Regulatory approach creeping into C-TPAT, Koch says
The Customs-Trade Partnership Against Terrorism faces both fair and unrealistic criticism about its ability to secure international cargo shipments and the global transportation network, said Christopher Koch, president of the World Shipping Council.
The main point of confusion stems from the fact that the trusted shipper program is not a regulatory regime to enhance supply chain security, but rather a voluntary partnership with industry to get foreign suppliers to adopt security practices in areas the U.S. government does not have jurisdiction, he said. That means expectations for the program need to be tempered by the fact that the United States cannot exert the same law enforcement pressure on companies in other parts of the world as it can on domestic companies.
In testimony before the Senate Commerce, Science and Transportation Committee, Koch said the program was designed to be flexible so as not to hurt companies with different types of supply chains by forcing them to adhere to the same set of security demands. U.S. importers often deal with thousands of suppliers, and getting each and every one to comply with U.S. standards for fencing, lighting, data integrity and other security measures is difficult, he acknowledged.
“There is an unavoidable degree of variability, imprecision and ambiguity in the program when it comes to implementation,” Koch said.
C-TPAT’s dichotomy is characterized by the fact that the program relies on companies to base security measures on their own risk assessments and implementation decisions, while simultaneously trying to promote uniform and common standards of behavior by requiring importers and transportation providers to meet minimum standards as a condition for participating in the program and receiving the benefit of reduced cargo inspections at the border, Koch said.
CBP is also falling into the same trap as its critics by demanding uniformity where the program was designed to allow flexibility, Koch cautioned. CBP is rightfully raising the bar on security criteria in trying to get importers to hold each of their suppliers to the same standard outlined in their security plan, but not differentiating between cases in which some suppliers may have difficulty meeting costly requirements. The agency sometimes treats companies as if it is dealing with a regulatory regime that applies specific criteria to everyone at all times rather than with general criteria not designed to cover all aspects of security.
A security failure many not involve a breach of an importer’s C-TPAT agreement, but CBP has taken a position that it can suspend companies from the program “without advance notice, without discussion and without an opportunity to cure the problem; for matters that are not covered by the terms of the C-TPAT agreement; for any violation of law or significant security breach; for an undefined duration,” Koch explained.
Ocean carriers, which are represented by the World Shipping Council, “have found this to be a surprising and troubling development at best,” Koch said. “Carriers had believed that under a ‘voluntary partnership’ program with CBP, specific security concerns would be jointly assessed to determine what measures could reasonably be taken to address any specific security shortcomings. To face no-notice suspension from a voluntary program that provides no direct benefits for events that may be highly unpredictable and under the control of third parties will significantly change the program and how it is perceived.”
Koch repeated his call for CBP to reconsider the role of ocean carriers because they receive no direct benefits from the importer-based program and are covered by other regulatory regimes. C-TPAT participation was valid at the program’s inception, but since then U.S. and international security codes and regulations covering vessel and port facility security plans have been implemented and are being enforced by the U.S. Coast Guard.
“Today, there are comprehensive Coast Guard regulations on these issues, and it is no longer appropriate for CBP to use C-TPAT to address the issues that the Coast Guard is addressing through its regulations,” Koch said.
He also questioned whether C-TPAT is sufficiently developed to use it as the basis for contingency plans and giving trusted shippers first release of cargo in the wake of a terrorist attack involving a container shipment because “there is uncertainty about whether all the suppliers in an importer’s supply chain comply with adequate standards that warrant such confidence.
That confidence might be justified if the program evolved from a program that gives benefits to U.S. importers for taking certain actions, “to a program that gives benefits to shipments where both the U.S. importer and a foreign manufacturer or container stuffer were certified as complaint with the appropriate standards,” he added.
Koch also recommended that the Container Security Initiative for conducting targeted container inspections in foreign ports be improved by stationing U.S. inspectors on long-term assignments rather than rotating them through every few months. A recent report by the Government Accountability Office noted that foreign Customs authorities are not inspecting all the containers that CBP has identified for security inspections. Long-term billets would allow inspectors to develop relationships and mutual trust that would enhance joint screening, he said. The World Customs Organization’s is also adopting the principle that countries should conduct outbound inspections of high-risk containers at the request of the importing country, a step that should also help improve the level of CSI inspections, he said.
If CBP feels it is not getting cooperation from a foreign customs authority it should issue an order denying the container from being loaded on a vessel, he added.