C-TPAT for Exporters

Dear Friends:

As some of you may already know, US Customs has decided to open its Customs-Trade Partnership Against Terrorism (C-TPAT) program to eligible exporters.   While US Customs has not yet specified how participating exporters would benefit from this program, the expectation is that participants will have fewer export shipments examined by US Customs and will be provided a US Customs account manager (i.e., a “go-to” person in the event a problem arises with a shipment).  Another potential selling point is that participating exporters will  enjoy the benefits of reciprocal “trusted trader” programs around the world, such as AEO in the EU.  (In theory, exports from a C-TPAT-approved company are less likely to be scrutinized when imported into countries with whom the United States has signed a mutual recognition agreement.)

US Customs recently released the exporter eligibility requirements for participation in C-TPAT.  The source document is available here.

In short, in order to qualify for the program, the exporter must meet certain eligibility requirements.

First, the entity must be an “Exporter,” as that term is defined by the program, and comply with the following requirements:

  1. Be an active U.S. Exporter.
  2. Have a business office staffed in the U.S.
  3. Have an Employer Identification Number (EIN), or Dun & Bradstreet (DUNS) number.
  4. Have a documented export security program and a designated officer or manager who will act as the C-TPAT program main point of contact. Additionally the participant should have an alternate point of contact should the designated point of contact be unavailable.
  5. Commit to maintaining the C-TPAT supply chain security criteria as outlined in the C- TPAT Exporter agreement.
  6. Create and provide US Customs with a C-TPAT supply chain security profile that identifies how the Exporter will meet, maintain, and enhance internal policy to meet the C-TPAT Exporter security criteria.
  7. Have an acceptable level of compliance for export reporting for the latest 12-month period and be in good standing with U.S. regulatory bodies such as:  Department of Commerce, Department of State, Department of Treasury, Nuclear Regulatory Commission, Drug Enforcement Administration, and Department of Defense.

Second, the entity must comply with certain minimum security criteria requirements (e.g.,  container inspection and storage protocols; conveyance tracking and monitoring procedures; physical access controls to cargo facilities; etc.).

Should You Join?

As we have advised in the past, all importers/exporters should take steps to secure their international supply chains.  Doing so is the right thing to do and often provides meaningful benefits to the business.  That being said, we have a number of concerns with the C-TPAT program, which also apply to this new exporter-focused variation of the program.

The fact that there is no legislation, or even regulation, governing the program means US Customs is more or less free to modify the program at will.  As a result, the requirements imposed on importers participating in the program have steadily increased over the years; while the tangible benefits US Customs has promised have failed to materialize for most participants.  The same is likely to be true on the export side.  Indeed, the benefits that US Customs will likely offer participating exporters appear to be even less tangible than those offered to importers (e.g., US Customs cannot guarantee that the shipments of a participating exporter will be subject to less scrutiny abroad).  As a result, based on our experience with the import program, participating in the export program will subject exporters to US Customs supply chain security “validations” (they do not want to call them audits) which will often produce unrealistic security “recommendations” in exchange for some potential benefit to a shipment’s targeting score.

In sum, while securing your international supply chain is the right thing to do for a variety of reasons, whether to join a voluntary supply chain security program like C-TPAT is a separate determination.  It is important to understand the costs involved in participating in such a program and to weigh those costs against the potential benefits.  To date with the import version of C-TPAT, the costs have been real (and constantly evolving); whereas the benefits have been ethereal.  We expect the same to be the case with the export variation of the program.

If you have any questions about participating (or withdrawing) from the C-TPAT program, please let us know.

We hope this is helpful.

Best regards,

Ted

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