Mutual recognition is a term that importers and exporters likely have heard as it relates to supply chain security and trade compliance. The concept basically suggests one country will recognize the security or customs regime of a trading partner as equivalent to its own programs so shipments from those countries don’t need to be scrutinized again or can receive expedited treatment at the border. Those benefits typically apply to companies that belong to trusted trader programs and have gained the confidence of border management agencies for their strong policies, procedures and oversight for securing their supply chains and complying with all relevant shipping regulations.
U.S. Customs, for example, has recognized the Authorized Economic Operator programs of countries such as Canada, Jordan, Japan, New Zealand, Korea and Taiwan. The arrangements aren’t entirely reciprocal because the United States' main AEO program, the Customs-Trade Partnership Against Terrorism, isn’t geared yet towards exports. Until Customs does background checks on the supply chains of exporters, those countries won’t be able to let those inbound shipments skip some security checks for faster release.
But international regulatory reciprocity isn’t exclusive to customs administrations. The United States participates on panels with Canada and the European Union aimed at finding ways to make financial, safety and other rules more compatible so companies can do business more easily in each country.
And the U.S. Department of Agriculture recently announced that organic processed products certified in the United States or South Korea can now be labeled as organic in either country.
The USDA said the measure will allow American organic farmers, processors and businesses greater access to Korea’s growing market for organic products.
“Korea is a growing, lucrative market for U.S. organic products, and this arrangement increases demand for American organic products,” Agriculture Secretary Tom Vilsack said in a statement.
According to the USDA, without this equivalency arrangement in place, organic farmers and businesses wanting to sell organic processed products in either country would have to obtain separate certifications to meet each country’s organic standards. “This typically has meant two sets of fees, inspections, and paperwork, and delays for U.S. farmers and businesses trying to export,” the department said.
Similar to previous U.S. equivalency arrangements with Canada, the European Union, and Japan, the arrangement with South Korea eliminates significant barriers, especially for small and midsized organic businesses. This is South Korea's first organic equivalency arrangement with any trading partner.
To gain this equivalency measure, U.S. and Korean technical experts conducted on-site audits to ensure their programs' regulations, quality control measures, certification requirements, and labeling practices were compatible.
The arrangement covers organic condiments, cereal, baby food, frozen meals, milk, and other processed products. According to U.S. industry estimates, exports of organic processed products from the United States are valued at $35 million annually.
“The United States and Korea will continue to have regular discussions and will review each other's programs periodically to ensure that the terms of the arrangement are being met,” USDA said.
This column was published in the August 2014 issue of American Shipper.