Small and mid-market enterprises are being drawn into C-TPAT regulation due to their relationships with C-TPAT participants. A major criterion of the C-TPAT program is that the participant must have procedures in place requiring their business partners to demonstrate how they are meeting the C-TPAT security requirement either through contractual obligations, a written statement, a security survey or participation in an equivalent World Customs Organization accredited security program. Therefore, customs brokers, freight forwarders, carriers and suppliers must detail how their own operations support their customers' (the "Big Guy") C-TPAT requirements. So, how is C-TPAT voluntary? These "Little Guys" rely on their supplier relationships with the "Big Guy." If they can't support C-TPAT requirements, the "Little Guy" is at risk of losing business.
C-TPAT and the "Little Guy"
As a supplier to large-scale importers, smaller firms are finding that C-TPAT participation is becoming critical to their business's viability. It is becoming a common occurrence that, as part of a vendor/supplier selection process, C-TPAT participants are requiring that their suppliers become C-TPAT certified or have an equivalent security program in place. Remember, C-TPAT certification is not mandatory. However, the C-TPAT participant must assess its own risk exposure by continuing to do business with a vendor lacking security measures. The obligation remains with the C-TPAT participant to ensure that the supplier poses minimal risk to its global supply chain. As a result, many smaller companies are creating their own security criteria above and beyond the C-TPAT requirement in a bid to maintain or win additional business with large-scale importers. This is exactly what CBP wanted, as a customer's relationship with its supplier is much more powerful than government regulation.
What Should You Do?
Is C-TPAT really a voluntary program? In the eyes of CBP, yes, it is, and chances are that it will remain a voluntary program. However, as a supplier, you may not have a choice if you wish to continue your existing business relationships with C-TPAT participants. In addition, you may be forced to join C-TPAT if your business happens to be one of those companies that will be affected by the Import Safety Plan, which requires a safety program be put in place to address global supply chain security.
Becoming a C-TPAT registrant may not be as cumbersome as you think. For that reason, it is suggested that all businesses perform a C-TPAT security assessment to understand the pros and cons of joining the program. A typical assessment should identify the security gaps that need to be addressed and will provide insight into how to develop, validate and maintain a security program utilizing existing operational processes.
About the Author: Karin Muller is a U.S. and Canadian Certified Customs Specialist within the Trade Management Consulting practice at JPMorgan. She has more than 30 years of extensive experience in import and export trade-related issues with various industry and service sectors. She has assisted many importers in their analysis and subsequent preparation for global trade security program certifications and validations including C-TPAT, PIP and more recently AEO. www.jpmorganchase.com/trade.