June 1, 2007 By: David A. Stout
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For years, the US and Canada have been working together on measures to enhance border security without hindering the flow of trade. The tension between security and the free flow of goods goals was never more evident than immediately after the September 11 attacks. Canadian exporters remember all too well the miles-long tie-ups at border crossings across the continent.

The moment a credible and serious terrorist threat is identified on either side of the border, we should expect a renewed border clampdown. As an exporter, the viability of your business could depend on how you can cope with such a situation, to make sure your products still get into the US market. The Customs-Trade Partnership Against Terrorism (or C-TPAT) is a voluntary US initiative that Canadian exporters should seriously consider investigating.

Traditionally, physical inspection of cargo has been the primary enforcement tool at border crossings. However, this is an inefficient method – there is no practical way to search all shipments, and deciding which shipments get searched is more art than science.

Although positively identifying risky shipments is difficult, identifying lower risk shipments is relatively easy. As a result, US Customs and Border Protection (CBP) has recently shifted its approach toward actively identifying the safest shipments before they even get to the border. By doing this, safe shipments can be given preferred treatment and can pass through faster. The number of pointless searches drops, freeing resources for closer inspections of riskier shipments. A crucial component of this strategy is C-TPAT.

Under C-TPAT, importers and exporters evaluate the security risks in their operations, so that CBP can assign risk levels to shipments before they even arrive at the border. This helps them to determine how it will deal with a shipment when it arrives. Currently, shipments from non-C-TPAT senders are six times more likely to be physically searched than those from C-TPAT partners.

C-TPAT partner shipments already get priority heading into the US. However, the difference in treatment would become far more obvious in the event of another terrorist threat. In that situation, CBP has committed to process C-TPAT partner shipments first. Practically speaking, this means that non-C-TPAT companies could, without warning, find it impossible to get their products into the American market.

By some estimates only about 3% of Canadian firms shipping goods to the US are presently involved in C-TPAT. The possibility of a sudden border clampdown poses a clear danger to the Canadian economy, unless more Canadian businesses start joining programs like CTPAT.

How a Canadian firm would join C-TPAT

The basic process for joining C-TPAT is the following:

  1. Conduct a comprehensive security self-assessment. Usually this would involve hiring a consultant to do a Security Gap Analysis, to analyze the following points:

    1. How secure are the shipping containers (how easily can someone put weapons, drugs or people in the container without you knowing it)?
    2. Physical access controls: do you use ID cards? Is your staff trained to challenge those who are not wearing ID?
    3. Personnel security: are background checks done for those in high-risk positions?
    4. Procedural security: where are sensitive documents stored and who has access to them?
    5. Physical security: fencing, gate houses, alarms, lighting, cameras, etc.
    6. IT Security: how often are passwords changed, how hard are passwords to guess?
    7. Security and threat awareness training.
  2. Evaluate the security of your supply chain. The higher the level of risk in your supply chain, the higher the level of risk will be assigned to your shipments. If your suppliers are all C-TPAT partners, your supply chain is not necessarily low-risk but at least the risks are more easily quantified. The more non-C-TPAT suppliers you have, the more uncertainty there is in your supply chain and the higher the level of risk your supply chain poses. This encourages companies to deal with C-TPAT partners and to require their non-C-TPAT suppliers to join the program.
  3. Application for C-TPAT membership. Acceptance is based on the self-assessment and supply chain data provided.
  4. Validation: this is the crucial step, in which US Customs officials visit your site and verify the information you provided with your application. Validation determines the level of risk that is assigned to your shipments.

The cost to join C-TPAT will vary greatly depending on a number of factors including, the number of employees in your organization and the size of your supply chain. Security initiatives might seem expensive, but if your business relies on exporting to the US, the alternative could be much worse. In addition, investing in security provides secondary benefits, such as reduced losses due to theft and vandalism. It could be an investment your business can't afford to pass up.

For further details on C-TPAT visit the US Customs and Border Protection website at www.cbp.gov.

David A. Stout, lawyer, and Trevor E. Fenton, student-at-law, Nelligan O'Brien Payne LLP.

[This article was originally published in the June 2007 issue of the EntrepreNews Newsletter]

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.