C-TPAT, AEO and MRA - Benefits and Drawbacks to Security Arrangements
The first major post 9-11 security program adopted by U. S. Customs was the voluntary program known as the Customs – Trade Partnership Against Terrorism (C-TPAT). This program was developed under then Customs Commissioner Robert C. Bonner in part to leverage the knowledge that importers and subsequently other supply chain providers have about their own suppliers and operations; in part to give U. S. companies a way to demonstrate their concern with import security issues; and in part to demonstrate to Congress that methods other than 100% cargo inspections could be devised to secure America’s imports. C-TPAT quickly grew to include several thousand certified members, mostly but not exclusively larger companies. Membership allowed these companies to consider themselves a part of the 9-11 security response, and demonstrate their commitment to security to Customs and other agencies. As the program expanded to include customs brokers, carriers, and other service providers, it became a selling tool for such companies seeking business from C-TPAT certified importers as part of an integrated secure supply chain.
C-TPAT also served as the template for the development by the World Customs Organization of the SAFE Framework of Standards to Secure and Facilitate Global Trade. A major component of the SAFE Framework is the Authorized Economic Operator (AEO) concept, including the use of Mutual Recognition Agreements (MRA) between countries implementing such programs. AEO programs are required to be full-fledged operations, with strong validation and security components
built in, to qualify for MRA participation. AEO programs have been adopted by dozens of countries, some using their own program names (Partners in Protection in Canada, the Secure Export Scheme in New Zealand, the Golden List in Jordan), with Japan, Korea, Taiwan, Singapore, Israel, and all of the European Union included. As of December 2014, the U. S. has entered into MRA agreements with all of those jurisdictions, and is working toward agreements with China and Switzerland.
In the decade plus since the institution of the C-TPAT Program, membership grew to over 10,000 certified partners, but has stagnated at that level over the past several years despite plans by Customs to at least quadruple the size. (C-TPAT partners do import over 50% of the total value of U.S. imports, while constituting less than 1% of the total number of importers.) As the program developed and Customs gained more experience, the minimum security criteria and the information required from participants – particularly sometimes difficult to obtain data regarding foreign suppliers; and the formality of presentation – all electronic submission through a web Portal; increased. Validations have sometimes seemed to use mandatory checklists with limited applicability, such as questions relating to production facilities applied to office locations, or to container operations for bulk cargo like steel, with little opportunity to explain the differences or non-applicability. More validations are also being conducted in expensive, difficult locations, including those with limited volumes of trade.
A number of companies have begun to question continued participation as the costs and difficulty of maintaining certification increase, and the benefits seem more distant or elusive. Although Customs statistics show that C-TPAT participants undergo fewer cargo examinations, for many companies the actual reduced number has not been too significant. “Front of the line” exam processing and expedited trade processing by Centers for Excellence and Expertise (CEEs) have (at least yet) also not been found particularly helpful or necessary. The possibility of expedited treatment in any trade disruption is seen as (at least so far) an illusory benefit.
There are some meaningful benefits. For carriers, participation allows access to the FAST lanes (highway carriers) and penalty mitigation (maritime carriers for late ISF data). Importer participation is required to join the Importer Self Assessment (ISA) program, and to secure Partnership level processing from the CEEs. Importers with large numbers of entries receive greater benefits from reduced inspections. The inclusion of other government agencies, such as the FDA and TSA, results in benefits to companies regulated by such agencies.
MRAs with AEO countries reduce the time and cost for C-TPAT importers when their suppliers are part of the exporting country AEO program – both verification and validation is done by accepting the other country’s approvals. (This does mean that U.S. validations of foreign suppliers will be of non-AEO companies and countries.) The addition of a C-TPAT for exporters module means that exporters qualified and validated by U.S. Customs can be accepted as validated suppliers in the importing country’s AEO program without necessitating a second set of documentation and/or verification.
It remains to be seen whether the increasing costs and complexity of participating in C-TPAT will lead to continued lack of growth or even reduction in numbers, or the benefits from full implementation of the CEEs, improved administration from the consolidation of the trusted trader programs, and expansion of the number of MRAs will trigger greater interest in becoming a member. Customs continues to direct significant resources to the program and push new companies to apply and current members to maintain membership.
Mutual RecognitionofAEOs = China, Japan, Norway, Switzerland, USA
Country
|
Date Launched
|
Program Title
|
Type
|
Number
|
Argentina
|
2006
|
Customs System of Reliable Operators
(SAOC)
|
Export
|
7
|
Canada
|
1995
Revised 2002, 2008
|
Partners in Protection (PIP), Customs Self-Assessment
(CSA), Free and Secure Trade (FAST), Partners in
Compliance (PIC)
|
PIP - Import/export
CSA, FAST, PIC - Import
|
1,535
|
Colombia
|
2011
|
AEO
|
Import / Export
|
NA
|
Costa Rica
|
2001
|
PROFAC
|
Export
|
1
|
China
|
2008
|
Classified Management of Enterprises
|
Import / Export
|
2,174
|
Dominican Republic
|
2012
|
AEO
|
Import / Export
|
NA
|
EU (27 countries)
|
2008
|
AEO
|
Import / Export
|
13,885
|
Guatemala
|
2011
|
AEO
|
Import / Export
|
2
|
Hong Kong, China
|
2012
|
Hong Kong AEO
|
Import / Export
|
15
|
India
|
2012
|
AEO
|
Import / Export
|
4
|
Israel
|
2011
|
AEO
|
Import / Export
|
8
|
Japan
|
2006
|
AEO
|
Import / Export
|
518
|
Jordan
|
2005
|
Golden List
|
Import / Export
|
44
|
Kenya
|
2010
|
AEO
|
Import / Export
|
38
|
Korea
|
2009
|
AEO
|
Import / Export
|
292
|
Malaysia
|
2010
|
AEO
|
Import / Export
|
48
|
Mexico
|
2012
|
NEEC
|
Export
|
41
|
New Zealand
|
2004
|
Secure Exports Scheme
(SES)
|
Export
|
123
|
Norway
|
2009
|
AEO
|
Import / Export
|
32
|
Peru
|
2012
|
UAC-OEA
|
Export
|
NA
|
Singapore
|
2007
|
Secure Trade Partnership
(STP)
|
Import / Export
|
110
|
Switzerland
|
2011
|
AEO
|
Import / Export
|
14
|
| Taiwan | 2010 | AEO | Import / Export | 292 |
Thailand
|
2011
|
AEO
|
Import / Export
|
111
|
Turkey
|
2013
|
AEO
|
6
| |
Uganda
|
2012
|
AEO
|
Import / Export
|
NA
|
USA
|
2001
|
Customs-Trade Partnership against Terrorism
(CTPAT)
|
Import
Export program in development
|
11,201
|
The following are developing or have developed AEO programmes
Country
|
Program Title
|
Type
|
Botswana
|
Trans Kalahari Accreditation Scheme
|
Import / Export
|
Chile
|
AEO Pilot
|
Export
|
Ecuador
|
AEO
|
Export
|
El Salvador
|
AEO
|
Import
|
Former Yugoslav Republic of Macedonia
|
AEO
|
Import / Export
|
Indonesia
|
AEO
|
Export
|
Morocco
|
AEO
|
Import / Export
|
Serbia
|
AEO
|
Import / Export
|
Seychelles
|
AEO
|
Import / Export
|
Tunisia
|
AEO
|
Import / Export
|
Uruguay
|
Qualified Economic Operator
|
Import / Export
|
