Overview of Customs and Border Protection’s Self-Policing Import Programs
1. Customs-Trade Partnership Against Terrorism (C-TPAT) Program
The Customs-Trade Partnership Against Terrorism (C-TPAT) program was formed in direct response to 9/11, and the announcement of its creation was made two months after the attacks. 1 C-TPAT is a voluntary partnership between the government and the private sector created as part of Customs and Border Protection's (CBP) effort to increase the security of imports. 2 C-TPAT participants are certified by CBP to monitor their own supply chain security, and in exchange they receive a number of benefits from CBP, including expedited processing of imported containers.
For a number of years, C-TPAT essentially existed solely as a policy of CBP, with limited congressional input. In 2006, however, Congress weighed in by passing the SAFE Port Act, officially establishing C-TPAT "to strengthen and improve the overall security of the international supply chain and United States border security." 3
To gain acceptance to C-TPAT, a company must complete a five step process:
- Application – A company submits the required information via an online form and signs an agreement to participate in C-TPAT.
- Security Profile – Within 60 days of the initial application, the company must evaluate its security measures at specified points throughout the supply chain.
- Certification – A review is conducted by a government employee who is a Supply Chain Security Specialist (SCSS) to assess the applicant's compliance with CBP's minimum security standards for that trade sector.
- Vetting – While evaluating the security profile, the SCSS also analyzes the company's history of compliance and violation of customs law. The SCSS is to identify any questionable findings that may bar an applicant from being trusted with the self-regulation implicit in the C-TPAT program. If an importer has a favorable review under both the certification and vetting processes, benefits to the importer can begin.
- Validation – A review, again conducted by an SCSS, is conducted one year after a company is approved for C-TPAT. The SCSS meets with company representatives to determine the extent to which the security profile is accurate and reliable. Importers who exceed the minimum requirements are approved for extra C-TPAT benefits corresponding with their level of security.4
Once these materials are submitted, the importer begins its climb up the C-TPAT tiered benefits system. The first tier allows for a reduction of an importer's Automated Targeting System score. 5 The second tier is reached when CBP validates the company's security measures, and allows access to benefits that may include priority cargo searches and a reduction in cargo examinations. At the third tier, associated with the highest level of compliance, importers can expect expedited release of cargo regardless of the DHS threat level, a further reduction in cargo examinations, and priority when they are selected for cargo examinations.6
This year, the Senate proposed the "Customs Facilitation and Trade Enforcement Reauthorization Act of 2009,"7 which would allow for the development and implementation "additional trade benefits" for Tier 1, 2, and 3 C-TPAT participants.8
2. Importer Self Assessment (ISA) Program
Another perk of C-TPAT tier-three status is Importer Self Assessment (ISA) program eligibility. The ISA program, announced on June 13, 2002,9 allows importers to evaluate their own compliance with federal trade laws. ISA was created by CBP using its regulatory audit authority, and has not been codified by Congress.
ISA was implemented as a way for "interested importers to assess their own compliance with Customs laws and regulations."10 To become a member of ISA, an importer must be a member of the C-TPAT program, and submit an application, ISA questionnaire, and Memorandum of Understanding (MOU). The application includes basic company information and a statement certifying its C-TPAT standing. The questionnaire is two pages of "yes or no" questions followed by a page of short-answer questions.11 The MOU is a signed document under which the importer agrees to oversee itself according to CBP policies, inform CBP if something is wrong, maintain records in case a review is initiated, and submit a yearly update confirming that the company continues to meet CBP security standards.12
Those documents are submitted to CBP for review. In some cases, the agency may send liaisons to consult with the company on its application. CBP stresses that this process "will not be an audit and will not involve extensive testing."13 Should CBP determine that the applicant is not ready to properly assess itself and make changes to its compliance program, CBP will work with the company to make the necessary improvements. If the company passes CBP's review, the agency will sign the MOU and the benefits begin immediately.
