Framework Standards of the World Customs Organization: reflected in the status of an authorized economic operator

Agamagomedova Saniyat ORCID: 0000-0002-8265-2971 Senior Research Fellow, Institute of State and Law of the Russian Academy of Sciences 119019, Russia, Moscow, Znamenka str., 10 saniyat_aga@mail.ru Other publications by this author

International organizations have played and continue to play an important role in the processes of harmonization and unification of various branches of legislation. Such a convergence of the regulatory framework in various spheres of public life occurs in various ways: on the basis of accepted model acts ^[1], on the basis of the establishment of general principles of legal regulation ^[2], on the basis of universal international standards proposed by international organizations. One of these intergovernmental international organizations is the World Customs Organization (WCO). The Framework Standards for Security and Simplification of World Trade (SAFE) adopted by it (hereinafter referred to as the Framework Standards) at the session of the WCO Council in June 2005 in Brussels established a modern universal level of supply chain security and, in fact, reflected a qualitatively new approach to the "end–to-end" management of goods transported across customs borders.

The Framework standards are regularly updated, one of the latest changes was the development of the 2021 version of the Framework Standards, which was designed to strengthen cooperation between customs and other government agencies, promote the use of "smart" security devices in order to improve customs control.

An important component of the Framework of Standards is the block related to the development of the institution of an authorized economic operator (hereinafter – AEO). In the context of modern challenges of internal and external nature, it seems very relevant to consider the trends in the development of the AEO status in Russia in terms of membership in the Eurasian Economic Union (hereinafter referred to as the EAEU) from the point of view of the impact of Framework Standards and identify the prospects for such development.

The administrative and legal status of an authorized economic operator in relation to Russia appears for the first time in the Customs Code of the Customs Union (hereinafter referred to as the TC CU) and reflects a certain increase in the confidence of the member states of the Eurasian integration in law–abiding business.

This novelty of the integration-level agreement, subsequently enshrined in the national legislation of the CU member States, was based on Framework Standards. Its essence was that the state, represented by the customs authorities, provides special simplifications to such participants in foreign economic activity who have some experience in conducting foreign trade operations and have established themselves as law-abiding and conscientious persons in interaction with customs authorities. For almost the first time in relation to domestic business, we are talking about a differentiated approach, the categorization of controlled entities and the emergence of a privileged group of persons who meet the established criteria and in exchange for this claim to receive special simplifications.

It should be noted that the idea of simplifications and minimization of procedural formalities is not fundamentally new for domestic customs legislation. The 2003 Customs Code of the Russian Federation contained Article 68 "Special simplified customs clearance procedures for individuals", which regulated the procedure for passing such procedures for certain categories of persons. At the same time, such simplified procedures were established by the federal executive authority authorized in the field of customs affairs (that is, at the departmental level), and persons applying for them were required to comply with law enforcement aspects of their activities (absence of facts of bringing to administrative responsibility in the field of customs), to maintain a record-keeping system, and the duration of implementation foreign economic activity.

Despite this, it is difficult to overestimate the importance of the introduction of the AEO institute in the TC CU in 2010. For the first time, such procedural simplifications are due to the administrative and legal status of a legal entity, in fact, a privileged administrative and legal status ^[3]. Moreover, it seems that the generation and further consistent development of such administrative and legal statuses is a reflection of the processes of deregulation in the customs sphere (deregulation in the sense of reducing administrative and legal impact) ^[4]. Assessing the principles of the Framework Standards, it should be noted that in fact they establish two main postulates of public law regulation in the field of foreign trade: ensuring security and facilitating international trade. The optimal balance between these two aspects is reflected in the status of the AEO: the simplifications provided to it facilitate trade relations, at the same time, the state interacts with a reliable, proven, trustworthy business partner.

D.V. Nekrasov, who studies the legal aspects of the AEO status, considers the AEO institute, on the one hand, as one of the elements of a secure supply chain of goods, and on the other – as a kind of a secure supply chain program ^{[5, p. 14]}. Highlighting the AEO institute and considering it from the point of view of the general theory of law, scientists believe that, depending on the functional role, the AEO institute is regulatory, and by nature — material ^{[6, p. 124]}. It is difficult to agree with this in the part that the administrative and legal institution of the AEO incorporates norms of both material (conditions for obtaining status) and procedural (or rather, procedural) properties (administrative procedures for using special simplifications).

