On May 16 2014, at its seventh meeting in Beijing, the EU-China Joint Customs Cooperation Committee adopted a decision on the mutual recognition of authorised economic operators (AEOs). Once implemented, this decision will provide access to streamlined customs procedures for certified traders in both the European Union and China and will facilitate trade between the two trading partners. The European Union concluded similar mutual recognition agreements with Japan and the United States in 2011 and 2012, respectively (for further details please see "EU-US Customs Facilitation Mutual Recognition Agreement enters into force".
The committee also concluded a strategic framework for customs cooperation and an action plan concerning EU-China customs cooperation on IP rights between 2014 and 2017. This framework will reinforce cooperation between EU and Chinese customs authorities to facilitate trade and combat illicit and counterfeit trade further.
The European Union and China first concluded a customs cooperation and mutual administrative assistance agreement 10 years ago. Since then, customs cooperation between the European Union and China has developed within the framework of the committee.
Some EU member states(1) and China are also jointly taking part in the Smart and Secure Trade Lanes Pilot Project. This project aims to improve data exchange, facilitate mutual recognition on key customs issues and assess security risks better.
Trade between the European Union and China is second in volume and value only to trade between the European Union and the United States. Trade in goods between China and the European Union amounted to €428 billion in 2013, with EU exports amounting to €148 billion and Chinese exports to €280. With such a sizable trading relationship, a number of customs challenges inevitably arise, which has led to the committee's focus on:
- trade facilitation;
- enforcement of IP rights;
- supply chain security; and
- anti-illicit trade efforts.
Under the mutual recognition agreement, certified traders from the European Union and China will benefit from the lower costs and simpler procedures of streamlined customs administration and clearance systems already in place within each trading partner. With fewer resources being spent on routine trade and customs matters, the European Union and China will have the opportunity to direct more attention and resources towards the protection of IP rights and combatting illicit trade.
Algirdas Šemeta, the EU commissioner responsible for taxation and customs union, highlighted the agreement's ability to:
"mak[e] customs procedures easier, cheaper and faster for our trusted operators" and, with reference to the governments, their traders, and their citizens, that "everyone is a winner with this customs agreement".(2)
In the European Union, the AEO system, which has been in operation since 2008, provides for simplified customs procedures to certified companies that are considered to be safe and reliable, and have a record of complying with security standards. AEOs have access to swifter procedures and enjoy fewer inspections, and can thus significantly reduce their customs clearance and related costs.
The bilateral deal comes amid a wider, multilateral context of improved trade facilitation efforts, including the World Trade Organisation (WTO) Agreement on Trade Facilitation which was adopted, in principle, in December 2013 at the WTO Bali Ministerial Conference with an implementation deadline of July 31 2014. While questions and outstanding issues may threaten the timely implementation of the agreement, bilateral efforts such as the EU-China deal may bring immediate and tangible trade benefits to EU enterprises, as well as potentially furthering ongoing multilateral efforts.
For further information on this topic please contact Charles Julien or Jordan Shepherd at King & Spalding LLP by telephone (+41 22 591 0800), fax (+41 22 591 0880) or email (firstname.lastname@example.org or email@example.com). The King & Spalding LLP website can be accessed at www.kslaw.com.