CTPAT Program Losing Members, Director Says

CBP is seeing an uptick in companies pulling out of the Customs-Trade Partnership Against Terrorism, Manuel Garza, CBP director of CTPAT in the Office of Field Operations, said. “Because of COVID, we have seen an increase in the number of companies that have withdrawn from the program,” he said. The program still has about 11,400 total members and 315 trade compliance members, he said while speaking at a CBP Virtual Trade Week session Sept. 9. Some 53.4% of U.S. imports by value are CTPAT-certified, according to a CBP presentation.

The attrition has led CBP to ask companies why they have left CTPAT, he said. “Is it the minimum security criteria [MSC] that you're unable to accomplish? Or is it financial reasons? Is it changes to the structure of the company?” So far, “of the 100-plus companies that have withdrawn since January, [they] pretty much have all told us” that the decision is due to financial reasons or changes of “habits for how they supply cargo” into the U.S., he said. None has said it is due to difficulty around the updated MSC (see 2004160022), Garza said.

The agency hopes to complete its transition for importer self-assessment program members into the CTPAT trade compliance program by the end of the fiscal year, Carmen Perez, OFO branch chief for trade compliance, said. It will also begin taking new applications “probably by the end of the calendar year,” she said. CBP “is developing forced labor requirements to be incorporated by early FY21 as a part of CBP’s Agency-wide efforts to combat the forced labor in global supply chains,” the agency said in the presentation. Figuring out what information would be required under the CTPAT trade compliance program “has been a bit of a tricky process because we have to really determine what that information means and if it's feasible for the company to provide,” Perez said.

One possible benefit would come if a member's goods are subject to a withhold release order, Perez said. For example, CBP would send the information provided under CTPAT to other CBP divisions, using it “to assist with helping you get through whatever is going on with that” WRO, she said. “The goal is never to kick a company out should there be a kink, if you will, in your supply chain security, especially when it to comes what we're trying to do in combating forced labor,” she said. The agency wants to have as much information as possible so it can figure out “where this sourcing is happening” and “what manufacturers or commodities may be tied to it,” she said.

It may not be obvious to the members, “but be assured that we are going to be looking for” forced labor indicators in the paperwork, Perez said. “If there are egregious violations, no, there's not going to be any leniency. There's not going to be reduced penalties. There are not going to be the same CTPAT or trade compliance benefits that you are used to seeing because we are doing anything within our power” to fight forced labor.

Enforcement hasn't stopped during the COVID-19 pandemic, Garza said. “I've suspended 52 companies this fiscal year and 14 of them have been suspended since Jan. 1,” he said. Those 14 suspensions were related to issues in the previous year, he said. CBP removed about 138 companies during the fiscal year, mostly due to a failure to respond to the agency with required validation information, he said. CBP is planning to update its bulletin on “suspensions, removals, appeals and the reinstatement process, and I hope to get that out in the coming weeks,” Garza said. The agency will put out more information about the validation processes “later on this year, as well.”

The validations have given CBP some information on which MSCs seem to be causing problems, Carlos Ochoa, OFO branch chief for trade engagement and communications, said. The largest number of validation deficiencies were around agricultural security and the requirement for procedures used to prevent visible pest contamination in compliance with wood packaging materials regulations, Ochoa said. Another problem area is the security vision and responsibility component that “calls for a company to document and review processes in place” and “outlines management's oversight,” he said. The agency is also actively working to convince mutual recognition arrangement countries to adopt the updated MSCs “so that our programs can once again be compatible,” he said. CBP also would like to see the MSC reflected in the World Customs Organization's guides for authorized economic operator programs, Ochoa said.