The institute in question is actively developing in the context of Eurasian economic integration. In the current Customs Code of the EAEU (hereinafter referred to as the EAEU Customs Code), the differentiation of persons controlled by customs authorities continues and three independent AEO substates are allocated, depending on the certificate received (certificates of types 1, 2 and 3). The type of certificate determines the scope of special simplifications provided by the AEO. For the first time, the EAEU Customs Code defines special simplifications, which mean the specifics of performing certain customs operations and conducting customs control and other features of applying the provisions of the EAEU Customs Code, applied depending on the type of certificate of an authorized economic operator. (paragraph 1 of Article 437 of the EAEU Labor Code). Despite the fact that the EAEU Customs Code and national customs legislation use the concept of special simplifications, in the study of the AEO Institute, scientists operate with such concepts as "benefits" and "benefits" ^{[7, p. 316]}, "customs advantages" ^{[5, p. 13]}.

Thus, experts recognize that the Framework Standards provide for the development of business partnerships, and customs authorities provide benefits to companies that comply with supply chain security standards and best practices in the form of customs benefits ^{[7, p. 316]}. It seems that the concept of "benefit" in this case is not entirely successful. Firstly, benefits in customs relations are traditionally associated with tariff regulation, for example, benefits for the payment of customs duties and taxes (paragraph 3, paragraph 5, Article 405 of the EAEU Customs Code). Secondly, the above definition of special simplifications has, in our opinion, exclusively procedural content, that is, the specifics of performing individual customs operations and conducting customs control consist in simplifying, minimizing, and speeding up administrative procedures, including control and supervisory ones.

It is necessary to agree with the opinion of I.I. Dumoulin that trade facilitation is a multifaceted and complex problem, the solution of which can provide significant benefits to both entrepreneurs and public authorities ^{[8, p. 4]}. Such simplification is of particular importance in the context of active reform of the domestic system of state control and supervision, of which customs control and procedures for its implementation are a part. It seems that the privileged status of the AEO also lies in the fact that this category of persons is actively involved in the most progressive projects of the Federal Customs Service of Russia. An example is the experiment on customs monitoring from April 3, 2023, in which only AEO and industrial cluster enterprises can participate on a voluntary basis.

Legal status of AEO in modern conditions includes provisions of a number of acts as the level of the EAEU (for example, the Decision of Board of the Eurasian economic Commission dated 19.12.2017 № 186 "About the form of the register of authorized economic operators, member States of the Eurasian economic Union"; the Decision of Board of the Eurasian economic Commission dated 19.12.2017 № 187 "On the General register of authorized economic operators, member States of the Eurasian economic Union"; the Decision of Board of the Euroasian economic Commission of 10.03.2022 № 37 "On the form of the certificate on inclusion in the register of authorized economic operators and the procedure for its completion" etc.) and national (e.g., Chapter 66 of the Federal law of 03.08.2018 № 289-FZ "On customs regulation in the Russian Federation and on amendments to certain legislative acts of the Russian Federation", etc.) and institutional level (e.g., the order of the Ministry of Finance of Russia dated 29.03.2019 № 49н "On approval of the Order of suspension and renewal of the certificate on inclusion in the register of authorized economic operators, to the exclusion of legal persons from the register of authorized economic operators, shapes decisions on suspension, renewal of the certificate on inclusion in the register of authorized economic operators, the exclusion of the legal entity from this register as well as cases in which the decision of the authorized customs authority about the suspension of the certificate of inclusion in the register of authorized economic operators and the decision on the renewal of the certificate will be accepted automatically (without the participation of officials of customs authorities)", etc.).

Unfortunately, the requirements for obtaining AEO status in the EAEU are quite strict, which causes the small number of this category of persons. Thus, the register of AEO on the website of the Federal Customs Service of Russia as of July 11, 2023 includes 215 legal entities, of which 169 persons have the status of active AEO (https://customs.gov.ru/folder/720 (model date: 08/19/2023).

