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Supply Chain Security Is Of
Highest Priority To Customs

July 19, 2002

"The single-most important priority for the Customs Service for today and for the foreseeable future is anti-terrorism," said Tom O'Brien, Director of U.S. Customs Services Management Center for the Pacific Region, at a recent seminar on its "Customs-Trade Partnership Against Terrorism" ("C-TPAT") program. According to O'Brien "this is more important to us than trade enforcement or even narcotics interdiction."

To prevent the introduction of biological, chemical, and weapons of mass destruction, Customs is dramatically stepping up its efforts to screen for and examine what it calls "containers of concern." "This is inevitably going to result in the delay of the release of containers," noted O'Brien in this talk. He went on to say that, while the Port of San Francisco is at the forefront of container screening technology, there are some West Cost Ports that are already full with containers waiting to be screened and examined.

O'Brien then explained how importers can avoid these delays by becoming members of the "Customs-Trade Partnership Against Terrorism," or "C-TPAT" as it is known. Under the program, containers imported by members of CTPAT that are exported through a secure supply chain will be considered "low risk," and allowed to clear without the same inspection requirements as containers moving through a non-secure supply chain. This program is a "win-win" situation for importers and Customs, noted O'Brien. Importers get their cargo sooner, and Customs can focus its efforts and resources on the "high-risk" containers.

Containers that are most at risk are those that are from unknown sources, those that contain unknown cargo, those that originate from countries of concern, and those that move though known transshipment points. To avoid the inevitable delays that will occur, importers can take steps to secure their cargo and supply chain. Once this is done, the containers will not have to be examined.

Benefits of Participation

While ocean shipping containers are the most "at-risk", Customs is encouraging all importers to join the C-TPAT program. To encourage this, Customs is earmarking many of its new programs, such as periodic-payment and its new Importer Assessment Program, for only C-TPAT members. Benefits of participation in C-TPAT include:

  • Reduced inspections;
  • An assigned Customs account manager;
  • For current Low Risk Importers (LRIs), an opportunity to expand "low-risk" treatment to all divisions within the company;
  • Access to the C-TPAT membership list;
  • Eligibility for account-based processes (e.g., bimonthly/monthly payments);
  • Participation in Customs Importer Self Assessment Program.
What Does It Take To Join?

Joining the C-TPAT program is a two-step process. First, the importer fills out the Cargo Security Questionnaire and then signs a Memorandum-Of-Understanding (MOU) that commits them to the program.

In the MOU, participants agree to implement Security Recommendations issued by Customs, which will contain detailed suggestions for establishing, improving, or amending security procedures along the company's entire supply chain. Security recommendations will be made after Customs reviews the importer's completed supply chain security profile questionnaire and engages in discussions with the importer.

Implementation of the program, however, falls on the importer. It will be the responsibility of the importer to secure the commitments necessary from foreign suppliers to secure the cargo at the time of delivery to the first carrier in the supply chain. In the case of non-related suppliers, these commitments may have to be contractual.

Customs also expects importers to audit or inspect the facilities of their suppliers on a periodic basis to ensure that they are carrying out their commitments. Inspections can be done by the importer or by competent third parties.

"If the exporter is too small or not interested, the importer has a couple of choices," noted O'Brien, "it can switch suppliers or it can use an intermediary to screen and secure the cargo before it moves to the next stage."

Customs eventually expects the complete supply chain will be covered, including carriers, forwarders and Customs brokers. To facilitate the process, Customs will make information available to C-TPAT members about other members, including those in the delivery supply chain. That way, importers can select those carriers, forwarders and Customs brokers that are C-TPAT approved, or, otherwise, require suppliers to use only C-TPAT approved carriers and forwarders.

What Kind Of Program Is Needed?

Customs is looking for the importer and foreign supplier to have the following types of security programs in place or under development:

  • Procedural Security: Procedures should be in place to protect against unmanifested material being introduced into the supply chain.

  • Physical Security: Buildings should be constructed in a way that resists unlawful entry and protects against outside intrusion. Physical security should include the segregation and marking of international, domestic, high-value, and dangerous goods cargo within the warehouse by a safe, caged or otherwise fenced-in area.

  • Access Controls: Access controls should include positive identification, recording, and tracking of all employees, visitors, and vendors.

  • Conveyance Security: Conveyance security involves the protection of the container against the introduction of unauthorized personnel and material before or during shipment.

  • Personnel Security: Importers and suppliers should conduct employment screening and interviewing of prospective employees to include periodic background checks and application verifications.

  • Manifest Procedures: Companies should ensure that manifests are complete, legible, accurate, and submitted in a timely manner to Customs.

  • Education and Training Awareness: A security awareness program for employees covering cargo integrity and unauthorized access.

What Should You Do First?

This program is very important to the Customs Service, particularly as the Service moves towards merging into the new Department of Homeland Security. And, while it is described as a voluntary program, Customs is stepping up efforts to get U.S. companies to sign up. The current goal of the Commissioner of Customs is to have 1,000 importers signed up for the program by the end of Customs' fiscal year (October 31st). Currently, Customs has about 274 companies signed up for the program.

Step One: As a first step, we recommend that the company download and review the Cargo Security Questionnaire, Memorandum-Of-Understanding and Customs' Security Recommendations.

Step Two: The company should assemble an inter-departmental committee made up of affected groups (such as logistics, manufacturing, security, purchasing or procurement, and supply chain management) to review and discuss the pros and cons of participation in the program.

Step Three: Conduct an initial evaluation of your company's existing cargo security efforts and that of any related party suppliers and key third party suppliers and vendors (i.e., third party JIT warehouses, Foreign Trade Zones and bonded warehouses). Initial supplier valuations can be done in writing, by phone or through interviews with company individuals who visit the supplier on a regular basis. Once the initial evaluation is done, the company can assess the potential cost and/or changes to the company's business plan that might be required.

For additional information on Customs' C-TPAT program, please visit our website (, and select the link to our C-TPAT page. If you have any questions or would like a presentation for your company on Customs C-TPAT program, please call (415) 288-0428, or e-mail us at



Copyright 2002 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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