Status of authorized economic operator: “green corridor” at customs or a symbolic sign

Large Ukrainian exporters and importers are gradually receiving the status of authorized economic operator (AEO), which provides certain advantages in international trade. That is why the business is gradually showing interest in its registration, which can take almost a year. According to the analysis of the opinions of experts, obtaining this status does not free a business from queues at the border, but the costs of a complex and lengthy process can pay off within a few months.

In the EU, the AEO status has been in effect since 2008: it is granted to companies and corporations with a large and stable turnover, and it has become a common practice in European countries. This status is valued in the long term, as it allows companies that have been in the market for a long time to save time and money at customs.

In 2022, the EU had 18,200 companies with the status of AEO, which in total made about 74% of all imports and 83% of exports of Europe for the year.

For Ukrainian businesses, the simplification of customs procedures is also critically important, especially after November 7, 2023, when Ukraine began to act updated customs legislation. In the process of adaptation to the EU standards, the reliefs, which were based on EA declarations and allowed to carry out customs clearance without the need to bring goods to customs, were canceled. Currently, in order to avoid the need to present goods to the customs authority during import and export, the company has two options: to obtain the status of AEO in the Ukrainian customs authorities or to take advantage of certain customs simplifications, which partially repeat the advantages provided by this status. It is important to distinguish between AEO status and simplifications provided for by the Customs Code or the NCTS Common Transit Convention. Both allow not to present the goods to the customs authority, but they can be obtained separately from the AEO status.

How to get this status?

Getting these simplifications at customs can be interesting and useful in Ukraine, and this is especially due to the fact that due to the regular blocking of the borders with the EU, Ukrainian companies have problems with the export and import of goods in the normal mode.

From August 2020 in The AEO status also began to apply to Ukraine, which 36 legal entities have received so far. Most of the registrations fall on the end of 2023 and the beginning of 2024.

Companies that have received simplifications under the Customs Code or NCTS are significantly outnumbered by those that have received AEO status, which is often done to maintain reputational advantages, and companies are also considering the possibility of separate lanes for the movement of companies’ cars at the border, such as it is stipulated in the Customs Code.

For example, the simplification called “receipt/departure by location” allows you to carry out customs clearance of your own goods at the facility without presenting them at customs. Companies can process goods automatically, if the automated customs control system does not detect risks of violations during such operations.

In 2022, Ukraine signed the NCTS Convention, which opened up new opportunities for simplified transit with the EU, including the following:

1. The use of a general guarantee, which allows companies to reduce the amount of funds that must be held in the account of customs authorities for transit supplies. After one year, the guarantee amount is reduced by 50%, and after 2 years – by 70%.
2. Obtaining the status of an authorized consignor/consignee, which allows enterprises to process goods without presenting them at customs and declare them in the common transit mode. Part of the interaction with customs authorities can be carried out remotely.
3. The possibility of self-imposition of special seals by companies on goods, separate cargo spaces, containers and vehicles, after which information about them is entered into the customs declaration, which allows to reduce time and costs at customs.

What are the advantages of AEO status?

The status of Authorized Economic Operator (AEO) opens the door to a full arsenal of simplifications in customs procedures for businesses. There are two types of this authorization in Ukraine:

1. “AEO-S” (Special simplifications). To obtain it, you must have a specialist with the status of “AEO” in your staff.
2. “AEO-B” (Confirmation of safety and reliability). It is necessary to meet strict safety and integrity standards, guaranteeing the protection of property, cooperation with verified counterparties, etc.

Both options of the AEO status have certain privileges at customs, which will bring significant advantages to the business. Some of these benefits are similar to the benefits available without this status:

1. An advantage in the preparation of customs declarations over other companies.
2. Reducing the number of inspections of goods at customs.
3. The possibility of using a separate traffic lane at the borders (although this possibility is currently inactive).
4. Simplified declaration, when the company regularly submits customs declarations instead of paying for each shipment.
5. Status of authorized consignor/consignee.
6. Ability to apply seals of a special type independently.

In addition, AEO-C companies are entitled to a general financial guarantee, while AEO-B companies can foresee future inspections of their goods and vehicles following a breach risk analysis. In addition, an enterprise with the status of “AEO-B” can choose a border point for moving goods to the EU on the territory of Ukraine. The European Business Association emphasizes that, in addition to the above-mentioned simplified customs clearance procedures, there are no others in the European Union. It is also important to note that the AEO status only concerns customs formalities and does not extend to interaction with other control authorities during border crossing.

