U.S. Customs intends to significantly expand the number of companies in its voluntary supply chain security program, and monitor and process the new enrollees, on a smaller budget than in years past, Commissioner Alan Bersin said in an interview Tuesday.
At last week’s annual Trade Symposium, the nation’s top border management official set a goal of increasing membership in the Customs-Trade Partnership Against Terrorism from 10,000 to 40,000 companies within five to seven years.
But the White House’s 2012 budget request submitted to Congress earlier this year says Customs and Border Protection only needs $45 million to manage the program -- about $18 million less than appropriated in fiscal years 2010 and 2011. Officials say the program has matured and that initial expenses for facility acquisition, information technology and additional personnel do not need to be covered on a recurring basis.
Bersin, who is moving on several fronts to enhance the agency’s effectiveness and role as a commercial facilitator, suggested that giving the private sector more responsibility for checking the trustworthiness of C-TPAT applicants would allow CBP to scale up the program with existing resources.
“We should not project straight line that it takes this many people to attract this many partners and to administer the program,” Bersin said during a lengthy interview in his office.
“I think we’ve reached a different point in the evolution of the program where … we would rely on many of our existing partners to bring in others in their supply chains and do it in ways that would not require the manpower intensive work that the initial certification would achieve,” he added, referring to follow-up revalidations that CBP conducts every three years in most cases.
There are about 200 personnel in the C-TPAT program, with funding for 207 positions, according to budget documents.
Bersin’s position dovetails with recent comments expressing interest in having customs brokers encourage customers that import goods, especially small businesses, to join C-TPAT and then vet their security plans on behalf of CBP.
“It’s not to say that we would not have serious standards and rely very heavily on validations. But how those validations were done and who did them are issues that we would expect to be taking up with the private sector,” Bersin said.
During a Trade Symposium town hall Bersin referred to deputizing private firms as a force multiplier and said CBP can share more information with certified shippers about potential threats and vulnerabilities in the supply chain.
“One of the changes we have to make … is actually bring the private sector into the process, be willing to share information,” he said, noting that if the U.S. military can have private contractors working in war zones, CBP should be able to collaborate with companies on supply chain security.
“CBP is in a position to do it since we deal with top secret, classified intelligence all the time. Most of the information we deal with is neither top secret or classified, even though some of it is classified as such,” Bersin said.
Customs needs to “be willing to have you collocated and embedded in the manner in which the Marines, the Air Force, the Navy invited the public to be embedded in a much more dangerous and risky enterprise.
“We can work through that and I think get to the point where we can implement what we know now, which is we can’t secure the supply chain without calling on those of you who know the supply chain a lot better than we know it away from the American homeland,” he said.
Under C-TPAT, CBP extends expedited import clearance to companies that have approved procedures for maintaining control of shipments at origin and in transit to prevent criminals or terrorists from compromising an ocean container or truck.
The agency says C-TPAT importers are four to six times less likely to incur a security or compliance examination because they are scored lower in its automated targeting system. Other stated benefits are front-of-the-line privileges, when possible, for cargo that is targeted for inspection, stratifying containers in a multiline entry so that those not being held for the compliance exam are quickly released to the custody of the shipper and eligibility for other partnership programs.
CBP inspects about 3 percent of ocean containers and a quarter of the 11.l3 million trucks entering the country.
Agency officials spoke at the Trade Symposium about how they intend to multiply the C-TPAT population and advance their strategy of segmenting traffic by risk, which is designed to reduce the pool of suspicious or unknown shipments for inspectors to focus on.
C-TPAT Director Bradd Skinner said his office would encourage existing C-TPAT members to talk to more of their business partners about the advantages of joining the program. Surveys conducted by CBP show indirect benefits to participation in the trusted shipper program include reduced cargo theft and pilferage, improved predictability moving goods across the border and reduced insurance rates.
One of the agency’s goals listed in its budget proposal is to reach out to any Top 100 importers not already in C-TPAT and help overcome any factors preventing them from applying.
Expanding C-TPAT will also require intensified efforts to harmonize the program with similar authorized economic operator (AEO) programs in other countries so that overseas companies certified by other national authorities as having secure supply chain practices can be granted equivalent treatment as C-TPAT importers, said Kevin McAleenan, deputy assistant commissioner for field operations. To achieve so-called mutual recognition, however, CBP has to assess the other program’s rules for reviewing corporate security and how they are implemented.
