1. Current Status of AEO MRA
15.5
Korea Customs Service

2. AEO Overview
2. Understanding of MRA

3. 1. AEO Overview

4. Integrated Supply Chain Management Guideline
1. History of AEO Program
(Policy Priority)
Trade Facilitation
Trade Security
Security +
Facilitation
Goal
Secure
Economic
Operator
A E O
Authorized
Economic
Operator
Authorized
Person
Authorized
Person
Concept
Authorized
Supply Chain
9/11 Attacks in the U.S.
US C-TPAT
(2002)
(Time)
Revised Kyoto
Convention
(1999, WCO)
Integrated Supply Chain Management Guideline
(2002 , WCO)
SAFE Framework
(2005 , WCO)
Regulation

5. 2. Definition and Concept of AEO Program
When a person related with trade such as manufacture, transport, storage or clearance of importing and exporting goods satisfies security management requirements,
customs accredits the person as an Authorized Economic Operator and provides preferential benefits during clearance.
WCO : A person related with import and export who complies with the WCO or equivalent supply chain security standards and is authorized by its Customs
Compliance + Internal Control & Security mgmt
Exporter
Importer
Port Terminal Operator
Customs Broker
Airliner
Sea Carrier
Import and Export Cargo Transporter
International Freight Forwarder
Bonded Area Operator
[AEO]
Fast Clearance
Reduction of
Cargo Inspection Rate
Partnership with
Customs
Partnership
Voluntary
AEO Certificate +
Increasing Law Compliance + Strengthening Supply Chain Security
Enhancing Trade Facilitation
Exporter
Importer
Broker
Freight Forwarder
Bonded Transporter
Bonded Area Operator
Sea Carrier
Airliner

6. 3. The Reason of AEO Authorization
AEO, The Best Partner of Customs Full Support
New Requirement
for Trade
Companies require AEO authorization or minimum security standards as terms of trade
- Boeing examined whether Korea Aerospace Industries and Korean Air satisfied security requirements
When it has no AEO authorization or it does not meet security standards at the same level with AEO program, it can be excepted from trade partners or relegated to a posterior post
Prerequisite to enhance corporate competitiveness
Non-tariff
Barrier
Countries reduce import inspection to AEOs, while strengthen import inspection to non-AEOs
Inspection rates of the U.S. C-TPAT is about 1/10 of that of the U.S. non-C-TPAT
When it has no AEO authorization, it cannot be provided clearance benefits in counterpart country (relative demerit)
Both inspection and other clearance-related costs and time required for clearance are increased (Increase of logistics costs)
※ The KCS proactively endeavors to conclude AEO MRA between countries

7. 4. Global Status of AEO Adoption
65 countries worldwide => Trade volume of AEO adopters amounts to 80% in total
Category
Name
No.
Region
Adopting Country
(65)
Korea, Japan, China, Thailand, India, Israel, Taiwan, Hong Kong, New Zealand, Jordan, Singapore, Malaysia, and Arab Emirates, Vietnam,
Kazakhstan 15
Asia Oceania
U.S., Canada, Costa Rica, Columbia, Mexico, Dominica, Peru, Argentina, Uruguay, and Guatemala 10
America
EU (28 countries), Turkey, Norway, Switzerland, Andorra, and San Marino 33
Europe
Kenya, Senegal, Tanzania, Uganda, Algeria, Zambia, and Congo 7
Africa
Preparing Country
(14)
Mongolia, Indonesia 2
Asia
Chile, El Salvador, Brazil, and Panama 4
Botswana, Morocco, Tunisia, Egypt, and Rwanda 5
Macedonia, Serbia, and Russia 3

8. 5. AEO Program in Operation
Title of AEO programs in Operation
Title
Country
AEO
Korea, Japan, Hong Kong, Malaysia, Chile, EU, Norway, Switzerland, Mexico…
IMECM
China (Interim Measures of Customs Administration of the People’s Republic of China for Enterprise Credit Management)
STP
Singapore (Secure Trade Partnership)
C-TPAT
USA (Customs-Trade Partnership against Terrorism)
SES
New Zealand (Secure Exports Scheme)
PIP
Canada (Partners in Protection)
GLP
Jordan (Golden List Program)
UAC-OEA
Peru (Certified Customs User)

9. 2. Understanding of MRA

10. MRA and Relevant Strategy in Korea
1. Understanding of Mutual Recognition Arrangement
Mutual Recognition Arrangement
Through a MRA regarding AEO programs in two countries, AEOs in one country are provided clearance benefits at the same level with those of AEOs in the counterpart country by counterpart country Customs.
As a cooperative arrangement between customs authorities, it does not create legal rights or obligations.
▪ No. of MRAs in the world: 36 (as of at the end of April, 2015)
* The first MRA concluded between US C-TPAT and NZ SES in June 2007
▪ No. by country: Korea(11)>U.S.(10)>Japan·Singapore(7)>EU(6)>
Canada·China·Hong Kong(4)
▪ It will increase as MRA discussion and AEO programs increase
▪ MRA conclusion (11): US, CA, SG, JP, NZ, CN, HK, MX, TR, IL, DO
▪ MRA negotiation: India, Thailand, Taiwan ▪ KCS has put much effort to promote AEO MRA after signing KR-CN MRA
MRA Trend in the World
MRA and Relevant Strategy in Korea

