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Customs Releases More
Information on Its Trade Partnership Against

March 5, 2002


In the wake of September 11th, Customs Commissioner Robert Bonner called for the development and implementation of a new industry wide security standard for countering terrorism, now know as the "Customs - Trade Partnership Against Terrorism", or "C-TPAT." Since that time, industry groups have been working with Customs to develop a plan for such a program. While the details of the C-TPAT are still being finalized, it is generally considered a cooperative venture but one which has the potential to greatly impact the way in which trade moves.

Benefits Of Participation

According to Customs, the chief benefits of participation in C-TPAT will be:   

(1)            A reduced number of inspections (reduced border times);

(2)            An assigned account manager (if one is not already assigned)(although some companies would not view this as a benefit);

(3)            For current Low Risk Importers (LRIs), an opportunity to expand "low-risk" treatment to all divisions within the company (Customs has previously stated that a low-risk designation is assigned by IRS number, and that it is possible that only certain divisions within a company would be eligible for low-risk designation);

(4)            Access to the C-TPAT membership list;

(5)            Eligibility for account-based processes (e.g., bimonthly/monthly payments);

(6)            An emphasis on self-policing, not Customs verifications; and

(7)            Increased security assurances for employees.

Perhaps more importantly, participants also avoid the consequences that may occur if they do not "volunteer," which Customs has indicated might include:

(1)                  Classification of the importer into an "unknown" security category

(2)                  Higher scrutiny of cargo

(3)                  Increased reviews and audits

(4)                  Added examinations

(5)                  Requests for more information

(6)                  No guarantee of cargo processing times

While the benefits of C-TPAT are obviously greater for large companies that rely heavily on international supply chains, the C-TPAT is designed for the entire trade community, and Customs encourages all companies to apply.

Low-risk importers (LRIs) will be accepted into C-TPAT upon submission of a signed C-TPAT agreement. According to Customs, such LRI applications will be expedited since these companies have already been evaluated for risk, and the benefits under C-TPAT will begin immediately.

For companies other than LRI importers, C-TPAT benefits will not begin until Customs has completed a company risk assessment encompassing both security and trade compliance.  These evaluations are expected to be completed within 30-60 days after the applicant submits a supply chain security questionnaire.

Who May Be Eligible To Participate In C-TPAT

According to Customs, practically every member of the trade will be eligible for participation. C-TPAT will be open to a broad spectrum of the trade community, such as importers, carriers, brokers, warehouse operators, and manufacturers. Customs has already selected five volunteer importers to participate in C-TPAT and will shortly be including others.

How the Process Will Work

C-TPAT participation requires the filing of a formal agreement that commits the applicant to undertake the following:

(1)            Conduct a comprehensive assessment of supply chain security using C-TPAT security guidelines jointly developed by Customs and the trade community, which address procedural security, physical security, personnel security, education and training, access control, manifest procedures, and conveyance security;

(2)            Complete and submit a supply chain security questionnaire to Customs;

(3)            Develop and implement a program to enhance security throughout the supply chain in accordance with C-TPAT guidelines; and

(4)            Communicate C-TPAT guidelines to other companies in the supply chain and work toward building the guidelines into relationships with these companies.

The Memorandum of Understanding (MOU), the required document signed by importers to participate in the C-TPAT, has been published on Customs website, along with a set of proposed security recommendations for importers. In the MOU, participants agree to implement the Security Recommendations issued by Customs, which contain detailed suggestions for establishing, improving, or amending, security procedures along the entire supply chain. Customs states that each set of recommendations applies to a specific segment of the import chain such as a carrier, broker, importer, or warehouse and is meant to serve as only a guide and not as an established standard. As the C-TPAT evolves, the recommendations may be adjusted. MOU's for other members of the supply chain (manufacturers, freight forwarders, carriers, etc.) are still under development.

Customs warns that, if a company fails to uphold its C-TPAT commitments, Customs will take action to suspend benefits or cancel participation.

Timeline For Participation Has Not Been Announced
But Is Expected Shortly

Notices will be posted to the Customs website announcing openings for open enrollment for importers. Other portions of the supply chain are to follow.

Liabilities And Commitment Levels Of Participation

Customs is also attempting to minimize the burdens of participation. Customs has stated that the intent of C-TPAT is not to impose security requirements that will be cost prohibitive and that C-TPAT participants may find that they already have many of the guidelines in place.

Customs has also said that C-TPAT is not intended to create any new liabilities for companies beyond existing trade laws and regulations.   Finally, Customs believes that C-TPAT should not duplicate work for current Customs Carrier Initiative Program (CIP) participants.

Other Customs Initiatives In Anti-Terrorism And Security

Since September 11, 2001, the top priority of Customs has been responding to the continuing threat at U.S. land borders, seaports, and airports. According to Commissioner Bonner, Customs' anti-terrorist efforts have included:

Office of Anti-Terrorism. Customs has established a new Office of Anti-Terrorism within Customs headed by an experienced security expert and senior military leader.

Operation Green Quest. Operation Green Quest was formed as a joint investigative team to fight against terrorist financing. It is led by Customs and supported by the Internal Revenue Service (IRS), Secret Service, and other Treasury Department bureaus, as well as the FBI and the Justice Department.

Operation Shield America. Customs has been working under Operation Shield America to monitor exports of strategic weapons and materials from the U.S. and, since the inception of the program, Customs agents have visited approximately 1,000 companies in the U.S. that manufacture or sell items that may be sought by terrorists or state sponsors of terrorism.

Office of Border Security. Customs has established the Office of Border Security to help Customs officers in the field. The mission of the office is to develop more sophisticated anti-terrorism targeting techniques for cargo and passengers in each border environment.

U.S.-Canada Smart Border Declaration. The U.S. has worked with Canada to harmonize security and commercial processing, and the U.S. and Canada have agreed to a 30-point "Smart Border Declaration".

Container Security Initiative. In January 2002, Bonner proposed a Container Security Initiative (CSI) to address the vulnerability of cargo containers to the smuggling of terrorists and terrorist weapons. The initiative would begin with the mega ports that export to the U.S to develop a uniform standard for targeting and screening cargo before it is shipped. The core elements of a sea container security strategy include:

(1) Establishing security criteria for identifying high-risk containers (i.e., those containers that potentially pose a risk);

(2) Prescreening the high-risk containers before they are shipped to the U.S.;

(3) Using technology to prescreen high-risk containers; and

(4) Developing smart boxes, smart and secure containers with e-seals and light sensors that will indicate to Customs if the container has been tampered with, particularly after it has been prescreened.

U.S.-Mexico Eight-Point Declaration. The U.S. is now working with Mexico on an eight-point declaration that would commence unprecedented cooperation and information sharing regarding incoming goods and passengers along the U.S.-Mexico border.

Heightened Customs Inspections. Bonner indicates that the percentage of Customs inspections has increased significantly since the 9/11 attacks.

Support for Senate Bill 1214. Bonner described the Senate's passage of S.B. 1214 as a giant stride toward enactment of legislation that will equip Customs with the tools, technology, and information it needs to bolster U.S. defenses against international terrorism. S.B. 1214 would require submission of advance shipping manifests, which are now strictly voluntary. By mandating advance information for outbound as well as inbound passengers and cargo, S.B. 1214 would expand on Customs' successful efforts to require airlines to submit passenger manifests to the Advance Passenger Information System (APIS).


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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