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Understand this Authorized Economic Operator Mutual Recognition Arrangement

by Nikhita Pais

In a historical event in mid-September 2022, the Brazilian Customs Authority (Receita Federal) and the US Customs and Border Protection (CBP) signed the Authorized Economic Operator (AEO) Mutual Recognition Arrangement (the “MRA”). The groundwork for this arrangement began way back in 2002, wherein the Government of Brazil, CBP’s Office of International Affairs, and the Office of Field Operations first signed a Customs Mutual Assistance Agreement. This was the first step in warranting enhanced cooperation in trade and security between the two countries.

Subsequently, in 2005, the CBP Container Security Initiative was launched. It aimed at using technology to identify high-risk containers and take steps to pre-screen and evaluate containers before they were shipped. After that, in 2014, both Brazil and the US commenced work on an AEO supply chain security program, resulting in a joint work plan to secure the trade partnership between both countries. The MRA of 2022 takes this budding relationship between Brazil and the US to the next level in recognizing each other’s security and trade measures.

The World Customs Organization (WCO) defines the term AEO as:

“the Authorized Economic Operator (AEO) is 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.”

The security standards prescribed by the WCO relate to areas such as

  1. compliance with customs requirements;
  2. management of commercial records;
  3. financial viability;
  4. consultation, cooperation, and communication;
  5. cargo, conveyance, premises, personnel, and trading partner security; and
  6. crisis management and incident recovery, to name a few.

Therefore, AEOs are companies operating in foreign trade and work closely with customs authorities to maintain supply chain security.

An MRA is a bilateral understanding between two customs bodies whereby the customs administrations exchange information about the supply chain security programs they have in place. An AEO MRA aims to recognize these AEOs and thereby ensure better coordination between Brazil and the US about supply chain security and develop efforts to contend offences concerning trade and customs.

The AEO MRA signed between Brazil and the US is a step forward in recognizing that both countries have AEOs that function on principles compatible with each other. This would enable companies registered as AEOs to have faster clearance of goods in each other’s jurisdictions, reducing costs and increasing competitiveness. Moreover, the MRA recognizes the standard set of security requirements of each party’s jurisdictions, thereby permitting each to acknowledge the findings of the other’s customs authorities, benefitting both the customs authorities and stakeholders.

With the development of the AEO MRA between Brazil and the US, trade between these two countries is expected to flourish with higher standards of supply chain security, easing the bureaucratic requirements of conducting operations.

We will keep an eye on this evolution and let all our followers know!

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