The Customs-Trade Partnership Against Terrorism

The basic promise to C-TPAT members is this: in exchange for committing to meeting minimal security standards throughout the importer’s supply chain, Customs promises reduced inspections and quicker Customs clearance. This gives you greater confidence in on-time delivery. It allows you to minimize the chances your cargo will be selected for intensive examination by Customs. As a direct result, you will reduce delays in Customs clearance and avoid attendant costs.

Although membership is not a legal requirement, the program has been accepted by the importing community as a practical necessity. Virtually all major importers are in the program or in the process of applying. It is now recognized that to fail to join will ultimately make a company that relies on imports non-competitive as delays in Customs clearance will become unacceptably frequent.

What We Do

• Guide you through the application process, assisting in the completion of the profiles, and interface with Customs to obtain your acceptance into the program.
• Review and if necessary revise the security systems you have in place.
• Address Customs security concerns with minimal changes to existing company procedures.
• Prepare forms and checklists necessary to document your implementation of compliant procedures.
• Provide security guidelines and checklists for to your foreign suppliers, freight forwarders and carriers. While foreign manufacturers, except those in Canada and Mexico cannot be C-TPAT members, they are held to the program’s security standards and you as a C-TPAT member are required to use their best efforts to insure that they do. (Your Customs brokers and international carriers are likely in the program.)
• Travel to the foreign supplier before an overseas validation and work with the factories, truckers and forwarders as well as with Customs inspectors during the validation to insure that the Customs’ report is favorable.M

More Details

After 9/11. Congress was in an uproar about the fact Customs had the capacity to inspect only 2% of the containers coming into this country. Yet it was widely recognized that containers were ideal vehicles for the smuggling weapons of terrorism, drugs and other contraband.

There was no way for Customs to beef up its staff so that it could inspect any significant percentage of containers. To counter the terrorist threat latent in so many uninspected containers entering our borders, Customs developed C-TPAT in late 2001. It “enlisted” importers into the effort to insure that contraband is not concealed in incoming sea and air cargo. The program has gained momentum ever since. Congress gave statutory approval to the program in the “Safe Ports Act of 2006.”

Tightening Security

To join the C-TPAT, an importer must show Customs that it has reviewed and if necessary tightened its security throughout its supply chain–starting from the overseas manufacturers, continuing through stuffing and sealing of containers, to inland and overseas transport to your warehouse, and ending with to the inspection of shipping containers and cartons in the US.

In return, Customs reduces the odds that C-TPAT members’ containers will be delayed because they have been selected for intensive examination. Intensive examinations can take a week or more. Aside from the inability to receive and ship the goods during this period, the importer is responsible for charges for warehousing pending the exam, as well as the unloading loading and reloading of the air or sea containers. You can readily estimate the cost savings for reducing “intensives” by 80% to 90% if not more.

More and more domestic manufacturers, wholesalers and retailers--your customers-- are demanding their suppliers join the C-TPAT. They recognize that a suppliers’ membership makes it more reliable and can be counted on to meet delivery schedules. This gives a C-TPAT member a competitive edge over non-members. And there are other benefits to joining the program. Studies have shown measurable cost savings. For example, inventories in the US can be reduced because of increased reliability of deliveries from overseas. Better tracking of imports results in earlier detection of production and shipping delays. Better physical and access security to your facility and to incoming cargo measurably reduces pilferage.

The C-TPAT Process

The process begins with a company’s on-line filing of both a company profile and a C-TPAT “supply chain security” profile. The first gives basic information about the company–location, number of employees, nature of business, etc. The second requires how the company meets the 29 specific areas in which Customs has specific security concerns. These include the physical security of your facility, access controls, computer controls, procedural security, employee training on C-TPAT requirements, container security and inspection, and security requirements demanded of merchandise and service suppliers. All security procedures must be documented–you must have standard security procedures and documentation that the procedures are being followed.

Three Tiers Explained

There are three “tiers” of C-TPAT membership. Once a company has passed the initial muster, it becomes a Tier I C-TPAT member and its profile that would trigger a pre-clearance inspection is lowered. This is generally followed up, usually during the year after Tier I membership has been granted, with a request by Customs to travel to one of your major suppliers to inspect its security measures. If this “validation” is satisfactory, you become a Tier II C-TPAT member and your profile as a potential target for inspection is lowered further. If your and your supplier’s security measures go well beyond minimal standards, the company becomes a Tier III C-TPAT member, the highest status. By law, C-TPAT membership is to be reviewed by Customs every two years.

Should there be a serious terrorist incident in the US, orders are for the borders to be immediately sealed. Yet Tier III members will see their flow of goods continue uninterrupted. Then Tier II members will obtain clearance. Then the Tier I’s. Customs will not be concerned about the length of time the others will wait.

Looking to the Future

But even absent any incident, the pool of regular importers who are not in the program is rapidly decreasing. Customs naturally has less confidence in the integrity of their imported cargo and as a result is more likely to target it for inspection. While the door has not slammed shut yet, and many companies who are not in C-TPAT have not yet noticed increasing delays in Customs clearance, many are waking up to the need to join. They are beginning to understand, as the almost 10,000 current C-TPAT members already do, that companies who are not in the C-TPAT will in the end have to cease or severely curtail their import programs. This is because non-members will find themselves with an unreliable and uneconomical import supply chain.

Contact Us for More Information

You are welcome to call us to review any area of concern. Contact Stephen M. Zelman, Esq., at 1+ 212.245.6100 for a telephone consultation, with no obligation for any fee. E-mail at stephenzelman@gmail.com.