Issue 435, April 1, 2004
The Customs-Trade Partnership Against Terrorism or C-TPAT was one of U.S. Customs and Border Protection's ("CBP") first initiatives after the September 11th attacks. Under C-TPAT, CBP works with importers, carriers, brokers and other intermediaries to develop and implement security programs to protect supply chains from terrorists. According to CBP, C-TPAT currently has 5,300 participants that have signed a Memorandum of Understanding ("MOU") to participate in C-TPAT, including 3,300 importers, 800 carriers and 1,100 brokers and freight forwarders.

Participation in C-TPAT at this time is voluntary, although CBP has and likely will continue to strongly encourage participation. For example, CBP has made C-TPAT membership a pre-requisite for participation in several important CBP programs. Specifically, for an importer to participate in CBP's Importer Self-Assessment program -- and thus avoid a CBP audit of its import processes and transactions through a focused assessment -- it must be C-TPAT approved. Moreover, C-TPAT membership is required for importers that wish to join Free and Secure Trade ("FAST"), the CBP northern and southern border expedited cargo clearance program.

Recently, C-TPAT has been the object of growing criticism from a number of sources, including Congress. Many believe C-TPAT has bogged down, particularly with respect to the validation process. CBP has acknowledged this fact, claiming that validations have been delayed by lack of personnel and funding. According to CBP, it is attempting to remedy this situation. CBP's 2005 budget request includes $15 million for the program, some of which CBP hopes to use to beef up its C-TPAT staff to 270 workers.

Other problems persist in addition to C-TPAT budget issues. One that has lingered since the program's inception is the inability of CBP to identify and provide quantifiable benefits to participants. Congress and the trade have complained that CBP has not produced hard data to show that C-TPAT members have any advantage in comparison to non-members. According to CBP, non-C-TPAT companies are twice as likely to have their cargos inspected than C-TPAT participants, yet many companies -- participants and non-participants -- have maintained they have not seen any marked changes in their inspection rates.

In recent months, CBP has attempted to develop additional benefits for C-TPAT participants. One such example is the C-TPAT status verification interface ("SVI"), which will allow consenting, certified C-TPAT members to query SVI for information on other consenting, certified C-TPAT members. CBP assumes that this knowledge will permit a company to further tighten its supply chain security. According to CBP, it expects SVI to be operational in the next few months.

For the future, one thing seems almost certain -- C-TPAT is not going away and, in fact, the bar could be raised higher for current and future C-TPAT members. For example, late last year, Commissioner Bonner announced that soon only C-TPAT members that use "smart containers" -- containers with state-of-the-art locks and sensors to detect tampering -- would receive expedited clearance of their goods. Another possible development could be efforts to make C-TPAT mandatory. In this regard, there may be a similar push to create objective or regulatory standards under the C-TPAT program for measuring and evaluating a company's security programs. While CBP maintains that the current lack of specific and objective criteria allows for flexibility in the program, this approach has left many critics wondering whether C-TPAT translates into real security. The effectiveness of the program will be the subject of a new General Accounting Office study this year. Whatever transpires, one can be sure that the C-TPAT landscape will change in the months and years ahead.

Our contributing writer David R. Hamill is an attorney for Miller & Chevalier Chartered in Washington, D.C. and can be reached at dhamill@milchev.com.

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.