C-TPAT - Are Your Imports Ready for the Green Lane?

Maintaining secure and free-flowing supply chains, while avoiding costly customs delays, has long been an important concern of U.S. importers. In the wake of 9/11, and now during the global war on terrorism, increased attention has been focused on safeguarding the nation's borders and securing global supply chains.

Balancing these concerns with the important business interest in keeping imports moving, U.S. Customs and Border Protection (CBP) and private businesses have joined together to establish the Customs-Trade Partnership Against Terrorism (C-TPAT) program. This article provides a brief introduction to the C-TPAT program and reports on an important change that recently became effective.

C-TPAT's Purpose and Basic Framework

The purpose of C-TPAT is to build cooperative relationships between government and private businesses, so that effective security processes are developed, enhanced, and maintained throughout the global supply chain. Since it was established in November 2001, participation in the C-TPAT program has grown from seven importers to more than 8,800 companies.

In return for agreeing to implement certain security measures, participants in C-TPAT may receive a number of benefits, such as fewer border inspections, an assigned account manager, eligibility for certain account-based processes (e.g., monthly/bi-monthly payments), and access to the C-TPAT membership list.

Although the highly desired and long-promised "green lane" through U.S. Customs has yet to materialize—i.e., smooth sailing through CBP controls with no stoppages for security inspections for C-TPAT members—many companies are choosing to become "C-TPAT certified" for business, as well as patriotic, reasons.

Although the C-TPAT program is still evolving, it is currently open to U.S. importers, carriers, brokers, freight forwarders, consolidators, ports, and terminal operators, as well as to Mexican manufacturers. Participation in C-TPAT is strictly voluntary, though some lawmakers have been critical of the voluntary nature of the program, and contend that all businesses should be subject to mandatory security requirements.

The C-TPAT Application Process

To join the C-TPAT program, companies must complete an application process and sign an agreement with CBP, which commits them to take four basic actions:

• conduct a comprehensive self-assessment of their supply chain security;
• prepare a supply chain security profile questionnaire;
• develop and implement a program to enhance security throughout the supply chain in accordance with C-TPAT guidelines; and
• communicate C-TPAT guidelines to other companies in the supply chain, and coordinate with those companies with a view to building the guidelines into their relationships.

More specifically, as part of the application process, an importer must prepare and submit a Supply Chain Security Profile that addresses each item in the C-TPAT Security Criteria for Importers. Importantly, new minimum security criteria for importers became effective on March 25, 2005. Previously, C-TPAT participants were not obligated to meet specific security criteria; rather, CBP proffered general recommendations that participants "should" follow.[1]

New Minimum Security Criteria

To complete the Supply Chain Security Profile, an importer must conduct a comprehensive self-assessment of international supply chains based upon the C-TPAT Security Criteria for Importers. Security measures consistent with these criteria and based on risk must be implemented and maintained throughout the importer's supply chains. The criteria cover areas such as business partner requirements, container security, physical access controls, personnel security, procedural security, security training and threat awareness, and information technology security.

For example, under the business partner requirements, importers must have written and verifiable processes for the selection of business partners, including manufacturers, suppliers, and vendors. Further, importers must ensure that business partners develop security processes and procedures consistent with the C-TPAT Security Criteria to enhance the integrity of each shipment at the point of origin. Under the container security criteria, there is a requirement that a high security seal must be affixed at the point of stuffing to all loaded containers bound for the U.S.

There are numerous other security criteria that must be satisfied to gain C-TPAT certification. Further information about all of the criteria is available on the CBP website at: http://www.cbp.gov/border-security/ports-entry/cargo-security/c-tpat-customs-trade-partnership-against-terrorism/apply/security-criteria.

Applications to join C-TPAT must be filed on line. There are provisions to keep application data (and participation itself) confidential. Upon receipt of a completed Agreement to Voluntarily Participate and Supply Chain Security Profile, CBP will review these documents and provide feedback to the applicant within 60 days.

Assuming the application package is deemed adequate, benefits will begin to flow once CBP notifies the applicant of its findings. Going forward, an account manager will contact the participant to begin joint work on establishing account action plans to reflect C-TPAT commitments.

After joining C-TPAT, participants will eventually undergo a validation process in which CBP will review the participant's actual security practices to validate that the supply chain security measures contained in the C-TPAT participant's security profile are in place. This process can—and has—resulted in participants losing their C-TPAT certification.

Is It Worth It?

While some have questioned whether membership in the C-TPAT program yields tangible benefits, especially given that the so-called "green lanes" have yet to appear, participation in the C-TPAT program continues to grow. Many companies appear to view participation as an important quality mark or indicator of good business practices.

On a more practical level, CBP reports that C-TPAT importers are six times less likely to be subjected to a security-related cargo inspection, and four times less likely to be chosen for customs compliance examinations. However, because CBP has greatly increased the number of inspections in recent years, this benefit may not be so readily apparent.

Whether a true "green lane" through U.S. Customs will ever come to pass is not clear. However, it is likely that imports of all kinds—especially those that have the potential to affect the safety of the nation's food supply—will continue to be subject to increased scrutiny. Further, you may find that customers are demanding more detailed assurances regarding the security of your supply chains. Obtaining C-TPAT certification may be one way of addressing those demands.

FOOTNOTES

[1]For existing C-TPAT members (i.e., those companies that were members prior to March 25, 2005), compliance with the new Security Criteria is being phased in through three stages over a period of 180 days. In essence, importers had 60 days from the March 25 effective date to address criteria related to container security, physical security, and physical access controls. They have 120 days to address criteria pertaining to personnel security, procedural security, information technology security, and security training and threat awareness. Finally, they have 180 days to address certain business partner requirement elements. Existing C-TPAT members will not be required to resubmit Security Profiles or otherwise certify that they are complying with the new security criteria. CBP intends to use the existing validation process to confirm whether an importer is meeting the new criteria.