January 17, 2005

The following article is excerpted from the 17 January 2005 edition of “American Shipper”.

U.S. Customs and Border Protection this year will begin providing U.S. importers who demonstrate willingness to go beyond minimal security guidelines and best practices to
secure their supply chains a "green lane" through customs for virtually all their shipments, Commissioner Robert Bonner said Thursday in a briefing with reporters.

That means "no inspection upon arrival -- immediate release" for companies in the Customs-Trade Partnership Against Terrorism trusted shipper program that adopt the highest
levels of security controls, Bonner said. C-TPAT is a voluntary program.

CBP has always promised fewer cargo exams for certified C-TPAT companies, but Bonner said he was ready to take the program to the next level, or "C-TPAT plus," as an incentive
for low-risk shippers to do more. During the Customs Trade Symposium in Washington, CBP distributed a copy of its C-TPAT strategic plan in which the agency said it was exploring options to provide tiered-benefits to C-TPAT member companies.

Bonner said CBP security programs and confidence in certain shippers has evolved to the point that a "green lane" is now feasible. Top-drawer companies have sufficiently removed risk from their supply chains, allowing CBP to devote resources to shipments about which the agency has less knowledge.

"We know many companies out there that when they commit to something they are going to do it," Bonner said.

Companies seeking the highest tier of benefits will have to ship their products through foreign ports doing outbound exams of cargo under the Container Security Initiative and use so-called "smart box" technology that can detect and record whether tampering has occurred with a container seal after being affixed at the point of origin, Bonner said.

Many companies have complained that they are not noticing tangible benefits in the form of reduced levels of cargo examinations.

Bonner repeated previous agency numbers that shipments of certified C-TPAT members are six times less likely to undergo contraband enforcement and antiterrorism security exams and four times less likely to be scrutinized for trade-related compliance issues.

That difference is equivalent to one shipment in 300 vs. one in 47 getting pulled for a security exam, said Jayson Ahern, assistant commissioner for field operations.

Bonner said some companies may not perceive their raw number of exams has declined, but that is because the agency has quadrupled the percentage of inspections since the Sept. 11,
2001 terrorist attacks. "They may be getting the same number, but they could be getting six times more," he explained.

The commissioner reiterated promises made last year that the agency plans to issue each company an annual statement quantifying … their C-TPAT benefits and how much money they saved by being in the program.

Import managers will be able to take the statement to their chief executive officer and show how security investments translate into the bottom line in terms of predictability, Bonner said.

The commissioner said his vision to make C-TPAT fully effective is to make sure the government extends benefits beyond CBP, and that other agencies use the same risk-management principles in determining cargo holds.

"It's important to have one government partnership with the trade so we can also rationalize the benefits at the border so cargo is not inappropriately held up" by other agencies, he said.

CBP officials said they are willing to offer more potential benefits because they also plan to ratchet up security criteria for C-TPAT and demand more commercial data further in advance. Part of that effort includes a stepped up validation process.

CBP officials are using the two-day symposium to gain feedback on additional types of benefits the trade might prefer.

Michael Mullen, director of trade relations, speculated that the agency might be willing to offer benefits in the trade compliance area in exchange for following higher security criteria.

"We are looking for really concrete benefits that can make up for costs that are going to come," he said.

Ultra-low-risk companies perhaps warrant fewer audits or the ability to have penalties mitigated, Mullen said in a follow-up interview.

"Companies that practice good, strong controls for internal compliance are likely to have strong controls on security too," said Deputy Commissioner Deborah Spero.

After companies apply for C-TPAT membership, CBP reviews their security profile and action plan and certifies those that meet C-TPAT guidelines.

Companies are also vetted through a database search to make sure they don't have any criminal violations or other compliance issues. The last step is for CBP to validate companies through on-site visits to make sure their foreign manufacturing or distribution facilities are following through with the importer's security plan.

CBP expects importers to make sure security assurance standards are met in the same way suppliers are required to meet quality assurance standards, Bonner said.

"While you are worried about how many stitches are in a garment, why don't you make sure the security criteria are met?" he said, referring to corporate quality control visits.

CBP is under pressure from Congress to show that C-TPAT has some teeth and Bonner asserted that companies that don't comply are being decertified.

Ed Moriarty, a C-TPAT program manager, said CBP initially denies about 20 percent of security profiles, up from 12 percent at the start of the program, and sends them back to
the companies to fix and resubmit. That covers about 1,000 of the 5,500 security profiles reviewed so far.

Some motor carriers have had their security profiles bumped back to them two, three or four times, Moriarty said.

About 10 percent of the 4,400 companies that have been certified have undergone validations….

Moriarty also said about 50 trucking companies who had joined C-TPAT to belong to an expedited pre-clearance program at land borders had their benefits turned off because of drug seizures and other unidentified supply chain security incidents.

CBP plans to reduce the backlog of validations, Bonner said. The agency has 40 supply chain specialists and has funding for another 120 to evaluate C-TPAT companies. Moriarty said
the agency has 60 days to review applications and has improved its turnaround time to 22 days.

CBP officials said they want to open up C-TPAT to foreign manufacturers beyond those currently eligible in Mexico. Forty percent of imports by value enter the country through
companies that participate in C-TPAT and Bonner said his goal is to get that number up to 60 percent within a year.

The agency is looking at various avenues to open up enrollment to foreign manufacturers, including partnering with an industry association to invite their 100 largest suppliers into the program, Moriarty said. Another option is to go through the World Customs Organization.

Customs administrations could set up similar C-TPAT programs based on a WCO framework and the United States would recognize foreign manufacturers certified through that program, he said.

Bonner said he anticipated enrolling C-TPAT partners in Canada "relatively soon." Moriarty added that many Canadian companies belong to C-TPAT because they also have status as
U.S. importers.

CBP is being selective in how it expands C-TPAT until it has the staffing capacity to handle more reviews and validations, Bonner said.