C-TPAT validations for China and exports gain life, CBP says
U.S. and Chinese negotiators are inching closer to an arrangement that will allow border security officers to perform cargo security checks on domestic exporters and logistics providers in China, Customs and Border Protection officials said last week.
The head of China Customs in October broke an impasse over access by CBP inspectors operating under the Customs-Trade Partnership Against Terrorism program by agreeing in principle to the on-site supply chain security visits. China is the only country that doesn’t permit U.S. Customs teams to validate whether foreign suppliers are following the security plans outlined by their U.S. import partners in the voluntary program.
C-TPAT is designed to encourage importers to implement strong shipment controls and hold their overseas suppliers to the same standard in exchange for trade facilitation benefits such as reduced frequency of inspections, faster processing in dedicated lanes at land crossings and first-in-line privileges when inspections are required. The goal is to prevent terrorists from exploiting shipping containers to smuggle weapons, people and material into the country.
CBP hopes supply chain validations can begin in China by the middle of March if ongoing talks are successful, said Michael Mullen, assistant commissioner for international affairs and trade relations, in a break during a meeting of the Commercial Operations Advisory Committee in Tucson, Ariz.
“There is a high-level commitment, but the issue is trying to work out the details,” he said.
Officials indicated that CBP supply chain specialists will likely conduct joint validations with China Customs at their side.
Todd Owen, executive director for cargo and conveyance security, publicly said that CBP has already identified the Chinese companies it wants to visit.
On a related note, Owen said that a total of 15 U.S. importers have taken advantage of the one-year trial program to use third-party validators in China and that only three have completed any reviews.
Congress directed CBP to conduct a small-scale demonstration using third-party auditors as a potential force multiplier for the C-TPAT program. CBP targeted the program at China to give 304 importers who rely on China for the vast majority of their merchandise a chance to be reviewed and gain low-risk status for container exams that had previously been denied due to the lack of Customs access. Last summer the agency certified 10 companies to conduct the security validations on its behalf and report back the results.
CBP is scheduled to report the pilot program’s results to Congress in June.
Owen said the agency has shared with COAC draft eligibility criteria for the third-party logistics sector. C-TPAT is open to importers, foreign manufacturers, carriers, customs brokers, air carriers, railroads, Mexican long and short-haul truckers, and U.S. and foreign port authorities and marine terminals. CBP has been more deliberate about developing security criteria for the logistics industry because such a large part of its business involves the use of subcontractors, which it believes would be difficult to monitor for C-TPAT compliance. The 3PL industry is pressing for enrollment privileges, but Owen noted that a large amount of interest comes from domestic trucking and warehouse operators who do not fall in C-TPAT’s primary sphere of focus on the international sector.
A CBP official said for the first time that the agency is willing to explore expanding C-TPAT to the export side to enable other countries to mutually recognize the program and reciprocate treatment of international traders.
The statement came after COAC Chairman Bruce Leeds reiterated his call for CBP to open up C-TPAT to exporters so that the program is compatible with the European Union’s Authorized Economic Operator and other trade security programs. Without an export component to C-TPAT, countries may find it difficult to share the results of their corporate audits and grant mutual benefits to those companies to ease the burden of applying to multiple security programs.
Until now CBP has held that creating an export side to the program would require massive resources and divert attention from its import focus.
C-TPAT program director Bradd Skinner picked up on Leeds’ suggestion that a good transition strategy would be to add export validation requirements for companies that already participate in C-TPAT.
He said CBP is mulling the concept of adding a section on the C-TPAT application in which companies could comment on their export security procedures. The C-TPAT office could then check during the initial certification process whether a company has had any export violations and verify its export procedures during the domestic site visit with headquarters personnel that is part of the regular validation process.
Skinner played down expectations, saying, “Of course, it depends on resources.”
Many importers have complained that C-TPAT doesn’t always deliver trade benefits that justify the extra cost and work involved to initiate and sustain membership in the government-industry partnership. Some have questioned whether their inspection levels have been reduced, for example, while others say they have noticed improvement.
Leeds and Lisa Schimmelpfenning, vice president of direct imports administration and logistics for Wal-Mart Stores, asked officials to consider reducing entry bond amounts for Tier 3 importers that participate in the Importer Self Assessment program. That would mean reduced customs bond premiums for low-risk importers who have gone beyond the minimum security requirements and self-police their customs compliance processes.
CBP would be interested instead in revisiting the entire customs bond program to see how it could be reformed, responded Daniel Baldwin, assistant commissioner for international trade.
Customs bonds are the one remaining area in which the agency doesn’t apply risk management principles to its enforcement policy, he said. ' Eric Kulisch