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C-TPAT Update: Government-Trade Advisory Committee on Commercial Operations Meets in Redondo Beach CA And Discusses C-TPAT

October 7, 2005

At the October 6, 2005, DHS Advisory Committee on Commercial Operations of Customs and Border Protection (CBP) in Redondo Beach, California, CBP officials provided an update on the Customs-Trade Partnership Against Terrorism (C-TPAT) program. (C-TPAT is a voluntary government-industry program in which importers, brokers, carriers and other in the international supply chain receive certain benefits for cargo and trade security related programs.)

C-TPAT Program For Brokers & Carriers
Todd Owens, CBP Director of the Office of C-TPAT, indicated that new minimum-security criteria for brokers and sea, land, and air-based carriers would be released shortly.

Validations
Currently, CBP has conducted over 250 importer validations this summer. Overall, CBP has conducted over 1,000 C-TPAT validations to date, with over 550 completed in the last 9 months. CBP currently has approximately 1,700 validations in process, and expects to complete 1,000 by the end of the year. Overall, there are 5,294 certified C-TPAT partners (2,913 importers). Of this, a total of 2,812 have been validated or are currently in some process of validation (2,071 are importers).

Mr. Owens noted that validation teams have identified weakness in programs with respect to the new March 25, 2005, minimum security criteria for C-TPAT importers. Generally, however, these deficiencies have not resulted in the removal of the companies from the program, noted Mr. Owens, so long as the company has a demonstrated level of commitment to implementing the new requirements.

Currently, CBP has 86 full-time supply chain specialists, has borrowed approximately 30 more from CBP commercial operations and has requisitions for another 70. According to Owens, completing all validation applications are a top priority of his office.

CBP also discussed some of the fallout from the validations. Currently, approximately 20 companies have had C-TPAT benefits suspended and 13 have been removed from the program. Additionally, 58 companies have been suspended and 60 removed for actual security breaches. CBP noted that most of these security breaches were in connection with narcotics discoveries in shipments and involved land based carriers.

Tiered Benefit Structure
In May of 2005, CBP implemented a 3-tiered benefit structure for C-TPAT participants. To receive tier 2 and 3 benefits the importer must be validated by CBP. Not all validated companies will receive tier 3 status. Currently 110 C-TPAT importers have been granted tier 3 status. According to CBP officials, this amounts to approximately 25% of validated C-TPAT importers.

A determination as to whether a C-TPAT importer will receive tier 2 or tier 3 benefits is made by high level C-TPAT officials based on findings of the C-TPAT verification team, the number of best practices implemented by the C-TPAT importer, and its assessed risk level. Todd Owens, Director of CBP's C-TPAT program stated that a decision to move a company from tier 2 or tier 3 will depend on a totality of best practice elements found at the company, the level of risk associated with that company's imports, and the company's demonstrated commitment to the program. He also explained that if, after validation, a company is granted only tier 2 benefits, it may work to address the deficiencies found by the supply chain security specialist and petition the CBP C-TPAT office for a re-evaluation and an upgrade to tier 3. The re-evaluation may be based on submission of documentation or on a new on-site visitation to ensure that corrective action has occurred.

With regard to C-TPAT best practices, CBP officials indicated they have distilled a great number of "best practices" from the 1,000 or so validations they have completed, and have compiled these into a best practices catalog. This catalog of "best practices" is expected to be released to the public around the time of the Customs - Trade Symposium, in November of 2005.

One "best practice" discussed by CBP at the COAC meeting is the submission of entry line data as early as possible in the shipment of goods. CBP explained that the advanced data submission provides more information than the advanced cargo manifest data currently required. If the advanced entry data can be pre-filed before the cargo is loaded, CBP can make better screening and exam decisions at the foreign port of lading. Since C-TPAT benefits are based on IR numbers and manifest data does not contain IR numbers, C-TPAT companies that do not pre-file prior to the loading of the cargo are not receiving their complete benefits they may be entitled to. According to CBP, approximately 66% of tier 2 companies are pre-filing entry information and over 80% of tier 3 companies are pre-filing entry data with Customs.

CBP is also clarifying benefits for C-TPAT companies. Earlier this summer, Tier 3 companies began to receive "front-of-the-line" inspection benefits at cargo release. Some C-TPAT companies may also receive mitigation benefits for cargo-related violations.

For more information on C-TPAT participation, visit our C-TPAT webpage at: http://www.tuttlelaw.com/subjects/ctpat.htm, or the CBP website at: http://www.cbp.gov/border-security/ports-entry/cargo-security/c-tpat-customs-trade-partnership-against-terrorism

If you have any questions on any of the issues raised in this newsletter, please contact George R. Tuttle at (415) 288-0425 or via email at grt@tuttlelaw.com, George R. Tuttle, III at (415) 288-0428 or via email at geo@tuttlelaw.com, or Stephen S. Spraitzar at (415) 288-0427 or via email at sss@tuttlelaw.com.

George R. Tuttle, George R. Tuttle, III, and Stephen S. Spraitzar are attorneys with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright 2006 by Tuttle Law Offices.

All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

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