Japan AEO program background and key features
International Trade is an essential element for economic development. Another very important element many countries and companies must also consider is the vulnerability to terrorist exploitation within the supply chain. The role of Customs has become more and more indispensable these days and Customs has a unique role in international trade of providing increased security while ensuring the facilitation of the legitimate flow of goods.
In response to this trend, the World Customs Organization (WCO); the organization of 180 Customs administrations all over the world, adopted an international framework (“SAFE Framework”) in 2005, which includes the Authorized Economic Operator (AEO) concept, whereby a party involved in the international movement of goods would be approved by Customs as complying with the supply chain security standards, and given benefits, such as simplified Customs procedures and less Customs intervention. Based on the concerns for international supply chain security, many countries have begun to join the effort including Japan. Below are the important dates for program adoption by Japan.
|AEO Program for Exporter||March, 2006|
|AEO Program for Importer||April, 2007|
|AEO Program for Warehouse Operator||October, 2007|
|AEO Program for Logistics Operator||April, 2008|
|AEO Program for Customs Broker||April, 2008|
|AEO Program for Manufactures||July, 2009|
In this stream, the Japanese government has developed and promoted an AEO Program in close cooperation with the business sector, aiming at ensuring security while facilitating legitimate trade. For that purpose, Japan Customs, as a main entity in the field of international trade, has developed an AEO program for importers, exporters, warehouse operators, customs brokers, logistics operators and manufacturers which is consistent with the “SAFE Framework” developed by the WCO.
Outline of benefit for an AEO Program
Under this program, an AEO in Japan can enjoy specific benefits such as a positive reputation as a more compliant and security-oriented company, favorable consideration in Customs enforcement proceedings and better relations with Customs according to its type of AEO. Listed below are additional benefits the Japan AEO company can enjoy:
- Imported goods proceed through Customs realizing reduced examinations and inspections benefits
- Pre-arrival filing of import declaration and acceptance before goods arrival to Japan
- Cargo releases pre-duty/tax declarations and payments
- Periodic remittance of duty/tax payment on import declarations
- Waive of requirements for storing goods in Customs area
- Compliance-reflected reduced examinations and inspections
AEO Warehouse Operators
- Establishment of a new Customs warehouse only by notification
- Compliance-reflected reduced audits
- Free monthly handling fee
AEO Logistics Operators and Customs Brokers
- Expedited warehouse removal from bonded Pre-arrival submission of import declaration
- Cargo releases pre-duty/tax declarations and payments Periodical lodgment of duty/tax payment declaration
Current Country Mutual Recognition
Japan Customs has been actively working on a country-wide AEO program and similar efforts are being made in other countries. As one of its key efforts, Japan is striving to advance efficiencies in distribution through developing partnerships with overseas AEO programs. The intent is for participating countries to provide mutual benefits, including a more efficient and facilitated import/export Customs clearance for economic operators complying with the supply chain security standards.
|Signed||Consulting / Studying|
The future agenda for Japanese companies
For a Japanese company to receive AEO authorization, they must demonstrate they adhere to the below AEO standards in their internal Compliance Program:
- Organizational Set-up
- Contracting Parties (Business Partners) Requirements
- Cargo/Conveyance/Premises/Personnel Security
- Due Customs Procedures
- Consultation/Cooperation/Communication with Customs
- Crisis Management
- Internal Audit
Currently, 111 companies are authorized by Japan customs as AEO importers (23) and exporters (88). However, it is a very difficult task to meet the Compliance Program requirements for some Japanese companies. Because Japan is committed to the AEO program, Japan Customs authorities has made the AEO program a future mission and will be more aggressive in getting companies to participate.
Japan Customs and Tariff Bureau (CTB), Ministry of Finance is responsible for the policy and planning function of Japan’s AEO program. It also develops internal guidelines for proper implementation and operations. CTB also supports Mutual Recognition and international issues of the AEO program.
All 9 regional Customs headquarters nationwide have AEO specialists who are responsible for the application and authorization processes and have an authority to provide authorization to applicants. A national AEO center is established in Tokyo Customs to oversee the operations of the other regional Customs agencies in order to ensure consistency of implementing the AEO program.
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