Japan’s AEO Program

May ， 2008

Shinji TANIGUCHIDirector, Japan Customs

Role of the Customs and Tariff Bureau (CTB) - Planning the policies of customs and tariff

(including preparing national legislation)

- Administering the operation of 9 Customs

(HQ of Japan Customs) ・ 118 Customs Ports ・ 27 Customs Airports

Covered by 9 Regional Customs Houses

　 ・ 210 Customs offices （ Branches, Sub-branches, Guard posts ）

　 ・ 8,620 Customs officials

CTB and 9 Customs

Hakodate

Okinawa Regional

TokyoYokohama

Nagoya

Osaka

Kobe

Moji

Nagasaki

CTB, MOF

Outline of Japan Customs

Japan Customs:Japan Customs: Outline Outline

- １ -

Japan Customs:Japan Customs: Three Missions of Japan Customs

Collecting customs duties and domestic consumption taxes appropriately and fairly

To Collect customs duties and domestic consumption taxes appropriately and fairly as a revenue agency that collects about \5,400,000 million representing about 10% of the total national tax revenue

Further facilitating trade procedures

To further facilitate customs procedures while ensuring security in international distribution .

Realizing a safe and secure society

To build a “Japan that is the safest country in the world” setting blocking of smuggling of guns, illegal drugs and other goods harmful to the society as the most important task and by preventing terrorist acts in Japan

Trade Facilitation

Fiscal RoleSecurity and Safety

AEO Program

- ２ -

　Security Measures and AEO Programs

2001 2002 2003 2004 2005 2006 2007 2008～

WCO

USA

EC

JAPAN

Simplifie d ImportDe claration Program

Authorize d Exporte rs ' Program

Authorize dWare house

Ope rators ' Program

AmendCustoms Code

AEO Program

2008.1～

2009.7～

24-hour Rule

2005.4

2006.3～

2007.10～

2001.3～

ImplementingRecommendations ofthe 9/11 Commission

Act of 2007

2007.8

CSI

2002.3～

C-TPAT

2002.4～

24-hour Rule

MI

2003.6～

SAFEFramework

2005.6～

AEOGuidelines

2006.6～

Advance Re porting ofCargo Information

(on re que st)

200４.4～

2002.12～

SAFE PortAct

2006.10

9/11

Authorize d Importe rs ' Program

2007.4～

AEO Programsfor

CustomsBroke rs andForwarde rs

2008.1

10+2 ProposedRule

SFI

2007.10～

2008.4

Report on SFIto Congress

2008.4～

Advance Re portingof Cargo Information

(obligatory)

2007.2～

- ３ -

　 　Reform on AEO programs for importers/exporters

・ Consistency with WCO guidelines

・ Increased benefits for traders

Introduction of AEO program for warehouse operators

Customs － BusinessesPartnership

Fundamental Reform

Establishment of AEO Programs

Promote mutual recognition with major trading partners with equivalent AEO programs

International Partnership

Promote participation in AEO programs－ more than 50% of exports in value be conducted by authorized exporters by end CY 2008

Customs - Business Partnership

Further DevelopmentFurther Development

Establishment of Japan’s AEO Program(Apr. 2007)

- ４ -

Importers

andExporte

rs

Transportation

companyForward

ers

Warehouse

Operators

Customs

Brokers

Shipping

Company

and Airline

Importers

and

Exporters

abroad

International Logistic Operators

Expansion of Scope of AEO Program

〔 Before〕

〔 From April, 2008 〕

Importers

andExporte

rs

Transportation

companyForward

ers

Warehouse

Operators

Customs

Brokers

Shipping

Company

and Airline

International Logistic Operators

Importers

and

Exporters

abroad- ５

-

(Consistent with WCO SAFE)(Consistent with WCO SAFE)

○Compliance Record

○e-system for Customs Procedures

○Compliance Program・ Organizational Set-up

・ Contracting Parties Requirement

・ Cargo/Conveyance/Premises Security

・ Consultation, Co-operation and Communication with

Customs and Other Relevant Authorities

・ Crisis Management

・ Education/Training

・ Internal Audit for Measurement, Analyses and

Improvement

○Financial Integrity

Authorized ImportersAuthorized Importers- Compliance-reflected reduced examination and inspection

- Pre-arrival lodgement of import declaration and permission

- Release of cargo before duty/tax payment declaration and duty/tax payment

- Periodical lodgement of duty/tax payment declaration

Authorized ExportersAuthorized Exporters- Waive the requirement to deposit cargoes into the Customs area

- Compliance-reflected reduced examination and inspection

Authorized Warehouse Operator Authorized Warehouse Operator - Establishment of a new Customs warehouse only by notification - Comprehensive permit is provided to each Operator - Compliance reflected reduced audit - Free monthly fee

