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Tuesday 19 March 2013

THE AEO PEOPLE: CUSTOMS SIMPLIFICATION



Introduction

Being able to use “fast track” customs clearance facilities, hold goods in a customs bonded facility or at your premises without payment of duty under a suspension scheme, being accepted as “Approved Exporters” under Customs preference schemes, presenting missing paperwork after the goods have been delivered to you to avoid storage charges, knowing the majority of your imports won’t be examined by Customs before being released – all of these, and more, are actually simplifications under customs procedures.  And in the UK we take them all for granted.
UK Customs – with its incredible computer system CHIEF (Customs Handling of Import and Export Freight) – have been making life simpler for UK exporters and importers over many years so we are now the 3rd fastest country in the world with regard to customs releases (Singapore and Hong Kong are 1 and 2).  The rest of the EU, not to mention the world do not have the same level of simplification schemes available to all traders, they are only granted to “trusted traders”.

EU AEO “trusted trader”

Since the introduction of AEO approval in the EU in 2008 one of the “carrots” of the scheme has been the fact that approved companies can apply for simplification to standard customs procedures.  In Italy where the customs clearance time for imports is said to be 3 days to reduce this to 1 hour is a great incentive – but not so in the UK. 
The Customs Code under which the EU operates came into force in 1993 when the Single Market was established.  That is 20 years ago and customs, like everything else, has moved on – a lot!  In 2008 it was announced that the EU Commission was re-writing the Customs Codes to be launched in June 2013 – the Modernised Customs Code (MCC).  As well as reducing the number of legal articles and making the language simpler it also linked the use of Customs Simplification Schemes to being an AEO approved company.  Non-AEO approved companies could still apply to use simplified procedures but there would be restrictions to through-put times or financial guarantees required.  These requirements would have to be applied in the UK as well.
With 2013 as the target date many companies, especially in Germany, applied for AEO, often just AEO Customs Simplification approval, so they would gain from the re-written regulations.  Then the Lisbon Treaty came along and slowed the MCC implementation down and then stopped it by requiring unanimous acceptance by all member states of the new legislation.  MCC faded into the background and the Union Customs Code (UCC) took over.

When will we see the changes?

A good question – the UCC has been drafted, lots of mention to AEO approved companies within areas of the Code but no actual dates.  We are expecting gradual implementation of the changes from 2014 until 2020.  The areas of “simplification” we are expecting are:
1.      Waiver from financial guarantees when using duty suspension regimes, eg IPR, Customs Warehousing, etc
2.      Faster import clearances without checks
3.      If goods are selected for port authority checks the AEO approved business is given priority
4.      Streamlined Customs approvals across different regimes, ie combining PCC, End-Use, IPR, OPR, Warehousing, etc
5.      Reduced information required on customs entries
6.      Use of approved exporter status with regard to preference movements
7.      Granted increased benefits in existing regimes, eg through-put period up to 3 years, not 3 months
8.      Setting your own tax point date when duty/VAT will become due
9.      Making self-assessment reports for duty/VAT payments similar to normal VAT reports without the requirement for deferment accounts
10.   Setting up a Central Customs Clearance point in any one of the  EU Member States
In the UK, though, we are already seeing some tightening up on processes and procedures and limiting through put periods in regimes such as Inward Processing Relief (IP) for non-AEO approved companies.  In 2010 all companies approved to use the UK fast track import/export procedures -Customs Freight Simplified Procedures (CFSP) – had to reapply proving they were either AEO or could meet AEO condition.

Conclusion

Companies that decided to just go for the AEO Customs Simplification approval are going to have to wait for the benefits to come in – irritating for almost half the AEO approved companies in Germany who sought this single approval.  Mutual Recognition Agreements which require AEO Safety & Security or AEO Full approval will see more benefits in the short term.  In the UK, though, being AEO or providing evidence you meet AEO conditions.in the short term may make the difference to whether you are granted 3 months or 12 months through-put under Inward Processing Relief or asked to provide a financial guarantee to run that Customs bonded warehouse or use CFSP.
As one of our clients said – “if I have to show I meet AEO conditions by jumping through hoops, I may as well go for the badge”.

1 comment:


  1. Customs Clearance

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