PH AEO program for roll out in first half

PH AEO program for roll out in first half

Stakeholders that apply and qualify for the Authorized Economic Operator program are allowed to clear their goods with minimum or zero customs border intervention. Image courtesy of khunaspix at

The Philippine Bureau of Customs (BOC) will finally implement its Authorized Economic Operator (AEO) program by the first semester of this year, according to Assessment and Operations Coordinating Group (AOCG) deputy commissioner Atty. Edward James Dy Buco.

BOC is just awaiting the customs memorandum order (CMO) that will provide implementing rules signalling the start to the program, Dy Buco said in a recent press conference.

He noted stakeholders have already been informed about the program’s implementation, with some manifesting their interest in join it.

AEO—a concept under the World Customs Organization (WCO) SAFE Framework of Standards to Secure and Facilitate Global Trade—represents a customs-to-business partnership that seeks to enhance international supply chain security and facilitate movement of legitimate goods.

Under AEO, stakeholders that apply and qualify for the program are allowed to clear their goods with minimum or zero customs border intervention.

According to the WCO, AEO has become a flagship customs-business partnership program for WCO members as it offers an opportunity for customs to share its security responsibilities with the private sector, while at the same time rewarding participants with a number of additional facilitation benefits.

WCO said such partnership programs allow customs to achieve more with less effort and aim to ensure sustainable and long-term compliance through incentives, such as reduced levels of control, simplified procedures, periodic reporting, deferred payment, and reputational benefits, as well as facilitation benefits across borders through mutual recognition arrangements (MRA).

The Philippine BOC in 2013 had already issued rules governing implementation of an AEO program, but only an ad-hoc office was created so the program was not implemented. Now the program is part of the law, via the Customs Modernization and Tariff Act (CMTA).

Implementing the AEO program is part of BOC’s plan to enhance its cargo clearance and examination capabilities under its 10-point priority program for 2019. The AEO program is also meant to bolster BOC’s compliance with its commitments to the WCO.

In 2017, too, BOC issued Customs Administrative Order (CAO) No. 05-2017, which covers the establishment of an AEO program by providing the infrastructure, facility, mechanism, process, and benefits necessary for its full implementation. The CAO has not been implemented either.

3 AEO elements

Under CAO 05-2017, BOC’s AEO program will have three components—cargo security system (CSS), trade clearance facility (TCF), and MRA.

CSS ensures the integrity and security of imported goods in accordance with the principles of the WCO SAFE Framework, while TCF enables highly compliant stakeholders to clear their goods with minimum or zero customs border intervention.

The AEO program may be either fully implemented or implemented in phases, depending on the available resources and capacity of BOC.

Stakeholders eligible to apply for accreditation under the program include importers, exporters, customs bonded warehouses and customs facilities and warehouses; non-vessel operating common carriers, freight forwarders, international freight forwarders with offices in the Philippines, shipping lines and airlines and their agents, authorized agent banks, local transport operators and their facilities and equipment; and foreign suppliers, manufacturers, and other entities in the logistics and international supply chain accredited as AEOs by another country with which the Philippines has an MRA.

But right now the BOC does not have an MRA with any country, according to Dy Buco.

MRA refers to a formal document between two or more customs administrations outlining the circumstances and conditions in which AEO programs are recognized and accepted between the signing parties.

The MRA sets out the process needed to implement, evaluate, monitor, and maintain mutual recognition. In addition, it defines the benefits to be mutually provided to AEOs by the participating customs administrations, and lays down the practical arrangements enabling the participating customs administrations to provide those benefits.

For AEO applicants with multiple services in the international supply chain, one application form may be submitted for several categories, but the AEO certificate of accreditation will be given for each category.

Applicants must meet standards of reliability and trustworthiness,  measured according to the applicant’s level of risk, the nature of its business, and the conduct of its importation as against customs revenue, compliance, and cargo security.

Levels of membership

BOC will establish a simplified system of processing, evaluation, and action on applications for AEO accreditation. Processing of AEO applications will be on several levels.

A Level 1 member is exempt from renewing accreditation, while a Level 2 member will have a dedicated processing lane, advance clearance process, periodic lodgement, one-time exemption certificate, and expedited customs clearance for exports.

A Level 3 member will be extended additional benefits that the customs commissioner, in consultation with the AEO Office to be created, will identify. The AEO Office will manage the overall implementation of the program.

Once granted under the AEO program, accreditation will last unless suspended or revoked based on the degree of culpability and resulting injury to the government. BOC will establish a formal procedure for suspending or revoking the accreditation of AEO members. – Roumina Pablo


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