Businesses seek clarity on WCO security guidelines
Multinational corporations are concerned that implementing guidelines for global trade facilitation and security standards adopted by the World Customs Organization in June could make voluntary participation in national supply chain security programs too difficult and expensive.
The key issue revolves around the concept of the authorized economic operator (AEO), or trusted trader, under which customs administrations would provide expedited customs clearance and other benefits to shippers that meet baseline criteria for strong shipment controls through partnership programs with the private sector modeled on the U.S. Customs-Trade Partnership Against Terrorism.
The WCO guidelines as written are flawed because they allow inconsistent standards for AEO programs in each nation and set onerous criteria for businesses to qualify for AEO status, said Bruce Leeds, a top import/export officer for the Boeing Co, in a briefing at the quarterly meeting of the Department of Homeland Security’s Commercial Operations Advisory Committee earlier this month.
The AEO guidelines allow countries to supplement the AEO guidelines with their own rules for verifying corporate security and providing benefits. Companies engaged in international trade want a system in which countries can certify domestic companies and have those findings accepted by other countries so they don’t have to comply with different security regimes in each country in which they operate. But countries like the United States are unlikely to mutually recognize overseas certifications until other countries raise their security standards to the C-TPAT baseline.
Leeds said the AEO document is an “impediment” to mutual recognition because it forces companies to meet different security standards in each country.
“We need universal guidelines that are accepted by all countries,” Leeds said.
Otherwise the cost of conducting trade rises and could become a non-tariff trade barrier, said Kevin Smith, General Motor’s customs director.
Keith Thomson, assistant commissioner for international relations at U.S. Customs and Border Protection, said his agency is working with the WCO to update the guidelines so that AEO standards for mutual recognition are consistently applied and promote predictable trade.
International trading companies are also concerned that the WCO made AEO eligibility contingent on companies having demonstrated compliance with customs requirements and financial viability, Leeds said. The customs compliance requirement means that a company that violates a customs trade compliance rule in one country would be prevented from receiving AEO status in other countries.
The financial viability rule is also problematic because “there are some major companies, carriers, out there who are currently experiencing some financial hardships and you hope that would not bar them from qualifying as AEO’s” and having their shipments avoid delays, Leeds said.
The controversial AEO participation requirements are not part of C-TPAT.
The private sector wants the WCO to clarify what the eligibility rules mean, he added.
The inclusion of business health in the security guidelines stems from the European version of the AEO program that is focused on trade compliance, and is a compromise to get the program off the ground, Deputy Commissioner Deborah Spero said.
The Private Sector Consultative Group that provided input to the WCO on the guidelines is recommending that the WCO or member nations publish metrics showing the percentage by which inspections were reduced or shipment velocity through customs was increased so that companies can see the results of their substantial cargo security investments, Leeds said.
Reduced inspections and documentation requirements, as well as simplified customs procedures, are “a lot harder to explain to management and a whole lot more difficult to quantify” and define than something like tariff reductions, which are not even part of the benefits under consideration, he said.
“That’s powerful data and would go a long way to supporting the program,” he argued.
The private sector committee, comprising representatives from 29 major trade associations and corporations, is participating in two WCO working groups to assess the AEO standards’ impact on the question of mutual recognition and on the participation of small and medium-size businesses with the goal of creating more clear, consistent standards as well as meaningful and measurable benefits.
The WCO voted to continue the High Level Strategic Group, an executive committee of more than a dozen customs leaders that pushed the development of the global framework of security standards in 2005, for another year, Thomson said. He said there was a “fair amount of opposition” to the group because it is perceived in some parts of the world as a select group that leaves many countries out of the policymaking process.
WCO officials say it is likely that the High Level Strategic Group, in which the United States plays a driving role, will be disbanded. That would lead to “a much more democratic approach which might imply that some of the things we are trying to move forward at a fair clip might be slowed down a little bit,” Thomson said.
The WCO has conducted 15 diagnostic missions so far to assess the needs of the 103 countries that have said they need training and development assistance to implement the WCO global security standards, he reported.
The United States is assisting 10 countries in Africa, the Americas and the Middle East. Thomson afterwards declined to name any of the countries, citing concerns about drawing attention to countries with potential security vulnerabilities.