How to become an AEO Authorized Enterprise by the Customs? A Guide for Self-examination of the Customs AEO Standards
Author: Sean Jia，Jing Ning 2020-04-16Abstract: For import and export enterprises, the words such as “AEO”, “authorized enterprises”, “Customs authorization” are more and more familiar. There are many advantages to become an authorized enterprise. Therefore, many enterprises are eager itching to have a try but full of confusion. This paper will focus on the questions as following:
· Do you really understand the customs standards for AEO authorized enterprises?
· What should we pay attention to before applying for the authorization?
· How to carry out self-inspection and evaluation according to the customs standards for authorized enterprises?
· How to apply for AEO authorized enterprise by the Customs?
Do you understand the Customs Standards for AEO authorized enterprises?
(I) Basic concepts
AEO is short for Authorized Economic Operator. AEO authorized enterprises are authorized economic operators by the PRC Customs, which include advanced authorized enterprises and general authorized enterprises. Customs Standards for Authorized Enterprises is the reference standard for PRC Customs to evaluate whether an enterprise is qualified to be authorized.
1. Customs Standards for Authorized Enterprises are classified into customs standards for advanced authorized enterprises and for general authorized enterprises. Each standard includes common standards and single standards respectively.
2. The authorized enterprises shall meet both the common standards and the single standards for the actual corresponding business category.
At present, the single standards mainly include: consignees and consignors of imported and exported goods, customs declaration enterprises, foreign trade comprehensive service enterprises, cross-border e-commerce platform enterprises, entry and exit express delivery carriers. Among them, the single standards for cross-border e-commerce platform enterprises and entry and exit express delivery carriers was just implemented on March 1 this year (2020).
(II) A outline of Customs Standards for Authorized Enterprises
Taking the common standard for consignees and consignors of imported and exported goods as an example, here is the outline of Customs Standards for Authorized Enterprises. Common standard for consignees and consignors of imported and exported goods are categorized into 4 types: internal control, financial status, compliance and trade security. There are different categories under each type, and each category is provided with a single item (expressed by 1, 2, 3, etc.), and some single items are also provided with sub-items (expressed by (1), (2), (3), etc.). See Table 1.
Internal Control | Financial Status | Compliance | Trade Security | ||||
Structure Control | 1.Training on Customs Affairs; 2.Internal Structure; |
Financial Status |
12.Accounting Information; 13.Comprehensive Financial Status; (GACC Announcement No. 46 [2019] ) | Compliance with Laws and Regulations | 14.Staff Observance; 15.Corporate Observance; | Physical Security Control Measures | 23.Physical Security; |
Import/ Export Business Control | 3.Documentation Control; 4.Documentation Keeping; 5.Import and Export Activities; | Regularity of Import and Export | 16.Registration Information; 17.Import /Export Record; 18.Regularity of Declaration; 19.Regularity of E-data Transmission; 20.Tax Payment; | Physical Access Control Measures | 24.Physical Access Security; | ||
Internal Audit | 6.Internal audit System; 7.Quality control; 8.Rectification Mechanism; | Customs Requirements | 21.Management Requirements; | Personnel Security Measures | 25.Personnel Security Measures; | ||
IT System Control | 9.Information System; 10.Data Management; 11.Information Security | External Credit | 22.External Credit; | Security Control Measures for Business Partners | 26.Business Partners Security; | ||
Cargo Security Control Measures | 27.Cargo Security; | ||||||
Container Security Control Measures | 28.Container Security; | ||||||
Security Control Measures for Means of Transport | 29.Security of Means of Transport; | ||||||
Crisis Management Measures | 30.Crisis Management31.Security Training | ||||||
Table 1 Outline of Customs Standards for Authorized Enterprises of Consignees and Consignors of Imported and Exported Goods
It shall be noted that:
1. Many single items (expressed by 1, 2, 3, etc.) are also included some sub-items (expressed by (1), (2), (3), etc.). In view of the fact that this is only to straighten out the basic framework, the specific sub-items are not listed here.
2. The “31.Security Training” highlighted in yellow is the requirement for advanced authorized enterprises only.
What are the differences between the standard for advanced authorized enterprises and that for general authorized enterprises?
After demonstrating the basic outline of authorization standards, we will take a further look at the comparison between advanced authorization and general authorization standards. Table 2 and Table 3 are both based on consignees and consignors of imported and exported goods.
