CBP Set to Add Forced Labor Section to Annual Trade Compliance Letter, Restarts CTPAT Enforcement

As CBP moves toward implementation of a forced labor component in the Customs-Trade Partnership Against Terrorism Trade Compliance program, still hoped for by the end of September (see 2106250045), the agency is working to flesh out what will be required from participants and what benefits will be provided to them. As it stands now, CBP looks set to add a section on social compliance programs related to forced labor to the annual notification letters that are already required of the 300 some current CTPAT Trade Compliance participants, said Carmen Perez, branch chief of the Trade Compliance program at CBP.

The agency hopes that approach will minimize the burden on Trade Compliance participants by not adding requirements for any new submissions, Perez said, speaking at CBP’s Virtual Trade Week on July 22. As with any rollout, “there’s going to be time” to implement the forced labor component and understand it, she said. CBP’s CTPAT office is still working with other CBP divisions to determine what benefits will be available to participants under the new forced labor component. “We have some ideas, and hopefully they will come to fruition sooner rather than later,” Perez said.

CBP has also been looking into how to bring e-commerce entities into CTPAT for about a year now, said Manuel Garza, director of the CTPAT program, also during the Virtual Trade Week. The agency has set up a group that includes members of the Commercial Customs Operations Advisory Committee (COAC) to evaluate what current CTPAT criteria are applicable to e-commerce entities, whether it be a platform, a vendor or even some warehousing entities that ship out the product.

CBP has restarted enforcement of CTPAT requirements after a hiatus to give companies breathing room during the COVID-19 pandemic, Garza said. With some companies not submitting required annual security assessments, CBP has had to suspend 76 companies from the program in 2021, and removed a further 43 companies that failed to respond to CBP’s suspension notices, Garza said.

“Companies aren’t responding, and we have to do our job” to make sure CTPAT members are adhering to the program’s standards, Garza said. “Last year we didn’t do a lot of enforcement on businesses” because CBP “knew they were struggling” Garza said, noting about 500 CTPAT members went out of business in 2020. “This year we had to do what’s best for the program,” he said.

Despite the loss of members during the pandemic, the CTPAT program still counts about 11,000 members, representing about 53% of trade by value coming into the U.S., Garza said. There are currently around 200 new applicants “in the queue right now waiting to get certified for the program,” which is a “good sign,” he said. Those applicants mainly come from Mexican and Canadian highway carriers, which were particularly hard hit by the pandemic.

CBP did some 600 virtual CTPAT validations last year, after switching from in-person validations in March as the pandemic ramped up. As of July 1, 2021, CBP has done 807 virtual validations, with another 69 in-person validations conducted under mutual recognition arrangements to CBP’s foreign customs agency counterparts. Even when the pandemic is over, virtual validations will still be “part of the toolbox,” Garza said. CBP actually began work on virtual validations in November 2019 as a benefit that could be provided to Tier III CTPAT members to reduce travel expenses.

The agency has been developing its ability to analyze data from validations in the hope of being able to detect patterns in which various sectors in the trade industry are falling short. On average, CBP makes abut three recommendations per validation of a CTPAT member. “That’s actually really good," Garza said. The top reasons for recommendation have to do with CTPAT criteria for cybersecurity and agricultural security, which comes as “no surprise” because those are the newest components to the program, Garza said.

CBP has also entered into a new contract to design and develop a “version 3.0” of its CTPAT portal, and work continues today, Garza said. “We are expecting a release date later this year,” he said. The agency won’t go live with the portal until everything has been thoroughly tested, and has reached out to CTPAT members to gather volunteers to test the new system, Garza said.