11. 2. Mutual Recognition of AEO program
Step 1
Step 2
Step 3
Step 4
A Side-by-Side Comparison of Programs Criteria
Joint Validation Visits
& Operational Discussion
Signing of an MRA
Implementation of the MRA

12. 3. MRA Process Studying Study on the counterpart’s program Stage 1
Step 1 : Exchanging idea by working level meeting, JCCC meeting
Step 2 : Exchanging commissioners’ letter & having a meeting
Step 3 : Agree to start MRA negotiation
Step 4 : Set up Working group & Working group meeting
Stage 1
Side by side Comparison of AEO Criteria
Stage 2
Joint Validation
Stage 3
Benefits, conferring condition, MRA text, etc.
Stage 4
Sign

13. ⑧ Declare import and provide benefits
4. Procedures to Apply MRA Benefits in Korea
MRA
Signed
Country
Customs Administration
① Send AEO Information
KCS
② Input AEO Information
③ Publicize MRA
(Request notifying AEO ID)
⑥ Check validity of AEO ID
⑦ Notify OBPC
Overseas Business Partner System
Integrated AEO Mgmt System
Import C/S
⑤ Issue OBPC linked with AEO ID
AEO Exporter
Importer – Non-AEO
⑧ Declare import and provide benefits
④ Notify AEO ID

14. 5. Understanding of Risk Management in KCS
Single
window
Clearance
Logistics
Quarantine, etc.
Verification Agency 3
Import
Declaration
Customs Declaration Targeting
Inspection
Declaration
Acceptance
Manifest
Submission
Manifest
Targeting
Entry Report
Declaration of
Unloading
Bonded
Transportation
Declaration
Entry Report
Removal report 4
Risk Management System B
Passenger
Air/seaport
Surveillance
Customs
Examination
Entry
Inspection
Quarantine
Clearance
Audit RM
Investigation
Surveillance
Selection of Objects
Entry
Unloading
Bonded
Area
Removal
Entry
APIS
Selec-tion
Green Line
Fast Entry
Data Analysis
System 1
Intelligent surveillance system based on RFID,USN
Detailed
Audit
High Risk
Passenger
Red Line
EDW 6 A
Tax Audit
Investigation
Direct Countermeasure for Contraband
Report or Other Pending Problems
Gradual
Enhancement
Audit
Exemption
Measurement
of Law
Observance
Degree
Selection of Post Audit
Provision
of HS
Value
Data
Faithful Company
Smuggling Data
Alarm
Planned
Analysis
Planned
Investigation
Capacity Development
Supporting
Company
Foreign
Exchange Data
Feed Back
Data collection and
Establishment of Analysis System at All Times
Audit
Reinforcement
Unfaithful Company
Narcotics Data 2 5
Feed Back

15. Total share in Trade Volume : Export (49%), Import(28%)
6. Number of AEOs
As of April, 2015
AEO Parties
Number of AEO
Under
Validation
Exporter
169 12
Importer
131 5
Customs broker 97 10
Freight forwarders
175 25
Bonded Warehouse Operator 37 8
Bonded Transporter 28
Sea carrier 9
Airlines 3 1
Ground handler 4
Total
653 69
Total share in Trade Volume : Export (49%), Import(28%)

16. 7. MRA Status in KCS Signed In progress Korea U.S (10.6) China (13.6)
Hong Kong (14.2)
Canada (10.6)
Mexico (14.3)
Turkey (14.6)
Japan (11,5)
New Zealand (11.6)
Singapore (10.6)
Israel
(15.3)
In progress
India,
Taiwan and Thailand
Dominican
Republic (15.4) 16

17. 8. MRA Benefits MRA Benefits 1. Reduction of import inspection rate
5. Urgency measures
2. Simplification of documentary validation
MRA
Benefits
4. Designation of liaison officials
3. Priority in clearance

18. 9. Korea-China AEO Mutual Recognition Arrangement for Supporting Exporting Companies and Facilitating Trade
<Mutual Recognition Arrangement regarding Authorized Economic Operators Programs was signed by Commissioner of Korea Customs Service, Baek Un-chan, and Minister of General Administration of Customs of the People’s Republic of China, Yu Guangzhou, in the presence of Presidents of the two countries on June 27th, 2013 in Beijing, China>

19. Export Competitiveness
10. AEO & FTA
Non Tariff Barrier
AEO
Tariff Barrier
FTA
Export Competitiveness

20. Thank you