News Excerpt: 

The Centre has given the Authorised Economic Operator (AEO) status to the gem and jewellery sector.

More About the News: 

The AEO is a programme under the World Customs Organisation (WCO) SAFE Framework of Standards to secure and facilitate global trade.  

Why AEO started: The inception of the AEO scheme can be traced back to the aftermath of the September 11, 2001, events in the US, which prompted governments worldwide to recognize the vulnerability of the supply chain to terrorist activities. 

• This realization underscored the urgent need to enhance supply chain security. Given that the trade sector largely controls the supply chain, Customs administrations began collaborating closely with trade partners to bolster security measures. 
• The United States initiated the CT-PAT (Customs Trade Partnership Against Terrorism) program in response to these concerns. Subsequently, in 2005, the World Customs Organization (WCO) adopted the SAFE Framework of Standards to both secure and facilitate trade. 

• This framework comprises three pillars: 

• Customs-to-Customs partnership, 
• Customs-to-Business partnership, 
• Customs-to-other-Government stakeholders partnership. 
• The AEO program is a fundamental component of Pillar II, which focuses on fostering partnerships between Customs administrations and businesses to enhance supply chain security.

AEO Programme: The Government has developed the Authorized Economic Operator (AEO) Scheme in alignment with the World Customs Organization's (WCO) SAFE Framework of Standards (FoS) adopted in 2005. 

• Its objective is to bolster security along the international supply chain while facilitating the movement of legitimate goods. AEO involves multiple stakeholders in the international supply chain. Under this initiative, entities involved in international trade are evaluated by Customs to ensure compliance with supply chain security standards, leading to the granting of AEO status and certain benefits. 
• India's AEO Program aligns with the commitments outlined in Article 7.7 of the World Trade Organization's Trade Facilitation Agreement (TFA). Participation in the AEO program is voluntary, allowing Indian Customs to enhance and streamline cargo security by fostering close collaboration with key stakeholders in the international supply chain.

SAFE Framework of Standards: The international trade landscape is crucial for global economic development, yet it faces significant threats from different non state organizations. Customs administrations play a vital role in the international supply chain, balancing the need to facilitate legitimate trade while enhancing security measures. 

• In 2005, the World Customs Organization (WCO), representing 178 Customs administrations, adopted the SAFE Framework of Standards to secure and streamline global trade. 
• This framework introduced the concept of the Authorized Economic Operator (AEO), where parties involved in international goods movement are recognized by Customs as compliant with supply chain security standards, granting them benefits like simplified Customs procedures and reduced intervention. 
• The AEO model is increasingly embraced by Customs administrations worldwide, aiming to fortify the supply chain while benefiting the trading community. Since its inception, the SAFE Framework has undergone several enhancements to bolster its effectiveness. In 2007, provisions detailing the conditions and requirements for Customs and AEOs were incorporated. 
• Subsequent updates in June 2012 introduced new segments on Coordinated Border Management, Trade Continuity and Resumption, and an additional Annex I containing key definitions, including that of "high-risk cargo." 
• In June 2015, a new Pillar 3 was integrated to promote closer collaboration between Customs and other governmental agencies, ensuring a coordinated and efficient response to the security challenges faced by the supply chain.

Mutual Recognition Agreements (MRAs): Mutual Recognition Agreements (MRAs) serve as the international extension of various countries' domestic AEO Programs, acting as a mechanism to harmonize minor differences and ensure seamless facilitation of benefits and processes for accredited entities moving goods across borders. 

• These agreements, a pivotal component of the WCO SAFE Framework, aim to enhance end-to-end security in global supply chains and amplify advantages for traders worldwide. Under MRAs, two customs administrations commit to recognizing the AEO authorization issued by each other's programs and offering reciprocal benefits to AEOs from the partner country. 
• Indian Customs has engaged in collaborations with several foreign customs administrations to align its Authorized Economic Operator Program with international standards, thereby extending benefits to Indian trade globally. 
• Currently, India has signed MRAs with the Customs Administrations of South Korea and Hong Kong, with additional agreements in the final stages of conclusion, including those with the United States of America and Taiwan.

World Customs Organisation: The World Customs Organization (WCO), initially formed in 1952 as the Customs Co-operation Council (CCC), operates as an autonomous intergovernmental entity with the primary goal of improving the efficacy and productivity of Customs administrations worldwide. 

• History: The General Agreement on Tariffs and Trade (GATT), signed in Geneva in October 1947 and enacted in January 1948, aimed to facilitate international trade by reducing Customs tariffs, promoting the concept of free trade. Inspired by this agreement, 13 countries including Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Turkey, and the United Kingdom, initiated discussions to explore the formation of a Customs Union in Europe. They established a Customs Union Study Group in Brussels, Belgium, in September 1948 to develop a common Customs tariff and goods nomenclature.
• Although the group didn't achieve its goal of creating an intra-European Customs Union, its work in harmonizing Customs regulations led to the creation of two Conventions: one on a common tariff nomenclature and another on Customs valuation. 
• These efforts laid the groundwork for future Customs unions, notably the European Union Customs Union established in 1968.
• Additionally, recognizing the need for ongoing collaboration in Customs matters, the Study Group proposed the establishment of an international body to provide guidance on the application of the Conventions and to promote uniformity in Customs legislation and procedures, thus preventing them from hindering international trade. 
• This initiative led to the formation of the World Customs Organization (WCO). The Convention establishing a Customs Co-operation Council (CCC), later renamed as the WCO, was opened for ratification on December 15, 1950. Presently, the WCO boasts a membership of 186 Customs administrations spanning the globe, collectively handling about 98% of global trade. 
• Serving as the paramount hub of Customs knowledge and expertise on a global scale, the WCO stands as the sole international organization with jurisdiction over Customs affairs, earning it the rightful designation as the authoritative voice of the international Customs community.