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GACC Order 240
Meaning
The administrative regulation issued by the General Administration of Customs of the People’s Republic of China governs the credit management of enterprises involved in international trade. This GACC Order 240 establishes a comprehensive system for classifying companies based on their compliance history, internal management quality, and financial health. The order creates several levels of credit status, with the highest being the Authorized Economic Operator or AEO, which grants a company significant benefits such as faster customs clearance and fewer physical inspections.
Conversely, companies with a poor record are classified as discredited enterprises and face increased scrutiny and administrative restrictions. The boundary of the order’s application is any legal person registered in China that participates in the import, export, or storage of goods under customs supervision. For a foreign party, the credit rating assigned under this system is a primary factor in its operational efficiency and logistical costs within the country.
The state uses this order to incentivize self-regulation and to allocate its enforcement resources to the areas of greatest risk.
Registration Requirement
Participation in the credit management system begins with the mandatory registration of the enterprise with the local customs bureau. This GACC Order 240 requires the submission of a detailed profile, including the company’s unified social credit code, its physical location, and the identities of its key management personnel. The registration must be kept current, with any changes to the company’s status or business scope reported to the authorities within a specified timeframe.
This requirement ensures that the customs bureau has a complete and accurate database of all entities active in the trade sector. The company must also establish a dedicated customs compliance department or appoint a qualified person to manage the relationship with the authorities. This person is responsible for ensuring that all declarations are accurate and that the company follows the specific requirements of the credit system.
Failure to maintain an accurate registration can lead to the downgrading of the company’s credit status and the loss of its trade privileges. The registration also serves as the basis for the regular audits and inspections that the customs bureau performs to verify the company’s compliance.
Audit Standard
Evaluation of a company’s credit status is based on a rigorous set of criteria that cover all aspects of its international trade operations. This GACC Order 240 sets out the standards for internal control, compliance with customs laws, financial solvency, and the security of the supply chain. The audit process involves a review of the company’s internal manuals, its transaction records, and its data management systems.
Inspectors look for evidence that the company has a systematic approach to identifying and mitigating customs risks, such as the incorrect classification of goods or the use of improper valuation methods. They also examine the company’s financial statements to ensure that it has the capacity to meet its potential liabilities to the state. The security component of the audit focuses on the physical protection of the goods and the vetting of the company’s business partners, such as carriers and warehouse operators.
Achieving the AEO status requires the company to meet the highest standards in every category, while a failure in any one area can result in a lower rating. The audit is a continuous process, with regular re-evaluations to ensure that the company maintains its performance over time.
Customs Control
Enforcement of the credit system is realized through the differential treatment of enterprises during the daily clearance process. This GACC Order 240 mandates that companies with a higher credit rating be given priority in the processing of their declarations and be subject to a lower rate of physical inspection. These benefits can significantly reduce the lead time for shipments and lower the overall cost of the logistics operation.
AEO companies also benefit from the mutual recognition of their status by the customs authorities of other countries, which facilitates their exports to those markets. On the other hand, discredited enterprises are subjected to the highest level of control, with every shipment potentially being inspected and delayed. They may also be required to provide a higher level of financial security and be barred from participating in certain types of trade activities.
The customs bureau also shares its credit ratings with other government agencies through the national social credit system, meaning that a poor customs rating can have negative consequences for the company’s tax status, its ability to secure government contracts, and its reputation in the broader market. This integrated control mechanism is a powerful tool for ensuring that all trade participants follow the rules set by the state.