P ORTER W RIGHT M ORRIS & A RTHUR LLP A t t o r n e y s & C o u n s e l o r s a t L a w 1919 Pennsylvania Avenue N.W. Leslie A. Glick Suite 500 (202) 778-3022 Washington, DC 20006-3434 lglick@porterwright.com Facsimile: 202-778-3063 Toll Free: 800-456-7962 November 17, 2005 AMERICAN BAR ASSOCIATION SECTION OF ADMINISTRATIVE LAW AND REGULATORY PRACTICE 2005 ADMINISTRATIVE LAW CONFERENCE WASHINGTON, D.C. PRESENTATION OF LESLIE ALAN GLICK, ESQ. ∗ CUSTOMS TRADE PARTNERSHIP AGAINST TERRORISM AND CUSTOMS RESPONSE TO SEPTEMBER 11, 2001. I. INTRODUCTION TO C-TPAT AND EVENTS FOLLOWING SEPTEMBER 11, 2001 A. Customs Trade Partnership Against Terrorism (C-TPAT) 1. A “voluntary” partnership between customs and importers and exporters. Companies sign a contract with Customs agreeing to review and improve their security. In exchange, C-TPAT members receive fewer inspections, and inspections they do receive are less intrusive ( e.g. , x-ray versus unloading your trailer). 2. Customs is putting pressure on more companies to join by asking existing members to use suppliers that are C-TPAT certified (soon to be compulsory). 3. Membership has doubled in this past year. Now there are over 8,000 in C-TPAT. ∗ Mr. Glick is a graduate of Cornell Law School and has focused his practice on international trade law, customs law and Food and Drug law for more than 25 years. He is the author of several books, including Understanding the North American Free Trade Agreement (2 nd edit.) and Guide to United States Customs and Trade Laws (2 nd edit.). He is also the author of Chapter 4, “Legal Aspects of Trade with Mexico” in the multivolume treatise Doing Business in Mexico . Mr. Glick is Chairman of the Customs and International Trade Law Committee of the Administrative Law and Regulatory Practice Section of the American Bar Association.
4. Membership is open to U.S. importers, truckers, freight forwarders, customs brokers and Mexican exporters. a. The longer you wait to apply for C-TPAT, the longer it takes to be approved. More and more companies are applying. Until you are approved, you cannot obtain C-TPAT benefits. b. Among the benefits are membership in the FAST (Free And Secure Trade) program: � Only C-TPAT members can join FAST � FAST port of entry exist or are under construction on the US- Mexican and US-Canadian borders � FAST is an expedited clearance program for low-risk cargo 5. What is involved in applying for C-TPAT? a. Companies have not taken full advantage of C-TPAT for several reasons: � Lack of knowledge that they are eligible � Lack of understanding about what they need to do � Concerns about cost � Language barrier b. Cost of not joining can be greater. Customs has said that non-C-TPAT members are “unknown entities.” � Your customers may exclude you as a supplier. � If you have a seizure or a problem, you will face costly fines and penalties, while a C-TPAT member might not. c. FAST has actually shown to save money through better utilization of equipment. II. NEW SECURITY CRITERIA UNDER C-TPAT EFFECTIVE MARCH 25, 2005 A. New Minimum Security Criteria Now in Effect 1. Existing C-TPAT members will have more time to address these new criteria in a three-stage phase-in. 2. New members will have to meet these new standards before acceptance. B. Phase I — Hardening of Physical Supply Chain 1. Must be implemented within 60 days of March 25, 2005.
a. Container Security – Container integrity must be maintained to protect against the introduction of unauthorized cargo or persons. At point of loading, procedures must be in place to properly seal and maintain the integrity of the shipping containers. A high-security seal must be affixed to all loaded cargo bound for the U.S. All seals must meet or exceed the current ISO 17712 Standard for security seals. i. Container Inspection – Procedures must be in place to verify the physical integrity of the container structure and the reliability of the locking mechanisms on the doors. A seven-point inspection process is recommended to include front wall, left side, right side, floor, ceiling/roof, inside/outside doors, and outside/undercarriage. ii. Container Seals – Written procedures must stipulate how seals are to be controlled and affixed to containers as well as include procedures for recognizing and reporting compromised seals and/or containers to U.S. Customs and Border Protection (CBP). Only designated employees should distribute container seals. iii. Container Storage – Containers must be stored in a secure area to prevent unauthorized access and possible manipulation. Procedures must be in place for reporting and stopping unauthorized entry into containers or container storage areas. b. Physical Security – Cargo handling and storage facilities must have barriers and deterrents that guard against unauthorized access. These include: i. Fencing – Perimeter fencing should enclose the areas around cargo handling and storage. Interior fencing within a cargo-handling structure should be used to segregate domestic, international, high value, and hazardous cargo. All fencing must be regularly inspected for integrity and damage. ii. Gates and Gatehouses – Gates through which vehicles and/or personnel enter or exit must be manned and/or monitored. The number of gates should be kept to the minimum necessary for proper access and safety. iii. Parking – Private passenger vehicles should be prohibited from parking in or adjacent to cargo handling and storage areas. iv. Building Structure – Buildings must be constructed of materials that resist unlawful entry. The integrity of structures must be maintained by way of periodic inspection and repair. v. Locking Devices and Key Controls – All external and internal windows, gates and fences must be secured with locking devices. Management or security personnel must control the issuance of all locks and keys.
vi. Lighting – Adequate lighting must be provided inside and outside the facility, including the following areas: entrances and exits, cargo handling and storage areas, fence lines and parking areas. vii. Alarm Systems & Video Surveillance Cameras – Alarm systems and video surveillance cameras should be utilized to monitor premises and prevent unauthorized access to cargo handling and storage areas. c. Physical Access Controls – Access controls prevent unauthorized entry to facilities, maintain control of entry visitors and protect company assets. Access controls must include positive identification of all employees, visitors and vendors at the point of entry. i. Employees – An employee ID system must be in place to give positive identification for control purposes. Employees should only be given access to those secure areas necessary for the performance of their duties. Company management or security personnel must adequately control the issuance and removal of employee, visitor and vendor badges. Procedures for issuance, removal and changing of access devices ( e.g. , key cards, etc.) must be documented. d. Visitors – Visitors must present photo ID for documentation purposes upon arrival and should be escorted. ID badges must be visibly displayed. e. Deliveries – Proper vendor ID must be presented for document check upon arrival of all vendors. Arriving packages and mail should be periodically inspected before being disseminated. f. Challenge and Removal of Unauthorized Persons – Procedures should be in effect to identify, challenge and remove unauthorized persons. C. Phase II — Internal Supply Chain Management Practices 1. Must be implemented within 120 days of March 25, 2005. a. Personnel Security – Processes must be in place to screen prospective employees and to periodically review current employees. i. Pre-employment Verification – Application information, employment history and references must be checked and verified prior to employment. ii. Background Checks – Consistent with local, federal and state laws, background investigations should be conducted for prospective employees. Once employed, reinvestigations should be performed based on cause and/or the level of the employee’s position. iii. Termination – Companies must have procedures in place to remove identification and access cards for terminated employees.
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