Authorised Economic Operator (AEO) Programme June 2020

Facilitated by: D. Liebenberg Consulting

• Opening & Welcome

• Keynote Address: SARS

• Facilitator Introduction

• Background to AEO Programme

• Migration from PT to AEO

• Benefits – Business wants

• Desired Outcome (Document)

• Way Forward & Closing

AGENDA :

Background to AEO Programme:

The SAFE Framework of Standards to Secure and Facilitate Global Trade was adopted by the World Customs Organization (WCO) in June 2005.The aim of the SAFE Framework is to act as a deterrent to international terrorism, secure revenue collections and promote trade facilitation.The core concept of this is the Authorized Economic Operator programme.Focusing on compliance, safety and security.170 WCO member countries have submitted letters of intent to implement the AEO programme.It is currently in operation in EU, Japan and the USA.The SAFE Framework is based on 4 Core Principles and these rest on 2 pillars of Customs.

FOUR CORE PRINCIPLES

Advance Electronic Information

Risk Management Outbound Inspection

Business Partnership

Harmonise the advance electronic information requirement on inbound, outbound and transit shipments.

Commit to employing a consistent risk management approach to address security threats.

Outbound inspection of high-risk consignments being exported, preferably using non-intrusive inspection methods.

Customs will provide benefits to businesses that meet minimal supply chain security standards and best practices.

(sourced from WCO FAQ’s)

TWO PILLARS

Consisting of 11 Standards: 1. Integrated Supply Chain Management 2. Cargo Inspection Authority 3. Modern Technology in Inspection

Equipment 4. Risk-Management Systems 5. High-risk Cargo or Container 6. Advance Electronic Information 7. Targeting and Communication 8. Performance Measures 9. Security Assessments 10. Employee Integrity 11. Outbound Security Inspections (sourced from WCO FAQs)

Customs to Customs Pillar Customs to Business PillarConsisting of 6 Standards: 1. Partnership2. Security3. Benefits4. Technology5. Communication6. Facilitation

Background to AEO Programme:

What is an AEO ?

• Demonstrated compliance with Customs requirements: requirements specified for the AEO and taken into account when Customs considers qualifications of an AEO applicant.

• Satisfactory system for Management of commercial records: recognizes the importance of maintaining accurate commercial records by an AEO and their ready availability to Customs.

• Financial viability: recognizes the critical role to be filled by good financial standing in allowing an AEO to fulfil its commitments under the SAFE Framework.

• Consultation, Co-operation and Communication: Establishes measures for both Customs and the AEO aimed at fostering mutually beneficial working relationships.

• Education, Training and Awareness: recognizes the importance of reinforcing in employees (both Customs and the AEO) the necessity of learning proper procedures and dealing with anomalous situations.

What is an AEO ? Cont.

• Information Exchange, Access and Confidentiality: Provisions to secure information and to prevent its misuse or unauthorized alteration.

• Cargo Security: Seeks to ensure that cargo integrity and access controls are maintained at the highest levels.

• Conveyance Security: Encourages Customs and the AEO to work together to secure and maintain transport conveyances.

• Premises security: Requirements to implement programmes to secure buildings and to control and monitor perimeters.

• Personnel security: Elements for both Customs and the AEO regarding recruitment, security checks and personnel procedures.

What is an AEO ? Cont.

• Trading Partner Security: Encourages the AEO to conclude contractual provisions with partners in the Supply chain to bolster their level of security commitment.

• Crisis Management and Incident recovery: Encourages advance contingency planning for recovery from adverse incidents.

• Measurement, Analysis and Improvement. Seeks to foster consistency, security integrity and the identification of security system requirements.

