1

In Jamaica

A new initiative of the Jamaica Customs Department

Authorised Economic Operator System

The AEO System was introduced at the annual review in April 2009 by the Commissioner of Customs. An AEO committee was formed consisting of Persons from several units within the Customs Department.

All these Units were given specific mandates to begin the AEO process in Jamaica.

3

Purposes of Introducing the AEO

1. To enhance client relations, trade facilitation and compliance with tax laws;

Underlying Concepts

– To serve the Importing Entities in a more professional and customer-oriented manner

– To reward compliant importers by making the clearance process smoother and more efficient

– To encourage and develop a working partner relationship with these Entities.

4

Purposes of Introducing the AEO

The introduction of AEO will allow the

Customs Department to focus scarce inspection

capacity on potentially unsafe operators.

The Department will receive compliance with

revenue payments

Improved communication resulting in reports of

suspicions

Minimizing corruption

5

Purposes of Introducing the AEO

To improve business processes for both

Customs and Importing Entities.

Less Smuggling

Simplified Customs Procedures

To encourage the full compliance of

Importers in all spheres of government –

GCT Returns, Income Tax Returns and

Customs Duties

Implementation Process &

Progress

The Post audit Division during the months of May to early June sent out approximately 1800 letters island wide to Importing Entities to invite them to become Authorised Economic Operators.

6

7

Implementation Process &

Progress

Authorised Economic Operator System

The Post audit Division during the months of June to early July made presentations to 6 Associations and the Directors and Managers of approx 400 Importing Entities informing and inviting them to become Authorised Economic Operators.

Overall the Unit conducted 85 sessions island wide

Implementation Process &

Progress

The following Associations were sensitized:

Jamaica Chamber of CommercePrivate Sector Organisation of JamaicaCustoms Brokers and Freight Forwarders AssociationShipping Association of JamaicaJamaica Manufacturers Association

8

AUTHORISED ECONOMIC

OPERATOR SYSTEM

PRESENTATION9

10

DEFINITIONThe first phase of the Authorised Economic Operators

(AEO) System to be implemented by the Jamaica

Customs Department.

DEFINITION OF AEO (BY WCO)

An AEO is defined as: “a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards.

11

Definition Cont’dAuthorized Economic Operators include

inter alia manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors” For Jamaica Customs Department the current focus is on importers.

12

Attaining AEO Status

The essence of the AEO-concept can be found in the Customs-to-Business partnerships. Operators can be accredited by Customs as AEOs when they prove to have high quality internal processes that will prevent goods in international transport to be tampered with. I.e.:

Ensure the integrity of the information, i.e. what is said to be in a container/shipment, really is in the container and nothing else, more, or less;

13

Attaining AEO Status

Ensure the integrity of its employees, that they will not put goods in the container that should not be there; and

Secure access to its premises, to prevent unauthorized persons to put goods in the container.

14

CRITERIA FOR AEO

MAINTENANCE OF PROPER BOOKS & RECORDS

MUST BE A REGISTERED LEGAL ENTITY

ACCURATE INFORMATION TO FACILITATE A 2-YEAR REVIEW

UNRESTRICTED ACCESS TO PREMISES, DOCUMENTS & RECORDS.

15

CRITERIA FOR AEO

AEO MUST BE FINANCIALLY VIABLE

CONTINUOUS EXCHANGE OF INFORMATION WITH CUSTOMS

ENSURE SECURITY OF CARGO AND PREMISES

REPORT EXCESS GOODS AND PAY THE RELEVANT DUTIES

NOTIFY CUSTOMS OF ILLEGAL/ SUSPICIOUS CARGO OR ACTIONS.

16

Countries who have implemented

the AEO System

Most members of WCO have acceded to the SAFE framework and it can be expected that in the next few years, the majority of customs administrations will introduce AEO-programmes. At present, AEO or similar programmes have been introduced in:The United States, under the name of C-TPAT (Customs-Trade Partnership against Terrorism

17

Countries who have implemented

the AEO SystemThe member states of the European Union, (EU) There are 27 Member States within the EU e.g. the UK, Sweden and The NetherlandsAPEC -Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries e.g. Australia, Japan, Mexico, Chile, Peru & CanadaNew Zealand, under the name of Secure Export Scheme (SES)Singapore, under the name of Secure Trade Partnership (STP)

18

AEO Process in JamaicaThe AEO Process for Importing Entities has three

steps :

STEP 1

Signing a Memorandum of Understanding (MOU). The MOU for Authorised Economic Operators (AEOs) is a document that will be signed by companies and individuals to become an Authorised Economic Operator (AEO) and enjoy certain privileges as a result.

