What Is AEO Certification & Could It Benefit Your Business?

Discover how to unlock your business’s competitive edge with AEO Certification.

Complex customs checks, lost freight, missed deadlines—for many, these challenges are an unavoidable part of the global trade landscape. However, there is a ray of hope for businesses hoping to streamline their shipping: AEO Certification. 

AEO stands for Authorised Economic Operator, a designation granted by customs authorities in the European Union (EU). A prestigious mark of quality, AEO Certification gives businesses a competitive advantage when exporting globally. 

So, picture this: simplified customs procedures that whisk away some burdensome paperwork, expedited processing that slashes clearance times, and no need for expensive security guarantees that reduce your liquidity. So, what else do you need to know?

What is AEO Certification?

In 2005, the World Customs Organisation (WCO) recognised the growth of global trade, increasing security threats, and drafted the WCO Framework of Standards to Secure and Facilitate global trade (SAFE). AEO is one of the main building blocks, looking to accredit operators that can prove high-quality internal processes that prevent goods from being tampered with in transport. 

Today, AEO certification is available to businesses involved in the international movement of goods, including importers, exporters, manufacturers, logistics providers, and customs agents. Companies must meet specific criteria related to customs compliance, financial solvency, security and safety standards, and record-keeping procedures. 

Once certified, trading businesses can benefit from various advantages, such as simplified customs procedures, reduced customs controls, and priority treatment in customs-related matters.

Why is AEO certification important?

A mark of trust

AEO certification demonstrates that your role within the international supply chain is secure and that your customs controls and procedures are efficient and compliant. Since 2005 it has become a globally recognised status that is increasingly demanded by businesses, especially in the US and China. There are two types of AEO available:

• AEO-C (Customs Simplifications). Issued to businesses that can prove AEO compliance, appropriate record keeping, and financial solvency. It signifies the presence of internal quality management controls for customs compliance.
• AEO-S (Safety and Security): All the above, but the business also passes AEO safety and security standards. (Security standards are of growing importance worldwide, indicating a focus on employee welfare—an ESG consideration).

Once granted, AEO certification is permanent, and certified companies must adhere to customs procedures continuously, including addressing malfunctions, undergoing inspections and monitoring audits at least once every three years, reporting significant company changes to the Regional Customs Service, and maintaining a trusted relationship throughout.

What are the benefits of AEO certification?

The big one is simplified customs procedures, which result in faster transit and reduced administrative burden, leading to shorter lead times, improved efficiency, and cost savings. Priority treatment is also helpful for faster processing and expediting the release of goods. More than 70 countries participate in the scheme and there are comparable initiatives recognised under Mutual Recognition Agreements – more on this soon. Being AEO accredited is valuable when striking new business deals as partners can trust that your products will be shipped on time and at speed.

How to apply for AEO certification 

While AEO Certification is a straightforward process, it can be time-consuming. Submissions take between three to 12 months, with around 120 days allocated for assessment and site visits. Officials evaluate your finances, shipping procedures, compliance with customs requirements, quality management, and customs knowledge among staff. 

To apply for AEO status, you need to complete a C117 form (application for AEO status) and a C118 form. Your business will need:

• An appropriate record of compliance with customs requirements.
• A satisfactory system for managing commercial and transport records.
• Proven financial solvency.
• Appropriate security and safety standards.

Before submitting the AEO application, you must complete the following steps:

• Conduct a cost-benefit analysis.
• Obtain senior management buy-in and sign-off.
• Develop an AEO project plan.
• Perform a self-assessment.
• Identify any compliance gaps.
• Remediate any compliance gaps encountered.
• Document all relevant processes to a standard accepted by customs administrations.
• Conduct a readiness assessment.

After submission, you may need to answer follow-up questions from officials and prepare for an official audit. It's essential to design and implement a monitoring plan to ensure continuous adherence to AEO status criteria in the future. Regular internal and external AEO status compliance reviews should also be conducted.

AEO Certification in other countries 

AEO programmes exist around the world, each with its own requirements and benefits. For example, The United States has the Customs-Trade Partnership Against Terrorism (CTPAT), Canada has the Partners in Protection (PIP), and Japan has its own AEO Programme. While core principles are similar, they do not automatically fall under a single umbrella organisation. However, the EU has implemented mutual recognition of AEO programmes with countries such as Norway, Switzerland, Japan, Moldova, the United States, China, and the UK.

Should you get AEO certified? 

Since the EU introduced the AEO Certification programme, the scheme has grown at pace. Many global companies now insist on AEO Certification as it simplifies procedures and ensures partners are taking shipping, communication, and security seriously. 

Obtaining AEO status is a lengthy process, but with an experienced partner like SEKO, you can fast-track AEO certification while keeping costs manageable. To find out more about becoming an AEO trusted trader, drop us a note anytime.