of benefits for Authorised Economic Operator (AEO) (in future called ‘Trust and Check traders’) who will be authorized to self-release goods, as well as a partial harmonization of customs sanctions. If adopted by the legislator, the new provisions and the creation of the EU Customs Authority will be bold steps which will bring the EU customs union to a higher level and will increase uniformity in the treatment of economic operators importing into, and exporting from, the EU Customs Union. Part of the reform package are also changes to the EU customs tariff with regard to e-commerce goods (introduction of four groups of flat rate duty, plus one for duty-free goods, abolition of the current customs duty relief for goods up to a value of EUR 150), as well as an amendment of the VAT System Directive according to which the import one-stop shop (IOSS) will be extended to e-commerce goods beyond a value of EUR 150. EU Customs reform, EU Customs Data Hub, (deemed) importer, customs sanctions, EU Customs Authority, Trust and Check traders, low value imports, flat rate duty buckets, e-commerce

Improving the Assessment of the Solvency of Authorized Economic Operators in Bulgaria

In achieving a balance between the ever-increasing requirements on customs administrations regarding the security and safety of international trade on the one hand, and the desire of merchants for easy and quick customs clearance of their goods on the other, so-called ‘simplified customs procedures’ and in particular, Authorized Economic Operator (AEO) status, play an important role. To obtain AEO status, several requirements (criteria) must be fulfilled, including proof of their financial solvency. To date, the Bulgarian customs administration has not developed a single method that allows a more accurate assessment of solvency. This paper presents an analytical method designed to achieve this aim.

Terrorism on the rise – What can WCA countries do to combat difficulties with international trade?

In the last 5 years, the center of gravity of terrorism has shifted from the Middle East and North Africa (MENA) region to sub-Saharan Africa. As of 2018, this region had the highest number of fatalities and the greatest material damage. This paper assesses the situation of the countries most affected by terrorism in the WCA (West and Central-Africa) region by examining economic complexity, the costs of cross-border trade and corruption. The AEO (Authorized Economic Operator) program is a means of ensuring the security of international supply chains while simultaneously facilitating the cross-border flow of goods. By 2020, 97 countries in the world had operational AEO programs, but only one country in the WCO (World Customs Organization) WCA region had implemented one. The threat of terrorism is very high in seven countries of the region: Nigeria, Burkina Faso, Cameroon, Democratic Republic of Congo, Niger, Chad and Mali. As a result of the evaluation, it can be concluded that these countries need mechanisms to facilitate international trade and would benefit from the implementation of the AEO program.

The Authorized Economic Operator (AEO): the World Customs Organization’s commitment to Supply Chain and International Trade Security

La creciente expansión de la economía devela un mundo nuevo de oportunidades para el comercio internacional. En este contexto, la vulnerabilidad y los riesgos asociados al tamaño de las cadenas de suministro hacen necesaria la implementación de medidas globales de control que garanticen los objetivos básicos de la logística de clase mundial: bajos costos, efectivos tiempos de entrega y una alta calidad de los productos. Por ello, la figura OEA que se traduce en Operador Económico Autorizado, constituida por la Organización Mundial de Aduanas, se presenta como una respuesta al requerimiento de seguridad y a la promoción del comercio internacional. Colombia, todavía tiene una discreta implementación, por lo cual los resultados alcanzados todavía no pueden considerarse significativos para determinar la verdadera eficiencia y aprovechamiento para el país.

Improving the activities of the authorized economic operatorin the Eurasian economic union

Moscow, RussiaThis article analyzes in detail the current state of the institution of an authorized economic operator (AEO) within the framework of the Eurasian Economic Union, taking into account the identified urgent problems of customs regulation in this area. The relevance of the research topic is to increase the role of authorized economic operators as a tool for liberalizing and simplifying customs procedures, as well as establishing cooperation between participants in foreign economic activity and customs authorities. At the same time, the existing relations in the field of functioning of the AEO institute in the Eurasian Economic Union have not yet reached their perfection, and therefore, the issue of the development of this institute within the Union is of particular importance. The purpose of the study is to develop measures to optimize the activities of the institute of an authorized economic operator in the EAEU. In this regard, the definition of the term “authorized economic operator” was given and the trends in the development of AEO in world practice were analyzed. In the course of the practical analysis, the foreign trade activities of the JSC Firm “August”, which has the status of an authorized economic operator with a certificate of the third type, were directly considered, and the main advantages received by the company within the framework of the AEO status were also identified. As a result, problematic aspects of customs regulation of AEO activities in the EAEU were identified, including in terms of the application of special simplifications, as well as ways to solve them were proposed and promising directions for further development of the institute were outlined.