ISA members get even more leeway than C-TPAT members. As an ISA participant, an importer will be exempt from certain comprehensive compliance audits,14 performed by CBP, but they may be subject to more limited-scope audits, such as Quick Response Audits.15 CBP points out, however, that "it is unlikely that an ISA approved company, with established internal controls, would be the subject of a referral audit."16
3. Importer Self-Assessment Product Safety (ISA-PS) Pilot
In late 2008,17 again acting without congressional oversight, CBP in conjunction with the Consumer Product Safety Commission (CPSC) started the Importer Self-Assessment Product Safety (ISA-PS) pilot program. The pilot program was conceived by an "Interagency Working Group on Import Safety" charged with "identify[ing] actions and appropriate steps that can be pursued, within existing resources, to promote the safety of imported products."18 An ISA company applying for this pilot will be evaluated simultaneously by the CBP and CPSC against a list of "best practices to ensure compliance with CPSC's current regulations."19 If CBP and CPSC agree that an importer is credible, the company will be trusted to "ensure product safety at all points in the product life-cycle"20 of their imports.21
Requirements include being an active ISA member, completing a questionnaire and addendum to the ISA MOU, agreeing to "comply with all laws and regulations administered by CBP, as well as CPSC," maintaining internal controls, and submitting an annual notification to CBP that "acknowledges that the importer continues to meet the requirements of the ISA-PS pilot program."22
4. Broker Self-Assessment (BSA) Pilot
In April 2009, CBP started the Broker Self-Assessment (BSA) pilot program.23 "Under the BSA program pilot, participating customs brokers will update and improve internal controls, perform periodic testing of these internal controls, and disclose to CBP deficiencies discovered through the testing. The primary goal of the pilot is to ensure a high level of broker compliance with CBP laws and regulations."24 According to CBP, "[c]ustoms brokers are private individuals, partnerships, associations or corporations licensed, regulated and empowered by [CBP] to assist importers and exporters in meeting Federal requirements governing imports and exports."25
Similar to the other self-policing programs, BSA members must be C-TPAT members, complete a questionnaire, "agree to comply with all applicable CBP laws and regulations,"26 and conform to a few other requirements. Applications were reviewed by CBP, and in July 2009, four brokers were selected to participate in the year-long pilot.27
1 U.S. Customs and Border Protection, "Commissioner Robert C. Bonner: Trade Symposium 2001 Opening Address," November 27, 2001.
(Downloaded December 8, 2009)
2 Non-C-TPAT importers suffer border disruptions due to increased examinations and slower processing periods to get cargo released by CBP. See U.S. Customs and Border Protection, C-TPAT: A Guide To Program Benefits, no date provided. (Downloaded December 9, 2009)
3 U.S. House of Representatives, 109th Congress, "H.R. 4954: To improve maritime cargo security through enhanced layered defenses, and for other purposes" (Report No. 109-447), March 14, 2006. (Downloaded December 8, 2009)
4 Government Accountability Office, Testimony Before the Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, United States Senate – Homeland Security: Key Cargo Security Programs Can be Improved (GAO-05-466T), May 26, 2005, pp. 3, 6-8. (Downloaded December 8, 2009)
5 The Automated Targeting System (ATS) is "a CBP data system that obtains, provides, and analyzes sources of information in order to track import shipments that may pose a risk to the United States. The ATS assigns a risk based point score to shipments as they enter or prepare to enter the United States." Department of Agriculture, Food Safety and Inspection Service, FSIS Directive: Targeting for High-Risk Imported Product Shipments, September 10, 2008, p. 1. (Downloaded December 8, 2009)
6 Government Accountability Office, Supply Chain Security: U.S. Customs and Border Protection Has Enhanced Its Partnership with Import Trade Sectors, but Challenges Remain in Verifying Security Practices (GAO-08-240), April 2008, p. 20. (Downloaded December 8, 2009)
7 111th Congress, S. 1631, Sec. 201, Trade Benefits Under The Customs-Trade Partnership Against Terrorism. (Hereinafter S. 1631).
