Brexit is GO! What happens now? And how will this affect the AEO (Authorised Economic Operator)?

On Thursday, perhaps like you, I also watched the election results culminate in Boris winning the vote and of course the Conservative majority in Parliament. So now we know Brexit is a GO and on course!

What does this mean to the World of International Trade and for the AEO?

For the last 7 years The Blue Bear Partnership has been delivering AEO’s successfully to over 50 companies. It has only been over the last few years that the term ‘Brexit’ has been mentioned – to many it’s been a repeating rhetoric like the ‘crazy frog’ song or Joey Pascale’s ‘I know a song that’ll get on your nerves’, banging on and on inside our heads - driving people sick of the sound of it! The AEO was always needed regardless of Brexit. AEO means the ‘Bank Guarantees’ being ‘Waivered’ as well as Trust a Trader status. Avoiding delays at port and port inspections create fines! So AEO has always paid for itself.

The AEO was always needed regardless of Brexit!

Well, now the fighting in parliament, is over and we are actually leaving the EU.  Leaving the EU means exactly that. We are now to become an island again without EU law governing us and without EU mutual trading, industry protecting tariffs. The EU have long since said that it won’t be in our interest to come out of the EU, mainly for these reasons. We don’t know a world without the EU as its been in place since the World Wars, known amongst other things in its history as the ‘Common Market’. It was there the old ‘butter mountains’ were kept, keeping the market value high on dairy and meat products. The UK then, seemed to be paying for more for ‘goods’ than their EU counterparts. There has always been some confrontation about this. In recent years, Solar Power has been seen as a great energy market. The Chinese can produce this cheaper but to protect the German market and industry in making Solar Powered Products, the Chinese products were so heavily taxed on duty imports (anti-dumping duty) that it didn’t make it viable to import them into the UK. So, the EU countries have all had ‘benefits’ of sought protecting their industries, products and business before, hidden within tariff codes. The UK may have benefitted too in its own way. The UK has however, long since lost its manufacturing capacity with the fall of the miners, foundries and in recent years steel. Even the fashion houses design in the UK but manufacturer overseas. Buy British has come to be a thing of the past and there doesn’t seem to be much fight about this. We seem to have become a capitalist country, producing nothing but servicing financials, investments, mergers and acquisitions. Without an industry to support as such, the move to exit the EU can be seen as being an opening, an opportunity to the world of purchasing – literally! No doubt Chinese Solar Powered Panels will hit the UK soon!

So alone in International Trade how will the UK fair? On the world scene we clearly don’t know how this affects our exports. Maybe the last of UK industry finally sets up overseas and imports to compete on exporting goods?

The transporting of goods certainly will mean that the UK will no longer be recognised as part of something i.e the EU and so border controls will potentially delays goods with increased checks. These can cause inspection delays. Delays by days. Some by weeks! The AEO was created to avoid this. As part of the EU Trusted-Trader the consignees ‘goods’ would be trusted whilst passing EU borders. Border control always has had its differences, as Germany would have increased checks and demands on what seemed to be their own version of ADR in transport and likewise boasted to have something like a 90% border check-rate compared to the UK which had an approx. 5% check. You’ll notice the difference in security if you visit Liverpool docks and then visit Tilbury. At Liverpool you’ll be escorted by police and ID checked. At Tilbury a couple of guys wave you on through, without any check or escort of any kind. A world of difference and that’s just some 200 miles inside our own borders! The AEO has enabled the EU to carry out minimal checks and delays at border. That will change.

If you don’t have an AEO then you definitely are at risk of delays!

What about the AEO itself?

The AEO is an EU standard. Standards are standards after all. They don’t change. The AEO was written by all member states but the one they liked the most was the one written by the UK. So, it is mainly a UK written standard with some potential EU lobbied questions added into the C117 & C118 forms. This also explains how disjointed and disconnected the application was as everyone has an add-on to put somewhere within the written application.

The UK will no doubt, need to have its own AEO version that the WCO (World Customs Organisation) EU and USA approve. Personally, I cant see this taking much to do, nor it being a difficulty as this along with the rest of the world including Malaysia, India, China are all coming into alignment with the USA’s CTPAT (Customs Trade - Partnership Against Terrorism). All of them have the same standards for trading and for those wanting mutual agreements will need to have the higher levels in place.

To explain; For goods to move freely in the EU, the AEOC although a different standard, was acceptable as part of the EU. If you wanted to export large amounts or the majority of goods into the USA, then AEOS was required for mutual recognition and relative free movement of goods into the US without checks or delays.

What will your AEO be worth coming out of Brexit? It will be given the same status, as it was approved by the European Union. The UK coming out of the European Union will mean that the UK Customs will need to make a UK AEO version that will need to be approved in its current form and later made ‘British’ with recognition within International Trade arena. Although this won’t take long, it still may create the need for a transition period in the meantime.

Should it stop you getting an AEO?

I certainly would hope not! The delays and fines are very real without one! A colleagues client has delayed their AEO and currently has 10-20 containers held at port for inspection. It’s costing demurrage fines and delays to market so much, that these costs are making it unprofitable to have imported these containers. This is no small player on the International arena, but they have been caught out thinking they can import without the need of AEO.

Can any business really afford that?

Standards are standards as so the work and processes required for the AEO will only see you through this time and into the Post-Brexit trade arena when like the rest of the world businesses will need to ensure ‘goods’ are being safely and securely transported, shipped, air-freighted the world over.

So, do I need an AEO?

Unanimously, The Blue Bear Partnership says Yes! Not only for right now but also for the new UK version of AEO to come.

To check on whether you have what it takes to meet the standards, why not use our online gap assessment? Click on the link below, to start your AEO journey today!

www.thebluebearpartnership.com/aeo