C-TPAT program addresses exports, GAO fixes

C-TPAT program addresses exports, GAO fixes U.S. Customs and Border Protection intends later this year to begin a small project to test the possibility of expanding its trusted trader supply chain security program to include exports, said Bradd Skinner, director of the Customs-Trade Partnership Against Terrorism.
   CBP is conducting preliminary discussions with top-tier corporations in the program to help shape an export component for the purpose of extending reciprocal fast-lane customs clearance in other nations for shippers that meet joint security standards, Skinner told a packed audience at the American Association of Exporters and Importers conference in New York on Monday.
   Meanwhile, his staff is already working hard to implement recent recommendations by the Government Accountability Office to improve program management, he said.
   C-TPAT is an import-oriented program that provides incentives to shippers, such as reduced cargo exams and first-in-line priority for inspections, in exchange for adopting tight internal shipment processes for themselves and overseas business partners to prevent terrorists or criminals from slipping contraband or weapons into a container. CBP checks that companies follow approved security plans that meet minimum guidelines by visiting a company’s headquarters and conducting sample audits of some foreign suppliers and transport providers.
   Representatives of the trade industry have pressed the agency to open 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, expedited-clearance benefits to companies to ease the burden of participating in multiple security programs. Companies also benefit because they will only have to undergo one validation instead of two.
   Skinner opened the door to a possible C-TPAT export component in February during a regular meeting of the Commercial Operations Advisory Committee and the annual C-TPAT member conference in New Orleans several weeks ago.
   The agency envisions limiting its export security program to C-TPAT members who also export rather than create a standalone program open to all exporters.
   Skinner said his office is talking with Tier 3 members about what questions to include on the C-TPAT application and how the validation process would take place for checking export-related security procedures. The intent is to design a process to review whether a company’s inbound security procedures are consistent with its outbound procedures during the domestic part of the validation visit, he said. The C-TPAT office would also check during the initial certification process to make sure a company has not had any export violations.
   CBP “will also have a mechanism to allow the member to make their (C-TPAT) status known to an administration with which mutual recognition has been achieved. But it will be up to the receiving (customs) administration to determine how they’ll factor that information into their risk analysis and benefits,” Skinner told American Shipper after the presentation.
   CBP is working to link C-TPAT with similar programs in several countries that demonstrate their security guidelines and industry benefits are compatible. The agency must also have confidence in the shipment inspection procedures of a customs administration before it enters into a bilateral pact to mutually recognize and share the results of corporate security reviews.
   Last year the United States signed a mutual recognition agreement with New Zealand and plans to sign similar deals with Jordan and Canada at the World Customs Organization’s annual meeting in Brussels later this month, according to CBP officials. It is also evaluating supply chain security programs in Japan, Singapore, Australia, Mexico and the European Union.
   CBP has worked closely with Canada Customs to bring its Partners in Protection program up to the standard of C-TPAT. Skinner said at the May 9 COAC meeting that Canadian border security officers have also participated in some C-TPAT training, and that he and his Canadian counterpart have spoken to shippers on the other side about how collaboration between the programs could smooth cross-border trade. Once the mutual recognition agreement is signed, the two sides will work out technical implementation details such as what type of information to exchange and what information platform to use.
   CBP will also participate in two WCO events in the hemisphere later this year to promote C-TPAT, he said.
   More than 8,300 companies are certified C-TPAT members and CBP has conducted 7,469 validations, including 830 revalidations, of member supply chains, according to CBP statistics through mid-April. There are 252 companies that have achieved Tier 3 status because of their extensive use of security best practices, which further reduces their risk score for cargo exams and makes them eligible to participate in joint incident management exercises.
   Last week the GAO said CBP needed to:
   ' Ensure companies address security vulnerabilities discovered during on-site reviews before extending benefits.
   ' Factor into validations the results of any available internal company or third-party security audits.
   ' Fix software in its handheld PCs that skews responses to electronic questionnaires used during field visits.
   ' Record key dates of program activities to better monitor the security status of companies.
   ' Develop better performance measures.
   Skinner said he has already issued policy guidance to C-TPAT personnel to include findings from third party or internal reviews of supply chain security practices in their reports. “It makes sense to consider all pieces of information,” he said in a brief post-panel interview.
   CBP has suspended 531 companies during the program’s six-year existence for security breaches or failing to follow their security plans. But Skinner acknowledged the agency needs to formalize procedures for following up with each company that has security gaps.
   The border protection agency is already well along in developing a next-generation data collection tool for its supply chain security specialists, he said. C-TPAT staff is pilot testing the device with several importer partners and CBP expects to apply it to other industry sectors, such as carriers, brokers and foreign manufacturers, by the end of the year, Skinner said.
   And CBP is looking beyond administrative program numbers for other types of metrics — such as the cargo exam rate by mode, the extent to which C-TPAT members receive fewer security inspections, and the reduction in random compliance exams — to quantify the impact of the program, he said. Those figures will be included in a brochure touting C-TPAT’s benefits, along with findings from last year’s study by the University of Virginia on CBP’s behalf in which four out of 10 companies said they didn’t have a supply chain security program in place prior to joining C-TPAT and that the program had increased their ability to manage supply chain risk.
   The C-TPAT program office is taking other steps to improve outcomes for participating companies. Many importers complain that they are incurring large costs to meet C-TPAT standards without realizing any tangible gains in customs clearance efficiency or reductions in red tape.
   At the COAC meeting, Skinner said he recently visited the Port of Los Angeles to learn how C-TPAT cargo is treated there when it comes to random exams, front-of-the-line privileges for automated inspections, and physical exam stations.
   CBP recently reiterated guidance to port directors about the importance of following through with C-TPAT service promises and to develop creative solutions for speeding up the movement of C-TPAT cargo through their facilities, Skinner said.
   The C-TPAT office took advantage of a recent meeting of nationwide port directors to educate them about the program’s goals, membership and benefits.
   “I want to encourage interaction between C-TPAT field offices and the ports of entry,” Skinner said. There are seven C-TPAT field offices around the country.
   Meanwhile, Skinner said CBP is planning to conduct a second joint validation later this summer in China after the government there had refused for years to allow inspectors to enter the country to conduct corporate security reviews.
   U.S. and Chinese Customs officers in March conducted the first joint security audits of domestic Chinese manufacturers and transport providers whose customers belong to C-TPAT. The pilot project involved examining the supply chains of three U.S. importers who source most of their products from China.
   China’s earlier denial of access had prompted CBP to run a one-year test program using third-party inspectors to collect data on Chinese supply chain partners. Only 30 out of 306 companies who primarily sourced products from China opted to pay for outside auditors, even though not doing so means the agency can’t validate them and they aren’t able to receive any direct C-TPAT benefits.
   The pilot program will end this month and CBP will then report its findings to Congress. CBP, which has always maintained cargo security is an inherently governmental function, is not pushing to extend the pilot. ' Eric Kulisch