Authorized Economic Operator (AEO) Programme:
The World Trade Organization (WTO) recently praised India’s liberalised Authorised Economic Operator (AEO) programme for significantly increasing the participation of micro, small, and medium enterprises (MSMEs) in international trade.
- AEO is a programme under the aegis of the World Customs Organisation (WCO) SAFE Framework of Standards to secure and facilitate Global Trade.
- The WCO in June, 2005, with a view to secure the international supply chain, adopted the SAFE Framework of Standards (WCO SAFE FoS).
- AEO is one of the three pillars on which the SAFE FoS is formed.
- AEO helps to build a closer partnership between the customs department and the trade industry.
- WCO SAFE FoS is the basis of the Indian AEO programme.
- AEO is a voluntary compliance programme which enables Indian Customs to enhance and streamline cargo security through close cooperation with the principal stakeholders of the international supply chain importers, exporters, logistics providers, custodians or terminal operators, custom brokers, and warehouse operators.
- Launched by the Central Board of Indirect Taxes and Customs (CBIC) as a pilot in 2011 and revised in 2016, the AEO programme merges India’s earlier accredited client programme.
- It is implemented by the Directorate of International Customs of CBIC.
- Under the AEO programme, an entity engaged in international trade is approved by Customs as compliant with supply chain security standards and granted AEO status & certain benefits.
- An AEO is a business entity involved in the international movement of goods requiring compliance with provisions of the national customs law.
- Once granted an AEO status, they are entitled to faster clearances, deferred duty payments, and reduced inspection frequency.
- Thus, an entity with an AEO status can be considered a reliable trading partner and a secure trader.
- This segmentation approach enables customs resources to focus on less noncompliant or risky businesses for control.