(sourced from WCO FAQs)

AEO Programme Countries:

• 84 Countries are operational globally• In Africa:

– Egypt– Morocco– Tunisia– Burundi– Kenya– Rwanda– Mauritius– Uganda

(sourced from WCO Compendium 2019 Edition)

Overview of AEO and Customs Compliance by WCO Members in Africa

AEO Programme Countries:

• AEO Programme under development: 19• In Africa:

– Cote d’Ivoire– Ghana– Gabon– Nigeria– DRC– Angola– Botswana– Lesotho– Seychelles– South Africa

(sourced from WCO Compendium 2019 Edition)

Background to AEO Programme:

In 2010 SARS adopted the Preferred Trader (PT) programme for compliant traders. Seen as a “stepping stone” to the AEO Programme.PT focused on compliance, with safety and security to be the next phase.In May 2017, SARS extended the Customs PT Programme to the broader Private Sector.Main objective: move from “gate-keeper” to a risk based approach.SARS Compliance related to:• Good governance• Transfer pricing• Valuation• Classification• Origin• Accounting of Tax, etc.

Migration from PT to AEO (SA):

• AEO = PT Compliance + safety and security• Client must be PT approved before applying for AEO• 9 Focus areas of Safety and Security:

– Personnel security– Physical premises and access security– Consultation, co-operation and communication– Crisis management and incident recovery– IT security– Business partner security– Cargo and conveyance security– Education, training and threat awareness– Corporate governance

Migration from PT to AEO (SA):

• Self-Assessment questionnaire – permanently employed• Based on WCO SAFE, WCO AEO Guidelines and EU Guidelines• Only covers safety and security• 9 Separate standardized control sheets created based on questionnaire:

– SOP– Layout Plan– Matrix – organizational structure, reporting lines, etc.– Workflow linkage with safety and security– Escalation tables with remedies– Statistics sheet

• Engagement with SARS – “walk-through” audits• Gap analysis – next steps

WCO SAFE Benefits: AEO:

• WCO SAFE lists 62 potential benefits• These fall under the following sub-sections:

– Expedite cargo release, reduce transit times, lower storage costs– Facilitate post-release processes– Special measure for trade disruption or elevated threat levels– Participation in new trade facilitation programmes/initiatives– Benefits – OGAs– Benefit – MRAs– Access to information of value to AEO– Indirect benefits

EU AEO Benefits:

• Easier access to Customs simplifications• Fewer physical and document-based controls

– Both safety/security and compliance• Prior notification for physical control i.e. safety and security• Prior notification for Customs control i.e. other Customs legislation• Priority treatment• Possibility to request place for Customs control• Indirect benefits• Improved relations with Customs/OGAs• Fewer delays• Lower inspection costs• Improved customer service• MRAs with third countries

CTPAT Benefits:

• Customs Trade Partnership Against Terrorism (USA CTPAT)• Reduced CBP examinations• Front of line inspections• Possible exemption from Stratified exams• Shorter wait times at border• Assignment of Supply Chain Security Specialist• Access to Free and Secure Trade lanes at border• Access to CTPAT web-based portal system and library of training material• Possibility of enjoying MRA’s benefits• Eligibility for OGA’s programmes• Business resumption priority – natural disaster, etc.• Importer Self-Assessment Programme• Priority consideration at CBP’s Centres of Excellence

EAC AEO Benefits:

Burundi, Kenya, Rwanda, Tanzania, and Uganda:• Recognition as low risk company• Faster clearance procedure with Customs• Automatic passing of declaration• No physical examination – except random or risk based• ECTS requirement waiver – where applicable• Expedited payment of refunds• Reduced Customs security• Priority to participate in Customs initiatives• Guaranteed renewal of customs license• Priority treatment in cargo clearance chain• Waiver of movement bond• Self-management of bonded warehouse

SARS Proposed Benefits:

• Exemption from certain special Customs services/No charge• Prioritisation of applications for special Customs services• Expedited refunds/drawbacks process• Participation in new Customs initiatives• Targeted training sessions• MRAs• AEO logo• Access to trade stats e.g. top 10 tariffs, etc.• Automatic license renewal• Reduced compliance audits• Electronic warehousing• Integrated interventions• Simplified and automated payment method• Bond reduction - deferments

Desired Outcome:

• What impact do the current proposed benefits have on business ?

• What are the benefits that business want to see ? (in line with WCO SAFE)

• How will the benefits be managed between Government and Business ?

• OGA’s ?