What Is an Authorized Economic Operator?

An authorized economic operator is a designation given by the World Customs Organization (WCO). This designation allows an exporter or importer of goods or raw materials to facilitate the movement of these goods across national boundaries. The purpose of the authorization is to facilitate international cooperation in making supply chains more secure from the threat of terrorism. A supply chain consists of all the entities involved in a series of economic transactions required for a manufacturing operation.

Customs officials within each country inspect both inbound and outbound goods to ensure compliance to laws and payment of custom fees. The prevention of smuggling and potential acts of terrorism is a responsibility of border control officials. In an attempt to streamline the process, while still preserving an adequate level of security, a shipper may apply to the WCO for an authorized economic operator designation. As part of the application process, the shipper will go through a vigorous vetting process that investigates how adequately the shipper has complied with regulations covering the importation and exportation of goods. The goal of this review is to expedite shipping and eliminate unnecessary screening and inspections, while still retaining secure borders.

A wide range of commodities from raw materials to finished goods are imported or exported across national borders every day. These raw materials comprise, in total, a vast worldwide supply chain that feeds manufacturing processes around the globe. Finished goods shipped across borders allow a greater diversity of goods in marketplaces around the globe.

These chains are not formal organizations. They are fluid groups that come together for a shipping purpose and then disburse when new players come into the process. It is an informal arrangement. An authorized economic operator has gone through a screening to investigate whether or not the operator has a stellar record of compliance with customs requirements. Other things considered in the vetting process are how adequately the applicant has secured a supply chain against unauthorized activity, if the operator has thoroughly investigated the background of its employees, and what kind of ongoing training programs are in place to prevent illegal acts.

A corollary to an authorized economic operator is found in the screening procedures for frequent travelers in airports. Frequent fliers can apply to be approved for a faster processing through the security screening procedures, by complying with an investigation into the applicant's personal background. It is the same concept when granting an authorized economic operator the ability to expedite shipping across borders. Once the operator has been approved, it will have priority in going through customs, even in times of increased threats of terrorism.