Summary
To date both EU and UK companies involved solely in intra-EU trade have seen little need to secure AEO status. However a desire to minimise Brexit related trade disruptions is leading more companies to apply for AEO status. ACP exporters serving the UK market along triangular supply chains need to ensure their UK or EU27 partners have attained AEO status before 31st October 2019 in order to minimise their vulnerability to ‘no-deal’ Brexit related trade disruptions.
Press reports indicate that in the face of Brexit potentially giving rise to a 500% increase in the number of customs declarations being handled by the UK Border Force, some EU based exporters to the UK are looking to secure Authorised Economic Operator (AEO) status from the UK customs and revenue service (HMCR) (1). To date the use of authorised economic operators is under-developed in the UK. While in Germany some 6,225 businesses have authorised economic operator status and in the Netherlands 1,563, in the UK by July 2018 there were just 630 registered AEO (2) (for more details see companion epamonitoring.net article ‘Will The Trusted Trader Scheme Offer Relief to ACP Agro-Food Exporters Under a No-Deal Brexit’, 29 November 2019).
While the attainment of AEO status allows a company to participate in a self-assessment processes to simplify trade administration and provides the ‘the right to ‘fast-track…shipments through some customs and safety and security procedures’ the procedures for attaining AEO status can be time consuming and arduous. (3)
In addition it requires the implementation of rigorous controls on the movement of goods along the supply chain. Specifically an applicant business must have in place ‘appropriate security and safety standards to protect the international supply chain’, with these relating to: ‘physical integrity and access controls; logistical processes and, if appropriate, the handling of specific types of goods; personnel and identification of business partners’ (3) (see below for some more details).
| Some Aspects of Securing AEO Status
Applicant companies need to meet specific performance criteria in regard to: compliance with customs requirements; concise record keeping in regard to trading activities conducted; be solvent and have full records on the ‘professional qualifications and practical standards of competence’ of employees involved along the supply chains (3). Applicant companies need to show they have: · ‘procedures in place to identify and disclose any irregularities or errors to HMRC’; · ‘taken appropriate remedial action for any irregularities identified’; · ‘have satisfactory procedures for handling controlled goods’. In terms of security along the supply chain companies are required to ensure they have: · ‘a safety and security risk assessment in place’ · ‘secured external boundaries with documented procedures to control access’ to · ‘measures in place to protect …cargo units and to prevent unauthorised access to · procedures in place to ‘secure the safety of goods during storage, manufacture and · agreed ‘appropriate safety and security measures with … suppliers’; · carried out ‘security screening and procedures for prospective employees and · trained their ‘staff in the security and safety requirements’ (3). |
Securing AEO status requires sustained efforts from applicants in making their applications and in ensuring on a verifiable basis the integrity of their handling procedures along the entire supply chain are up to the required standard. As a consequence of these requirements very few businesses involved in intra-EU trading operations have sought AEO accreditation. This has given rise to a situation where only ‘a handful of food importers’ trading into the UK from EU27 member states have applied for AEO status (1).
However EU27 suppliers which have previously not needed to concern themselves with border clearance issues in trade with the UK are now looking to secure AEO status so as to reassure their customers that they are well placed to minimise any Brexit related trade disruptions.
For ACP exporters serving the UK market along triangular supply chains, (i.e. involving initial ports of landing in a EU27 member state before onward shipment to the UK) the absence of partners with AEO status could lead to delays in getting their products to the final customer in the UK.
| Comment and Analysis While many importers directly importing to the UK from ACP countries will have obtained AEO status, many companies traditionally dealing solely with intra-EU trade will have found the AEO application process over-burdensome compared to the benefits it gives rise to.Against this background ACP exporters trading into the UK market via other EU27 member states will need to ensure their partners are AEO certified in order to secure an inside track in minimising Brexit related trade disruptions.Given the scale of the border challenges which will be faced in the event of a ‘no-deal’ Brexit certain companies such as Pasta Italia (cited in the bakeryandsnacks.com article) are seeking to reassure their customers in regard to future reliability of supply through applying for and attaining AEO status. However while the attainment of AEO status may indeed provide an ‘inside track’ for border clearance operations, it is clear it will by no means provide a ‘silver bullet’ solution to potential Brexit related trade disruptions. Ascertaining whether logistics companies providing services to ACP exporters and trade partners in the EU are AEO certified should be just the starting point for a dialogue on the specific steps being taken to ‘Brexit-proof’ ACP export supply chains serving the UK market in the event of a ‘no-deal’ Brexit. |
Sources:
(1) bakeryandsnacks.com, ‘Post-Brexit UK customs declarations to increase by 500% to over 250 million’, 28 June 2019
https://www.bakeryandsnacks.com/Article/2019/06/28/Post-Brexit-UK-customs-declarations-to-increase-by-500-to-over-250-million
(2) theloadstar.co.uk, ‘Concerns over number of UK shippers signed up for ‘trusted trader’ status’, 17 July 2018
https://theloadstar.co.uk/concerns-lack-uk-shippers-signed-trusted-trader-status/
(3) gov.uk, ‘Authorised Economic Operator’, 24 May 2018
https://www.gov.uk/guidance/authorised-economic-operator-certification