SMEs are Essential for the Widespread Adoption of AEO Programs

SMEs are Essential for the Widespread Adoption of AEO Programs

We have previously stated that the World Customs Organization (WCO) is the advisory, regulatory, and decision-making authority for Authorized Economic Operator (AEO) status.  The WCO, the World Trade Organization (WTO), and the International Chamber of Commerce (ICC) published a joint report on November 13th with the aim of developing the AEO system.

 

The report addresses the integration of SMEs into AEO programs and states that customs administrations should strive to remove barriers in order to ensure that SMEs, which are the backbone of the global economy, have access to global markets and benefit from trade facilitation.

 

The report addressing the integration of SMEs into AEO programs urges customs administrations to strive to reduce difficulties in obtaining AEO status and remove bureaucratic barriers in order to ensure that SMEs, which are the backbone of the global economy, have access to global markets and benefit from trade facilitation.

 

The report is built on the main idea that the future of trade facilitation depends on the success of public-private partnerships and that these partnerships must encompass all economic enterprises, especially SMEs.

 

If we are to share the statistical information on SMEs worldwide that stands out in the report:

 

 

Based on the research and survey results conducted in the report, the challenges preventing SMEs from entering AEO programs are stated as lack of information and awareness, application process and compliance difficulties, resource and capacity constraints, perceived cost-benefit imbalance, and lack of capacity within customs.

 

The report recommends the following to enable SMEs to join the system: Establishing an internal working group to identify eligible companies and invite them to apply, using an online paperless application process, providing online access to regulations and direct question-and-answer opportunities with customs officials, launching a smart training system, reducing application documents, removing the requirement for declared reports related to financial statements, and accepting a financial eligibility certificate instead.

 

Apart from the global economic situation, according to the 2023 SME Statistics of the TurkStat (TÜİK), 3 million 713 thousand companies operating in the industrial and service sectors are classified as SMEs. According to the statistical classification of economic activities, in 2023, 36.1% of SMEs were active in the wholesale and retail trade, repair of motor vehicles and motorcycles sector, 15.2% in the transportation and storage sector, and 12.3% in the manufacturing industry sector. Furthermore, 35% of total exports and 20% of imports were carried out by SMEs.

 

In this context, it is clear that the integration of SMEs into AEO programs is not only a matter of economic justice but also a necessity for comprehensive supply chain security. The future of AEO is thought to lie in a partnership-based model where the world's smallest but most numerous commercial actors can demonstrate their capabilities with fewer restrictions.

 

Ultimately, this joint report will only be meaningful with effective supply chain security and the participation of all economic actors. Excluding SMEs from the system due to rigid and capital-intensive requirements will continue to hinder economic growth. In this regard, it would be appropriate for the Ministry of Trade to adopt this report as a guide and either change the AEO-II status or transition to a partnership-based, inclusive compliance model with a new AEO-K model that also covers small businesses.

 

Mehmet Altay YEGİN

International Authorized Economic Operator (AEO) Association

Chairman of the Board