McAleenan said C-TPAT would also become more meaningful to shippers if it can be synchronized with trusted shipper programs being considered or expanded by other U.S. government agencies.
Bersin has made inter-agency collaboration a major point of emphasis since taking office more than a year ago.
C-TPAT will also benefit from the Center of Excellence and Expertise demonstration project, McAleenan said. CEE is a small team created to develop expertise surrounding CBP regulation of the pharmaceutical industry and find ways to remove unnecessary impediments to cargo flows. CEE works closely with drug makers to understand their business operations and compliance processes, and provides guidance to ports of entry on ways to expedite processing for the industry’s highly controlled products.
Similarly, the effort to change over from processing every border transaction to managing regular importers on an account basis could contribute to C-TPAT’s allure, McAleenan said.
“We’ve always factored C-TPAT into our transactional analysis. But what the commissioner has challenged us to do is really look and make it an intentional discipline to try and work harder at segmenting the trade moving those people that we trust and know more about out of that transactional targeting focus.
“We know a lot more than the shipper, the address, the consignee, the contents of that shipment.
“We interact with you on the trade side. We might have had a regulatory audit interaction, a textile verification. You might be a member of the Importer Self-Assessment (program). We’ve got a supply chain validation through C-TPAT and we can connect all of that information to have our trusted partners not face the same impact.
“And as we look at that entire model, we can see the full end-to-end supply chain and identify additional opportunities to reach out and create new membership and make that membership very beneficial,” he said.
The approach now articulated by CBP signals a shift to expand C-TPAT beyond security to also be a quality-assurance program for trade compliance, more in line with World Customs Organization standards for AEOs to also demonstrate compliance with customs requirements and financial viability. More holistic AEO programs in the European Union, for example, provide trade and security benefits to highly compliant and security-conscious traders.
China’s General Administration of Customs has agreed to allow U.S. Customs officers into the country this year to audit the supply chain security practices of 100 manufacturers or logistics providers involved in exporting goods to the United States, an agency official announced last week.
Officials from the two border control organizations will sign an action plan May 9-10 in Washington to better align their trusted shipper programs so that participating companies face fewer hurdles moving cargo out of U.S. ports to their final destination, Charles Stallworth, acting assistant commissioner for international affairs at Customs and Border Protection, told delegates at the annual Trade Symposium in Washington.
The first step of the agreement will allow CBP specialists to validate the shipping processes of 100 companies in China by the end of the year and conduct another 100 validations next year, he elaborated following a town hall session.
U.S. importers that join the Customs-Trade Partnership Against Terrorism are eligible for a significant reduction in potential security inspections by implementing a security plan that meets or exceeds minimum criteria and demonstrating that their cargo poses a low risk of being infiltrated by smugglers. Other transportation intermediaries also join the program to satisfy their customers’ needs to ensure security from origin to destination.
CBP conducts on-site security verifications at select facilities around the world that do business with C-TPAT importers, but China has been the most difficult country to access for reviews.
There are at least 400 U.S. companies that have 75 percent of their products moving through supply chains originating in China that cannot achieve reduced scores in CBP’s risk rating system and face greater likelihood of container X-ray inspections by CBP or foreign partners, according to Stallworth.
In late 2008, CBP supply chain specialists in tandem with China Customs officials visited manufacturing facilities supplying 15 C-TPAT companies. The first round of joint validations occurred in March of that year. Even getting to that point took years of negotiation to gain permission for CBP teams to validate Chinese suppliers. In 2007, CBP tried a one-year experiment using third-party inspectors to get around the access issue and give importers who rely on China for the vast majority of their merchandise a chance to be reviewed and gain low-risk status for their containers. CBP pulled the plug on the trial due to lack of interest by shippers, who had to pay for the private-sector validations that normally are free.
The action plan spells out steps implementing a memorandum of understanding signed by CBP and China Customs in Beijing last June to cooperate on supply chain security and trade efficiency.
