CBP Work on C-TPAT Export Arm Continues, Though Many Details Undecided

“All other countries around the world focus on both imports and exports. In an effort to provide credibility to our exporters, we want to show other countries we have a clear understanding of their security program,” said Dan Baldwin, CBP Executive Director for Cargo and Conveyance Security, declining to comment on a specific target date for a pilot launch. “In order to launch a pilot program, its contingent on our ability to work with the trade community to build the security criteria that they would be accountable to ... After the idea is developed fully, and we have significant buy-in from our trade partners, that’s when we could start a pilot program.”

Baldwin said the security assurances, and affiliated costs, will likely be similar, but not precisely the same, as the C-TPAT import side. The primary costs for importers in the current C-TPAT program are associated with ensuring security at foreign manufacturing facilities, as well as on transportation routes to the export location, in customs facilities overseas and on international transportation routes, said an industry official. Obtaining background checks, when possible, are also costly, the official said.

As of early August 2013, Baldwin said 248 companies had signed up for an C-TPAT Export Operations Agreement that enables a certain level of preferential export status to some countries with which the U.S. shares Mutual Recognition Agreements (MRAs), although the 248 participants are not required to fulfill security criteria to U.S. customs officials. MRAs enable international customs officials to share individual company security disclosures. To date, CBP has signed seven MRAs with New Zealand, Canada, Jordan, Japan, Korea, the European Union and, most recently, Taiwan (here). These participant companies may provide the foundation for a C-TPAT export pilot that mandates security criteria adherence, Baldwin said.

The concept of incorporating an export arm has been floated for at least 18 months (here). The export inclusion concept stemmed from the idea that U.S. exporters could also pose a threat to global partners, as conduits of illicit material or weapons, and security assurances would foster more trade activity, said Julie Park, Senior Manager Export/Import Operations Raytheon Company, also a member of the Commercial Operations of CBP, better known as COAC, which advises CBP on customs policy. Park said the priority of an export arm is to ensure incentives. “What CBP needs to do is to show the trade community there will be trade benefits, primarily ease of foreign import,” said Park, adding the most likely beneficiaries will be pool of exporters that are able to control the import process into foreign countries. “There is also the potential for certain export practices to be expedited but that’s for CBP to flesh out.”

CBP works with companies on an individual basis to ensure supply chains are secure, CBP official Baldwin said, while noting the export arm will be completely voluntary, as is the import side. “We don’t want to hold up any cargo here. We don’t want to hold up cargo reaching destinations in other countries,” said Baldwin. “We’re not looking for companies to make tremendous investments on this. We want to make sure they are accruing as much of the profits as possible when exporting.”

CBP officials have offered other indications of private sector willingness to partake in a C-TPAT export arm. Sixty-seven percent of current C-TPAT member organizations favor inclusion of a C-TPAT export component, Acting Director of Imports/Exports in the CBP Office of Field Operations Ted Clifton said recently (see 13082223). Clifton said then a pilot program may launch in 2014.

Companies benefit financially from participation in C-TPAT but the expense can be a deterrent to some, said Adam Salerno, Senior Director of National Security and Emergency Preparedness at the U.S. Chamber of Commerce. “We see tremendous value in C-TPAT. To expand that globally to secure the supply chain is the goal. But benefits have to correspond with the costs, said Salerno. “We live in a reality of security challenges…IP challenges. Companies look at the supply chain as a competitive advantage. To guard against theft, IP violations, and obviously they don’t want to allow malicious acts to be done with their products, such as terrorist acts.”

Baldwin said CBP is targeting low-risk current C-TPAT participants to be the first companies involved in the export arm, while declining to elaborate further on which security assurances CBP deems sufficient. CBP has cited success recently in retaining low-risk participants. Only one percent of the participants were pushed out of the program in 2012, CBP said in June (see 13061318).

One major difference than the existing C-TPAT program is that the export supply chain has not been monitored to the extent of the import supply chain and, therefore, will inevitably be burdensome, however, said President and CEO of the American Association of Exporters and Importers Marianne Rowden. C-TPAT exporters "would have to change their supply chain. They would have to change their practices,” said Rowden. “At the end of the day, U.S. customs can not slow down U.S. exports. I think that’s the standard.” -- Brian Dabbs