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Authorized Economic Operator Programs

In the Islamic Countries:

Enhancing Customs-Traders Partnership

125

agreement among its Member States. Although there are some differences in AEO practices

among the EU nations, still they are acting as a single AEO that signs MRAs with other

countries.

The level of regional economic integration and the high degree of regional consistency

supported by regulations make the EU a distinct case. However, it is still possible to design a

regional AEO program as it is in East African Community, where an OIC member state, Uganda,

is a participant. EAC countries, namely, Kenya, Tanzania, Rwanda, Uganda and Burundi,

achieved enhanced cooperation on Customs policy and procedure, with harmonized AEO

practices.

Designing a regional AEO brings together the countries with utmost economic relations and

decreases the administrative cost of individually designing an AEO and makes the capacity

building initiatives in the region easier with improved cooperation among the Customs.

Moreover, particularly for small countries, the interest of companies in joining AEO programs

would be limited due to scarce expected benefits. However, with the regional AEO the

economic benefits provided by the AEO program multiply with the number of participant

countries, which escalates the companies’ desire to hold the AEO status.

As it bares costs for a country to initiate MRA negotiations, they naturally choose the countries

which they have significant economic relations. Therefore, it is much easier to find interested

parties to initiate MRA negotiations for regional AEOs rather than single economies.

Regional MRAs are also an effective way of increasing the benefits of AEO status holder

companies in a fast and efficient way. Although it takes some time for the parties of agreement

to align their rules and regulations as well as application and implementation procedures of

the AEO programs, once the agreement signed, the benefits of a regional MRA will be very

similar to the benefits of a regional AEO. In other words, the regional MRA is more costly

compared to the regional AEO in that the administrative cost of alignment and harmonization

of the AEO program is not relevant in the latter one. Moreover, capacity building is much easier

in the regional AEO programs due to the extensive cooperation of the member states.

Free trade agreements have already signed between the groups of countries around the globe.

The existing FTAs would play the role of necessary infrastructure to create regional AEO/MRA

networks. The examples to plurilateral FTAs are the ASEAN (Association of Southeast Asian

Nations), the GCC (Gulf Cooperation Council), SADC (South African Development Community),

and APEC (Asia-Pacific Economic Cooperation). APEC member states have already started the

regional AEO initiative.

Negotiations regarding free trade agreements as well as regional AEO programs are not

straight forward. The main challenge is the disparate level of development of the AEO

programs. The regulatory framework of the countries also plays an important role in this

process.

Regarding OIC countries, the existing free trade agreements are Agadir Agreement between,

Egypt, Jordan, Tunisia and Morocco; GCC between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia

and the United Arab Emirates; and TPS-OIC (Trade Preferential System among the Member

States of the OIC), which is still not in effect.