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Why invest in an E-Trade solution?
According to Nathan Associates, E-Trade solutions like ClearView Trade have many benefits, including:
The future of cross-border trading
ClearView Trade assists you to comply with the customs laws and regulations shaping the “New Customs Paradigm” shift within international trade. The specific legislative changes being implemented by the EU and US are outlined on the following.
European Union Customs Code (UCC)
On the 9th of October 2013, the European Union (EU) adopted the Union Customs Code (“UCC”) to replace the current Community Customs Code 2. The UCC foresees a complete shift to a paperless environment by the end of 2020. By that time, the customs environment must be based entirely on electronic data-processing techniques for the exchange of information between economic operators and customs officials – and the 28 EU Member States must comply (with some room for member state discretion).
The UCC is intended to achieve greater legal certainty for businesses as well as increased clarity for customs officials throughout the EU. It also seeks to improve and simplify customs rules and procedures, harmonize decision-making procedures further, and lead to more efficient customs transactions. The improvements introduced by the UCC include measures to complete the transition to a paperless/electronic customs environment, and provisions to expand and reinforce customs procedures for Authorized Economic Operators (“AEOs”), including centralized clearance.
The new UCC also extends benefits for AEOs (Authorized Economic Operators). An authorized economic operator, or AEO, is defined as “a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with World Customs Organization or equivalent supply chain security standards. Authorized Economic Operators include inter alia manufacturers, importers, exporters, brokers, carrier’s consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors”
WCO’s SAFE framework
The growth of global trade and increasing security threats to the international movement of goods have forced customs administrations to shift their focus more and more to securing the international trade flow and away from the traditional task of collecting customs duties. Recognizing these developments, the World Customs Organization (WCO), drafted the WCO Framework of Standards to Secure and Facilitate global trade (SAFE). In the framework, several standards are included that can assist Customs administrations in meeting these new challenges. Developing an Authorized Economic Operator program is a core part of SAFE and the EU legislation has taken on board the AEO concept in its legislation adoption.
What is AEO status?
The EU transport domain is going through a significant change as a result of customs legislation changes. In response to a heightened awareness of the potential for terrorist attacks on freight infrastructure, or taking advantage of freight infrastructure, customs and regulatory bodies around the world are introducing new procedures and regulations which have a strong focus on security. The US CTPAT (Customs Trade Partnership Against Terrorism) was launched in the wake of the 9/11 attacks; the EU’s Authorized Economic Operator (AEO) follows on from the US initiative in bringing supply chain security to prominence.
CTPAT, AEO and other global initiatives in this area share two parallel goals – to increase the level of security in the supply chain, and to facilitate organizations that can demonstrate that they implement such levels of security. The approach is relatively simple – individual companies are assessed (in a manner not unlike ISO9000), and if they comply with a range of criteria they are awarded a status which recognizes this compliance. The benefits of recognition will ensure smoother trade and a trusted partner status and a company can apply to be certified as having appropriate levels of management and security.
In Europe, this means applying for AEO status. The (voluntary) application is made to the responsible government agency, often the customs service nationally and then all AEO applications are centrally registered by the EU. There are four main criteria for AEO:
Typically, EU member state governments have a process for applications for AEO status that includes self-evaluation kits, FAQs and a helpdesk.
In the US, CTPAT compliance follows a similar pattern. It is hoped that mutual recognition of certification will lead business and security benefits for all concerned, and that AEO companies in Europe will experience business benefits while trading with the US.
Why become an AEO?
A company which does not apply for AEO status can continue to trade and to import and export as before. Officially, not having AEO status will not impact on the customs experience, but companies with AEO status can expect a number of benefits that may reduce the cost and delays associated with international trade.
AEOs will be recognized as secure trading partners by other companies (especially other AEOs). This will give them competitive advantage relative to non-AEO companies. AEOs will typically be considered lower-risk by risk management profiling systems.