It also outlines the consequences that will result from breaching the agreement

19

Memorandum of Understanding

TERMS OF THE CONTRACT1. DECLARING ACCURATE VALUES

2. SECURING YOUR BUSINESS PREMISES

3. COMPLIANCE WITH REVENUE PAYMENTS

4. COMPLIANCE WITH ALL GOVERNMENTAL AGENCIES

5. PROVIDING DOCUMENTS TO CUSTOMS and ACCESS TO PREMISES WHEN REQUIRED

6. WORKING PARTNERSHIP WITH POST CLEARANCE AUDIT

20

Memorandum of Understanding

PRIVILEGES/BENEFITS TO IMPORTING ENTITIES

1. EXPEDITED CLEARANCE

2. FIRST-IN-LINE SERVICE

3. WORKING AS A PARTNER

4. FAST TRACK SERVICE

5. NO PRE-CLEARANCE CHECKS

6. SIIS STATUS FOR COMPLIANT AEOs

21

PRIVILEGES/BENEFITS TO

IMPORTING ENTITIES Cont’d

Some countries and commercial partners will make AEO status a prerequisite for trade

Better protection against the theft of products and intellectual property

Better systems to prevent fraud and corruption

Better business continuity preparedness

Can lead to lower insurance premiums

22

PRIVILEGES/BENEFITS TO

IMPORTING ENTITIES Cont’d

Perform less or no inspections on goods imported or exported by or via the AEO.

Just in Time inventory system

Lower transport costs will result.

Customs will trust the operator

23

Sanctions for breach of MOU Contract

Relevant Penalties raised in accordance with the section(s) of the customs act that has been breached will be applied

All shipment will be subjected to pre-verification checks by the relevant Customs Units.

24

Sanctions for the Breach of

MOU Contract Cont’d

Detention of current shipments

Removal from the AEO Listing and placed on the UEO (Unapproved Economic Operators) Listing where all importations will be subjected to pre-clearance verification procedures

AEO Process in Jamaica

STEP 2

Making accounting books and

records available to the Post

Audit team prior to

implementation to determine

compliance and whether these

companies are auditable.25

26

Records Required for Audit

1. Audited Financial Statements• Balance Sheets

• Profit and Loss Accounts/ Income Statements

• Cash Flow Statements

2. Trial Balances• These are schedules of year end

balances of the various accounts contained in the General Ledger

27

Records Required for Audit (contd.)

3. General Ledger Accounts/ extracts

4. Bank reconciliation statements. These should be accompanied by bank

statements and cheque stubs.

5. Contracts and Agreements between importers and suppliers of imported goods

6. Contracts and Agreements between importers and freight forwarders/ freight consolidators

AEO Process in Jamaica

•STEP 3

Final decision presides with

the Commissioner of Customs

28

29

Implementation Process &

ProgressAn Internal Procedures for AEO

Committee has been formed which has representations from all the relevant areas – Airports, Seaports, Entry processing, IMU, Post audit, Risk Management Unit, Human Resource, Training, Valuation and Research.

This committee was responsible for putting together the Simplified AEO Procedures

30

OPERATIONAL ASPECTS

The Customs Staff and Administration at the various Customs Points will ensure that:

AEOs receive first-in-line service

Officers will give AEOs preferential treatment regarding examination on the Ports

STAFF SENSITIZATION

PROCESS

The Training Unit was sensitized and was given the task to sensitize and train the staff for the October 5 implementation date of the Authorized Economic Operator (AEO) System

31

32

Implementation Process &

Progress

A Frequently Asked Questions (FAQ) listing was prepared and submitted to Customer Service so that they could adequately address questions and concerns raised by Importers and staff members.

33

Implementation Process &

Progress

Authorised Economic Operator System

Sensitization of Ministries/ Departments that Customs performs agency functions for. This was done on July 27, 2009. Their input was received and noted to improve the AEO Process

Implementation Process &

Progress

The following Ministries were sensitized:

Ministry of Health

- Pharmaceutical Division

-Food Division

Ministry of Finance

Pesticides Control Authority

Infestation Division

34

35

Questions and Answers

Questions and Answers