Companies approved by customs offices as complying with the World Customs Organization’s security standards can ease nontariff barriers through mutual recognition arrangements, according to the Korea Customs Service.

Authorized economic operators’ mutual recognition arrangements, or AEO MRAs, are agreements inked between customs authorities to allow the companies, known as authorized economic operators, to receive the same treatment in foreign countries as domestic AEOs.

These agreements mainly serve to simplify authorization procedures, but in Korea, they are even helping to finance small and mid-sized firms whose main business is exports.

“Not only did we simplify the authorization process, but we also secured 1.1 billion won to support SMEs,” said an official from the Korea Customs Service, which is at the center of the MRA efforts.

“We expect there will be more than 60 new SMEs this year that will move to become AEOs,” the official said.

MRAs provide quick customs clearance by alleviating or exempting inspections. This ultimately improves companies’ competitiveness by allowing more accurate estimated delivery dates.

According to the Korea Customs Service, if the top 200 export companies are approved as AEOs, it could reduce annual inspection costs by 22 billion won ($20.5 million).

Moreover, MRAs can improve a company’s brand value and provide leverage during emergencies that lead to delays in commerce and heightened inspections.

The World Customs Organization first recognized the AEO system as an international standard to help promote trade and travel safety in the aftermath of the Sept. 11 attacks in the United States.

The system is currently implemented in 62 countries worldwide including Korea, China, Japan, the United States and the European Union. Fifteen more countries are preparing to adopt the system.

As nontariff barriers increase as a result of a global slowdown and the expansion of free-trade agreements, more countries are promoting MRAs to help exporters.

Korean adopted the AEO system in April 2009. There were 533 public companies and 292 small and medium-sized enterprises authorized as AEOs as of February 2014.

Korea is currently the world’s leading contractor in AEO MRAs. The country has finalized agreements with eight export destinations ― the U.S., Singapore, Canada, Japan, New Zealand, China, Hong Kong and Mexico ― and is in MRA negotiations with Turkey, India, Israel and Malaysia.

Meanwhile, customs clearance for non-AEOs is expected to become more difficult, according to the KCS.

The AEO certification process, which was improved this year by the Korea Customs Service to cater to SMEs, involves five stages ― submission, document examination, screening, official approval by the board and final evaluations.

By Kim Joo-hyun (jhk@heraldcorp.com)