TAKEN ON TRUST: THE IMPORTANCE OF AEO ACCREDITATION
TAKEN ON TRUST: THE IMPORTANCE OF AEO ACCREDITATION
24 October 2018
- ‘Trusted traders’ key to post-Brexit business success
- AEO accreditation critical for swift, cross-border shipments
- Simarco one of only 600 UK logistics firms with AEO registration
- Brexit causing long delays in AEO applications
The ongoing deliberations about the details of Britain’s withdrawal from the European Union have placed more focus on the continent’s borders than at any point in the previous three decades.
Back in the mid-1980s, of course, the prevailing sentiment was one of countries drawing closer together. That movement was underlined by the signing of the Schengen Agreement, a treaty which allowed for the freer movement of citizens and goods across borders (https://ec.europa.eu/home-affairs/what-we-do/policies/borders-and-visas/schengen_en).
Initially signed by just five countries of the then European Economic Community (Belgium, Germany, France, Luxembourg and the Netherlands), it was later extended to 26 of the EU’s member states.
Even though the UK – along with the Republic of Ireland – was one of the two countries to remain outside the area covered by the terms of Schengen, it has undeniably derived gains from the so-called ‘friction-free’ passage of people and product.
All that has, of course, been upset by Brexit.
Regardless of the various proposals for Britain’s withdrawal, covered extensively in Simarco’s Brexit white paper (https://simarco.com/index.php/news-media/68-state-of-the-nation-the-simarco-view), it appears likely that companies which either export or import will be faced with the headaches associated with pre-Schengen customs; namely, extra paperwork and delay.
Both business and politicians – in Brussels and Westminster – are, not surprisingly, trying to find a solution. Fast.
As the BBC has noted, many of the suggestions to date highlight the importance of so-called ‘trusted traders’ (https://www.bbc.co.uk/news/business-45813901), organisations which would be able to sidestep at least some of the difficulties due to their being considered reliable by the authorities.
Chief among them in European terms would be firms which have been awarded something known as Authorised Economic Operator (AEO) status.
The introduction of AEO status by the EU in 2008 (https://ec.europa.eu/taxation_customs/general-information-customs/customs-security/authorised-economic-operator-aeo/authorised-economic-operator-aeo_en) followed the creation of the Customs-Trade Partnership Against Terrorism (C-TPAT) by US Customs and developed out of concerns about the growth and security of international freight after the attacks on the United States in September 2001.
The aim was to create a network of approved firms able which could safely and swiftly move goods across borders.
The AEO registration process for UK companies is overseen by HMRC (https://www.gov.uk/government/publications/notice-117-authorised-economic-operator/notice-117-authorised-economic-operator).
It’s perhaps worth pointing out that Simarco was awarded AEO status in April 2013 (https://simarco.com/index.php/news-media/41-simarco-boosts-international-freight-credentials-with-aeo-status).
Nevertheless, despite the kind of benefits which both we and our customers have seen over the past five years, Britain lags well behind its European neighbours in terms of AEO-accredited businesses.
According to figures published last year by the Institute of Export and International Trade (https://www.export.org.uk/news/320338/AEO–what-is-it-and-could-your-business-benefit.htm), the UK has far fewer AEO-approved firms than Germany, France and the Netherlands.
Brexit has sparked somewhat belated interest in holding AEO status. Whilst HMRC’s previous estimates suggested that it was taking companies six months to demonstrate that they had met the necessary criteria, an increase in the volume of logistics operators pursuing approval since the withdrawal vote has led to that schedule being more than doubled (https://www.icaew.com/library/brexit-practical-guides/brexit-supply-chains/authorised-economic-operator-status).
That is arguably of little reassurance to client businesses requiring specialist carrier support and ministers trying to effect the smoothest possible withdrawal ahead of the formal deadline on March the 29th next year.
Of course, merely being AEO accredited does not in itself guarantee being able to insulate firms which export or import from planning to overcome the uncertainties and challenges which Brexit presents.
We at Simarco have been involved in extensive discussions with clients and partners alike almost since the June 2016 referendum.
Although we don’t have a crystal ball capable of showing exactly what is going to happen, we believe that we have put robust contingencies in place to help keep customer businesses on-track.
It’s one reason why we are trusted and ready for whatever Britain’s transition out of the EU may bring.