Draft 3 of CBP's New C-TPAT Security Standards for Importers Available

According to press sources, 'Draft 3' has been sent to a select group of importers and trade associations, with CBP asking for feedback by January 14, 2005. However, trade sources indicate that CBP has extended this comment deadline to January 21, 2005.

Below is a transcription of third draft version of these new standards. Pluses identify new draft text. Carrots < > identify deleted draft text. Text that is unchanged is unmarked.

Draft 3

C-TPAT Security Standards - Importers

Importers must conduct a comprehensiveassessment of their international supply chains based upon the following C-TPAT security criteria <standards>.

Appropriate security measures must be implemented and maintained throughout the importer's supply chains - based on risk.¹

Where an importer outsources or contracts elements of their supply chain, such as a foreign facility, conveyance, domestic warehouse, or other elements, the importer must work with these business partners toensure that pertinent security measures are in place and adhered to by their direct/contractedbusiness partners.

Thesupply chain for C-TPAT purposes is defined from point of origin (manufacturer/supplier/vendor) through to point of distribution.

¹Importers shall have a documented and verifiable process for determining risk throughout their supply chains based on their business model (i.e. volume, country of origin, routing, potential terrorist threat via open source information, etc.)

C-TPAT recognizes the complexity of international supply chains and endorses the application and implementation of security measures based upon risk analysis.

Therefore, the program allows for flexibility and the customization of security plans based on the member's business model.

Business Partner Requirements

Importers must have written and verifiable processes for the selection of business partners including manufacturers, product suppliers and vendors.

<Processes must include the verification of a written security questionnaire or security report submitted by the business partner. >

For those business partners eligible for C-TPAT certification (carriers, terminal operators, brokers and consolidators, etc.) the importer must have documentation indicating that these business partners are/are not C-TPAT certified.

security procedures.Importers must require current and prospective business partners, not already C-TPAT certified, to demonstrate that they are meeting C-TPAT security criteria via written/electronic confirmation (e.g., contractual obligations; via a letter from a senior business partner officer attesting to compliance; a written statement from the business partner demonstrating their participation in C-TPAT or an equivalent WCO accredited security program administrator by a foreign customs authority; or, by providing a completed importer security questionnaire). Base upon a documented risk assessment process, business partners must be subject to verification of compliance with C-TPAT security criteria by the importer.

<Importers must require current and prospective business partners not already C-TPAT certified,to submit a written response to a security questionnaire regarding their current security procedures. Questions and responses must be reviewed, and if weaknesses are noted, the importer should implement an appropriate plan of action, based on risk, that will assist the business partner in improving their security. Questions and responses received must be filed and produced upon request by CBP. It is imperative that business partners outline their current security practices and procedures for their C-TPAT importer so potential supply chain weaknesses can be identified and appropriately corrected. >

Through these verifications <questionnaires>, importers can more easilyidentify if outsourcing occurs at any point in their supply chain and if C-TPAT security standards are being met or exceeded by their business partners <the entity handling their merchandise>.

point of production. Importers must ensure business partners develop security processes and procedures consistent with the C-TPAT security criteria <standards> to enhance the integrity of the shipment at point of manufacture <production>. Periodic reviews of business partners' facilities should be conducted based on risk, and should maintain the security standards required by the importer.

participation/certification in foreign Customs administrations supply chain security programs. Current or prospective business partners who have obtained a certification in a supply chain security program being administered by foreign Customs Administration should be required to indicate their status of participation to the importer.

other internal requirements for selection.Internal requirements, such as financial soundness, capability of meeting contractual security requirements, and the ability to identify and correct security deficiencies as needed, should be addressed by the importer. Internal requirements should be accessed against a risk-based process as determined by an internal management team.

Container Security

Container integrity must be maintained to protect against the introduction of unauthorized material and/or personnel. Importers must require that atpoint of stuffing, procedures are in place to seal andmaintain the integrity of the shipping containers. A high security mechanical seal must be affixed to all loaded sea containers bound for the U.S. All seals must meet or exceed the current PAS ISO 17712 standards for high security mechanical seals.

Container Inspection.Procedures must be in place to verify the physical integrity of the container structure prior to stuffing, to include the reliability of the locking mechanisms of the doors. A seven-point inspection process is recommended for all containers: Front wall, Left side, Right side, Floor, Ceiling/Roof, Inside/outside doors, and Outside/Undercarriage.

Container Seals.Written procedures must stipulate how seals are to be secured, logged, and affixed to loaded containers and verified throughout the supply chain - to include procedures for recognizing and reporting compromised seals or seal discrepancies to CBP or the appropriate foreign authority. Only designated employees should handle and distribute container seals for integrity purposes.

Container Storage.Allcontainers , empty or full, must be stored in a secure area to prevent access and/or manipulation. Procedures must be in place for reporting and neutralizing unauthorized entry into container storage areas.

