Customs May Impose Stricter C-TPAT Standards

International Alert

The Customs-Trade Partnership Against Terrorism program (C-TPAT) may be undergoing some significant changes soon that importing companies should consider if they are about to apply, in process, or are already qualified to participate.

C-TPAT is a voluntary program offered by U.S. Customs and Border Protection (CBP), in which participants agree to implement supply chain security measures in exchange for reduced inspections and faster border access (e.g., the FAST program). The requirements to qualify for C-TPAT have been evolutionary, with CBP developing criteria as it has implemented the program over the last few years. In recent months, CBP has begun to consider more rigorous standards for applicants. Among the changes being considered:

  • CBP would require C-TPAT importers to obtain, evaluate, and verify written responses to a security questionnaire from all of their “business partners” -- including suppliers, carriers, terminal operators, brokers and consolidators -- in effect, shifting the “enforcement” burden of reviewing those entities’ security procedures from CBP to the importers who work with them; and
  • CBP would standardize and formalize the various security procedures that C-TPAT importers are expected to address in their own security questionnaires. All importers would be held to the same set of specific, detailed requirements related to container security, physical access controls, personnel security, procedural security, information technology security and security training. New standards would be established for container seals.

If adopted, such changes would represent a fundamental shift in the C-TPAT program, which until now CBP had presented as a voluntary, flexible program under which each importer could establish, and then disclose to CBP, its own company-specific security procedures, subject to guidance from the agency in the form of published “best practices.” Under the current program, importers are not obligated to enforce CTPAT compliance by other entities in their supply chains, but are merely expected to notify their counterparts of the C-TPAT security guidelines and encourage them to participate. Moreover, an importer is held only to the security commitments that it makes for itself, guided by factors such as its import volumes, the type of merchandise it imports, the regions from which it imports, and the identities of its suppliers and service providers.

The changes under consideration by CBP reflect what many have believed is an inevitable shift in the program’s emphasis, from soliciting voluntary cooperation from private parties to imposing mandatory requirements on those who choose to participate. CBP has consistently stated that it does not intend to make C-TPAT participation mandatory for all U.S. importers -- and indeed it lacks the legal authority to do so. Nonetheless, it is clear that CBP is looking for ways to put more “teeth” into the program by holding participants to more clearly defined and rigorous standards, and placing the responsibility for evaluating, verifying and monitoring the standards of suppliers and service providers on importers. There is no question that changes such as those now being considered would substantially increase the cost and administrative burden of C-TPAT participation, and would raise the bar for those seeking admission to the program. Further, it is unclear how such changes would impact those already participating in the program. Importing companies -- whether or not already participating in C-TPAT -- should remain on the alert for pending changes that could affect their business decisions relating to cargo security issues.

We will keep you posted as the C-TPAT program evolves.

Related Files
Related Links

The information contained in this newsletter is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information about these issues, please contact the author(s) of this newsletter or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This newsletter is protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this newsletter without prior written consent of the copyright holder.