Authorized Economic Operator for secure supply chains and trade facilitation benefits

According to the World Customs Organization (WCO) study titled “Compendium of Authorized Economic Operator Programmes”, the majority of global trade is legitimate, and a large portion of that trade is repetitive between highly compliant traders and this needs to be reflected in customs procedures as well as trade facilitation benefits. Authorized Economic Operator (AEO) programmes, in line with the World Custom’s Organization’s SAFE Framework, recognise businesses with secure supply chains and provide them trade facilitation benefits. Linking the support given to AEOs in return for demonstrating supply chain security provides opportunities for trade facilitation more broadly. Through assessing businesses’ trade compliance at the same time as supply chain security, greater trade facilitation benefits may be offered.Many partnership programmes have been developing across the world based on the provisions of various international standards, including the Revised Kyoto Convention, the SAFE Framework of Standards to Secure and Facilitate Global Trade, the World Trade Organization Agreement on Trade Facilitation.

Moreover, AEO programmes internationally vary in their scope including in the benefits offered to businesses. The release of goods for authorised persons on submission of minimum information, clearance at the declarant’s premises, reliance on commercial records, simplified single goods declaration over a period, self-assessment of duties etc., have been provided in many AEO programmes.

In line with the above, the South African Revenue Service (SARS) launched a domestic accreditation programme on 23 July 2021 (after the pilot of 2019), which is aligned to the compliance requirements of an AEO programme. This was known as a Preferred Trader Programme and offered some benefits to accredited entities. From this initiative the AEO programme in its current form was born. The AEO-Compliance and Security programme is available to registered importers and exporters and all registered entities involved in the handling, transit, conveyance, storage and processing of imported goods, or goods to be exported, which are subject to customs control.

The rules under Section 64E of the Customs and Excise Act, 91 of 1964, have been amended to expand the participation of economic operators within the SARS AEO supply chain. The rules align more closely to the standards of Pillar 2 of the WCO Framework of Standards by introducing a safety and security leg in accordance with international best practices. There are two levels of accredited client status provided for namely level 1 which deals with AEO Compliance and level 2 which covers AEO Security with associated facilitations.