China and South Korea to Implement Agreement on Mutual Recognition of AEOs

GAC CHINAOn March 7th China’s General Administration of Customs (GAC) issued Notice No.20 of 2014, announcing the commencement of an agreed arrangement with Korean Customs Service (KCS) on mutual recognition of authorized economic operators (AEO) from April 1st, 2014.

The mutual recognition arrangement and agreement between customs authorities in China and South Korea was first signed in June 2013. Pilot programs run to assess the feasibility of the venture were successfully concluded recently.

According to the March 7th Notice, China GAC will recognize AEOs accredited by KCS, and vice versa. AEOs will be granted several benefits including reduced entry inspection rate, simplified document verification and prioritized status at custom clearance, etc.

The AEO program is designed to reduce financial costs and boost trade efficiency. The AEO program helps companies to improve international competitiveness and better equips them to cope with economic downturn and the challenges of the international trade market.

Background Information:

AEO is an important concept introduced in the World Customs Organization’s (WCO) Framework of Standards to Secure and Facilitate Global Trade (SAFE). It is a voluntary program designed to provide Governments an option to facilitate and increase trade productivity.

The authorization of an AEO in both China and South Korea requires similar operational criteria in customs clearance, covering 4 main aspects namely legal compliance, internal control system, financial status and security management. In China, companies accredited as Class AA in accordance with Measures on Classified Management of Enterprises (GAC Order No. 197) are considered AEOs by Chinese Customs. Korea’s AEO program is built on a legal base which includes the Customs Act, Enforcement Decree of Customs Act and Enforcement Rule of Authorization and Management on AEO Companies.

* China’s Class AA companies can be searched at: http://www.e-to-china.com.cn/hgyzqy/search.php

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