Physical Access Controls

Access controls prevent unauthorized entry to facilities, maintain control of employees and visitors, and protect company assets. Access controls must include the positive identification of all employees, visitors, and vendors at all points of entry.

Employees.An employee identification system must be in place for positive identification and access control. Employees should only be given access to those secure areas needed for the performance of their duties.

Visitors.Visitors must present photo identification for documentation purposes upon arrival. All visitors should be escorted and visibly display temporary identification.

Deliveries (including mail).Proper vendor ID and/or photo identification must be presented for documentation purposes upon arrival by all vendors. Procedures to periodically screen arriving packages and mail for potential threats should be implemented.

<Vendors must present photo identification for documentation purposes upon arrival. Arriving packages and mail should be screened before being disseminated.>

Challenging and Removing Unauthorized Persons. Procedures must be in place to identify, challenge and address unauthorized/unidentified persons.

Securing Physical Access.Company management or security personnel must adequately control the issuance and removal of employee, visitor and vendor identification badges. The issuance, removal and changing of access devices (e.g. keys, key cards, etc.) as necessary.

Personnel Security

Processes must be in place to screen prospective employees and to periodically check current employees.

Pre-Employment Verification. Application information, such as employment history and references must be verified prior to employment.

Background Checks/Investigations. Consistent with foreign, federal, state, and local regulations, background checks and investigations should be conducted for prospective employees. Once employed, periodic <background> checks andreinvestigations should be performed based on cause, and/or the sensitivity of the employee's position.

Personnel Termination Procedures.Companies must have procedures in place to remove identification,facility, and system access for personnel whose employment has been terminated <terminated employees>.

Procedural Security

Security measures must be in place to ensure the integrity and security of processes relevant to the transportation, handling, and storage of cargo in the supply chain.

Documentation Processing. Procedures must be in place to ensure that all information used in the clearing of merchandise/cargo, is legible, complete, accurate, and protected against the exchange, loss or introduction or erroneous information. Documentation control must include safeguarding computer access and information.

Manifesting Procedures.To help ensure the integrity of cargo received from abroad, procedures must be in place to ensure that information received from foreign suppliers is reported accurately and timely.

Shipping & Receiving. Arriving cargo should be reconciled against advance information on the cargo manifest. The cargo should be accurately described, and the weights, labels, marks and piece count indicated and verified. Departing cargo should be verified against purchase or delivery orders. Drivers delivering or receiving cargo must be positively identified before cargo is received or released.

Cargo Discrepancies. All shortages, overages, and other significant discrepancies or anomalies must be resolved and/or investigated appropriately. Customs and/or other appropriate law enforcement agencies must be notified if illegal activities are detected.

Security Training and Threat Awareness

A threat awareness program should be established and maintained by security personnel to recognize and foster awareness of the threat posed by terrorists at each point in the supply chain. Employees must be made aware of the procedures the company has in place to address the response to a situation and how to report it. Additional training should be provided to employees in the shipping and receiving areas, as well as those receiving and opening mail.

Additionally, specific training should be offered to assist employees in maintaining cargo integrity, recognizing internal conspiracies, and protecting access controls. These programs should offer incentives for active employee participation.

Physical Security

Cargo handling and storage facilities in domestic and foreign locations must have physical barriers and deterrents that guard against unauthorized access. Importers should incorporate the following C-TPAT physical security standards throughout their supply chains as applicable:

Fencing. Perimeter fencing should enclose the areas around cargo handling and storage facilities. Interior fencing within a cargo handling structure should be used to segregate domestic, international, high value, and hazardous cargo. All fencing must be regularly inspected for integrity and damage.

Gates and Gate Houses. Gates through which vehicles and/or personnel enter or exit must be manned and/or monitored. The number of gates should be kept to the minimum necessary for proper access and safety.

Parking. Private passenger vehicles should be prohibited from parking in or adjacent to cargo handling and storage areas.

Building Structure. Buildings must be constructed of materials that resist unlawful entry. The integrity of structures must be maintained by periodic inspection and repair.

Locking Devices and Key Controls. All external and internal windows, gates and fences must be secured with locking devices. Management or security personnel must control the issuance of all locks and keys.

Lighting. Adequate lighting must be provided inside and outside the facility including the following areas: entrances and exits, cargo handling and storage areas, fence lines and parking areas.

Alarm Systems & Video Surveillance Cameras. Alarm systems and video surveillance cameras should be utilized to monitor premises and prevent unauthorized access to cargo handling and storage areas.

Information Technology Security

Password protection.Automated systems must use individually assigned accounts that require a periodic change of password. IT security policies, procedures and standards must be in place and provided to employees in the form of training.

Accountability. A system must be in place to identify the abuse of IT including improper access, tampering or the altering of business data. All system violators must be subject to appropriate disciplinary actions for abuse.

CBP's third draft C-TPAT security standards for importers availablefromBP via email by emailing documents@brokerpower.com.