At present, we still have the disjunction on Being or Not an AEO? What are the benefits that directly impact my organization?
First, I will begin by explaining, that you are an Authorized Economic Operator (AEO).
What is an Authorized Economic Operator?
In simple terms, an Authorized Economic Operator is that Foreign Trade Operator that complies with current regulations established in the country, which has an adequate system of accounting and logistical records, financial solvency and adequate level of security, thus becoming a trusted operator for the Customs Administration. On the other hand, among the main objectives of the AEO programme we have to “secure the international logistics chain by implementing security measures based on international standards and facilitating trade operations“.
Our country began certifying in 2013, with this option only exporters; there are currently 5 foreign trade operators who can certify being exporters, importers, customs agency, customs warehouses and fast-delivery service companies.
Globally, by 2020 there are 97 operational programs, 20 programs in development, with more than 46,000 AEO certified companies worldwide.
Main benefits of the AEO program in Peru
Among the main benefits we can mention the following:
Assignment of an OAS contact point, which will provide guidance and specialized assistance in procedures linked to the AEO program.
Reduction of physical inspections, by way of quoting an example, it has been shown that physical capacity (red channel) accounts for 0.05% of total operations for AEO certified companies.
Reduction of deadlines and formalities, such as in the deadlines for the resolution of rights refund files, for AEO companies there is a maximum period of 30 working days against 45 working days, which is the regular time stipulated in the regulations.
Nominal guarantee for advance clearances and temporary admissions, in which, if the customs agent is also AEO, the enforceability of the customs tax obligation would be from the last calendar day of the month following the date of the discharge term.
Preferential attention for firms subject to physical recognition, extraordinary checks, in the processing of files by rectifications of the custom declaration, among others.
Direct boarding for exporters certified as AEO, depending on the nature of the product, direct shipment can be carried out in containers from the premises designated by the exporter.
To enjoy these benefits, we must keep in mind that the average time to obtain AEO certification worldwide and in Peru is 90 business days, and may be extended up to 30 additional days, if any additional information is needed.
Additional benefits
- At the process level
The number of safety requirements applicable for OAS certification in Peru is one of the highest in the region, requirements related to container and other cargo units, physical safety of facilities and safety in the transport of goods, have different levels in terms of the particular compliance conditions required. All this will allow the certified organization to:
- Accelerate cargo clearance
- Reduce times and costs in the logistics chain
- Improving traceability of all processes
- Raising process efficiency, reducing errors
- Minimize the risks of theft and loss of goods
- Financially
The use of the nominal guarantee will eliminate the financial expense of having an overall guarantee, which is approximately 4.5% of the amount insured annually. In addition, speeding up load release allows for operational cost reductions such as storage, mobilization for capacity, crew, forklift use among others, with a reduction of approximately US$ 250 per container being possible; considering that our country has logistical costs outside the Latin American and Caribbean average, reaching a logistical cost of 50% of the value of the product for certain goods, any cost reduction in our logistics chain is of vital importance, not only as an internal benefit of the organization, but as an image of the country as a sign of competitiveness.
- Internationally
Being an AEO is a sign of international quality, provides greater opportunities for the recruitment of new customers and suppliers, as well as, allows to obtain facilities in customs of other countries with which there are Mutual Recognition Agreements (MRA) of the AEO program (optimal implementation), accessing a more effective exchange of information, allowing the elimination of redundant validations, lower percentage of customs inspections, use of fast roads at borders, prioritization of dispatches, among others.
Let us remember that by 2020, Peru has 6 MRA’s completed, which concentrate approximately 32% of our Foreign Trade operations, these being:
- South Korea (Dec. 2017), the fourth destination country for our exports.
- Uruguay (Mar. 2018), the main destination of undesterated wool, other fish preserve preparations, local deodorants and iron wire.
- Pacific Alliance (Jul. 2018), make up the fourth place of our imports and in terms of exports the main products are minerals, fresh avocados and semi-white rice.
- USA (Set. 2018), the second country of our imports and exports, being the main imported Diesel product and the most exported products are minerals, avocados and fresh grapes.
- Andean Community (May. 2019), among the main products exported we have un toasted coffee and sugar cane.
- Brazil (Oct. 2020), is the third country from which our imports are made and in exports is the main destination for olives and ethylene polyterephthalate (PET) plates.
On the other hand, it should be noted that Peru, Mexico, Costa Rica, Chile and Colombia are immersed in a pilot project with the Inter-American Development Bank (IDB) that consists of the implementation of blockchain technology “CADENA”, which includes the following benefits:
- Improve the operational implementation of binational or multilateral MRA’s.
- Improve the management of the AEO programs of each customs party participating in the project.
- Strengthen supply chain security by reporting AEO certification, suspension, and cancellation of AEO certification in real time.
- Facilitate the effective capacity of customs to provide benefits to companies certified as AEO in real time.
In addition to the above benefits, it is important to note that the Peruvian State has been working with different regulatory entities such as SENASA, Ministry of Health, SANIPES and SUCAMEC in order to streamline the logistics chain for restricted products.
Finally, consider that only 18.7% of the 2020 imports and exports in Peru correspond to companies certified as AEO, so there is still the great opportunity that more companies add to this process. In this regard, we are clear that certifying how AEO is monetarily expensive, however, not being an AEO has a high opportunity cost that is increasing over time.
Now, I invite you to reflect on the benefits that directly impact your organizations and place on the table the question Being or Not an AEO?
