Authorized Economic Operators

In the Islamic Countries:

Enhancing Customs-Traders Partnership

The EU is the first regional AEO program which will be discussed in detail in Section 2.2.3.

The East African Community composed of Burundi, Kenya, Rwanda, Tanzania, Uganda

(member of COMCEC) and South Sudan has developed a regional AEO program with the

support of the WCO. Under this scheme, regional AEOs will be mutually recognized in all

Partner States and receive uniform benefits. The latter have been estimated to reach 100 to

400 US dollars per consignment. With more than 10,000 consignments, companies saved

between 1 and 4 million US dollars per month. Moreover, it is important to note that 46

companies that are part of this program account for 5.6 percent of the transactions in the EAC

region (1 billion USD per month) and thanks to harmonized policies, they did not experience

any contentious procedures (Chopra and Ojok, 2018). Box 2.1 presents detailed information on

EAC regional AEO program.

2.2 Three Best International Practices

2.2.1 Rationale behind Case Choices

In the section to follow, three cases for best international practices in the area of AEOs are

presented and discussed. These are: Japan, Canada and the EU. These countries are chosen for

several reasons. First of all, these countries are important in terms of many economic

indicators, such as GDP, and above all, their share of trade. The EU is the first largest trading

block, with 32.5 percent of international exports and imports. As for Canada, it represents 2.4

percent of the world’s exports, while Japan’s share is 3.8 percent. Second, these countries are

among the pioneers in applying AEO programs.

Japanese case is worth to be investigated for two main reasons. First, its gradualism in

implementation was remarkable. Such gradualism made the AEOs feasible instead of

embarking on a broad and inefficient program. Second, it contributed significantly to the

decrease in time to trade, as it will be discussed in the next Section.

Canada has been the first country that implemented an AEO program and since then has

allocated huge amount of resources for a successful application of its AEO program with the

objective of eventually achieving a Mutual Recognition Arrangement with the United States in

the post 2001 era. This has been eventually and successfully achieved in 2008. The Canadian

case is therefore not only an example of a successful AEO program, but also a case where such

program has been part of a broader trade policy and a tool to achieve MRA with one of the

largest economic powers at the international level.

The EU AEO program provides a successful example of harmonization of trade related

measures and application of the AEO program by the Customs administrations amongst its 28

Member States. The EU case provides a role model and a best practice example for countries

wishing to deepen their integration, not only by harmonizing their standards, but also by

applying a uniform procedure to authorize economic operators, leading hereby to enhanced

and more efficient, but also safer, trade flows.

In addition to the reasons mentioned above, the AEO program of the three case studies has

proven to be efficient in facilitating trade by significantly reducing time to release goods

through Customs, in addition to several other red-tape costs related to trade and increased

performance overall.