On October 26 2018, China’s General Administration of Customs (GAC) and Japan Customs officially signed the Agreement on Mutual Recognition of China Customs Enterprise Credit Management System and Japan’s Authorized Economic Operator (AEO) Program (hereinafter referred to as “the Mutual Recognition Agreement"). Thereby, Japan becomes the thirty-sixth country to sign an AEO mutual recognition agreement with China.
According to the Mutual Recognition Agreement, AEO enterprises in China and Japan can enjoy the following four facilitation measures for trade in goods:
So far, China has signed AEO mutual recognition agreements with 36 countries/regions, including 28 EU member states, Singapore, Korea, Switzerland, New Zealand, Hong Kong, Australia, Israel and Japan. China is also actively engaged with United States, Canada, Mexico, Brazil, Malaysia, Thailand, Russia and South Africa for AEO mutual recognition.
According to China’s current customs regulations, an AEO enterprise must be an Advanced Certified Enterprise (“ACE”), which is generally required to declare its imports and exports of goods as follows in order to enjoy facilitation measures:
First, an AEO enterprise shall exchange its AEO code with its importers/exporters from countries/regions which have signed an AEO mutual recognition arrangement with China;
Second, when a domestic importer/exporter declare its imported goods to the Customs, it is required to enter its AEO code/AEO code of its counterparty from a country/region which has established mutual recognition with China in the “Remark column” of the customs declaration form;
Third, facilitation measures would be automatically applied once the AEO codes are verified by the customs system.
The signing of the Mutual Recognition Agreement reflects the improvement of Sino-Japanese relations and the acceleration of economic cooperation between the two countries as US-China trade tensions continue.
In light of the current global economic and trade tensions, China has stepped efforts to improve its import and export credit system to build a new, credit-oriented customs supervision mechanism.
China also strives to utilize AEO mutual recognition to promote "interconnection" of international supply chains and trade facilitation, and continues to support the development of foreign trade enterprises.
AEO mutual recognition not only provides enterprises with customs clearance convenience, but also offer them an opportunity to comprehensively review their current import and export business, rectify potential issues and mitigate customs risks from the perspectives of customs compliance, clearance speed and trade safety.
Therefore, enterprises should grasp the opportunity of AEO mutual recognition to enjoy trade facilitation and fully enhance their customs management level under current regulatory environment.