Law Summary

Introduction

• This Customs Administrative Order (CAO) implements Sections 1227 and 1228 of the Customs Modernization and Tariff Act (CMTA) as per Republic Act No. 10863.
• It establishes the framework for the Authorized Economic Operator (AEO) Program in the Philippines.

Scope

• The CAO covers the establishment of an AEO Program, providing the necessary infrastructure, mechanisms, processes, and benefits for its implementation.

Objectives

• The objectives of the AEO Program include: • Compliance with international trade agreements (WCO SAFE Framework, ISCM Guidelines, Revised Kyoto Convention, WTO ATF). • Development of mutual recognition status with other countries' AEO programs. • Provision of benefits to accredited members to incentivize compliance with customs regulations. • Establishment of a special customs cargo clearance lane for efficient trade facilitation.

Definition of Terms

• Key definitions introduced in the CAO include: • Authorized Economic Operator (AEO): Entities accredited based on the WCO SAFE Framework and related guidelines. • Customs Administration: The governmental body responsible for customs law enforcement and revenue collection. • Freight Forwarder, Importer, Exporter, etc.: Various stakeholders involved in international trade with specific roles and responsibilities.

General Provisions

Establishment of AEO Program

• The AEO Program consists of: • Cargo Security System: Ensures the integrity of imported goods. • Trade Clearance System: Enables compliant stakeholders to clear goods with minimal customs intervention. • Mutual Recognition Arrangement (MRA): Formal agreements between customs administrations regarding AEO recognition.

Participation in the AEO Program

• Eligible stakeholders include: • Importers, exporters, customs brokers, freight forwarders, airlines, and other logistics entities.

AEO Membership Accreditation Criteria

• Accreditation requires: • Reliability and trustworthiness as evaluated through risk assessment. • Compliance with customs regulations and a sound security infrastructure. • Operational history of at least one year prior to application.

AEO Application Processing and Approval

• A simplified system for processing AEO applications involves three levels of membership: • Level 1: Basic accreditation with limited benefits (e.g., exemption from renewal, self-assessment of duties). • Level 2: Enhanced benefits after validation of security measures and practices (e.g., dedicated processing lane, advance clearance). • Level 3: Superior benefits for sustained security practices exceeding Level 2 standards.

Grounds for Denial of Application

• Applications may be denied if: • Security measures do not meet requirements. • False or misleading information is provided.

Request for Reconsideration

• Members may file for reconsideration of adverse decisions within specified timeframes (90 days for security measures; 30 days for false information).

AEO Membership Responsibilities

• Members must: • Maintain full disclosure of information to Customs. • Ensure compliance and designate responsible personnel. • Submit annual statements regarding material changes.

Suspension and Revocation of Accreditation

• Accreditation may be suspended or revoked for: • Intentional violations leading to revenue loss. • Repeated non-compliance with regulations.

AEO Organization

• The AEO Office will manage the program, utilizing technology for database management and implementation.

Authority of the Commissioner

• The Commissioner has the authority to issue supplementary rules for effective implementation of the CAO.

Periodic Review

• The CAO will be reviewed every three years for possible amendments.

Separability Clause

• If any provision is declared unconstitutional, the remaining provisions remain effective.

Repealing Clause

• Customs Administrative Order No. 01-2012 is revoked.

Effectivity

• The CAO takes effect 15 days after publication in the Official Gazette or a national newspaper.

Key Takeaways

• The AEO Program aims to enhance customs compliance and facilitate international trade.
• Stakeholders must meet specific accreditation criteria and adhere to ongoing responsibilities.
• The program features a tiered benefits structure to incentivize compliance.
• Regular reviews and the authority of the Commissioner ensure the program's adaptability and effectiveness.