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C-TPAT: Why it’s becoming less “voluntary” and more “necessary”

Six years into the Customs-Trade Partnership Against Terrorism (C-TPAT) security program, introduced by the Customs Border & Protection Agency (CBP) as a voluntary trade security initiative to secure the global supply chain, it’s fair to ask if the program is still “voluntary.”

Billed as the largest partnership ever introduced between industry and government, the program continues to grow and add ‘teeth’ to its mission to identify and correct vulnerabilities within the global supply chain that could be leveraged for terrorist purposes, such as the compromise of containers, railcars, trucks and trailers inbound to the US. In 2005, minimum requirements were established by CBP based on practices that appeared to be prevalent throughout the trading community of companies who submitted their applications pre-2005. In 2006, the SAFE PortAct codified the C-TPAT program. And the recently released Import Safety, will include a voluntary (in most instances) security certification process that will probably be integrated into the C-TPAT certification program.

C-TPAT has been purposely established as a voluntary program. The general reason is CBP’s acknowledgement that one security program will not suit all businesses -one glove does not fit all hands. Each company is different based on its product and industry. In addition, it has been the opinion of CBP that a customer has greater power than promulgated regulation to enforce security standards in its supply chain, namely service providers and vendors, making it more effective overall. The intent of the program is to push the C-TPAT security guidelines down throughout the supply chain. This includes, but is not limited to, customs brokers, freight forwarders, carriers (all modes) and suppliers. But as C-TPAT adds new policies and procedures it becomes less ‘voluntary’ and more ‘necessary.’

Initial supporters of the program were large-scale importers, typically in the retail space. They viewed the program as a way to help speed their goods through customs – critical for a supply chain with seasonal spikes or just-in-time inventory strategies. These organizations have weighed the pros and cons of the program and decided that the benefits outweighed the costs to join C-TPAT. Unfortunately, the buck doesn’t stop there. Small and mid market enterprises are being drawn into C-TPAT regulation due to their relationships with C-TPAT participants. A major criterion of the C-TPAT program is that the participant must have procedures in place requiring their business partners to demonstrate how they are meeting the C-TPAT security requirement either through contractual obligations, a written statement, a security survey or participation in an equivalent World Customs Organization accredited security program. Therefore, customs brokers, freight forwarders, carriers and suppliers must detail how their own operations support their customers’ (the ‘Big Guy’) C-TPAT requirements. So, how is C-TPAT voluntary? These ‘Little Guys’ rely on their supplier relationships with the ‘Big Guy’. If they can’t support C-TPAT requirements, the ‘Little Guy’ is at risk of losing business.

As a supplier to large-scale importers, smaller firms are finding that C-TPAT participation is becoming critical to their business’s viability. It is becoming a common occurrence that, as part of a vendor/supplier selection process, C-TPAT participants are requiring that their suppliers become C-TPAT certified or have an equivalent security program in place. Remember, C-TPAT certification is not mandatory. However, the C-TPAT participant must assess their own risk exposure by continuing to do business with a vendor lacking security measures. The obligation remains with the C-TPAT participant to ensure that the supplier poses minimal risk to their global supply chain. As a result, many smaller companies are creating their own security criteria above and beyond the C-TPAT requirement in a bid to maintain or win additional business with large-scale importers. This is exactly what CBP wanted as a customer’s relationship with its supplier is much more powerful than government regulation.

Is C-TPAT really a voluntary program? In the eyes of CBP, yes, and chances are that it will remain a voluntary program. However, as a supplier, you may not have a choice if you wish to continue your existing business relationships with C-TPAT participants. In addition, you may be forced to join C-TPAT if your business happens to be one of those companies that will be affected by the Import Safety Plan which requires a safety program be put in place to address global supply chain security.

Becoming a C-TPAT registrant may not be as cumbersome as you think. For that reason, it is suggested that all businesses perform a C-TPAT security assessment to understand the pros and cons of joining the program. A typical assessment should identify the security gaps that need to be addressed and will provide insight into how to develop, validate and maintain a security program utilizing existing operational processes.

Karin Muller is US and Canadian Certified Customs Specialist within the Trade Management Consulting practice at JPMorgan. Muller has more than 30 years of extensive experience in import and export trade related issues with various industry and service sectors. She has assisted many importers in their analysis and subsequent preparation for global trade security program certifications and validations including C-TPAT, PIP and more recentlyAEO.

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