By Kathleen M. Murphy, Mollie D. Sitkowski and Beata K. Spuhler
U.S. Customs and Border Protection (CBP) is expected to expand its Trusted Trader Program with a test pilot this Fall. With the Trusted Trader Program, CBP hopes that it will eventually manage both supply chain security and trade compliance. In March of this year, CBP announced the formation of a Trusted Trader Subcommittee within its Advisory Committee on Commercial Relations of CBP (COAC) with the objective of creating a pilot program by September. A Federal Register Notice announcing the first phase of the Trusted Trader Program is expected shortly. CBP has assured companies that the expanded Trusted Trader Program will have no effect on C-TPAT or its benefits.
With the Trusted Trader Program, CBP aims to create a holistic approach for companies to achieve trusted trader status. Traditionally, trusted traders are those companies who are members in either Customs-Trade Partnership Against Terrorism (C-TPAT) or the Importer Self-Assessment (ISA) program. In effect, CBP will offer enhanced incentives and benefits by consolidating its current C-TPAT program with its ISA program. C-TPAT is a voluntary supply chain security program while ISA is a joint government-business initiative focused on internal controls that strengthen compliance with CBP rules and regulations regarding classification, valuation, etc. CBP is also considering whether and when Partner Government Agencies will participate in the new trusted trader status. CBP intends this change as a step in its long-term goal of creating a trusted trader program across U.S. government agencies. It also believes that this change will create an opportunity to enhance mutual recognition arrangements with foreign trading partners.
The expansion of the Trusted Trader Program was the result of a two-step process. First, CBP considered the possible incentives for low-risk companies to participate. A working group within the Trusted Trader Subcommittee collected information on what incentives would be valuable to companies and prioritized a list of 11 new undisclosed benefits that is undergoing final review by CBP. Only some of the benefits would be available to the anticipated 9 participants in the pilot, though, and the remaining benefits would be delayed for a period of time.
CBP next considered the industry standards outside ISA that are currently implemented by companies to achieve compliance with CBP rules and regulations in an effort to create recommended standards for participation. However, the working group within the Trusted Trader Subcommittee determined that there was no one solution to compliance and that each company handled compliance differently. The working group recommended that CBP consider compliance on a case-by-case basis in order to determine companies’ participation in the pilot.
The expansion of the Trusted Trader Program will have other benefits in addition to creating a trusted trader program across U.S. government agencies and enhanced mutual recognition arrangements. Currently, CBP is giving priority consideration to importers who are members in both ISA and C-TPAT for participation in the industry-specific Centers of Excellence and Expertise (CEEs). Many importers who would like to take advantage of the industry-specific knowledge and centralized process of their imports offered by the CEEs are reluctant to join ISA. With the Trusted Trader Program, it is possible that CBP will expand many benefits offered under ISA to C-TPAT certified importers who are able to prove their internal controls are effective for compliance, although not quite as stringent (and costly) as those required under ISA.
Drinker Biddle will continue to monitor the Federal Register for announcements regarding the test pilot of CBP’s Trusted Trader Program. For more information on how your company can benefit from the expansion of the Trusted Trader Program, or for questions concerning C-TPAT and ISA generally, please do not hesitate to contact Kathleen Murphy, Beata Spuhler, Mollie Sitkowski or any other member of Drinker Biddle’s Customs and International Trade Team.