International Association of Authorised Economic Operators (AEO)
Customs and Logistics
2018 AEO CONFERENCE & ASSEMBLY
"Contributing to a secure business environment for economic development"
May 2-4, Baku, Azerbaijan
Hosted by the State Customs Committee of the Republic of Azerbaijan
2018 AEO INTERNATIONAL CONFERENCE AND ASSEMBLY
"Contributing to a secure business environment for economic development"
1. Leveraging the Customs-Private Sector partnership to improve international trade
All stakeholders from the private sector involved in international trade are also a responsible party for the security of the supply chain. Public-private cooperation in the form of Authorised Economic Operators (AEO) programs that certify "trusted" traders help both Customs and business to operate with robust management systems that guarantee the security of supply chains. Customs policies, strategy and modernization initiatives may not be efficient unless taking into account the trading community perspective.
2018 AEO INTERNATIONAL CONFERENCE AND ASSEMBLY, in this respect, is the first ever partnership initiative of a private sector international organization and Customs of Azerbaijan, truly addressing the trading community needs and expectations.
2. AEO institutionalization calls for interagency coordination
Business need legal security and reliable information in order to develop trade. AEO programs worldwide need to provide clear and standard legal provisions and practical implementation frameworks. Successful AEO implementation requires all border services to be engaged in building secure and agile supply chains, thus extending provisions for AEO status to these areas. Some AEO programs are already engaging all border services, lead by clear political will for interagency coordinationand enabled by tools such as the single window.
2018 AEO INTERNATIONAL CONFERENCE AND ASSEMBLY can in this sense be regarded as a big leap towards AEO institutionalization in Azerbaijan. Provisions on AEO have been already well engraved to customs legislation in Azerbaijan, including Customs Code and the decisions of the Cabinet of Ministers. Nevertheless, Customs Service of Azerbaijan still needs to take practical steps to develop a better understanding and raise awareness about AEO. Besides the trading community, the participation of other government agencies in the event creates a totally new landscape to build a common compliance strategy and think about a Single Government AEO status.
3. AEO focus on "risk management and compliance" practices
With AEO programs, Customs is in a unique position to provide increased security to the global supply chain. Customs services worldwide continue to maintain effective controls to combat cross-border crime and terrorism, which have grown and become sophisticated as a result of the new possibilities offered by technology developments and complex world markets. Nevertheless, to achieve best results, it needs a clear strategy to secure the movement of global trade in a way that it does not impede but, on the contrary, facilitates the movement of legitimate trade by compliant operators and actively go against those who operate illegally. From this perspective, 2018 AEO INTERNATIONAL CONFERENCE AND ASSEMBLY cultivating a risk management and compliance culture amongst the trading community is of utmost importance. Providing clear benefits to AEOs and ensuring proper monitoring and assurance mechanisms will help to find the right balance between trade facilitation and security agendas of Government.
The significant growth in international trade expected for this year – a 3.2% increase according to the World Trade Organization (WTO) - implies an increased number of goods exchanged in the international supply chains, which makes it necessary to speed up controls. Thus, AEO programs make a significant contribution to participating in competitive supply chains in international trade.
4. Mutual Recognition of AEOs gives competitive access to global markets. More MRAs are needed.
AEO benefit "trusted traders" and international trade. The mutual recognition of AEO status between Customs authorities of different governments scale up AEO benefits internationally. Already a good number of Customs administrations are working on bilateral and regional mutual recognition agreements (MRAs). A longer term goal is a global system of mutual recognition. MRAs are a key tool to ensure supply chain security from beginning to end. So far 61 WCO member countries have signed MRAs and 35 more are currently being negotiated.
In this sense, 2018 AEO INTERNATIONAL CONFERENCE AND ASSEMBLY promoted the idea that developing an AEO system in Azerbaijan will facilitate international competitiveness of "Made in Azerbaijan" products traded by AEO operators, as they should enjoy facilitation to access global markets.
5. Building trust among stakeholders
Trust between the public and private sectors and also between operators certified as AEO is key. The relationship between Customs and AEO traders is based on the principles of legitimacy, responsibility and transparency. Efficient risk management for secure trade facilitation by Customs, and time savings and other monetized savings for traders - it all depends on collaboration based on mutual trust. AEO is a certification open to all supply chain actors but nobody is obliged to be an AEO. Certification as an AEO must be born from the company itself, because acting as an authorized economic operator must be part of the company's philosophy and practice. A relationship of trust between companies, facilitates the necessary fluidity between suppliers and customers.
Information is available but not easy to share. Administrative costs can be higher than transportation and logistics costs. The AEO institution, with its rules and practices for compliance, security and transparency, builds trust among actors and contributes to reduce the costs of transactions in trade.
6. Role of emerging technologies is decisive
AEO and other Customs tools need to integrate emerging technology solutions, such as blockchain,to manage international supply chains in a more cost effective, transparent, fast and secure way. Customs and other border agencies today are faced with multiple challenges requiring a great deal of adaptability and resilience. Technologies, like Blockchain, IoT and Big Data may help to re-design our thinking about supply chain and its management.
Success in implementing AEO programs and smart border security models depend on the level of penetration and efficient use of ICT. In a world that is globally connected, International trade operations require ITC connectivity to secure the entire supply chain.
7. Support to Small and Medium Enterprises
Small and Medium Enterprise (SME) represent a vital part of global value chains, in some cases the vast majority of a supply chain may be composed of SME economic operators. The international customs community, led by WCO, is aware that there is a need to promote the SAFE Framework and AEO certification widely among SMEs. Unquestionably the proportionate impact of the investment required to become and maintain AEO status is greater for SMEs than for larger companies. AEO programs should involve clear strategies to support SMEs, providing them with benefits that far surpass expenses.
Business, regardless of its size, need to innovate, produce quality and differentiation to be competitive in international markets. The great challenge of both SMEs and big business is to differentiate itself in International markets. Business need to know that Customs exist and function well to facilitate trade and protect legitimate traders, and ultimately society. Business and Customs need to build a mutually supportive relationship, in order to generate wealth and create employment, these are the ultimate goals of business of all sizes.