Expert Outlines Benefits, Shortcomings of C-TPAT and CSI, Recommends Solutions (Including Third Party Validations)

(See ITT's Online Archives or 05/31/05 news, 05053115 for initial BP summary of this hearing. See ITT's 06/17/05 news, 05061705, for BP summary of CBP Commissioner Bonner's written and oral testimony for this hearing.)

Benefits of C-TPAT and CSI

According to Flynn, although C-TPAT and CSI have serious shortcomings, benefits of these programs include:

Fundamental change in how trade and CBP view each other. C-TPAT has helped usher in a fundamental change in how most companies and customs officials view their roles in container security by transforming the "cat-and-mouse" relationship by generating a wider appreciation within the private sector that importers and exporters must be a constructive partner in bolstering supply chain security.

Opportunity to detect and intercept dangerous cargos before loading. CSI creates an important opportunity for detecting and intercepting potentially dangerous cargoes before they are loaded on an ocean carrier destined for a U.S. port.

Greater cooperation and accountability among customs agencies. CSI has the potential to promote greater levels of cooperation and accountability among customs agencies. CSI also helps reverse a trend over the past few decades toward nations making only a cursory effort to monitor the exports leaving their jurisdictions.

Major Problems with C-TPAT and CSI

According to Flynn, while in principle, C-TPAT and CSI provide an excellent foundation for bolstering container security, the current ways these programs are being resourced and managed is largely undercutting that potential. Flynn notes that among the major problems are:

C-TPAT and CSI are "trust, but don't verify systems." The voluntary nature of C-TPAT and CSI translates into it being a "trust, but don't verify" system because the benefit of facilitated access to the U.S. market is offered without validating in advance that the participants are taking sufficient measures to ensure that they will not be compromised. Flynn notes that CSI currently suffers from a similar problem of providing membership without requiring that the host country demonstrate their ability to conduct inspections based on an established set of criteria.

C-TPAT and CSI may raise risk of a WMD being smuggled into participants' supply chains. As it currently operates, C-TPAT inadvertently may be actually raising the risk of a weapon of mass destruction (WMD) being smuggled into the U.S. via a participant's supply chain because CBP is placing too much reliance on the capacity of legitimate companies to independently put in place adequate supply chain security measures to deter terrorist groups from exploiting those chains. Flynn notes that since smugglers and terrorists know legitimate companies are viewed with much less scrutiny by U.S. authorities, it is these companies that present the best opportunity to get into the U.S. undetected if they can identify and exploit a vulnerability. According to Flynn, a second reason for a terrorist organization to explicitly target a C-TPAT participant is that a successful penetration will have the derivative advantage of eroding public trust in the U.S. government's risk-management model.

C-TPAT's lack of specific standards undermines incentive for legitimate companies. The lack of specific standards under C-TPAT that are uniformly enforced is undermining the incentive for legitimate companies to invest in upgraded supply chain security measures.

Resource constraints may create barrier to trade with less developed countries. To the extent that resource constraints prevent CBP from extending CSI to less developed countries, the U.S. may end up indirectly creating a barrier to trade with those nations. This then would have the unintended consequence of eroding the development prospects for those countries, thereby creating the very conditions that fuel the terrorist threat.

C-TPAT and CSI conflict with ISPS. There are conflicts between the operation of CSI and C-TPAT and the International Ship and Port Facility Security Code (ISPS) that came into effect on July 1, 2004. C-TPAT places requirements that are redundant or exceed the ISPS mandates on ocean carriers and marine terminals, but participation is voluntary and CSI places some poorly defined requirements on the ports who are participating, but it is not a universal program.

Recommendations for Addressing CSI and C-TPAT Shortcomings

In concluding his remarks, Flynn states that the shortcomings outlined above are very serious, but can be addressed at a reasonable cost, making it possible to advance the very positive objectives that spawned CSI and C-TPAT in the first place. Flynn states that:

Authorize third parties to conduct validation audits. The way to advance the credibility of C-TPAT is for DHS to authorize third parties to conduct the validation audits of the proposed security protocols.

Work with allies to develop standard for container tracking and monitoring. To minimize the risk that containers from C-TPAT participants will be targeted by terrorist organizations between the factory and the loading port, the U.S. government needs to work with the European Union and its other allies in advancing a standard for tracking a container and monitoring its integrity.

Endorse pilot project of Container Terminal Operators Assoc of Hong Kong. The U.S. government should endorse a pilot project sponsored by the Container Terminal Operators Association (CTOA) of Hong Kong in which every container arriving in the two busiest marine terminals in the world are, at average speeds of 15 kph, passing through a gamma ray machine, a radiation portal, and optical character recognition cameras which record the container number. These images and radiation profiles are then stored in a database allowing the virtual inspection of any and all containers entering the terminal.

Encourage international development organizations to fund NII equipment, etc. The State Department should lead a federal effort to have international development organizations (i.e., World Bank, regional banks, World Trade Organization, etc.) provide the less developed countries with the non-intrusive inspection (NII) equipment, training, and data management tools to examine cargo entering and leaving their jurisdictions.

Link C-TPAT and CSI to ISPS Code. CSI and C-TPAT should be linked to the ISPS code.

Steven Flynn's written testimony (dated 05/26/05) available at http://hsgac.senate.gov/_files/STMTFlynnCFR.pdf.