Introduction to The Customs Credit Certification System (AEO)

AEO and AEO International Customs Mutual Recognition is a system arrangement made by the World Customs Organization under the Framework of Standards to Secure and Facilitate Global Trade, which provides customs clearance facilitation measures for enterprises that meet the certification requirements in their home country and the customs of the mutual recognition countries, helping thousands of enterprises to reduce customs clearance costs, improve competitiveness, better safeguard supply chain security and promote trade facilitation.

Introduction to the Customs Enterprise Credit Management System

1. Introduction to the AEO system

The World Customs Organization (WCO) defines AEO (Authorized Economic Operator) as a party that is involved in the international movement of goods in any way and is determined by the customs authorities to be in compliance with the WCO or corresponding supply chain security standards.

2. China Customs' connection to AEO

On 1 December 2014, the Provisional Measures for Credit Management of Customs Enterprises of the People's Republic of China (hereinafter referred to as "Credit Management Measures", General Administration of Customs Order No. 225) was implemented to formally introduce the AEO system, replacing the original Measures for the Management of Customs Enterprise Classification of the People's Republic of China (General Administration of Customs Order No. 197).

The original five categories of AA, A, B, C and D enterprises have been transformed into four credit levels: AEO Advanced Certified Enterprise, AEO General Certified Enterprise, General Credit Enterprise and Bad Credit Enterprise.

Customs will re-certify AEO Advanced Certified Enterprises every three years. Enterprises that fail to pass the certification will have their credit rating adjusted and will not be allowed to apply for upward adjustment of their credit rating within one year.

3. Overview of China Customs AEO Mutual Recognition Arrangement

After the implementation of the AEO mutual recognition arrangement between China and Korea, China and Singapore, and Hong Kong and China, the cargo inspection rate of AEO enterprises of China Customs will be reduced by at least 50% and the speed of customs clearance will be increased by more than 30% on average.

4、Convenience measures for AEO certified enterprises

In addition, AEO certified enterprises also help enterprises enjoy preferential treatment and joint incentives in other sectors (e.g. state tax, foreign exchange, etc.). The General Administration of Customs and 40 departments, including the Development and Reform Commission and the People's Bank of China, have signed the Memorandum of Cooperation on the Implementation of Joint Incentives for Customs Advanced Certified Enterprises, which has introduced 49 incentive measures.

Taking the relevant departments involved in the import and export sector as an example, customs, inspection and quarantine, taxation, foreign exchange and industry and commerce have all implemented credit management for enterprises.

Customs Enterprise Credit Rating Standard

On 18 November 2014, the General Administration of Customs promulgated the Standards for Customs Certified Enterprises (General Administration of Customs Announcement No. 82 of 2014), as a companion standard to General Administration of Customs Order No. 225 Announcement No. 82 divides customs certified enterprises into senior certified enterprises and general certified enterprises and sets out the corresponding certification standards for each of these two types of enterprises.

1、Certification Standards - Advanced Certification

18 articles and 32 items. In addition to enjoying more domestic customs clearance facilities than general certified enterprises, they can also enjoy preferential measures and customs clearance facilities in mutually recognized countries or regions through the AEO mutual recognition arrangement.

All the items are assigned with no non-compliance and a total score of 95 points or more, of which 7 items are non-standardized improvement categories (prison accounting information solvency profitability, tax payment ability, corporate violations, management requirements, external credit).

2、Certification standards - general certification

18 articles and 29 items. Compared to the advanced certification standards, the general certification standards are mainly reduced in the internal supervision, import and export activities control, information system data management trade security and other aspects of certain requirements, and in the compliance standards to facilitate the difference.

All the items are assigned with no non-compliance and a total score of 95 points or more, of which 7 are non-standard improvement indicators (accounting information, solvency, profitability, taxability, corporate violations, management requirements, external credit).

3. Additional criteria

Additional points may be awarded upon confirmation by Customs in one of the following cases (Note: the maximum value of additional points is 2 points).

A. Enterprises within special customs supervision zones

B. Enterprises encouraged and supported by the State

C. Enterprises with honorary titles from national industry organisations

D. Sample enterprises of the China Foreign Trade Export Pioneer Index

E. Enterprises that are actively cooperating with the Customs in the development of customs declaration documents enterprise inventory