Priority Sector: Trade and Investment

Timeframe: 2014-2015

Budget: 21,942 USD + in-kind contribution

Sources of Funding: Asian Development Bank (ADB), Deutche Gesellshaft für Internationale Zusammenarbeit (GIZ) GmbH, in-kind contributions from Korea Customs Service (KCS) and Customs General Administration of Mongolia

Project Status: Completed

Project Framework

Background

Implementation of Authorized Economic Operator (AEO) is one of the key elements for facilitating trade. The Mongolian Customs General Administration (Mongolian Customs) has been actively involved in the initiatives of introducing AEO in Mongolia and has researched successful practices of other countries over the past years.

To implement a detailed cooperation activity following a MOU between the Mongolian Customs and KCS which was signed in October 2014, Mongolian Customs suggested a project proposal for implementing AEO in Mongolia through a capacity building program (“Capacity Building Programme for the Implementation of Authorized Economic Operators”) to the 4^th TFC meeting (19 NOV 2014, Vladivostok, Russian Federation), the other GTI member countries agreed on the importance of AEO and welcomed the Mongolian Customs’ proposal.

After the 4^th TFC meeting, the Mongolian Customs, in cooperation with the GTI Secretariat, has made efforts in mobilizing financial resource from partners to implement the capacity building program. Securing the financial supports from ADB and GIZ and with in-kind contributions from KCS and the Mongolian Customs, the project proposal was endorsed by the TFC members and NCs in June 2015.

Goal

The goal of the Capacity Building Program is to expedite the implementation of AEO among the GTI member countries. As one of the useful tools for managing risks for the Customs authorities, many countries have been focusing on AEO to simplify and harmonize Customs procedures. Further development of AEO will accelerate trade facilitation, improve business environment, and contribute to the overall growth of economy in GTR.

Objective(s)

Through this Capacity Building Program, the knowledge-sharing between the Mongolian Customs and KCS can trigger further development of AEO among the GTI member countries and beyond in the future. For the Mongolian Customs, this Capacity Building Program is aimed at transferring learned know-how from KCS to all the relevant Mongolian Customs officials in order to enhance its capacity to successfully set up an AEO system in Mongolia.

Outputs and Key Activities

To implement this bilateral project, KCS with supports from the GTI Secretariat, ADB, GIZ, and the Mongolian Customs organizes a custom-made Capacity Building Program for the Mongolian Customs. The Mongolian Customs officials take part in the Capacity Building Program and then set up a comprehensive plan for applying what they learned from ROK to the implementation of AEO in Mongolia and beyond.

In this regard, especially the Mongolian Customs conduct the following activities for the Capacity Building Program:

• Establish a working group of Customs officials who will develop relevant policies and regulations of AEO after participating in the Capacity Building Program, and continue working as professional officials in AEO-related posts;

•  Learn best practices of ROK’s AEO such as implementation processes, experiences in working with private sector, relevant IT infrastructure, etc.;

•  Disseminate the best practices learned from KCS among other Mongolian Customs officials to set up effective AEO apposite to the case in Mongolia; and

• Sustain close partnership with KCS to review the progress and outcomes of the new AEO in Mongolia
   

Outputs Produced and Key Activities

This Capacity Building Program was implemented on 14-18 SEP 2015 at the Customs Border Control Training Center of the Korea Customs Service. 12 officials from the Mongolian Customs took part in this Capacity Building Program. They overviewed ROK’s AEO program including related regulations, audit process and effect of AEO on businesses, and had discussions on developing the Mongolia’s AEO Program. The details of the Program are as the follows:

• Overview and Status of Korea’s AEO Program: Korea AEO program and its structure and organization; Structural organization of AEO unit at the headquarter of KCS; AEO conditions and requirements; Compliance requirement; Internal Control; Financial ability; Security; Level of authorization entities applying for AEO status (А, АА, ААА); AEO Monitoring system;
  

•  Korea’s AEO related Regulations and Audit Process;
  

•  AEO related Regulations of the WCO;
  

• Country Report on Mongolia’s AEO Program;
  

•  Effects of AEO from Businesses’ Perspective;
  

• Breakout Session on Development Direction of Mongolia’s AEO;
  

•  Information System to Evaluate Companies’ AEO Compliance Level;
  

• AEO On-site Audit at a Company:
  

•  Others: Simulation Learning Center at CBCTC, Study Trips
  

Budget Expenditure

Totally USD 21,941.95 was spent for this Capacity Building Program. ADB covered costs for accommodation for study trips, transportations, etc. which amount to USD 12,405.95. GIZ provided financial supports for airfare and meals for the participants which amount to USD 9,536. In addition to financial resources, in-kind contributions from KCS (accommodation for workshop) and the Mongolian Customs (interpreters) were provided for the Capacity Building Program.

Overall Assessment

1. The participants were satisfied with the custom-made Capacity Building Program and wanted to have a pilot test in cooperation with export-import enterprises in Mongolia later. Furthermore, being aimed at concluding MRA (Mutual Recognition Arrangement) among the GTI member countries, they hoped to visit China and the Russian Federation to learn AEO systems of those countries.

2. Although the financial supports from partners (ADB, GIZ) are welcome, KCS still hoped that the payment process from the partners should be concluded quickly, considering most of the service providers for the Capacity Building Program were SMEs (Small and Medium Sized enterprises).

Follow up Actions including Lessons learnt

The Mongolian Customs shared the follow-up activities for the capacity building programme at the inaugural meeting of GTI Customs Sub-Committee (13 DEC 2016, Incheon, ROK) to seek for further cooperations on AEO among the GTI member countries.