Japan’s AEO Program: Requirements & Benefits

RequirementsRequirements

Authorized Customs BrokersAuthorized Customs Brokers- Release of cargoes before duty/tax payment and its declaration in case an import declaration is conducted by an ACB- Lodgment of export declaration at the exporter’s premises and other facilities in case an ACB and an Authorized Logistics Operator control cargoes of their client exporter

Authorized Logistics Operators (Carriers/Forwarders)Authorized Logistics Operators (Carriers/Forwarders)- Waive the requirement to get permission for Customs transit

from Customs

Ben

efit

sB

enef

its

- ６ -

　 RequirementsRequirements

Compliance recordsCompliance records　 ⇒ Proper records of Compliance. No Commitment over a designated

period to any violation against Customs related laws and regulations. 　 ⇒ Business experiences no less than 3 years (International logistics

operators)

e-system for Customs Procedures e-system for Customs Procedures 　　　　　⇒ Eligibility for usage of e-system for Customs Procedures.

Financial IntegrityFinancial IntegrityCompliance ProgramCompliance Program ⇒ Organizational Set Up Contracting Parties Requirement Cargo/Conveyance/Premises Security Due Customs Procedures Consultation, Cooperation and Communication with Customs and Other

Relevant Authorities Crisis Management Education/Training Internal Audit

- ７ -

　 Requirements : Requirements : Internal Compliance Program for Internal Compliance Program for Customs RequirementsCustoms Requirements

Organizational Set-UpOrganizational Set-Up ⇒ Establishment of center office to manage CP and CP units in each department. ⇒ Ensuring the proper operation at each department.Contracting (Business) Parties RequirementContracting (Business) Parties Requirement ⇒ Ensuring the adequacy of business partners in relation to the performance of the CP including security aspects. ⇒ Establishment of a framework to ensure proper operations by business partners. Cargo/Conveyance/Premises Security (in the case of Importers / Exporters)Cargo/Conveyance/Premises Security (in the case of Importers / Exporters) ⇒ Appropriate management of the cargoes. ⇒ Establishment of a framework to check the route and the mode of transportation, as well as to properly track the movement of the cargoes. ⇒ Locking devices, barrier, fencing and lighting, including setup of video surveillance cameras, and periodic patrolling. ⇒ Checking of traffic both persons and vehiclesDue Customs ProceduresDue Customs Procedures ⇒ A list of cargoes (including descriptions, marks, tariff classification, tariff rate, application of trade control laws and regulations and other relevant information) 　⇒ Timely updates of the list of cargoes based on the revision of relevant laws and regulations. 　⇒ Establishment of a framework and appropriate management of Customs procedures.

- ８ -

　 Requirements : Requirements : Internal Compliance Program for Internal Compliance Program for Customs RequirementsCustoms Requirements

Consultation, Cooperation and Communication with Customs and Other Consultation, Cooperation and Communication with Customs and Other relevant authoritiesrelevant authorities ⇒ Establishment of a route of report to Customs on any accident or misconduct in implementing the CP. ⇒ Establishment of a route of report to Customs on the changes of the CP, if such changes are related to Customs procedures, cargoes and/or logistics

Crisis Management Crisis Management ⇒ Establishment of a framework to ensure route of report in case of emergency and taking remedial and preventative measures.

Education/Training Education/Training ⇒ Establishment of a framework to plan education and training programs and to implement those programs in a periodic and continuing manner.

Internal Audit Internal Audit ⇒ Establishment of a framework for internal audit to ensure proper implementation of the CP.

- ９ -

○Compliance-reflected reduced examination and inspection

○Pre-arrival lodgement of import declaration and permission

○Release of cargo before duty/tax payment declaration and duty/tax payment

○Periodical lodgement of duty/tax payment declaration

○Waive the requirement to deposit cargoes into the Customs area

○Compliance-reflected reduced examination and inspection

Authorized Importers

Authorized Exporters

　 Benefits for Authorized Importers/ExportersBenefits for Authorized Importers/Exporters

- １０ -

〔 Procedure for Authorized Importers 〕

〔 Normal Procedure 〕

Procedure for Authorized Importers

Cargo Release Procedure

Aircraft’s

arrival

Duty Payme

nt

Duty Payme

nt

Import/Duty

Payment Declaratio

n

Import Declarat

ion

Duty Payment Declarat

ion

Cargo Relea

seCargo Relea

seCargo Relea

se

Import Declarat

ionImport

Declaration

Import

Permit

Import

Permit

Import

Permit

Cargo Release Procedure

Import

Permit

ExaminationInspection

Cargo Relea

se

ExaminationInspection

Import Declarat

ionImport

Declaration

Import Declarat

ion(Optional) (Periodical

)

Aircraft’s

arrivalAircraf

t’s arrivalAircraf

t’s arrival

- １１ -

Premises of Exporters

Forwarders’ warehouse（ Customs Area ）

Premises of

Exporters

Customs Clearance

〔 Procedure for Authorized Exporters 〕

〔 Normal Procedure 〕

Procedure for Authorized Exporters

Customs Clearance

Export

Permit

Exam. Inspecti

on

Export Declarat

ion

Export Declarat

ion

Exam. Inspecti

on

Export

Permit

Forwarders’ warehouse（ Customs Area ）

- １２ -

　 Benefits for Authorized Warehouse Operators, Customs Brokers, Carriers and Forwarders, etc

