A Blueprint to Trust Holistic Risk Management and Effective Trusted - PowerPoint PPT Presentation

A Blueprint to Trust Holistic Risk Management and Effective Trusted Trader Program Marianne Rowden American Association of Exporters and Importers

AAEI Works with European Partners

FTAs Should Facilitate Trade Not Complexity • Market access for all industry sectors in all FTA countries. • Trade facilitation for “trusted traders.” • Clarity for rules of origin. • Simplicity in applying the rules. • Harmonization among FTAs.

Holistic Risk Management • Horizontal Risk Management System • Regulatory regime applicable to all industries to manage imports and exports based on company internal controls • Example: WCO SAFE Framework • Authorized Economic Operator program for “low risk” traders • E.U. and U.S. have a Mutual Recognition Agreement • Sectorial Risk Management System • Risk mitigation ranges from industry standards to strict liability regulation • Negotiators to determine which risk management regime is appropriate for the risk posed by the industry and the company • Regulators should develop pilot projects with the private sector to reduce redundant regulation

“Trusted Trader” Concept • Concept predates 9/11, but has gained currency with governments after 9/11 to describe a company which is: • Highly compliant • Good internal controls • Mitigates risk • “Authorized Economic Operator” • “a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards. Authorized Economic Operators include inter alia manufacturers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, distributors.” • WCO “SAFE Framework of Standards to Secure and Facilitate Global Trade” adopted in June 2005 in Section 2.3 at p. 8. • AEO programs are: • Voluntary regimes • Commitment to adopt good importer practices for security and compliance • Trade facilitation benefits

Our Challenge • AAEI seeks to develop a strategy to establish a holistic risk management/trusted trade program for CBP and other government agencies (OGAs) that is built, in part, upon existing models, such as C-TPAT, and provides genuine benefits to the trade community. Specifically, for AAEI and its member companies, the desired outcome of this program is to: 1. Facilitate trade and compliance 2. Reduce compliance costs 3. Establish more efficient, risk-based enforcement • Six Steps: 1. Define the elements, objectives, and arguments for the trusted trader initiative 2. Strategic Plan 3. White Paper (Current Stage) 4. User Fee Chart 5. Develop Industry Compliance Standards 6. Additional Work

Shortcomings of Existing Programs • Lack of coordination with CBP trusted-trader programs • Lack of specificity • Overly punitive • Insufficient benefits for companies and industries • Failure to understand or meet underlying objectives • Lack of flexibility to accommodate individual company or industry risk profiles • Insufficient scope (i.e., too limited in number and type of entries covered) • Overly onerous or expensive application process

Certified Compliant Commercial Entity (3CE) • Companies that: • Invest corporate resources (e.g., money, people, systems, etc.) into their corporate compliance programs • Demonstrate a strong commitment to ensuring commercial, security, environmental/conservation, human rights, and product health and safety compliance • Represent a low compliance risk to the public

Elements of 3CE • Assessing risk: • How the agency perceives risk based on its statutory mission • Focus on unacceptable or catastrophic risk • What makes an importer higher or lower-risk to set up a 3CE importer risk profile

Risk Factors • Type of importer • New or experienced importer • Size and complexity of the company • Type of imported product • Highly regulated, lightly or non-regulated product • Source country and/or country of export • Importer’s compliance record on commercial issues, security, and health and safety

Benefits • For the agencies: • Program must be consistent with and support the agency’s enforcement mission and mandate • Allocate resources efficiently and effectively to counter the greatest risks • Provides framework to facilitate and enhance the exchange of information between and among agencies • For importers: • Lower administrative and compliance costs • Efficient and expeditious trade facilitation • Lower business risk • Greater business predictability

If your company participates in a supply chain security program, why did your company decide to join the program? 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 Fewer Inspections It is the right thing to do Business partner pressure Expedited clearance Haven't joined Source: AAEI Benchmarking Survey – Security Question for Importers/ Exporters (June 2009, May 2010, May 2011, and August 2012, respectively)

Based on your experience with supply chain security programs, would you join today? 70% 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 Yes No Don't know Source: AAEI Benchmarking Survey – Security Question for Importers/ Exporters (June 2009, May 2010, May 2011, and August 2012, respectively)

Are you C-TPAT certified and, if so, at what level? No 17% 3% Yes, Tier 1 41% Yes, Tier 2 39% Yes, Tier 3 Source: AAEI Trusted Trader Survey (April 2014)

Are you currently participating in the Importer Self-Assessment (ISA) program? Yes 31% No 69% Source: AAEI Trusted Trader Survey (April 2014)

How does the government view the risk profile of your company based on the type of products you import? Low 3% 20% Medium High 77% Source: AAEI Trusted Trader Survey (April 2014)

Existing trusted trader programs and initiatives: C-TPAT, ISA programs, CBP/COAC Trusted Trader Initiative, SSCPP, VQIP, etc. What are your main concerns/criticisms with these programs? Lacks coordination with CBP trusted trader programs 12% Insufficients benefits 33% 14% Lacks understanding of your company or industry risk profile 12% Insufficient Scope (too limited) Application process too onerous or 29% expensive Source: AAEI Trusted Trader Survey (April 2014)

Do you support AAEI initiating a comprehensive Trusted Trader Initiative? 22% Yes No 78% Source: AAEI Trusted Trader Survey (April 2014)

Other than Customs and Border Protection, which PGAs should be included in a Trusted Trader Initiative? EPA 21% 29% U.S. Dept. of Agriculture, Animal and Plant Health Inspection Service U.S. Dept. of Agriculture, other 26% FDA 24% Source: AAEI Trusted Trader Survey (April 2014)

Should all supply chain programs be administered by a single agency (e.g., CBP, DHS, DOT, etc.)? 7 0 % 6 0 % 5 0 % 4 0 % 3 0 % 2 0 % 1 0 % 0 % 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 Y e s N o D o n 't k n o w D o e s n 't m a tte r Source: AAEI Benchmarking Survey – Security Question for Importers/ Exporters (June 2009, May 2010, May 2011, and August 2012, respectively)

Questions?