One of the solutions to the problem of the small number of this category of participants in foreign economic activity is, in our opinion, the possibility of obtaining AEO status by an individual entrepreneur. Currently, only a legal entity can be an authorized economic operator in the EAEU (paragraph 1 of Article 430 of the EAEU Labor Code).

Recent changes to the Framework Standards include the main provisions for the development of AEO programs of regional customs unions and the introduction of mutual recognition. To strengthen the sustainability and recovery of global supply chains against the background of the COVID-19 pandemic, three existing documents - the AEO Implementation Guide, the AEO Template and the Customs AEO Validation Guide - have been updated and based on them, the AEO Implementation and Validation Guide (WCO SAFE FRAMEWORK STANDARDS. 2021. https://www.wcoomd.org /~/media/50518838DCAD4D4B9600B3E94F37C663 (mod. date: 08/20/2023).

Thus, it is possible to identify several significant stages in the development of the AEO institute in accordance with the Framework Standards. Firstly, it is the very appearance of the administrative and legal status in the domestic legislation and international treaties of the EAEU. Secondly, it is a further differentiation of the AEO status, the generation of its substates within the framework of deepening the categorization of persons controlled by customs authorities. Thirdly, it is a gradual departure from the principle of residency in the regulation of the AEO status. Fourth, it is a link to the risk management system, another important element of the Framework of Standards (AEO is automatically recognized as a low-risk entity). Fifth, it is the introduction of mutual recognition of AEO programs and statuses. The latter is particularly relevant in modern conditions from the point of view that, in the context of unprecedented sanctions pressure on Russia, it is important to build a selective foreign trade and customs policy with foreign countries, using, among other things, forms of mirror reaction to the policies of "unfriendly" states. It should be noted the complexity of such selective impact of standards on the policies of individual states within the framework of integration entities, which experts pay attention to ^[9]. In the current situation, leading scientists, in relation to domestic practice, rightly defend the issues of legal identity formation, including in the regulation of economic relations that are transforming in the face of sanctions and other measures of interstate pressure ^[10-11].

The concept of mutual recognition of AEO status, enshrined in the Framework Standards, is being successfully implemented by Russia in relation to China (since December 2022, the Russian-Chinese project on mutual recognition of AEO status has been operating in the Russian Federation in full-format mode) and Iran (on May 17, 2023, a draft agreement on mutual recognition of AEO status was signed with the Customs Administration of the Islamic Republic of Iran). Currently, work is underway on mutual recognition of the AEO status with India, Tajikistan, Turkey and Uzbekistan (Mutual recognition of the status of an authorized economic operator. The official website of the Federal Customs Service of Russia. https://customs.gov.ru/aeo/vzaimnoe-priznanie-statusa-upolnomo (mod. date: 08/20/2023).

In this regard, we see the conclusion of bilateral (not multilateral) agreements on mutual recognition of the AEO status as a promising direction for the development of the AEO institute in modern conditions.

Thus, the WCO Framework Standards for Security and Simplification of World Trade have had and continue to have a significant impact on various aspects of public law regulation of foreign trade activities. A separate, rather independent block of such influence is the development of the AEO institute. The emergence and consistent regulation of this status became the development of a differentiated approach to persons controlled by customs authorities and reflected an increase in the level of trust between the state and foreign trade business. The essence of the AEO status is, on the one hand, to simplify and accelerate administrative procedures in foreign trade (including control and supervisory procedures), on the other hand, to increase the security of the supply chain of goods. Despite the small number of controlled persons under consideration, the very availability of the opportunity to obtain this privileged status is important. In modern conditions, such an aspect of the Framework Standards as mutual recognition of the AEO status in various states seems relevant. Under the conditions of the sanctions regime against Russia, the option of concluding bilateral agreements on mutual recognition of the AEO status seems to be more preferable. This option is designed to ensure Russia's national security while simplifying trade procedures for representatives of friendly states.