More than a decade ago, the World Customs Organization (WCO) established the framework of standards to ensure and facilitate global trade, thus creating the figure of Authorized Economic Operator (AEO). In 2013 the figure is implemented in Panama, and only two years ago (in 2016) the formal launch of the program in the Republic of Panama was carried out. Today, much is said about the advantages of AEO certification, but what exactly is it? What are its advantages and possible challenges for companies in the logistics sector in Panama?

What is the AEO or Authorized Economic Operator?

The AEO or Authorized Economic Operator is an accreditation by which a natural or legal person, voluntarily, submits to certain obligations and requirements in order to demonstrate compliance with certain measures related to security and good practices in the international commodity supply chain. Those who meet the criteria are considered “reliable partners”, and for this reason they enjoy certain benefits.

The Authorized Economic Operator concept was stablished in the SAFE Regulatory Framework from the World Customs Organization (WCO) in 2005, with the goal of applying more efficient security measures, and to enhance the flow of goods within international commerce.

In terms of international security, more specific goals can be pointed out: the prevention of drug trafficking, arms trafficking, money laundering and smuggling; in terms of streamlining customs operations: to facilitate the integrated management of logistics chains for all modes of transport, strengthen cooperation between customs administrations at the international level, and increase collaboration between customs authorities and the private sector.

Currently (third quarter of 2018) the Network of Countries Associated with the Authorized Economic Operator Program counts with 202 member countries.

Authorized Economic Operator in Panam

In Panama, the Authorized Economic Operator Program was implemented in October 2013 through Executive Decree No. 988. However, the official launch takes place in May 2016.

Companies interested in obtaining certification must complete a self-assessment questionnaire provided by the National Customs Authority. The validity of the AEO certificate will last three (3) years, renewable. In addition to the initial self-assessment questionnaire, the other requirements that must be met are:

• Preconditions on the existence, registration and licenses of the interested parties,
• The compliance of the previous conditions (the natural or legal person should have 5 years of active business experience),
• Satisfactory record of customs, tax and legal compliance,
• Financial certified viability,
• Adequate administrative, accounting and logistics management, and
• Protection and safety measures. 

Which activities can be developed by an Authorized Economic Operator (OEA) in Panama?

Article 3 of Executive Decree 988 lists the activities that a natural or legal person can carry out to be accredited as an AEO in the Republic of Panama, which are:

• Exports
• Customs warehouses
• Imports
• Airports
• Transport companies
• Rails
• Seaports
• Logistics operators
• Bulking agents
• Customs Broker
• Courier or express shipping 

Which are the advantages of being an Authorized Economic Operator?

According to October 2, 2013, Executive Decree No. 988, Authorized Economic Operators are considered reliable partners in the supply chain, thus obtaining the following advantages:

• To be acknowledged as a safe and trustable AEO in the customs supply chain
• Categorization in a low-risk channel in the Customs risk analysis system
• Priority in the application of customs control in selected inspections for risk analysis or other risk management entity
• Facilitation to carry out the pertinent controls in the operator's premises
• Training by ANA in matters of its competence
• Priority after an incident of closure and reopening of customs offices or borders
• Potential mutual international recognition
• Any other benefit that arise from the improvement of the OEA Program

 

These advantages are described in a very general way in the E.D, as compared to other countries we can exemplify in greater detail what these benefits imply. Namely:

• Greater facility to benefit from simplified customs procedures and submit brief declarations of entry and exit of goods
• Physical inspections reduction
• The facility to carry out the pertinent controls at the operator´s premises
• Office priority

 

Conclusion: How to prevent the medicine from being worse than the illness?

Once we have understood the Authorized Economic Operator figure, we can define it in simple words as that legal or natural person who is trusted enough not to have to present exhaustive customs controls. And although the previous is not a privilege but an anticipation to revisions (every time they are required to have internal control processes that are solid enough to prevent fraud), the doubts that may appear usually are:

If even with all the customs controls that exist today in each country, the problems of drug trafficking, money laundering and tax fraud, among others, persist, why providing a "trustworthy certificate" and reducing customs controls will help us reduce these scourges? Or, by contrast, could we end up encouraging them?.

This leads us to think that even honest companies could be harmed if they do not make use of the AEO figure with moderation, good judgment and responsibility. Since, once they are considered AEOs (trustworthy companies) they could, without knowing it, be used to carry out illegal procedures by unscrupulous people or organizations.

It is understood that the Authorized Economic Operator is a figure that arises from the needs of a globalized society, and that it is here to stay. For many companies dedicated to export and import in Panama, it will bring benefits by reducing the costs and times of the process of the goods in transit through customs, but like any system outlined by human beings, it has flaws which can be exploited by opportunists.

The most responsible way in which a company can make use of the Authorized Economic Operator program is to keep it under the supervision of a third party, which is independent of its organization; such as an External Auditor. This external agent is recommended to be an expert in customs procedures and procedures, such as the Customs Broker, whose function will be to supervise the processes and procedures carried out by the internal agents of the AEO.