The Strategic Role of AEO in Asia Pacific Economic Cooperation (APEC)

AB PSU

Akhmad Bayhaqi

Policy Support Unit, APEC Secretariat, Singapore.

(This article is written in the author’s personal capacity and should not be seen as reflecting the views of APEC member economies.)

 

As an international organisation, Asia Pacific Economic Cooperation (APEC) focuses on advancing regional economic integration in the Asia Pacific region, particularly through facilitation of cross-border trade and investment activities between its 21 member economies. The APEC Connectivity Blueprint 2015-2025, one of APEC’s long-term strategy, envisages a seamless and comprehensively connected and integrated Asia Pacific stemming from an efficient flow of goods, services, capital and people.

Issues of trade facilitation, including those in customs and border management, are of critical importance to APEC. This is also evident from the ratification of the WTO’s Trade Facilitation Agreement by all APEC member economies. In particular, article 7 on the release and clearance of goods mentioned about the Authorised Operators (AOs). Article 7.7 of the agreement necessitates economies to provide additional trade facilitation measures or preferential customs treatment related to the import, export, or transit formalities and procedures to reliable traders (AOs) that meet specified criteria related to compliance, or the risk of non-compliance, as specified in domestic laws and regulations. Basically it means that traders with a low risk of non-compliance will be given preferential customs treatment.

In 2009, APEC’s Sub-Committee on Customs Procedures established an AEO Working Group to address the development of new AEO programs and tackle the divergent array of existing programs. The objectives of the AEO Working Group are to work towards establishing AEO programs of equal caliber within each APEC economy, and to encourage mutual recognition agreements or arrangements (MRAs) of AEO programs among interested economies in the region.

The 2014 APEC Customs 3M (Mutual Recognition of Control, Mutual Assistance of Enforcement and Mutual Sharing of Information) Strategic Framework further emphasized the importance of AEO program as an instrument of trade facilitation, particularly on strengthening public private partnership to enhance secure and safer trade. In the short term, the 3M Strategic Framework aims to continue with capacity building for member economies that have yet to establish an AEO program, and to further advance the formulation of minimum security standards for AEO enterprises, including SMEs. The long-term objectives are to promote mutual recognition of AEO programs and to work out their benefit list.

An effective and beneficial AEO program will need to address security, compliance and trade facilitation in a comprehensive and holistic manner. The 2016 APEC Policy Support Unit (PSU) study on APEC Best Practices in AEO Programs[i] highlighted some of the private sector’s common concerns related to the benefits of the program: (1) The AEO program tends to only provide customs authorities with additional audit opportunities with little return on investment for participating enterprises (especially for SMEs); and (2) The benefits are not significant enough to offset the added costs, especially if there is already an existing streamlined trade-facilitation environment.

Moving forward, AEO program is seen as an effective instrument for improving trade facilitation and security across the borders and supply chains. There is a need for effective implementation and adherence to security standards that are consistent across supply chain stakeholders, emphasizing partnership, trust and collaboration between government and enterprises, including SMEs. Indeed, a secure and resilient end-to-end supply chain would be determined by its weakest link. The 2015 APEC Boracay Action Agenda aims to widen the base of AEOs and trusted trader programs to include SMEs in order for them to contribute to the security, integrity and resilience in the supply chains. Open communications, through both formal and informal consultations, are crucial in ensuring sustainable and effective AEO programs. This approach should be taken early on in the design stage and during implementation as well.

[i] http://publications.apec.org/Publications/2016/05/Study-of-APEC-Best-Practices-in-Authorized-Economic-Operator-AEO-Programs

COMCEC_Trade Working Group_AEO_APEC

APEC and the International Association AEO, Customs and Logistics shared the panel on international organisations and private sector perspectives on AEO, at the Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Conference (COMCEC) meeting of the trade working group on “Improving AEO Programs in the OIC Member States”. The meeting took place in Ankara on 6th November 2018.

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