Some of the benefits provided by AEO status may be particularly attractive to businesses in the face of growing international trade requirements and competition. For example, the priority processing of customs declarations can increase the speed of passage and reduce the waiting time at the border, which in turn contributes to increasing the efficiency of the company’s logistics processes. Moreover, simplified declaration and self-sealing help reduce the administrative burden on companies and provide greater flexibility in conducting customs operations. This can allow companies to respond more quickly to changes in market conditions and provide more efficient management of customs processes.

Thus, the status of Authorized Economic Operator can become an important competitive advantage for companies actively operating in international markets, providing more effective management of customs operations.

How long and what are the requirements for obtaining AEO status?

Acquiring the status of Authorized Economic Operator is a process that requires great efforts and costs for Ukrainian importers and exporters, similar to entering the top league of business, obtaining the status of AEO requires significant efforts and costs from companies, and it is granted according to strict criteria, because access to it is possible mainly for large enterprises capable of financial and organizational costs.

According to business communities, obtaining AEO status can take up to a year. The State Customs Service provides 120 days to check documents and confirm status, but companies may make mistakes that must be corrected within the allotted time. Not all errors can be corrected in this time, which leads to the risk of delay or “failure” of the process, in which case the package of documents will have to be submitted again.

Before obtaining the status of Authorized Economic Operator (AEO), it is necessary to adapt the company’s internal business processes to the criteria established by customs, develop additional documentation and appoint specialists to solve these tasks. This takes a lot of time and creates additional costs. Each enterprise has its own unique characteristics, and in each case the decision to formalize the procedures will be individual, because the approach to obtaining AEO status cannot be standardized, and for manufacturing companies it will differ from enterprises engaged in logistics.

For example, the company “JTI Ukraine”, which went through it back in 2021 (the first in Ukraine), noted that each stage of the process was like a separate test, and in order to obtain the status of AEO in 2021, they had to make significant efforts. The company went through a complex process of analyzing legislation, filling out a 70-page self-assessment questionnaire, as well as updating internal documents, etc. After that, they became the object of careful inspection by the State Customs Service and passed the AEO criteria.

Although the process can be difficult, AEO status has significant business benefits. In 2023, the company began to feel the significant effect of the “AEO-C” status, when it received all the improvements and advantages provided for by the Customs Code and the NCTS convention. In 2021, there was a reduction in the number of customs inspections due to a decrease in the activity of the ASUR system, and in October 2022, the company took advantage of the opportunity to use the general guarantee for the first time. This made it possible to reduce the size of the guarantee for the import of excisable raw materials and became a great advantage for business.

The value of the Institute of Authorized Economic Operator (AEO) in Ukraine will grow rapidly in the future, especially after the conclusion of agreements with EU countries on mutual recognition of this status. Then Ukrainian divisions of European companies will be able to use these advantages. The demand for receiving this distinction and certain customs simplifications will grow, even if the situation at the border is fully settled, notes the European Business Association (EBA). In this case, Ukraine will be able to systematically implement European customs legislation, and the growth of the number of authorized economic operators will contribute to this process.

Should we expect simplifications in the process of obtaining the status of Authorized Economic Operator (AEO)?

Customs brokers, legal consultants and other participants of Ukrainian business are not very willing to share their experience of working with this award, however, on condition of anonymity, industry representatives point out several disadvantages of this process:

1. The company did not notice any significant simplifications after receiving this status. There are problems, such as: a large number of documents, a long process of obtaining, constant confirmation of the legitimacy of the status and additional checks by customs.
2. Intermediaries often recommend AEO registration for a fee. Who knows, maybe this procedure was an aid to such interested persons”, – notes the specialist in foreign economic relations, who decided to leave his identity unknown.
3. In addition, users indicate the need to expand the staff at the enterprise. In addition to hiring additional “AEO specialists”, obtaining this status requires diverting some of the staff from their core duties. Therefore, the simplification of customs procedures complicates the structure of the company, critics of this tool note.
4. This area is also concerned about the need to disclose confidential information about the enterprise and its management, production strategies and financial results. Businesses fear the possible leakage of such data through cyberattacks or carelessness at work, which could lead to their use by competitors or even Russian hackers.

The European-Ukrainian Business Association indicates the expediency of easing the requirements for obtaining the status of Authorized Economic Operator (AEO). It is now registered in the Verkhovna Rada draft law No. 10411, which provides for the simplification of requirements for confirming the “sustainable financial condition” of enterprises, which is inaccessible to most Ukrainian businesses. The adoption of this draft law could significantly increase the interest of companies in simplifying customs procedures.

In addition, the existing electronic queue system at the border does not give priority in customs clearance to enterprises with AEO status or transit simplifications. Therefore, the adoption of the relevant draft law and the improvement of the electronic queue system would be important steps for Ukraine on the way to the European Union.