EAC partners with India for the development of an AEO Mutual Recognition Agreement

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The East Africa Community (EAC) signed on 13 August 2021 a Joint Action Plan with the Government of India for developing a Mutual Recognition Agreement (MRA) between their respective Authorised Economic Operator (AEO) programs.

The Authorized Economic Operator (AEO) program was launched in 2005 by the World Customs Organization (WCO) with the Framework of Standards for Facilitating Global Trade (SAFE), a document lastly updated in 2021 that identifies a series of solutions aimed at making the international supply chain more secure, while facilitating legitimate trade.

The AEO concept has its roots in the Revised Kyoto Convention on the simplification and harmonisation of customs procedures (RKC), whose Part 7, Chapter 3, of the General Annex, recognises the possibility to pre-authorised operators that meet certain requirements established by Customs, to access to particular facilitations and simplification of procedures.

The AEO status is granted by Customs following an audit aimed at verifying that economic operators satisfy a series of criteria such as customs compliance, management of commercial records, financial solvency and appropriate security and safety standards. The AEO certificate allows these operators to access to simplified procedures and to benefit from a rapid release of goods on the provision of minimum information.   

The SAFE further establishes that the AEO status can be granted to any party involved in the international movement of goods, specifying that AEOs may include manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, distributors and freight forwarders. The same document dedicates to the Mutual Recognition Agreements (MRAs) its Part VII, that clarifies how the objective of such agreements is to make possible the recognition and acceptance by Customs of actions, decisions or authorizations adopted by a customs administration in another jurisdiction.

A main requirement for developing an AEO-MRA is that the AEO programs of the concerned countries are homogeneous and conform to the standards and principles set out in the SAFE Framework. One of the main causes of incompatibility between AEO-MRAs, for instance, is their different coverage, as in many countries they are opened exclusively to importers and exporters, while in other they include other agents involved in the logistic chain.

In the EAC, a regional AEO program is operational since 2006. The program allows traders granted with such certificate to benefit from the same level of facilitation in any part of the EAC where they are conducting business. A standard operating procedure manual was also adopted by the EAC in April 2016. However, only 135 AEO certificates have been granted so far to operators in the Region.

Once finalised, the MRA with India will offer a set of facilitations in customs procedures to those certified operators from both countries that have invested in the security of their logistic chains and conduct trade transactions in the territory of their counterpart.