The Future of Trade Facilitation Lies with The AEO Programme

BLOG 02/09/2019

The Future of Trade Facilitation Lies with The AEO Programme

In 2005, the World Customs Organisation (WCO) Council adopted the SAFE Framework of Standards to secure and facilitate global trade. This was informed by the need to secure the international supply chain, and enhance trade facilitation worldwide especially after the September 11 terrorist attack in the USA. The Authorised Economic Operator (AEO) Programme was among the protocols that were borne out of that decision and as a result, the East African Community (EAC) revenue administrations, through their respective Commissioners for Customs conceived the regional AEO programme in 2006.

As the international trade supply chain becomes more vulnerable, the AEO programme seeks to shift focus from the goods to the traders by building trust through voluntary compliance. The status of an Authorised Economic Operator is awarded to compliant traders to enhance their experience when undergoing customs clearance processes. Presently, the EAC regional AEO programme is applicable to the partner states of Kenya, Uganda, Tanzania, Rwanda and Burundi and the Republic of South Sudan

The AEO programme in Kenya is managed by the Kenya Revenue Authority (KRA) under the Customs and Border Control Department. The programme seeks to have 80% of imports and exports in Kenya controlled by of the operators, translating to increased revenue collection.

Kenya has three operational categories of AEOs:

  • Transporters
  • Clearing Agents.
  • Importers/Exporters.

There are 215 AEOs currently registered in Kenya and nineteen (19) of these have already joined the EAC AEO Programme. Transporters in particular are encouraged to join the programme to create a seamless end to end process for their businesses. This is especially key for enhancing trade within the region where transporting cargo via road is the most preferred method of moving goods within East Africa. An AEO exporter should work with an AEO clearing agent and an AEO transporter for expedited cargo clearance process especially at common border posts within the EAC region. The recent bilateral talks between the Customs Administrations of Kenya and Uganda was a step in the right direction in achieving regional integration and promoting the programme.

Some beneficiaries of the AEO Programme at the national level have testified to the expansion and growth of their businesses in terms of increased profits, higher production levels, employment of more staff and faster turnaround time in the cargo clearance process. The door to customs has been wide open for them and these companies have taken advantage of their status to build a rapport with KRA. Existing AEOs have to be more proactive and raise issues or challenges when they face them so as to fully benefit from the programme. As an initiative of the WCO, organisations and companies around the world prefer dealing with AEO certified companies, which leaves non-AEOs at risk of losing out on business.

AEOs are considered low risk traders because they have consistently shown through their operations that they can be trusted and therefore enjoy the benefits of the programme. Less stringent measures are applied while handling their cargo because they have exhibited the ability for self-regulation. Those seeking to join the programme are required to lodge an application to KRA, fulfil a number of compliance procedures and undergo a vetting process before their accreditation to the programme. Those whose applications are declined are notified of the reason for the rejection. Additionally, KRA seeks to demystify the myth that the AEO program is only for large corporates and urges small to medium sized companies to apply for the program to avoid missing out on invaluable privileges.

Among other initiatives that KRA is undertaking to promote the programme is the continued sensitisation of Partner Government Agencies (PGAs) on their role in the vetting process and the overall implementation of the Programme at the national level. This will greatly improve the uptake of the AEO. At the regional level, the Common Market for Eastern and Southern Africa (COMESA) has developed draft COMESA Regional AEO Programme implementation guidelines (June 2018) whose objective is to develop regionally harmonised procedures and criteria for granting the status of AEO. When this comes into force, the trading bloc will seek to enter into Mutual Recognition Agreements (MRAs) with other economies and trading blocs around the world such as the European Union therefore benefitting its Member States.

 

In future, KRA envisions a seamless supply chain with significantly reduced enforcement measures thereby enhancing trade facilitation. This chain will include airports, sea ports, warehouses and shipping agents among others; making international trade efficient and convenient for all the players.

 

By Kwaje Rading'

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