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C-TPAT program improvements are in the pipeline, CBP official say

C-TPAT program improvements are in the pipeline, CBP official say

   U.S. Customs and Border Protection has begun to meet industry demands to speed up the validation process for companies participating in the Customs-Trade Partnership Against Terrorism, the man in charge of the program told a federal advisory panel Thursday.

   The agency has completed 1,300 security audits, or 23 percent of the 5,600 companies that have been accepted into the voluntary supply chain security program compared with 400 companies, or 8 percent of certified companies, in January, said Todd Owen, acting executive director for cargo and security conveyance. Another 2,460 companies, or 44 percent of the membership, are in some stage of having their supply chain practices reviewed by CBP specialists.

   Importers determined to have supply networks at highest risk of terrorist infiltration are validated first, but in a program update to the Department of Homeland Security’s Commercial Operations Advisory Committee, Owen said the agency is also beginning to examine low-risk supply chains. Supply chain specialists, for example, recently visited manufacturing sites in New Zealand, he said.

   “We are looking at ways to increase the frequency of lower risk validations as well, because we do recognize that to give Tier 2 and Tier 3 benefits we need to do validations,” he said.

   So far the C-TPAT office has designated 136 companies for Tier 3 status, making them eligible for inspection-free customs clearance and other benefits.

   Owen said a C-TPAT “best practices” catalog, which had been scheduled for distribution during CBP’s Trade Symposium in Washington Nov. 1-3, has been completed and will be distributed in January.

   CBP will hold another C-TPAT seminar March 1-3 in Costa Mesa, Calif., that will focus on educating importers, carriers and transportation intermediaries on best practices for meeting the program’s security criteria. And the agency will publish several comprehensive case studies showing how some companies have managed C-TPAT compliance and how the program has helped them.

   The C-TPAT Web portal, with communication and self-help tools for members, will be launched at the end of March, he added.

   Meanwhile, Owen and his staff have started discussions with ocean and surface transportation carriers to update C-TPAT minimum security criteria for those sectors. The timetable for updating the criteria has slipped during the second half of the year because Owen was diverted to Hurricane Katrina response and for other unexplained factors. CBP tightened security criteria for importers last March.

   CBP staff met separately in November with ocean industry representatives, as well as with the American Trucking Associations and highway carrier groups from Mexico and Canada, and gave them draft copies of the criteria to circulate among their members for comment. Once the new criteria are agreed upon, CBP will phase in implementation as it did for the importers. Owen said the phase-in periods could differ from the past depending on the criteria.

   Two COAC members asked Owen to circulate the draft carrier criteria among COAC to get a broader view and so the group can make sure those parts of importer and carrier criteria that are not unique to mode or industry are consistent. An issue of particular importance is the chain of custody for container and trailer seals, said Sandra Fallgatter, a J.C. Penney customs compliance manager. Importers and carriers both have criteria related to recording who, when and where seals are attached or removed from the shipping box.

   CBP is also responding to complaints from the trade community that C-TPAT lacks quantifiable performance measures by which companies can judge the effectiveness of the program, Owen said.

   The agency is designing a survey in conjunction with outside academic and business experts that will be sent to all C-TPAT member companies asking them to quantify the costs they’ve incurred to implement security measures, as well as the benefits they’ve received, he said. The survey will seek to identify direct benefits such as reduced inspections, average exam wait times and costs at major sea and airports so companies have an idea where delays are occurring, as well as indirect benefits from greater supply chain efficiency and visibility.

   The data collection project is designed to help companies evaluate their return on investment from participating in C-TPAT, and is scheduled to be completed by March.

   “Several large importers have done this type of analysis on their own, so now we are expanding it program-wide so everyone has an idea on their return on investment,” Owen said.

   Last year, the American Association of Exporters and Importers briefly tried to collect data on how customs exams are impacting businesses. The trade association, whose members include some of the nation’s largest manufacturers and retailers, gathered online feedback from companies engaged in international trade about their experiences with cargo security and trade compliance examinations. AAEI quickly abandoned the effort, however, after imbalanced responses from various industries skewed the results and left an unclear picture of CBP’s performance.

   One of the premises of C-TPAT is that participating companies will receive a reduction in the frequency of security and trade compliance exams that delay the release off their containers. But COAC member Mary Jo Muoio, a senior vice president at Philadelphia-based customs brokerage and logistics provider Barthco International, said that one of her customers received a message from CBP indicating that compliance exams will increase by 2 percent this fiscal year.

   According to the notice from a CBP representative handling the importer’s national customs account: “Beginning Oct. 1, 2005, CBP will be reimplementing the compliance measurement program. Entries will be flagged) for review by all CBP officers involved in the import process. CBP officers will verify import entries for: security, classification, value, antidumping and counterveiling duties, bond, duties and fees. All importers of record are subject to a 2 percent review of annual import volume. You will notice an increase in import exams. The compliance measurement program allows CBP to measure its effectiveness and report its progress to Congress.”

   Owen said he was unaware of the notice and asked to see a copy, but added that CBP’s sampling size for conducting statistically based random exams will be increased across the board.