CBP has mutual recognition arrangements with New Zealand, Canada, Japan, Jordan and South Korea, but the agency is still working out operational arrangements in most cases that would allow domestic security reviews by a partner customs administration to be recognized as equivalent to CBP procedures, thereby reducing redundancy and overseas trips.
New Zealand’s export validation program is the only one that CBP has deemed fully compatible and to which it has extended reciprocal C-TPAT benefits.
Other stated benefits of C-TPAT include access to the Free and Secure Trade (FAST) program for expedited cargo processing at land borders and potential preferred treatment when ports reopen in the wake of any crisis.
Mexico Customs will launch a pilot of its version of a supply chain security program for trusted shippers in May, an agency official confirmed last week.
The Alliance for Secure Commerce is being developed in the mold of the U.S. Customs-Trade Partnership Against Terrorism and other authorized economic trader programs promoted by the World Customs Organization to reduce opportunities for criminal and terrorist infiltration of containers and truck trailers moving in international commerce.
Authorized economic operator (AEO) programs provide trade facilitation benefits as an incentive to companies that demonstrate that they and their overseas business partners have tight security measures for facilities, personnel, data sharing, transportation and container stuffing. Some programs, such as in the European Union, also offer reduced administrative requirements for companies that have high compliance rates with trade laws. C-TPAT is focused on U.S. importers while some foreign programs focus on exporters to help them avoid U.S. scrutiny and speed their goods to market.
Mexican officials hope to open the Alliance for Secure Commerce for full business participation by the end of the year or early 2012, said Héctor Zavier Landeras Almaraz, the director of the secure supply chain program, in an aside with a reporter at Customs and Border Protection’s Trade Symposium in Washington.
The program needs to be up and running by the middle of next year before the Mexican presidential elections in July to prevent any complications, he added.
Earlier, during a town hall-style meeting, Landeros said Mexican Customs is gathering expertise and best practices from other customs administrations, and learning first hand from CBP officials.
A key goal is to align the program as much as possible with C-TPAT to help lower the cost of trade for companies, he said. U.S. officials have said the more a foreign industry partnership program resembles its standards and procedures, the easier it is to grant reciprocal benefits to exporters from that nation.
Landeros said Mexican Customs officers are conducting joint validations in Mexico to learn how to monitor whether companies are following through on their security promises.
U.S. Customs and Border Protection Commissioner Alan Bersin on Wednesday announced a goal to increase the number of firms that voluntarily participate in the Customs-Trade Partnership Against Terrorism from slightly more than 10,000 today to 40,000 within five years.
The security program is designed as a force multiplier to keep contraband and terrorist weapons out of import containers so that CBP doesn’t have to spend resources checking cargo in which it has a high-level of confidence. Shippers who implement approved security plans for their international supply chains are certified and their cargo on average is five times less likely to receive a non-intrusive imaging exam, depending on the tier of security they have achieved, according to CBP officials.
Other stated benefits include first-in-line treatment if a container must be X-rayed or physically searched. CBP has been challenged so far trying to communicate when that takes place so shippers understand the advantage they received.
C-TPAT has focused on precautions prior to arrival and needs to reward importers for meeting or exceeding shipment security standards by expediting cargo release and reducing paperwork requirements in the post-release stage, Bersin said during the annual Trade Symposium in Washington.
“It needs to be one continuum of focus,” Bersin said.
C-TPAT celebrated its 10th anniversary this year after starting with seven original importers in 2001.
“We recognize we need to provide positive incentives to achieve that goal,” Bersin said.
Last week, a CBP official suggested the Importer Self-Assessment, a sister program aimed at fostering trade compliance, is also a candidate for additional benefits to attract more companies. ISA allows companies with excellent track records of compliance and with sophisticated internal controls to self-assess their level of compliance each year. In exchange, participating companies are removed from CBP’s active pool of audit candidates and are generally exempt from regulatory audit activities.
ISA is widely considered undersubscribed given that only about 206 companies have signed up for the program. Trade professionals say the burden to participate is too high for the amount of benefits received.
“We think it’s a good deal and it’s going to be a better deal in the near future,” Brenda Brockman Smith, executive director for trade policy and programs, told delegates at the National Customs Brokers and Forwarders Association of America conference in Phoenix.