REGULATORY ALERT

Customs and Border Protection (CBP)

Cargo Security - Kicking it Up a Notch

The Customs-Trade Partnership Against Terrorism (C-TPAT) has entered its second era without fanfare. While the C-TPAT initiative remains a voluntary program, Customs officials are making it clear that they expect importers to adhere to the new criteria. On March 25, 2005, Customs and Border Protection (CBP) published the "Security Criteria for Importers," establishing minimum-security criteria for importers either already enrolled in the C-TPAT program, or wishing to join the C-TPAT initiative.

NEW IMPORTERS WISHING TO JOIN C-TPAT: Importers wishing to join the C-TPAT program on or after March 25, 2005, will need to meet or exceed the security criteria before they will be 'certified' and eligible for benefits. Applications for new membership will only be accepted electronically, via the C-TPAT web-based online application for importers, http://cbp.gov/xp/cgov/import/commercial_enforcement/ctpat/importers/application_importer.xml, with the submission of a completed, comprehensive security profile that will also be required at time of application.

EXISTING C-TPAT MEMBER IMPORTERS: Importers who are already a member of the C-TPAT program, having completed and received the memorandum of agreement signed by CBP, a gradual, phased implementation approach will be followed which provides existing members more time to address the security measures outlined in the criteria. The components outlined in the security criteria document have been segmented into three distinct phases, each with their own timeline.

PHASE 1 – HARDENING OF THE PHYSICAL SUPPLY CHAIN: Under the first phase, CBP has asked the existing trade community members to raise standards in these areas by May 25, 2005.

Container Security (seals, inspections, storage).

Physical Security (fencing, lighting, parking, building structure, locking devices and key controls, lighting, alarm systems, video surveillance cameras).

Physical Access Controls (employees, visitors, deliveries, challenging and removing unauthorized persons).

PHASE 2 – INTERNAL SUPPLY CHAIN MANAGEMENT PRACTICES: Under the second phase, existing trade community members should review and enhance internal and procedural security elements by July 25, 2005:

Personnel Security (pre-employment verifications, background checks, personnel termination procedures).

Procedural Security (documentation processing, manifest procedures, shipping and receiving, cargo discrepancies).

Information Technology Security (password protection, accountability).

Security Training and Threat Awareness.

PHASE 3 – BUSINESS PARTNER REQUIREMENTS: Existing member importers have until July 26, 2005 to address the Business Partner Requirement elements. Importers must have written and verifiable processes for the selection of business partners including manufacturers, product suppliers, and vendors, and documentation substantiating that business partners throughout their supply chain are meeting C-TPAT security criteria, or equivalent supply chain security program criteria administered by a foreign Customs administration.

Moreover, the CBP "Security Criteria for Importers" as published on March 25, 2005 directed the trade community to raise its container security standards for sealing container cargo by May 26, 2005. Sources within CBP have stated that the new importer security criteria were intended to have been issued after the new carrier security criteria. The new carrier security criteria, including cargo-sealing guidelines, are currently scheduled for publication on or about September 25, 2005. Given this confusion and in lieu of formal action, CBP may or may not relax their position on when sealing becomes mandatory for C-TPAT partners.

As of today, CBP sources further advise the trade community to take no action regarding seals until the seal guidelines are issued to carriers. If you are currently sealing cargo containers, continue the practice. Once the new seal criteria are issued to the carriers, a decision regarding your current seals will have to be made. If your seals do not meet the ISO 17712 standard, the decision to allow you to exhaust your supply will need to be made at the CBP headquarters' level. We suggest directing this question to industry.partnership@dhs.gov.

Should you exhaust your current supply of seals before the new carrier criteria are published, it is suggested that you replace them with seals meeting the ISO 17712 standard. Containers are defined as a 20' or 40' ocean container, an aircraft container, a truck trailer or any other type of container that is equipped to carrier merchandise from point to point. Therefore, truck trailers coming from Canada to the US are considered containers.

Cargo seals are used worldwide to ensure the integrity of containerized cargo moving from point to point within the supply chain. Seals will not be acceptable for use on cargo loaded trailers arriving in the United States lanes, unless they meet the standards, specifications, and identification requirements of 19CFR24.13a(a), (b), and (c). More detailed information is available at the following link http://squid.law.cornell.edu/cgi-bin/get-cfr.cgi?TITLE=19&PART=24&SECTION=13&TYPE=TEXT. These specifications are further explained in ISO/PAS 17712. Unique markings and numbers that are readily legible shall identify seals; markings intended for unique identification of the seal shall be considered permanent. Any modifications of markings shall require irreversible physical, chemical, heat or other destruction of the security seal. According to some CBP contacts, these seals can be purchased at an estimated cost of somewhere in the neighborhood of $0.90 each to about $1.50 each. Considering the high security intent of the seal specifications, the cost is very likely to be higher.

Sealing is the responsibility of the importer of record, who is usually the shipper, but this responsibility might, in some cases, be to the carrier. At this point, it is not clear what will happen at the border if an unsealed truck shows up - because this is a C-TPAT requirement, the importer and/or possibly the motor carrier may stand to lose its C-TPAT status. Because C-TPAT is a voluntary program, it is doubtful that trucks will be refused entry into the US. However, failure to comply with the container security criteria may jeopardize the importer's voluntary C-TPAT status. C-TPAT importers receive significantly reduced trade and enforcement inspections and may be eligible to participate in other CBP low risk programs.

For more detailed information regarding "C-TPAT Importer Security Criteria":

http://www.cbp.gov/xp/cgov/import/commercial_enforcement/ctpat/criteria_importers/ctpat_importer_criteria.xml

For more detailed information regarding sealing procedures that conform with the ISO 17712:

http://www.cbp.gov/linkhandler/cgov/import/commercial_enforcement/ctpat/fast/fast_conveyance_seals.ctt/fast_conveyance_seals.doc

The Deringer Logistics Consulting Group offers a full scope of C-TPAT services to support importers/exporters, carriers, and supply chain partners. Services range from education and facility reviews, including the preparation of applications and attendance during audit validations. For more information on the Deringer Logistics Consulting Group's C-TPAT services, please call 518-297-3511.