TKC Authorized Economic Operators Based Accreditation Scheme

Five Task Teams were established to look into various aspects, including System integration and connectivity, Risk Management, Joint controls/one stop border, Client Service Charter, and Accreditation/Authorized Economic Operator (AEO) and registration process of TKC users. The AEO Task Team was tasked with reviewing the provisions of the TKC Memorandum of Understanding (MoU), international conventions, and practical accreditation experiences of South Africa. The team was also required to develop common accreditation guidelines for the TKC and present a report with recommendations to the TKCMC Working Group on Customs and Transit Facilitation by 1st July 2008. The methodology for developing the harmonized TKC accreditation scheme involved reviewing legal instruments such as the TKC MoU, WCO SAFE Framework of Standards, and the Revised Kyoto Convention. The team also drew on experiences from the European Union (EU), Brazil, and South Africa. The AEO Accreditation Scheme is a differentiated system of handling clients, based on a risk-based approach of categorizing Customs Clients. It is a system to promote and reward compliance, risk management, and standard criteria of requirements and related benefits. The purpose of the scheme is to enhance best practices in Customs control and trade facilitation, promote cross-border recognition of national accreditation schemes, and promote public-private sector partnerships. The scheme has three types of AEO Status: Customs simplifications, Meets normal Accreditation Scheme, and Combination. The entitlements for each type of status include simplified declaration procedures, self-assessments, guarantee waivers, fast-tracked consignments through Customs controls, reduced data elements on pre-arrival/pre-departure, and recognition as a secure and safe operator. The TKC Customs Working Group agreed on a way forward and drafted an Implementation Action Plan, which will result in full implementation by end of July 2010. The action plan includes tasks such as forming national task teams, preparing a draft discussion document, marketing the accreditation scheme and its awareness programs, and providing support towards the delivery of awareness programs. The Task Team identified and agreed to develop the following instruments: Application form, Assessment form, Procedures and Guidelines, Internal structures, Monitoring Mechanism, and Defined benefits to clients. The application form will include data elements such as company information, employee profile, nature of business, size of business, company structure and job profiles, physical address of business, and date and place of registration. The criteria for accreditation include sufficient company information, record of compliance, management of records, financial solvency, security and safety standards, capacity building program, and company information. The record of compliance should include a compliance record of at least 5 years, number of irregularities or offenses committed, self-compliant checks and voluntary disclosure, personnel code of conduct, and consideration of previous AEO status holder or deregistration. The management of commercial and transport records should include automation of company processes, electronic registers, stock movements, inbound, processing, and outbound, availability of audited reports by qualified auditors, and ease of access to company records by customs. Financial solvency should include a sound asset base, positive bank balance, and financial standing to meet the type of business. Safety and security standards should include internal controls to embody safety and security procedures, external boundary security, employees issued with identification cards, routine procedures to ensure integrity of cargo, administrative procedures on handling of cargo, ownership and maintenance of cargo units, sealing and tracking of cargo, entry restriction to cargo areas, supervision of loading and offloading of cargo, imposing security requirements on partners, and contractual agreements to contain elements of safety and security. Deregistration should include insolvency, failure to manage debts, change of nature of business, non-compliance with provisions of the Customs and Excise Act, false declaration, valuation, originating status, classification, non-declaration, dishonesty, mismanagement of records, failure to submit audited reports, failure to keep records, difficulty in accessing records, failure to meet safety and security standards, and failure to comply with the accreditation scheme.