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CBP Announces Test of Trusted Trader Program Unifying C-TPAT and ISA

Monday, June 16, 2014
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has announced plans to begin an 18-month test, in collaboration with the Consumer Product Safety Commission and the Food and Drug Administration, of a trusted trader program that will unify the Customs-Trade Partnership Against Terrorism and the Importer Self-Assessment program.

Applications to participate in this test may be submitted beginning June 16 and the selection of initial participants will begin no later than July 16. The test will be limited to fewer than ten participants, including one or more importers currently participating in C-TPAT, one or more importers not currently participating in any CBP partnership program, and one or two participants who have imports monitored by CPSC and FDA. The test is not open to current ISA partners at this time.

Goals. The trusted trader program test has the following goals.

- streamline the process through which importers can establish that they strive to secure their supply chains and strengthen their internal controls for compliance with the laws and regulations administered or enforced by CBP

- encourage entities to take such actions through incentives not currently available to C-TPAT and ISA participants

- strengthen security, identify low-risk trade entities and increase overall efficiency of trade by

segmenting risk and processing by account

- leverage the Centers of Excellence and Expertise to manage trusted trader accounts from an industry perspective

- move toward a whole of government approach to supply chain security and trade compliance by strengthening collaboration between CBP and FDA and between CBP and CPSC

- align with authorized economic operator programs that focus on a combined trade and security compliance model implemented by other countries around the world

Benefits. The incentives for participating in the trusted trader program test are as follows.

- incentives currently provided to C-TPAT importers, including a reduced examination rate, access to Free and Secure Trade lanes that allow expedited border crossing privileges, exemption from stratified exams for Tier III importers and Tier II importers that also participate in ISA, “front of the line” treatment for shipments that are subject to exams, and penalty mitigation for late submissions of importer security filing data

- incentives currently provided under ISA, includingremoval from the audit pool established for Focused Assessment, expanded opportunity to file prior disclosures of certain violations, mitigation of civil penalties and liquidated damages, expedited cargo release, and priority consideration for applications to participate in the CEE tests

- a reduced FDA targeting/examination risk score, predicated on the participant’s agreement to allow CBP to share C-TPAT certification status with FDA

- as part of a CBP penalty mitigation decision, a penalty offset upon request

- for companies also participating in the reconciliation prototype, the ability to file notice of intent to file a reconciliation after filing the entry summary up to 60 days prior to the date for which liquidation of the underlying entry summary has been set

- a reduced number of foreign-trade zone on-site inspections

- for drawback claimants, exemption from on-site visits from drawback specialists and a limit of one full desk review per year

- exemption from random non-intrusive inspections (though participants will have the opportunity to opt-out of this incentive entirely or identify the ports where they want it applied, and CBP will reserve the right to conduct NIIs as appropriate for operational reasons)

- where a Chemical Abstracts Service number is required for a chemical compound classified in HTSUS chapters 27, 28 and 29, a quarterly submission of the CAS number, the use and the description for the compound will be allowed in advance of the calendar year quarter

- post-entry amendments on unliquidated entries will be processed within 90 days

- in the post-release environment, the ability to choose an exam location other than the port of arrival that contains accommodations CBP considers amenable for a thorough exam

- for participants who are importers of record who file an entry in ACE or ACS for merchandise arriving by vessel in multiple containers and a portion of the merchandise covered by that entry is selected for examination, the participant will receive a release message and be allowed to take possession of all merchandise except the goods subject to further examination (except for entries where the admissibility decision resides with an agency other than CBP or for shipments that arrive to the U.S. customs territory other than by vessel)

In addition, for test participants who complete the product safety portion of the trusted trader application, if CPSC and CBP jointly approve, the following additional incentives will be provided.

- a product-specific CPSC point of contact who can assist in providing National Electronic Injury Surveillance System product codes for entry lines

- access to special training concerning product safety compliance, internal controls and CPSC

audit trails

- opportunity to apply for external participation coverage of multiple business units (multiple importer of record numbers)

- the expansion of benefits to all products of approved participants will be considered if the entry line(s) contains all applicable NEISS product code(s)

- reduced product safety tests on imported goods

- “front of the line” product safety testing by CPSC laboratories when testing is conducted

- products may be destroyed by participants in lieu of redelivery to CBP

Requirements. Trusted trader program test participants will be required to do the following, among other things.

- submit a copy of their customs policies and procedures

- perform annual assessments to identify risks that could impact compliance with CBP laws and regulations

- develop and execute an annual self-testing plan based on risk, implement corrective action in response to errors and internal control weaknesses disclosed by self-testing, and maintain results of testing for five years and make test information available to CBP upon request

- develop, document and implement a system of internal controls designed to provide reasonable assurance of compliance with CBP laws and regulations

- make appropriate prior disclosures, post-entry amendments and/or post-summary corrections

- notify their supply chain security specialist of (a) any suspicious activities, anomalies and/or security breaches that affect their supply chain and (b) any major changes that may affect their security, including changes in company ownership or sourcing from a new country

- submit an annual notification letter (including changes in organization, import activity, internal control policies and procedures, etc.) and an annual security profile review to CBP

- cooperate with CBP, domestic and foreign port authorities, foreign customs administrations and others in the trade community in advancing the goals of C-TPAT and the Container Security Initiative

- undergo a trade compliance review meeting, if deemed necessary by CBP, to ensure they are maintaining and updating trade compliance procedures and meeting program requirements

Eligibility. To be eligible to apply for the trusted trader program test, applicants must meet the following criteria.

- be an active U.S. importer or non-resident Canadian importer who meets the requirements in 19 CFR Part 141, including sections 141.17 and 141.18

- have written policies and procedures pertaining to their import process

- have a business office staffed in the U.S. or Canada

- have an active IOR number or CBP-assigned number

- possess a valid continuous importation bond filed with CBP

- have at least two years of importing history before the application is submitted

- conduct an assessment of their supply chain based on C-TPAT’s security criteria for importers

- implement and maintain security measures and supply chain security practices meeting criteria established in the C-TPAT importer security criteria document

- have a designated company officer who will be the primary cargo security officer responsible for C-TPAT

- create and provide CBP with a C-TPAT security profile identifying how they meet C-TPAT’s importer security criteria

- maintain books and records to establish compliance with the laws and regulations administered or enforced by CBP

Existing ISA Participants. CBP states that if it decides to implement the trusted trader program after the test is over it will discontinue ISA and transition all existing ISA partners into the trusted trader program, though they will be given an opportunity to opt out.

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