USCIB & AAEI Ask CBP for "Next Gen" C-TPAT (10+2 Release, Zero Exams)

(This is USCIB's final list of 18 recommended C-TPAT benefits. On March 15, 2011, USCIB shared with Bersin and his senior staff, USCIB's provisional list of 18 benefits envisioned for C-TPAT participants. See ITT's Online Archives or 04/01/11 news, 11033170, for BP summary.)

18 Benefits Sought for Tier 2 and 3 C-TPAT Participants

In their letter, the U.S. Council for International Business (USCIB) and American Association of Exporters and Importers (AAEI) said that the implementation of the following benefits would increase the number of businesses participating in C-TPAT, which they state is in line with Bersin's goal to quadruple C-TPAT membership in the next five to seven years:

1. Utilize account structure. Utilize the account structure for minimizing transactional data needs and data comparisons to improve pre-trade flow parameters and minimize expensive data collection/transmission/retention.

2. Base cargo release on 10+2. Base cargo release on the 10+2 acumen inside a valid trade account and permit monthly entry of cargo aligned with periodic monthly statement (PMS).

3. Paperless customs entries. Pure paperless entries for all customs entries, except for hardcopy documents required by other agencies with jurisdiction over admissibility. All agencies should go paperless upon functionality of the International Trade Data System (ITDS).

4. Zero inspections. Zero inspections for purposes of enforcing compliance with trade laws.

5. Expedited response to ruling requests. Expedited response, or first-in-line priority, to requests for rulings so that importers are notified of a decision within 10 days versus the normal 30 days.

6. Penalty mitigation. Penalty mitigation for customs violations, except in cases of fraud. Recognize the due diligence that generates prior disclosures is more reflective of compliance research than current practices. In a specific penalty case, implement a formal penalty discounting for C-TPAT Tier 2 and 3 members.

7. Combine multiple suffixes in single statement. Allow multiple suffixes to the same nine-digit IRS number to be combined in a single statement for the periodic monthly statement. Tier 2 and 3 importers would be allowed to combine multiple two-digit suffixes to the same nine-digit root IRS numbers. This is a change from the current PMS requirement that all entries on statements must be for the same 11-digit IRS number.

8. Elimination of CF-28. Sharply reduce, or eliminate, the use of the CF-28 form to request information from importers and their brokers. Questions about classification of a product or other commercial issues should only be handled by the company's designated CBP account manager and the importer could submit its response electronically.

9. Prior disclosure benefit. Allow importers the opportunity to implement corrective action plans or make a prior disclosure before seizure of shipments or the issuance of fines and penalties. An importer would be allowed a reasonable period of time, perhaps 30 days, to address and cure the situation that led to the seizure of penalty. The prior disclosure benefit is similar to the disclosure process allowed under the Importer Self-Assessment (ISA) audit program.

10. Inland processing in bonded warehouse for C-TPAT carriers. Allow C-TPAT carriers to move shipments inland to their bonded warehouse for processing before the entries are submitted to CBP. The shipments would remain in complete control of the carrier, who would sort out the small volume that requires CBP inspections (non-security) and move them back to the border if necessary.

11. Expedite movement of cargo. Creation of a plan by CBP to expedite C-TPAT Tier 2 and 3 members' cargo following a shutdown/lockdown at the port. C-TPAT members have been told they will receive expedited treatment to move their goods following a shutdown/lockdown yet to the trade's knowledge there is not a plan to carry out this benefit. Therefore, USCIB and AAEI request for Congress to require for CBP to provide a report on how they will expedite cargo at the land border and sea port following a port shutdown/lockdown.

12. Expedite background checks. The requirements for discretionary background checks for Tier 2 and 3 participants should be waived (e.g. approved Foreign-Trade Zones, prior to activation, but not waived without cause or within a 3 year time frame from activation). In cases where Tier 2 and 3 importers are required to have Background Checks, the Port Director would request expedited servicing of the request by U.S. Immigration and Customs Enforcement (ICE).

Also, once required, Tier 2 and 3 firms would receive expedited service for and program that requires background checks for Tier 2 and 3 employees/contractors (such as TWIC or similar worker identification cards). CBP should also report back to Congress on the implementation of this benefit.

13. Only hold container being examined -- not entire shipment. Allow Tier 2 and 3 members to break the seals on the containers not under examination. Currently, an entire shipment is held while CBP examines one container.

14. Lower bond liability. C-TPAT Tier 2 and 3 and ISA importers should have their bond liability (the value upon which they are required to post CBP Bonds) on a lower bond calculation for single transaction and continues entry bond formulas to allow a lower limit of liability. USCIB's and AAEI's proposal is that single transaction entry bonds will always be set at a value plus estimated duty; continuous entry bonds will be set as 5% of duty, fees, and taxes paid in the previous year, or 5% of on-hand foreign inventory value.

15. Tax incentives and safety enhancements. Tax incentives for supply chain security and safety enhancements related to the supply chain's secure commerce investments.

16. Reduce merchandise processing fee. Reduce the merchandise processing fee by 50% for C-TPAT Tier 2 and 3 members. The fee is used to process entries forms. C-TPAT members require fewer resources and effort by CBP to process their entries. Therefore, they should pay a lower fee.

17. Provide clearer role for account managers. Define what role they play and don't play. Are they supposed to serve as an advocate or single point of entry for the company to Customs? Do they have the ability to communication with ports? Can there be a two-way exchange? What about cases of "absentee" account managers?

18. Mutual Recognition. Work to achieve mutual recognition between C-TPAT, PIP (Canada's Partners in Protection Program, and AEO.

Say Interaction Should be Focused at Pre-Trade and Post-Trade Events, Etc.

USCIB and AAEI also said that the core benefit of C-TPAT and the supporting effort need to focus on the pre-trade and post-trade events of the supply chain. These elements are surrounded by a trade account perspective that focuses on use of the supply chain via a secure network.

They added that the delineation of trade between tiers is often only necessary when the capacity of the government does not exist, and prioritization of limited resources is necessary to manage congestion.

(See ITT's Online Archives or 04/18/11 news, 11041825, for BP summary of Bersin stating that he would like to see C-TPAT grow from just over 10,000 to 40,000 participants within the next seven years. He also sought ideas from the trade on C-TPAT benefits they want.

See ITT's Online Archives or 04/22/11 news, 11042219, for BP summary of Senators introducing the SAFE Port Reauthorization Act to waive the 100% scanning deadline for maritime cargo, and provide additional benefits to Tier 2 and 3 C-TPAT participants.

See ITT's Online Archives or 07/13/11 news, 11071314, for BP summary of CBP highlighting its recent actions on C-TPAT, moving away from transaction-by-transaction to an account-based security approach, etc.)

Press releases on the May 15, 2011 meeting is available here and here.

USCIB and AAEI letter is available here.