This article will update previous postings on the Customs-Trade Partnership Against Terrorism (C-TPAT).

Importers Applying For C-TPAT
The latest figure I have received from US Customs is that some 300 importers have signed up as of early July, that is, have submitted the C-TPAT MOUs. However, only some 50 or so have submitted Executive Summaries in response to the Supply Chain Security Profile Questionnaires. This is not surprising given the time needed to complete an Executive Summary.

In addition to reduced examinations, US Customs has conditioned other benefits on C-TPAT membership, including participation in ISA (Importer Self Assessment, which removes the importer from focused assessments).

The combination of these benefits plus pressure from US Customs to join C-TPAT, means that almost all importers of any size will eventually join C-TPAT. Additionally, importers that sell to retailers will also be under pressure from their larger retailer customers to join. For example, Target was one of the charter members of C-TPAT. In addition to buying FOB foreign port (where Target is the importer), Target also buys from importers on an LDP basis. One would expect that Target will expect these importers to join C-TPAT so that their cargo receives the same preferential treatment that Target's cargo does when Target is the importer. Same story for other large retailers who buy FOB and LDP and join C-TPAT for their FOB purchases.

Membership Extended To Carriers
Commencing from July 15, 2002, air, sea and rail carriers can join C-TPAT. US Customs has posted on its website separate application forms and instructions for each of these carrier types. US Customs has not yet extended membership to truckers (trucks carrying cargo from Canada or Mexico) but has indicated that membership for truckers is in the offing.

Container Security Initiative (CSI)
US Customs is proceeding down parallel security tracks: C-TPAT and CSI. CSI is the government-to-government initiative that has been extensively covered in the local papers, and it involves US Customs posting officials in the so-called megaports, including Hong Kong, which handle most of the world's container traffic. So far a number of jurisdictions, including Singapore and Le Havre, have agreed to US Customs posting officials in their ports. Hong Kong is engaged in negotiations with the United States, and it is only a matter of time before agreement will be reached between the two governments. I believe that Hong Kong has no choice in the matter. Hong Kong would be at a severe competitive disadvantage if US Customs officials were posted at a competing port but not in Hong Kong. This would affect shippers' decisions as to which port to use, if shipments from the competing port were less likely to be stopped for security examinations on entry.

In the case of Hong Kong, US Customs has indicated that it would post 3-4 inspectors to Hong Kong once agreement had been reached. Hong Kong would take the lead on all screening, for example, Hong Kong government employees would operate the screening equipment. US Customs believes that the screening in Hong Kong would not add any additional time as the screening equipment could be positioned in a manner that would not result in extra movement or handling of the container, and a full-truck container could be screened in a few minutes or less. Further, US Customs believes that in Hong Kong at least the screening would not involve extra cost to the importer(s) whose container has been screened. It remains to be seen whether US Customs' beliefs will be borne out.

US Customs indicated that all containers would not be screened in Hong Kong, only those that US Customs or Hong Kong Customs & Excise believe to be high-risk. I assume that similar procedures would apply in other foreign ports where US Customs officials would be stationed. The screening in Hong Kong and other foreign ports would not detect chemical or biological traces. That can only be done by other machines that are largely under development. It is not clear whether those machines, once developed, will only be used in the United States or will also be deployed overseas.

The arrangements described above only cover sea shipments. At this time, there do not appear to be any comparable arrangements for air shipments. Therefore, air shipments, whether from Hong Kong or elsewhere, might be potentially disadvantaged because, with no opportunity for US Customs to screen (or participate in the screening of) air shipments in the foreign jurisdiction, will US Customs be more likely to examine air cargo on entry into the US? I would assume that, in the case of Hong Kong at least, Hong Kong will work out screening procedures at the airport equivalent to those employed for sea containers, but this remains to be seen.

This also brings up the interplay between C-TPAT and CSI. If a sea shipment makes it out of a port where US Customs has stationed its officials, the shipment is unlikely to be examined again on entry into the United States (US Customs has told me that "we won't waste time examining things twice") although an examination in both the foreign port and the US entry port is not out of the question, particularly if the screening equipment in the US is better or different than that in the foreign port. Under these circumstances, the C-TPAT member may do better in the foreign port than the non-C-TPAT member (less likely to have its container screened), but both would appear to fare the same on entry into the US.

Where US Customs has not stationed its officials in a foreign jurisdiction, US Customs would have no opportunity to screen the container at the foreign port (unless the foreign port fed all of its containers into a megaport where there were US Customs officials). On entry, US Customs would then be more likely to examine non-CTPAT member cargo than C-TPAT member cargo from the foreign port. This points out the need for the non-megaports in the region to develop or strengthen their screening procedures, so that their containers don't get stuck, whether in the megaport or in the US port of entry.