From the perspective of the common standard：
General Standard | Internal Control | Financial Status | Compliance | Trade Security |
The frequency of senior managers participating in internal training of Customs laws and regulations of is different; | The specific requirements of advanced authorized enterprises are higher than those of general authorized enterprises. (GACC Announcement No. 46 [2019] )
| The time limit, times, percentage and other requirements for the illegal behaviors of advanced authorized enterprises are more strict. | People who enter without permission and whose identification is unknown can be identified and taken actions againsy ; | |
The responsibilities of business, finance, trade security, internal audit and other positions shall be clearly defined and effectively implemented; | It shall be responsible for emergency disposal to reduce the impact on the import and export activities of the enterprise; and it shall report to the Customs in time; | |||
It is required to establish a process management system for import and export activities. | Security training: internal training mechanism and implementation; regular risk education and training; regular crisis management training and simulation exercise. |
Table 2 Standard for advanced authorized enterprises and that for general authorized enterprises--consignees and consignors of imported and exported goods
From the perspective for the single standard
Specific Standard | Internal Control | Financial Status | Compliance | Trade Security |
The management process of import and export business shall be reasonable and complete, and the logistics, documentation and information involved shall be effectively controlled; | The specific requirements of advanced authorized enterprises are higher than those of general authorized enterprises. (GACC Announcement No. 46 [2019] ) | The violation times, amount, proportion, etc. are more strict than those of general certified enterprises. | It shall take more responsibilities for physical security control: lighting, video supervision, and storage area; | |
The internal audit control of quality management mainly involves the internal control system of special articles, products and food as well as the risk control and disposal ability; | It shall take more responsibilities for business partner security: comprehensively evaluating, monitoring and inspecting business partner security; | |||
The requirements for enterprise information system functions is higher. In terms of customer management, contract, finance, customs affairs, logistics, etc., it is required to be able to record, trace, query, analyze, early warning and other functions and operate effectively; | Container security control measures require more: container seal, container storage; | |||
Data management: the main links of import and export activities shall realize process retrieval, tracking, data storage requirements, etc. in the system. | It shall take more responsibilities for the security control measures for means of transport: storage of means of transport, verification of drivers’ identification. |
Table 3 Standard for advanced authorized enterprises and that for general authorized enterprises--consignees and consignors of imported and exported goods
The highlighted contents in Table 2 and Table 3 are standards for advanced authorized enterprises only.
What shall you know before applying to be a authorized enterprise?
(I) Reward and responsibility are two sides of a coin.
It can be seen from Table 2 and Table 3, compared with general authorized enterprises, although advanced authorized enterprises enjoy greater and more preferential customs policies, their authorized standards have higher thresholds and more requirements correspondingly. This is very reasonable, and also reflects the principle of “available but controllable” throughout the customs clearance reform.
(II) Authorization standards consider the basic abilities of enterprise management and operation, which cannot be accomplished at one stroke.
Although the Customs standard for authorized enterprises are refined from the perspective of customs administration, you will find that the core of the standards is still inseparable from the word “compliance”. It can be seen that the standard covers all aspects of enterprise management and operation. To some extent, it is the embodiment of compliance management in customs business. This requires enterprises to accumulate experience in compliance management and infrastructure construction, including top-level design, infrastructure (hardware, software system, etc.), personnel management and training, etc., which can not be achieved in one day. There is a long way to go.
(III) Whether you want to do it or not and whether you can do it or not, you need to know your ability and do what you can.
“Whether you want to do it” is a kind of subjective intention, while “whether you can do it” is a kind of objective reality. Therefore, you need to check and evaluate the standard one by one, so as to have an objective understanding of your current situation. For self-inspection, please refer to the followings:
First of all, these standards can be followed to conduct self-examination and self-assessment:
1) Customs Standards for Authorized Enterprises
2) Guidance of Customs Standards for Authorized Enterprises
3) Financial Guidance of Customs Standards for Authorized Enterprises
Then according to the result of self-examination, consider whether the following three conditions are met simultaneously:
1) Meeting all of the standards;
2) The basic items of a single standard do not exceed 3;
3) Total score of authorization standard is higher than or equal to 95 points.
Finally, based on the results of self-examination and self-assessment, ask yourself the following questions:
--What's the gap between your enterprise and AEO?
--In the current situation, can this gap be made up?
--How much is the resource cost to make up?
--Are you able and willing to undertake this cost?
How to apply to be an AEO recognized by the Customs?
If your answers to the two questions of “Whether you want to do it” and “whether you can do it” are both “Yes”, then next is how to apply for it.
We will briefly introduce the process of applying to be AEO by Customs in this part .
1. Log in the website of China Electronic Port, select the “Customs and Enterprise Cooperation Platform”, then click the “Certified Enterprise Management”, and then select the “Enterprise Certification Application”.
2. Fill in the Application Form for the Status of Authorized Enterprises. The content showing on the web page is the information shall be filled in the Application Form for the Status of Authorized Enterprises.
3. Submit the information in the system. After filling in the Application, click the button “Declaration”.
4. Examination by the Customs at the place of registration. If the materials are complete, and the formation filled in is complete and satisfactory, the Customs shall accept it and issue the Receipt of the Application Form for the Status of Authorized Enterprises, and further submit the application to the enterprise management department of the regional customs through the credit system.
5. The regional customs shall verify and carry out the certification.
If the regional customs reckons that the management of the certification enterprise is applicable, the Customs shall issue the AEO Certificate of Customs Administration of PRC; if the management of the certification enterprise is not applicable, the Customs shall issue the Decision of Refusal of AEO Certificate of Customs Administration of PRC.
Tips:
1. Please conduct self-examination and self-assessment before applying for AEO Certificate. Answer the question “whether you can do it” first, and then think about “whether you want to do it”, otherwise, although full of enthusiasm, it may be unrealistic. In addition, it can also minimize the costs and effectively enhance the chance of success.
2. Make good use of the regulatory authorities’ services. For example, if the self-assessment meets all of the conditions, you can firstly apply to the Customs at the place of registration for credit cultivation, and proactively participate in the cultivation seminar or precise cultivation activities organized by the Customs.