(Downloaded December 9, 2008)
8 S. 1631, Sec. 201(a).
9 Department of the Treasury, United States Customs Service, Importer Self-Assessment Program (4820-02-P), June 13, 2002. (Hereinafter ISA Program). (Downloaded December 8, 2009)
10 ISA Program, p. 1. ISA is the successor to the Importer Compliance Monitoring Program, initiated in 1998.
11 U.S. Customs and Border Protection, Office of Strategic Trade, Importer Self-Assessment Questionnaire. (Downloaded December 9, 2009)
12 ISA Program, p. 4.
13 ISA Program, p. 5.
14 U.S. Customs and Border Protection, Office of Strategic Trade, Importer Self-Assessment Handbook, September 2005, p. 2 (Sect. 2.3 Benefits). (Downloaded December 8, 2009)
The ISA Handbook states that ISA benefits include the import's removal "from the Regulatory Audit Division's (RAD) audit pool established for Focused Assessments. (Importers will be removed from the RAD's audit pool for Drawback and Foreign Trade Zones if they request to have these programs included in the ISA Program.) The audit exemption will apply to each specific area when it is determined that adequate internal controls are in place. (Importers may be subject to on-site examinations for single-issue reviews.)." A focused assessment (FA) is described by CBP as a "risk based approach to audit[ing]." A focused assessment examines a company's internal controls and only examines areas deemed to be "at risk." See: U.S. Customs and Border Protection, Office of Strategic Trade, Regulatory Audit Division, Focused Assessment: a Risk Based Approach to Audit, 2001. (Downloaded December 8, 2009)
15 "Quick Response Audits (QRAs) are single-issue audits with a narrow focus. These audits are designed to address a specific objective within a short period of time. QRA is a term used to cover a variety of audits that will have limited objectives as opposed to the complete evaluation of a company's Customs and Border Protection (CBP) activities in the focused assessment program." U.S. Customs and Border Protection, "Quick Response Audits," May 17, 2006. (Downloaded December 8, 2009)
16 U.S. Customs and Border Protection, Importer Self-Assessment: Frequently Asked Questions, June 2006. (Downloaded December 9, 2009)
17 Federal Register, "Department of Homeland Security: U.S. Customs and Border Protection: Importer Self-Assessment Product Safety Pilot," Vol. 73, No. 210, October 29, 2008. p. 64356. (Hereinafter ISA-PS Fed. Reg.). (Downloaded December 8, 2009)
18 The Working Group was created on July 18, 2007 by President George W. Bush in Executive Order 13439. See: ISA-PS Fed. Reg. p. 64356.
19 ISA-PS Fed. Reg. p. 64356.
20 ISA-PS Fed. Reg. p. 64356.
21 U.S. Customs and Border Protection, "CBP, CPSC to Partner with Importers on Product Safety Pilot," October 29, 2008. (Downloaded December 8, 2009)
22 U.S. Customs and Border Protection, Office of International Trade Importer Self-Assessment-Product Safety Pilot Program Addendum, October 2008. (Downloaded December 9, 2009)
23 Federal Register, "Department of Homeland Security: U.S. Customs and Border Protection: Broker Self-Assessment Outreach Pilot," Vol. 74, No. 79, April 27, 2009. p. 19103. (Hereinafter BSA Pilot). (Downloaded December 8, 2009)
24 U.S. Customs and Border Protection, "CBP Selects Broker Self-Assessment Pilot Participants," July 29, 2009, p. 1. (Hereinafter BSA Participants). (Downloaded December 8, 2009)
25 U.S. Customs and Border Protection, "Becoming a Customs Broker." (Downloaded December 8, 2009)
26 BSA Pilot, p. 19103.
27 BSA Participants, p. 1.
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