We are writing to make sure you are aware of a development regarding the Customs-Trade Partnership Against Terrorism (“C-TPAT”) program. U.S. Customs and Border Protection (“CBP”) will begin accepting applications through its web portal from exporters wishing to join the program later this month.
While we encourage all companies to take responsibility for the security of their international supply chains, we have had a number of issues with the C-TPAT program over the years (e.g., the program is not governed by statute of regulation, the obligations on importers have increased without much notice or warning, many of the stated benefits of participating in the program have failed to materialize, etc.). That said, we believe that all companies that export articles from the United States to countries which have signed supply chain security mutual recognition arrangements (“MRAs”) with CBP should consider applying.
CBP has signed MRA’s with 10 jurisdictions thus far (i.e., Canada, the European Union, Israel, Japan, Jordan, Korea, Mexico, New Zealand, Singapore and Taiwan). These MRAs are based on a determination that C-TPAT and the foreign supply chain security program are compatible in theory and practice (e.g., standards, audit procedures, etc.), and the exchange of information between the CBP and the foreign Customs Administration. Historically, the fact that a U.S. company participated in C-TPAT as an importer provided little benefit (if any) when that company exported goods to an MRA-partner country. Stated differently, when a Customs Administration in the EU looks at an import shipment and sees it is from a U.S. company accepted into the C-TPAT program as an importer, that is interesting, but not particularly relevant to the question of whether that U.S. company has appropriate security procedures in place over its exports. This development is meant to close this gap. Companies that participate in the C-TPAT programs as exporters will be more likely to have their shipments receive targeting score benefits in the MRA-partner countries. This could be a meaningful benefit (particularly if the importing entity is an AEO participant).
For your reference, we have included a link to CBP’s exporter entity eligibility requirements and criteria here. As you will see, these requirements/criteria are substantially similar to those for importers (e.g., have a documented export security program that identifies the links in the supply chain and works to make them as secure as possible).
If you have any questions about C-TPAT for exporters, or would like to discuss whether the program would be beneficial for your company, please let us know.