This article is about Assisting Royal Thai Customs, RTC, to improve the popularity of the Thai AEO program among the economic operators; as well as about guiding RTC in preparing for a future AEO MRA negotiations, primarily with the European Commission Directorate General of Customs and Taxation. The findings on and the outcomes of this article (as well as the full report behind it, available for download on CBRA´s web-site, as of 18.2.2015), can be useful for CORE Risk-cluster and for Other-cluster, in particular WP19 Education and training. This article is published in parallel in CBRA´s supply chain security blog (in two parts, on 16.2 and 19.2.2015), next to the CORE WP18 Information Observatory pilot.

The mandate for the “Authorized Economic Operator, AEO & Mutual Recognition Agreements, MRA” -study came in fall 2012 from the Delegation of the European Union to Thailand, as part of Thailand-EU Cooperation Facility Phrase II (TEC-II), Policy Support Dialogue Component (PDSC) on “Implementation of international standards on Supply Chain Security leading to a secure Trade Environment and to increased Trade Facilitation” (Activity Code: TRA 4). This followed the request from the Royal Thai Customs, RTC asking for a technical assistance with two main objectives:

• Assisting Royal Thai Customs, RTC, to improve the popularity of the Thai AEO program among the economic operators.
• Guiding RTC in preparing for a future AEO MRA negotiations, primarily with the European Union / European Commission Directorate General of Customs and Taxation (EC DG TAXUD) by conducting gap analyses between the Thailand and the EU AEO scheme and recommending a roadmap for the future MRA.

The first research question was: How to make AEO more attractive for economic operators in Thailand? Below is the recommendation list with seven main action points, with up to four sub-points under each recommendation:

1. Make the application process as smooth, low cost and fast for the economic operators as possible: 

• Expand on current RTC AEO-guidelines, with more detailed content on what is expected from the economic operators; examples on how to comply in a cost-efficient and security-efficient manner and so forth.

• Recognize existing governmental and business certifications, authorisations and standards as part of the AEO approval process; and encourage companies to exploit their existing security policies, guidelines and work instructions during the process.

• Consider exemptions on AEO requirements for Small and medium sized enterprises, SMEs, due to the nature of their business and operations, which can differ significantly to those of large and especially multinational companies.

• Ensure that “effective and efficient supply chain security measures” are encouraged and appreciated during the process; this might require some internal crime prevention and security management training, covering also organizational management aspects of supply chain security, with RTC AEO staff.

2. Invest in systematic design, implementation and monitoring of AEO-benefits / incentives:

• Consider a broad portfolio of benefits and incentives to AEO companies, in particular company-level benefits and shipment-level benefits granted directly by RTC.

• In particular, analyse carefully AEO benefit suggestions by key internal organisations, including World Customs Organisation and International Chamber of Commerce, while considering their feasibility in Thai AEO context.

• Ensure that AEO status of companies is explicitly recognized within RTC risk management, assessment and profiling procedures, especially within the risk management information systems and tools.

• Establish a system for continuous measurement and improvement of AEO benefit delivery towards the AEO companies in Thailand; this should be done in close co-operation with Thai industries, including key Thai industry associations.

3. Drive towards multi-agency co-operation “under the RTC AEO-umbrella”:

• First study current developments for example in the EU and in the US, particularly with aviation security and food inspection agencies.

• Get together one or more other Thai agencies – e.g. food safety and/or aviation security – and start exploring co-operation options and requirements, including legal frameworks required; and consider first steps in operationalization in terms of how to avoid duplications in company applications, audit visits, shipment inspections and so forth.

• Establish first pilot project with one select agency, and a handful of Thai companies; expand after that, based on lessons learned during the pilot, as well as based on a broader framework on “intra-agency collaboration, and how that can benefit economic operators in the future”.

4. Consider shifting towards system-based and audit-based principles and practices

• Aim to complement and/ or replace transaction-based approaches with systems-based and audit-based approaches in the future.

• Aim to remove barriers, and aim to enforce drivers, when it comes to e-customs development and adoption among the Thai economic operators. 

5. Consider expanding to additional types of actors eligible for AEO-status

•  Start expansion towards the logistics sector, including freight forwarders, transport carriers and warehouse keepers.

• While expanding especially to the logistics sector, consider the specific risk factors and their implications to security requirements per actor type, e.g. in postal logistics.

6. Continue and possible expand in active interaction with Thai industries

• Discuss regularly on security requirements, if they make sense for the variety of economic operators; procedures throughout AEO lifecycle, if they could be further streamlined; AEO benefits, if they could be expanded and made more concrete; and so forth.

• Use models and tools from literature to facilitate discussions and opinion sharing, also to discuss on differing stakeholder interests.

7. Start driving towards several AEO MRAs with third countries and regions

And, linked to the seventh AEO recommendation above, the second (and last) research question for this study was: How to proactively prepare for future MRA negotiations, particularly with the EU? Below is the recommendation list with ten main action points:

1. Ensure clear high-level commitment to building a co-operative partnership, within RTC, as well as Thai government; this includes early on allocation of adequate human and financial resources for all stages of the MRA negotiation process.
2.  According to the SAFE Framework demonstrate implementation of a Customs-to-Business programme along with the five main elements of the Customs-to-Customs pillar.
3.  Establish a framework for a legally binding MRA between RTC and EU.
4.  Provide more detailed guidance on what would be recognised as appropriate security measures to counter and combat different risks and threats; and examine the possible alignment of the methodology used for risk assessment of AEO applicants with that of the EU’s AEO COMPACT MODEL FOR RISK ASSESSMENT
5.  Consider if the Thai AEO reference (identifier) structure might be aligned with that of the EU’s EORI in order to aid the identification and sharing of benefits offered to Thai AEO exporter companies trading with the EU.
6. Provide more details regarding revocation and suspensions: in particular, relating to an appeals process and timeframes for the AEO to remedy any deficiencies which give rise to the need for a suspension of the status, and the intended process of timely communication of revocations and suspensions to the MRA signatories.
7. Make preparations to receive EU customs officials visiting Thailand, RTC and selected AEOs and applicants; and, make preparations for visiting EU customs authorities, and select AEOs and applicants in Thailand for EU customs officials to visit (in order to show how an audit is carried out, in different conditions, for different types of business; and to see what security measures AEOs have in place and ensure they are being maintained, reviewed and improved as required; and to see the management structures, contingency plans, etc.).
8. Prepare to provide full transparency on all processes and procedures (the application and authorisation processes and procedures, auditing, validation, monitoring and AEO status-refusal/removal processes and procedures, data requirements, storage, monitoring and data security, approval process for trade facilitation benefits and customs simplified procedures).
9. Prepare for signing of an MRA.
10. Make provision of resource to maintain the representation of RTC within the Joint Customs Co-operation Committee (JCCC) and other communication channels with EU customs officials.