CBP readies C-TPAT for mutual recognition, 3rd party validators
The United States plans in 2007 to internationalize its supply chain security program for importers by mutually recognizing for the first time similar programs in a handful of countries, according to a top U.S. Customs and Border Protection official.
The move would allow companies accredited in one country as having adequate safeguards for container shipments to receive faster U.S. customs clearance without having to go through multiple application and vetting processes, or wait until U.S. officers can arrive to do the job.
CBP also will outline its plans for outsourcing some supply chain validations to private sector contractors by mid-February, said Todd Owen, executive director of cargo and conveyance security.
Under the U.S. Customs-Trade Partnership Against Terrorism implemented in the wake of the Sept. 11, 2001 attacks, CBP provides expedited customs clearance and other benefits to shippers that meet baseline criteria for strong shipment controls. The World Customs Organization, at U.S. urging, has passed a global security blueprint for customs administrations to follow that is largely modeled on U.S. programs, including C-TPAT. One of the goals is to convince customs administrations to start partnership programs with industry similar to C-TPAT.
U.S. officials must send teams overseas to verify the security practices of foreign suppliers. But they envision a global cooperative network whereby countries audit domestic shippers and share the results with trading partners so that customs agencies don’t have to send inspection teams around the world to check supply chain security practices of each company. Multinational corporations in particular are pushing for a common approach to customs processes, including voluntary trusted shipper programs, so that companies do not have to comply with multiple security and data requirements in the nations in which they do business. Companies also favor a multilateral approach because they can gain more credits towards inspection-free status by expanding the universe of suppliers directly and indirectly participating in C-TPAT.
CBP will move 'very quickly' towards recognizing supply chain security programs in a half-dozen countries, including New Zealand, Jordan, Canada, Australia and Sweden, that meet U.S. standards, Owen said during the agency's Trade Symposium last month. These countries already have strong security partnership programs in place and have gained the confidence of U.S. officials.
CBP supply chain specialists have attended joint training sessions with customs officers in these countries, as well as conducted vulnerability assessments of manufacturing and transportation facilities under the oversight of the host customs agencies. CBP officers, in turn, have shadowed local customs officials conducting supply chain inspections, Owen said.
During remarks earlier in the conference, CBP Commissioner Ralph Basham said the agency would continue to pursue mutual recognition with several countries that have similar standards and facilitation benefits, but did not provide any details. Basham suggested during a press conference that the agency still had to identify compatible trusted shipper programs, but Owens later revealed which countries have authorized economic operator programs, as they are referred to in the WCO guidelines, that would allow CBP to accept their corporate security validations as a substitute for its own checks.
A distinguishing characteristic of most of these programs is that they apply the benefits, such as reduced inspections, after assessments of corporate security plans have taken place rather than at time of application, Owen said.
'We are getting very close to the point where now we need to map out what is the next step to mutual recognition because these programs exist. They are very comparable. We are very comfortable with the programs. And now we need to institutionalize that approach,” he said.
In addition to relying on foreign customs agencies to validate whether foreign suppliers have systems in place to maintain shipment integrity, CBP will begin to implement a congressional requirement for a limited pilot test using third-party validators.
CBP will post an announcement on the FedBiz contracting Web site in mid-February outlining its qualification requirements and standard operating procedures for vendors seeking to conduct supply chain audits on CBP's behalf, Owen said.
Agency officials stress that they are only interested in subcontracting supply chain inspections for areas such as China, where government regulators lack access, not as a way of supplementing C-TPAT resources to speed up validations. Owen added that private sector auditors would be used on low-risk supply chains where CBP doesn’t have good intelligence.
Under the voluntary pilot test, C-TPAT members can opt to pay for certified inspection services to review their overseas security processes and facilities. During the pilot phase CBP will direct importers on which trade lanes they can use the third-party service.
Outside vendors seeking to qualify for C-TPAT business will need to maintain liability insurance, sign a confidentiality agreement, have a strong presence in the designated country, and a strong program for training the inspectors, among other requirements, Owen said.
'We don’t want somebody running around with a clipboard answering 'yes' or 'no' questions,' he said. 'We're going to look for a validation methodology that's very comparable to C-TPAT.'
Once the audit is completed the contractor will electronically transmit the information to CBP, which will review it and ultimately decide whether the importer is meeting or exceeding the minimum-security criteria. Companies that take significant extra steps to ensure shipment integrity are eligible to be elevated to Tier 3 status and receive more substantial customs benefits.
CBP conducted 2,200 validations in 2006, compared to 183 when the program first started in 2003 and more than double the number completed in 2005, according to the latest CBP figures. So far more than 3,740 companies (66 percent of the program's membership) have been validated as meeting C-TPAT criteria in key trade lanes, up from more than 3,500 companies in early November and 3,200 in mid-September. CBP expects to catch up and complete on-site vulnerability assessments for every one of the more than 6,000 certified applicants in the program sometime this year after recently reaching its hiring goal of 156 supply chain evaluators.
Mutual recognition is expected to reduce CBP's workload and potentially speed up the validation process for importers and their overseas partners.
CBP conducted on-site audits in 74 countries last year, including first-time visits to facilities in the Russian Federation, Kenya, Botswana, Swaziland, Slovenia, Latvia, Egypt, Pakistan, Oman and the United Arab Emirates, Owens said. He reiterated that CBP is directing its verification resources to trade lanes that pose the most risk for having shipments compromised.
So far, 199 companies have been suspended or removed from C-TPAT, including 128 highway carriers, for various types of security breaches. The number of sanctioned companies is up from 185 in early November and 151 last June. CBP carries out more vulnerability assessments in Canada and Mexico than elsewhere because of the threat posed to trucking companies from drug smugglers.
The SAFE Port Act enacted last October instructed CBP to begin revalidating companies through on-site audits of a second supply chain every four years, but the 2007 Department of Homeland Security appropriations bill calls for importers to be revalidated every three years. Owen said CBP will operate on a three-year plan and may conduct more frequent revalidations of some supply chains depending on their risk.
On Dec. 31, minimum-security criteria for customs brokers enrolled in C-TPAT went into effect. New entrants to the program will need to meet the baseline security standards and existing members will have 90 days to update their security controls for information technology, access, physical security, business partnerships, training, container security and other areas. U.S. Customs has previously issued elevated security standards for other industry sectors.
Owen said CBP will host its annual C-TPAT conference in New Orleans on April 4-6.