Authorized Economic Operators
In the Islamic Countries:
Enhancing Customs-Traders Partnership
16
Regional AEO Program:
Developing countries with a lower trade volume may face difficulties to achieve the security of
Customs as well as providing sufficient trade facilitation to the private sector. With the limited
resources, the initial capacity building and governance in such countries, it would be hard to
initiate an AEO program. Regional Authorized Economic Operator (AEO) program would be a
good opportunity for these countries to initiate AEO programs and to fulfill security and trade
facilitation goals.
The successful regional AEO programs should be composed of countries that have trade
volumes more than a certain threshold, similar governance structure, cooperation background,
and physical proximity. The initial stage for the countries to develop a regional AEO program is
to take a formal decision. Secondly a working group should develop a common legislation
supported by the national legislations of the participant countries. Capacity building both at
the regional level and the national level in a harmonized framework is key for regional AEO to
work properly. Running a pilot phase before implementation would provide insights to the
participant Customs to diagnose the areas that need improvement.
The benefits of involving in a regional AEO program for small economies would be itemized as
follows:
(i) In small economies, the basic problem of AEO programs is that the companies do not
get sufficient benefits preventing them to join AEO programs. With regional AEO,
companies in a small economy will get more benefits than they get from a national
AEO, which would incentivize them to join the regional AEO programs.
(ii) The prerequisites of design and implementation of AEO programs to Customs are
capacity building both in human capital such as training and employment of qualified
staff and infrastructure of the Customs operations such as developing the IT capacity
and improvement and adoption of the related legal framework. In this respect, it may
not be affordable for small economies to design an AEO program. However,
involvement in a regional cooperation would decrease costs of an AEO program.
Moreover, regional AEO programs would boost export and import in the region due to
the trade facilitation provided by the AEO program as well as the increased
cooperation and alignment of the infrastructure and legal environment among the
participant countries.
(iii) Mutual recognition agreements are the complements of the AEO programs in two
perspectives: (a) enabling the companies to benefit from trade facilitation provided by
the partner countries in addition to national benefits of holding AEO status, (b)
utilizing the resources at the national Customs in risky transactions from the partner
countries due to the decreasing controls of the partners’ AEO companies. However, it
is not easy for a small economy to sign MRA with its trade partners as it is costly to
harmonize two AEO programs for signing MRA. Therefore, countries usually prefer to
spend its effort of signing MRA with countries that it has significant trade volume.
Demand for signing an MRA with a Regional AEO is significantly higher compared to
the individual country within the regional AEO.