PROGRAM IMPLEMENTATION AUTORIZED ECONOMIC OPERATOR (AEO) IN INDONESIA

The national program of Authorized Economic Operators (AEO) program is a mandate that must be carried out by customs administrations in each country according to the agreement on WCO SAFE Framework of Standards, is adopted in 2005. Indonesia has expressed its commitment to implementing this program since the signing of the letter of intent of WCO SAFE FoS in 2005. The results of research analysis on the implementation of the AEO program in Indonesia show the conclusion that (1) the high interest of economic operator companies to participate in the AEO certification program is due to the potential benefit factor that will be received. Second (2), there are 13 standard conditions and requirements that must be met by AEO companies which are based on the DGCE Regulation number PER-4/BC/2015 breakdown into 51 criteria. This is a challenge that needs to be faced by enthusiasts of the AEO program to avoid administrative failure rates in the certification process. Finally (3), the efforts made by Customs in increasing the number of AEO certified companies, among others, by active socialization to economic operator companies and also Customs vertical units in the regions, carrying out Focus Group Discussions, and the most strategically developing a coaching clinic program as a form of assistance to economic operator companies who are interested in participating in the AEO program.
 
 Keywords: Authorized Economic Operator, AEO, WCO SAFE Framework of Standards

ПРАВОВІ ПИТАННЯ ЗАПРОВАДЖЕННЯ ІНСТИТУТУ АВТОРИЗОВАНОГО ЕКОНОМІЧНОГО ОПЕРАТОРА

The article covers current legal issues on implementing the institution of an authorized economic operator (AEO). The directions for developing the domestic economic and transport legislation are outlined. According to the International Monetary Fund data, supply chain disruptions have become a major challenge for the global economy since the start of the pandemic caused by COVID–19. Shutdowns of factories in China in early 2020, lockdowns in several countries across the world, labour shortages, as well as demand for tradable goods, disruptions to logistics networks have resulted in big increases in freight costs and delivery times. It is noted that the ongoing problems in the supply chain have caused some changes in the development of trade relations of Ukraine with other countries due to its transit state status. The institute of authorized economic operator was established in Ukraine according to the Law of Ukraine «On the amendments to the Customs Code of Ukraine on certain issues of functioning of authorized economic operators» adopted in October 2, 2019. It is emphasized that implementing the institution of the authorized economic operator corresponds to Ukraine’s obligations under the Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part. It is noted that more than 80 % of all customs clearance in the EU is carried out by companies with AEO authorization. A resident business entity as a participant of the international supply chain (including manufacturer, exporter, importer, customs representative, carrier, freight forwarder, warehouse keeper) may be authorized economic operators due to multi-stage conformity assessment system. In addition, the current legislation should be updated, in particular relevant provisions of the Economic Code of Ukraine, transport codes and laws in order to provide legal basis for authorized economic operators’ activities as the participants of freight transportation, as well as unifying the legal requirements for the AEO and carriers, freight forwarders, etc.

Challenges of Customs Law during the Paradigm of “Facility and Security” in International Trade

Abstract Changing conditions within international trade as well as the implementation of the facilitation and security paradigm have significantly impacted the structure of customs law. Both the SAFE Framework as well as the Trade Facilitation Agreement had indicated the need to maintain a balance between regulations introducing simplifications and those ensuring safety and security. One example of such a solution is the institution of the authorised economic operator (AEO), which grants those entities opportunities to take advantage of a number of simplifications, such as the filing of the simplified customs declaration, making entries in a registry, or performing self-assessments, but, at the same time, maintains the requirement of safety and security (through a detailed audit of the enterprise before AEO certification). However, by allowing authorised economic operators to perform self-assessment in respect of goods that have entered into the customs territory of the European Union and are to be released for trade, EU legislators have created significant challenges concerning the realm of safety and security, especially concerning the institution that is the most important within that area – that of customs controls. Despite all this, its importance to safety and security remains distinctive and may be seen in the emergence of new types of customs controls which concern only this particular sphere.

Development Model for Facilitating the Negotiation of AEO MRAs

This paper presents a model for an effective Authorised Economic Operator (AEO) Mutual Recognition Agreement (MRA) development process, based on the author’s doctoral thesis, which examined factors impacting the negotiation of AEO MRAs. The purpose of the model is to provide governments with a logical framework for facilitating the preparation, negotiation and implementation phases of MRA development at both the bilateral and multilateral level. First, an overview of methodology is presented to highlight the study’s data collection, analysis and result integration within the convergent parallel mixed-methods design. Second, identified factors are categorised by way of their impact on the various phases of the MRA process including preparation, negotiation and implementation. Each of the three phases is then discussed, together with the steps involved in each phase.

