2006 Year in Review for C-TPAT

This past year has seen a number of significant developments related to the Customs-Trade Partnership Against Terrorism, and supply chain security in general. Below is a brief chronology of significant events.

• February: The proposed purchase of the P&O operated US port terminals to Dubai Ports World causes strong media and public reaction. Congress debates the security implications of this transaction, eventually leading to DPW withdrawing the offer.
• March: CBP releases the Supply Chain Security Best Practices Catalog.
• April: Security Guidelines are issued for air carriers, air freight consolidators, NVOCCs and US marine or port terminal operators.
• August/October: CBP requires all current C-TPAT partners to update their supply chain security profiles onto the newly operational C-TPAT portal. Members who fail to do so risk losing their partner status.
• September: The Container Security Initiative reaches 50 foreign seaports.
• October: President Bush signs the HR 4954 – THE SAFE PORT ACT codifying C-TPAT, the tier system, the benefits awarded to partners and the validation process. It goes on to require that validated members undergo revalidation every four years. Notably, this bill also allows for the creation of a one year pilot project for third party validation inspections in China.
• December: Minimum Security Criteria is issued for US Customs Brokers.

Looking ahead to 2007:

While 2006 certainly proved to be a year with considerable advances for supply chain security, 2007 promises to deliver more significant developments. Already, in January the House of Representatives voted on and passed a new Cargo Security Bill, based on the recommendations from the 9/11 commission. This new bill will require that all cargo transported by passenger aircraft undergo scanning by the end of 2007. Furthermore, it also calls for ocean containers to be screened for radiation at selected foreign ports before they are loaded onto vessels. The bill requires this pre-screening at a number of large volume container ports within three years, and universally within five years. It remains to be seen whether this bill will be passed by the Senate, especially as the container screening provision is considered by many industry experts as causing too much of a drag on the movement of goods, and one that may ultimately not increase security appreciably.

Furthermore, in July 2007, the European Union will begin accepting applications for companies to become Authorised Economic Partners (AEO), similar to C-TPAT partner status open to US importers and transportation service providers. This will pave the way for the roll-out of the AEO program by January 2008.  Ultimately, both CBP and their EU counterparts are seeking to establish mutually recognized programs, whereby membership benefits, namely expedited customs clearance, will be extended to each others’ partners. Both programs share many similar requirements of their members, and promise related benefits. According to an article recently published on the website of the International Federation of Customs Brokers Associations (IFCBA), CBP will move “very quickly” towards recognizing supply chain security programs in a half-dozen countries, including New Zealand, Jordan, Canada, Australia and Sweden, that meet U.S. standards, [Todd] Owen (executive director of cargo and conveyance security, CBP) said during the agency’s Trade Symposium last month. These countries already have strong security partnership programs in place and have gained the confidence of U.S. officials.”

Lastly, 2007 will surely see an increase in the number of C-TPAT partner Validations, as CBP has been tasked with clearing up any backlogs by the end of the year. To date, CBP has conducted validations for roughly 66% of certified members, leaving roughly one third to complete. Moreover, thus far the government of the People’s Republic of China has prohibited US Customs agents from conducting site visits within its territories. The SAFE PORT ACT now orders CBP to explore the possibility of using third party monitoring firms to conduct Validation site visits in the PRC. There should be developments in this direction within the next few months.

All in all, it appears that 2006 brought significant and at times dramatic developments for the field of supply chain security. If the recent legislative events are anything to go by, 2007 should also be a year to watch. We will be following these events closely; check back soon!

Sources:

“CBP readies C-TPAT for mutual recognition, 3rd party validators”. International Federation of Customs Brokers Associations (IFCBA). Posted by Administrator on 2007/1/4 16:09:58. http://www.ifcba.org/modules/news/article.php?storyid=301