The Federation of East African Freight Forwarders Associations (FEAFFA) and the Commonwealth Secretariat (COMSEC) have started a sensitization campaign to increase the uptake of the Authorized Economic Operator (AEO) scheme in the East African region targeting Small and Medium Enterprises (SMEs).
A regional sensitization meeting that was facilitated by AEO experts from the EAC Secretariat, and the Kenya Revenue Authority (KRA) was held at the Golden Tulip Hotel, in Nairobi last week.
“The AEO scheme builds trust between the customs administrators and traders through compliance. It also enhances safety and security of traded goods among consumers from different geographical locations,” Mr. Lawrence Othieno, Commonwealth Secretariat (COMSEC) Adviser, Trade Competitiveness said.
“FEAFFA’s intention is to supplement the efforts of the EAC Directorate of Customs and Revenue authorities in strengthening the capacity of the private sector players, most of whom are SMEs, to meet the threshold for AEO accreditation,” Mr. Edward Urio, Vice President and President of Tanzania Freight Forwarders Association (TAFFA) told participants.
The Customs administrations of EAC Partner States have been implementing the AEO program for over 10 years yet the uptake has remained too low to positively impact trade. So far, only 142 firms have been regionally accredited in the EAC region.
A 2021 study by FEAFFA, in partnership with the Commonwealth, attributed the low uptake of the AEO scheme by SMEs to the low level of awareness, the complexity of the program, and the insufficient capacity of most businesses to meet the AEO requirements. The study recommended a continued awareness campaign, a move confirmed by the EAC Commissioners of Customs.
In 2005, the World Customs Organization (WCO) Council adopted the SAFE Framework of Standards to secure and facilitate global trade. This was informed by the need to secure the international supply chain and enhance trade facilitation. The Authorized Economic Operator (AEO) Programme was among the protocols that were borne out of this decision, and, as a result, the East African Community (EAC) revenue administrations, through their respective Commissioners for Customs, conceived the regional AEO programme in 2006.
Recently, the WTO Trade Facilitation Agreement reinforced the importance of AEO as a tool for facilitating trade and enhancing supply chain security. Authorized operators have trusted traders who are allowed to trade with minimal customs controls. They go through a rigorous vetting process by Customs before being accredited as AEOs.
The 39th meeting of the EAC’s Sectoral Council on Trade, Industry, Finance, and Investment (SCTIFI) held in November last year also emphasized the need for partner states to create more awareness of the scheme and spur demand and facilitate trade in the region. The Sectoral Council meeting also adopted the simplified AEO accreditation criteria to suit MSMEs to enhance their uptake.
The AEO program offers many benefits that most industry players are not aware of. The AEO guarantees supply chain safety and security. The scheme significantly reduces the physical and document-based controls, offers priority treatment customs, guarantees easy access to customs by businesses among others.