THE EFFECT OF THE EXCLUSION OF THE AUTHORIZED ECONOMIC OPERATOR FOR CUSTOMS BROKERS IN BRAZIL

Brazil joined the Authorized Economic Operator (AEO) program, established as a standard by the World Customs Organization, in 2014. In 2018, the change in legislation excluded the category of customs brokers from the certified entities. This research aims to address the reasons and consequences of the exclusion of the certificate to the category of customs brokers. This exclusion took place because many customs brokers filed lawsuits to acquire the certificate, without taking the exam. This analysis comes through survey type research, applied to customs brokers who had the certificate and those who did not, from a Customs broker association from the state of Sao Paulo, in which they described the main impacts caused in their profession. Sao Paulo state is the biggest import and export state and contains the main airports and ports in Brazil. The lack of certification in the customs broker´s chain may ameliorate the security controls in the whole international trade chain. This paper is especially useful because we present results that come up from a service provider in the global supply chain, as well as the effects that took place in Brazil may occur in other countries.

СТАТУС АВТОРИЗОВАНОГО ЕКОНОМІЧНОГО ОПЕРАТОРА ЯК ФАКТОР МІЖНАРОДНОЇ КОНКУРЕНТОСПРОМОЖНОСТІ ПІДПРИЄМСТВА

The article is devoted to the study of the advantages that give the subjects of foreign economic activity the status of an authorized economic operator and its impact on the level of international competitiveness of the enterprise. Object of research is international competitiveness of the enterprise. The purpose of the work is to study the prospects of obtaining the status of AEO by the subjects of foreign economic activity in the conditions of intensification of foreign economic activity, which will provide them with competitive advantages in international markets. Method of research is methods of synthesis and analysis. The international competitiveness of the enterprise is determined by the set of its competitive advantages in the foreign market. It is established that one of the potential advantages for domestic enterprises engaged in foreign economic activity is to obtain the status of an authorized economic operator. The types of authorization depending on the place of the enterprise in the international supply chain are considered. A three-layer system of providing simplifications to economic operators in the EU is presented. The benefits of obtaining this status for exporters and importers are identified. The results of this article can be used, for example, by enterprises engaged in foreign economic activity to ensure competitive advantages over other companies. Forecast assumptions about the object of study - increasing the level of international competitiveness of enterprises by obtaining the status of an authorized economic operator. KEY WORDS: INTERNATIONAL COMPETITIVENESS, COMPETITIVE ADVANTAGES, AUTHORIZED ECONOMIC OPERATOR, FOREIGN ECONOMIC ACTIVITY, ENTERPRISE, CUSTOMS.

AEO certification – necessity or privilege for supply chain participants

Purpose This study aims to investigate the motives for and the benefits of authorized economic operator (AEO) certification in the supply chain. Also, whether there are significant differences in the perception of the AEO status as a necessity or privilege among cargo owners and service providers. Design/methodology/approach The research design includes an international survey of 159 AEO-certified companies from four European Union (EU) countries performing various roles in the supply chain. The data are analyzed using quantitative methods, including factor analysis and analysis of variance. Findings Based on factor analysis, the research reveals the motives for and benefits of AEO certification. This reveals significant differences between two distinct groups of supply chain participants, namely, cargo owners and service providers. Service providers are mainly driven by the need to gain or maintain their competitive advantage and treat AEO certification as a standard that is required by customers. Cargo owners are relatively more focused on the improvement of internal processes and treat AEO certification as a privilege that helps them achieve a high level of efficiency. Originality/value The study fills the existing literature gap as it focuses on the differences between two distinct groups (cargo owners and service providers) in terms of their perception of the AEO certification. As empirical research in this area is scarce, especially at the cross-country level, this study also significantly complements knowledge on AEO certification in the EU.

How to Take Advantage of Trade Facilitation in Vietnam: A Case Study of Vietnam’s Logistics Firms

Inspired by the theme of the World Customs Organization and its conclusion that ‘Trade facilitation initiatives and intergovernmental schemes of customs community have been providing logistics enterprises with many opportunities to join effectively and profitably in the integrated supply chains all over the world’, this analysis focuses on Vietnam Customs creation of Authorized Economic Operator (AEO) status. It aims to enhance global trade security and foster business competitiveness, promoting greater success in international trade and business. However, Vietnam’s logistics companies cannot readily benefit from the AEO program because they cannot meet the AEO criteria of high exports and imports volume (for Vietnamese traders) as well as a huge number of customs declarations (for Vietnamese customs brokers). Obviously, no Vietnamese logistics company has been granted AEO status since the beginning of AEO program. Shining a light on this, we can explore the reality of why Vietnamese logistics companies really have not benefitted from the current AEO program.