U.S. eyes Japan for signing trusted trader programs

U.S. eyes Japan for signing trusted trader programs Japan is the next country in line to collaborate with U.S. Customs on a cross-border supply chain security initiative intended to facilitate the movement of shipments from low-risk companies.
   The agency has completed a side-by-side documentary comparison of the Customs-Trade Partnership Against Terrorism and a similar trusted shipper program in Japan followed by a series of joint validations with the Japanese Customs Service to understand if it uses a similar method for verifying that companies have strong shipment security in place, C-TPAT program director Bradd Skinner said last week.
   Customs and Border Protection hopes to sign a mutual recognition agreement with Japan by the end of the year if the two authorized economic operator (AEO) programs, as industry partnership programs are referred to in World Customs Organization parlance, are deemed compatible, he told a panel of industry advisers holding a quarterly meeting Seattle.
   Japan would be the fourth country to agree with the United States on procedures for reciprocal treatment of shipments from certified secure companies. This summer CBP signed arrangements with Jordan and Canada to use similar criteria when granting companies membership to their respective cross-border supply chain security programs. The first such bilateral agreement was with New Zealand one year ago. Once harmonized vetting processes are in place, the customs agencies are expected to share completed corporate audits and provide the same expedited clearance they do for their own domestic importers that have met the minimum-security standards.
   Multinational companies are itching for a day — still far in the future — when they will only have to qualify for one AEO program and have that status recognized around the world instead of doing so in each country that offers a program for self-policing logistics security.
   Skinner said his team is still evaluating Singapore’s supply chain security program, but is optimistic about that country’s progress towards meeting CBP standards. The border security agency continues to work with the European Union, which fully implemented its own AEO program this year, to meet the joint goal for mutual recognition in 2009 “if the programs are compatible,” he said.
   The two sides have conducted an initial pilot program in which CBP personnel observed security components of the EU’s AEO audit process, as well as exchanged best practices and training. Progress must still be made on political, administrative, legal, operational and oversight matters to build confidence in the capability of each other’s programs before companies certified by one national authority can receive similar benefits in the other.
   The agreement with Canada on common standards allows CBP and the Canada Border Services Agency (CBSA) to begin sharing information about validations of companies in C-TPAT and its Partners in Protection counterpart once certain disclosure safeguards, standard operating procedures and an information technology platform are developed.
   Skinner said the partnership will also deliver efficiency benefits to CBP. C-TPAT is open to Canadian manufacturers because of the intertwined nature of business across the shared northern border. There are about 1,000 common members in C-TPAT and Partners in Protection and next year CBP anticipates auditing about 500 Canadian companies.
   “CBSA could so some of those for us, and enable CBP to take those resources and deploy them in other areas,” Skinner said. Work sharing means “companies in the program will only be looking at one validation,” he added.
   To further enhance the benefits of mutual recognition, the C-TPAT Web portal has new functionality that allows companies to select if they want to share their C-TPAT rank, or status, with other customs administrations, Skinner said. It will be up to the receiving (customs) administration to determine how it will factor that information into their risk analysis and benefits. The option is an extension of the Status Verification Interface that allows certified C-TPAT participants to verify the status of business partners in the program.
   Member companies are grouped in three categories based on their commitment to, and investment in, internal security controls for themselves, their suppliers and logistics service providers. Skinner said there are now 267 companies that have achieved Tier 3 status, making them eligible for the lowest possible cargo examination rates and other benefits.
   So far this year more than 600 new companies have signed up for C-TPAT, bringing the total number of certified members to 8,527 as of July 21. Nearly every company has been audited once, and 1,285 of them have been revalidated. The agency has validated 1,619 companies this year on the way to its goal of 3,200 check ups.
   CBP has made significant progress in more quickly completing reports about on-site validations, Skinner said. Earlier in the program’s history businesses complained that CBP officers were slow to file and share the results of their audits, which meant members could not begin earning program benefits or quickly correct any problems identified during the review.
   C-TPAT offices were instructed earlier this year to complete validation reports within 60 days of a visit, and now the cycle time to get a report to an industry partner is 45 days compared to an average time of 100 days before the order, Skinner said.
   Last spring, CBP wrapped up a pilot program using third-party inspection services to verify several supply chains in China. Congress had ordered the demonstration and CBP opted to use approved contractors in China, which until recently had been the only country to bar C-TPAT personnel from conducting field visits at domestic facilities. More than 300 C-TPAT importers who relied almost exclusively on China for their international purchasing were invited to participate in the program, but only 28 firms signed up to pay for the outside auditors even though their C-TPAT status was in limbo until CBP could validate them. CBP officials attribute the lack of participation to the cost (there is no charge for validations conducted by CBP officers) and concern with sharing proprietary information with an outside commercial entity.
   Skinner said that only four of the 28 companies initially passed the review conducted by CBP with the information provided by the third-party services. About 275 remedial actions were required by the other 24 companies to bring them into compliance so they can start receiving C-TPAT benefits, he said. Many Chinese business partners, for example, did not meet the minimum-security criteria for properly sealing a container.
   CBP officials plan to soon submit a report to Congress documenting the results of the pilot, but few industry observers believe the agency will seek to renew or extend the program.
   As part of an ongoing effort to make C-TPAT appealing to businesses, CBP has completed a draft document highlighting the potential returns on investment from industry partnership on trade security. The brochure, which will eventually be published and posted on the C-TPAT Web site, shows how member firms have escaped higher examination rates even as the agency has ratcheted up the overall number of inspections during the past six years, according to Skinner. It also rehashes indirect benefits such as first cargo release following any terrorist incident that shuts down ports, the ability to market a company as a secure service provider, and to have other containers released when they are part of the same shipment in which one box is singled out for inspection.
   Another draft document deals with minimum security for third-party logistics providers, an industry sector that CBP has yet to allow into the C-TPAT program. The process has dragged out for more than a year because CBP is being very careful about setting rules for an industry segment that it views as difficult to closely monitor due to the prevalence of subcontracting.
   “We’re going to do this thoughtfully and carefully. We’re not going to be rushed to judgment. This is a sector for us we want to make sure we get it right,” the C-TPAT chief said. ' Eric Kulisch