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CBP to Pilot Expanded Trusted Trader Program, Pursuing MRAs with Mexico and China

Friday, August 16, 2013
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection is hoping to begin this fall the first phase of a Trusted Trader program under which it will eventually manage both supply chain security and trade compliance. A Federal Register notice announcing this first phase is expected shortly, and CBP anticipates that it will have no more than nine participants. CBP is also hoping to complete supply chain security mutual recognition arrangements with China and Mexico within the next 18 months.

The Trusted Trader program seeks to expand the Customs-Trade Partnership Against Terrorism, an initiative launched in 2001 to ensure the safety of imported goods, into a broader authorized economic operator-type program by unifying it with Importer Self-Assessment, which focuses on compliance with traditional customs issues such as classification, valuation, etc. CBP believes this change will be a step toward its long-term goal of a trusted trader program across U.S. government agencies and that it will also create an opportunity to enhance existing and future mutual recognition arrangements with foreign trading partners.

Agency officials told trade community representatives at a recent meeting of the Commercial Operations Advisory Committee that the Trusted Trader program will enable CBP to provide additional incentives to participating low-risk partners. CBP asked for information on what incentives would be valuable to participants (e.g., in terms of time and resources related to the processing of cargo, cost savings, etc.) and a working group within the COAC Trusted Trader Subcommittee has completed a prioritized list of 11 new benefits that is now undergoing final review by CBP. Some of these benefits would be available when the pilot begins, while others would be delayed for a time. CBP officials have emphasized that the Trusted Trader program would have no effect on C-TPAT or its benefits.

CBP also requested a list of existing industry accepted standards outside ISA that are currently implemented by companies to achieve compliance and maintain internal controls. These standards would then have been considered as potential standards to satisfy the trade compliance element of the Trusted Trader framework. However, the Trusted Trader Subcommittee determined that no such common standards exist and that the vast majority of internal programs do not afford the required coverage or depth to satisfy ISA requirements. Each company handles compliance differently, the subcommittee found, and so there is no one catch-all solution.

On a related note, CBP officials said at the COAC meeting that mutual recognition arrangements between C-TPAT and the AEO programs of Mexico and China could be in place within the next 12-18 months. CBP has been working with Mexico to ensure that its New Certified Companies Scheme (NEEC) has the same 66 standards as CTPAT, but progress has been slowed because CBP is unable to conduct validations in some areas of Mexico at present. Among other things, this has prevented Mexican C-TPAT certified truck carriers from being able to access the Free and Secure Trade lanes at U.S. border crossings, prompting COAC to urge the development of an alternative to on-site validations. China, meanwhile, has recently agreed that its AEO program will incorporate all 66 C-TPAT standards after a period of disagreement over about 20 of them. However, there are some political issues concerning the conduct of joint validations of Chinese companies that still have to be resolved.

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