- Establishment of a new Customs warehouse only by notification to Customs - Comprehensive permit is provided to each Operator - Compliance reflected reduced audit - Free monthly fee

Warehouse Operator

- Import Procedure　　　　⇒ In case an import declaration is conducted by an Authorized Customs Broker, release

of cargoes are allowed before duty/tax payment declaration and duty/tax payment- Export Procedure　　　　⇒ In case an Authorized Customs Broker checks cargoes of its client exporter and those

cargoes are brought into container yard for loading by an authorized transportation company, it is allowed to lodge an export declaration at the exporter’s premises and other facilities. etc.

Customs Brokers

- Simplification of Customs transit procedure (Normal Procedure)

A permission is required to each transit, followed by the submission of manifest data. (Procedure for AEO)

Only submission of manifest data is required for the route covered by NACCS system

Carriers and Forwarders etc.

- １３ -

Customs Area B

Customs Transit

Normal Procedure

PermitConfirmation of

ShipmentConfirmation of

Arrival

Every transit

Customs Area A

Unnecessary ×〔 New Procedure for AEO/TC 〕 ×

〔 Current Procedure 〕

AEO Challenges:AEO Challenges: Program for Authorized Transportation Companies

Unnecessary

Every transit

×

Benefits

- １４ -

-Stipulate specific procedures.

Examples: procedures for customs clearance with benefits, application procedures for

authorization

【 Cabinet Order 】 (Cabinet Order for Enforcement of the Customs Law)

- Stipulate the rights and obligations of citizens.

Examples: benefits, requirement for authorization (reasons for disqualification), expiry and

revocation of approvals

【 Law (Customs Law) 】

-Stipulate details for the implementation of the specific procedures.

Example: Particulars to be set forth in the compliance program.

【 Ministerial Ordinance 】 (Enforcement Regulation of the Customs Law)

- Stipulate details for the implementation of the specific procedures.

Examples: specific customs clearance procedures, exemplification on the particulars of

compliance program, guidelines for reviewing the applications at Customs

【 Order of Director General of CTB 】 (Basic Orders regarding Customs Law; Guidelines in reviewing the approval requirements of authorized importers)

AEO : Legal Structure

-１５ -

Submission of Application

- Conducting self-assessment according to check points

- Reviewing the operational flow and contracts with business

partners

- Preparation for submitting the application forms and supporting

documents

- Explanation of AEO requirements including checking list

- Support for stock-taking the present operational flow and

identifying the points to be reviewed

- Support for drafting the Compliance Program

- Application form, Check List, The Compliance Program &

Supporting Documents including protocols and contracts

with business partners

(if requested)

- Checking the security measures of cargo storage facilities,

including surroundings of the facilities, lighting, locking

devices, access control, cargo segregation and computer

system

- Checking whether the export procedures are conducted in

accordance with the compliance program and protocols

Authorization

【 Application Process 】

【 Authorization Process 】

　 Process of AuthorizationProcess of Authorization

【 Post Audit Process 】

Prior Consultation with Customs

For Quality Assurance

Applicants’ exercisesOn-site inspection

Examination of application

Consultation with AEO center

- １６ -

　 Administrative Order for Improvement and Revocation

When Customs identifies at least one of the following facts, the authorization will be revoked

1. An authorized exporter has committed Customs laws and/or some other laws

2. There is a false description on the book/records3. An authorized operator does not take remedial actions to comply with administrative order for improvement

When Customs identifies the operations of an AEO exporter are not compliant with the requirements of AEO authorization, the administrative order for improvement will be issued to the AEO from Customs.

Administrative Order for Improvement

Revocation

- １７ -

Hakodate Customs

Tokyo Customs

Yokohama Customs

Nagoya Customs

Osaka Customs

Kobe Customs

Moji Customs

Nagasaki Customs

Okinawa Regional Customs

AEO Operation : Ensuring Consistency

AEO Unit

AEO Unit

AEO Unit AEO Unit

AEO Unit

AEO Unit

AEO Unit

AEO Unit

AEO Center (Ensuring consistency)

- １８ -

- Define & Planning of Pilot Program - Implementation of Pilot Program

- Analysis / Evaluation

Pilot Program

- Improved Understanding of Customs procedure of each party

- Comparability Study of both Programs

Mutual Understanding

- Discussion with regard to benefits of Mutual Recognition

- Arrangement of Mutual Recognition and Operational protocols as necessary

Declaration of Mutual Recognition

AEO Challenges - Process of Mutual Recognition

- １９ -

Mutual Recognition Under Consultation/Study

Malaysia

USA

Korea

EU

China

Australia NZ

Singapore

Canada

- ２０ -

Thank you for your attention.