China and Africa sign first AEO mutual recognition arrangement

Recently, the Chinese customs and the Ugandan Customs signed the "arrangement on mutual recognition of accredited operators" (AEO) . This is the first AEO mutual recognition arrangement signed by Chinese customs in the African region. In response, Liu Qinghai, director of the Institute of African economics at the Zhejiang Normal University, said in an interview with the China trade daily that the signing of the agreement will encourage enterprises to better comply with the Chinese and African legal systems, to improve the credit situation of enterprises, while encouraging other African countries to sign such agreements with our country, and to promote further cooperation between China and Africa in the field of trade and investment. Uganda is one of the friendliest African countries with China. In 1962, shortly after independence, Uganda and China established diplomatic relations, and since then the two countries have maintained long-term friendly and cooperative relations. Uganda is the centre and hub of East Africa, with an average size and population in Africa. It has a comfortable climate, convenient visa, sufficient electricity, low labor costs, stable political situation, less ethnic, religious, trade union, security and political risks, and good public security. It is a good destination for china-africa production capacity cooperation. "Uganda has sound investment and business laws, a high degree of economic liberalization, a good continuity of investment policies, unregulated foreign exchange, normal repatriation of after-tax profits, no restrictions on foreign investment in industries, investment ratios, etc. , free capital in and out, and a freely convertible currency. Total tax rates (as a percentage of profits) in Uganda are 33.7 percent, lower than the average of 46.8 percent in sub-saharan Africa (SSA) and even lower than the average of 39.8 percent in high-income countries of the Organization for Economic Cooperation and Development (OECD) ,"Liu said. According to reports, Uganda attaches great importance to exports to China. The country's agricultural products, including coffee beans, cocoa beans, sesame seeds and sea bass, are popular in the Chinese market. In recent years, the trade between China and Uzbekistan has developed rapidly, but on the whole it is small. Between 2015 and 2019, imports and exports rose from $640 million to $783 million, according to Chinese customs data. According to the World Bank's doing business 2019 report, the border compliance time required to complete exports in Uganda was 59 hours, well below the SSA average (97.3 hours) and $209, also below the SSA's average cost of $605.80. On the import side, however, the performance of Ugandan Customs has been somewhat disappointing. "At present, border compliance costs to complete imports in Uganda, while lower than the SSA average, take up to 145 hours, which is higher than SSA's 126.3 hours. The documentation required to complete the import takes about as long to comply as the SSA, but costs more than the latter and is far more expensive than OECD countries. On the whole, Uganda has made great progress in its export trade in recent years, but there are still problems of too much time and cost in its import trade,"Liu said. She believes that China and Uganda AEO mutual recognition, trade with Uganda Aeo enterprises will enjoy more preferential treatment in Uganda. "applying a lower inspection rate, giving priority to cargo for physical inspection, designating customs liaison officers to communicate and solve customs clearance problems, and giving priority to customs clearance when international trade is interrupted and resumed, will help Aeo enterprises significantly reduce customs clearance time, minimize enterprise port, insurance, logistics and other trade costs, and enhance international competitiveness. " Uganda is located in South Sudan, Congo (DRC) , Rwanda and Burundi east to the sea on the transport routes, is an important distribution center for goods into these countries. As a member of the East African Community and the Single Market, Uganda can also radiate eastward to Kenya, Tanzania, and other southeast African countries. Therefore, AEO mutual recognition can also greatly shorten the trade time between Chinese AEO enterprises and these countries, and reduce trade costs,"Liu said. It is understood that over the years, African Customs in clean and efficient and other aspects of criticism, related infrastructure and equipment is relatively backward, technical force is also relatively weak. Affected by this, in many African countries, normal trade clearance time is very long. This not only greatly increased trade costs, extended trade and delivery time, but also caused many Chinese enterprises in Africa due to the lack of timely access to raw materials production or even shut down. Some enterprises have lost a lot of customers because of the difficulty in delivering on time according to the contract. Some enterprises in order to facilitate and reduce costs, gray customs clearance and even smuggling, will adhere to the legal customs clearance of the enterprise at a disadvantage, and even caused the phenomenon of "Gresham's law. ". According to Liu, AEO mutual recognition may not play a significant role in the short term due to the African countries'institutional, cognitive, thinking, habits, incorruptibility and border management. "Only other complementary measures can make these arrangements work as they should. "In the long run, the signing of this agreement will help to create a law-abiding and trustworthy social climate in China and Africa, improve the international image of Chinese companies and promote China's national image. "