Despite Recent C-TPAT Updates, Challenges Persist

Among the major roadblocks is that C-TPAT is not governed by statute or regulation and CBP is free to modify the rules, said Ted Murphy, a customs lawyer with Baker & McKenzie. “The C-TPAT requirements have evolved” and the continual possibility of further changes make consideration difficult, he said. CBP hasn’t done anything to change the regulatory status of C-TPAT because it "benefits from not being governed," said Murphy. The benefits of joining the program are generally unclear, as some companies don't see how joining would benefit them, Murphy said.

Part of the problem is that larger companies don’t notice a meaningful drop in exams or available time and resources and there are no programs for smaller companies, said Michael Laden, CEO of Trade Innovations, a consulting company that focuses on customs issues. While C-TPAT's original vision was to separate clearly between “the haves and the have-nots," those "not involved aren’t suffering enough,” he said. Laden, who worked with former CBP Commissioner Robert Bonner on the original formulation of C-TPAT, said,­ "CBP likes free-wheeling without government regulation and that strategy is no longer effective and has plateaued."

Joining C-TPAT is a "perceived cost to some" due to a lack of tangible benefits, independent of company size, said Pete Mento, who heads the customs practice at Ryan, a tax consulting company. Some of the most basic reasons behind the program aren't even realized, he said. “If the entire point of the program was to make cargo security more secure; it hasn’t done that," Mento said. The agency also pushes away some potential participants by going too far with its requirements. "Customs listens to complaints and does what it can, but now it’s overreaching," Laden said. Overly intrusive C-TPAT verifications are one example of CBP's overreach and customs needs to stop “raising the bar beyond reasonable expectations," Laden said. Laden considers C-TPAT and other trusted trader programs overall to be a “huge win,” for CBP, but not necessarily for the trade, he said.

CBP can’t really quantify the benefits because it is done on a “case by case basis,” said Lenny Feldman, a customs lawyer with Sandler Travis. Some additional benefits may still emerge as there are programs still in development and CBP has begun granting compliant companies benefits. Also, 11 out of 15 of the U.S.’s top trading partners have signed Mutual Recognition Agreements that allow for reciprocal consideration of trusted trader programs, Feldman said. As of July 2015, there were over 11,000 companies that have been certified as "trusted Partners," and more than 54 percent of all imports entering the United States are C-TPAT certified, including 344 Tier 3 importers, said CBP (here). Importers, with 4,260 accounts, make up the biggest percentage of C-TPAT certifies partners. Brokers accounted for 866 of the total number of certified members.

Feldman remains confident in the program and its benefits. "As CBP and participating government agencies develop a trusted trader model, participation will dramatically increase," Feldman said. Importers and exporters will also see further benefits once the Centers of Excellence and Expertise become better aligned with C-TPAT, he said. As more companies become members, non-members will “stick out” and will be "subject to increased targeting,” said Feldman. So far, advanced manifests, screening, and scanning have already resulted from C-TPAT, paying back the trade side for the tolls C-TPAT has taken, said Feldman.

How to attract new participants remains an open question and the addition of C-TPAT for exporters is a new source of hope for the program's future. The best option for increasing participation would be to create a sort of “one-stop shopping for traders,” Laden said. The agency could also do a better job of advertising tangible benefits, he said. "Customs hasn’t done a good enough job (of promoting the program) because CBP doesn’t have the infrastructure to compel or entice companies to join C-TPAT and small and medium size companies think it’s too onerous," Laden said. CBP didn't return a request for comment.

CBP has made a recent effort to improve some pieces of the program, such as the new C-TPAT portal (see 1411170024). "The new C-TPAT portal is an improvement from the old version and there will be additional modifications," says Feldman. Another new initiative, CBP's ongoing Trusted Trader pilot (see 14061320), could be considered "C-TPAT and ISA on steroids," and CBP should address the problems with the current C-TPAT before any new programs get started, said Laden.