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CTPAT Benefits

Why Companies Join CTPAT

Reduced CBP Inspections

Expedite processing and reduce the number of U.S. Customs & Border Protection (CBP) inspections and audits of cargo entering the U.S. from overseas. This reduces the risk of cancelled orders by customers. Below are the CBP-issued statistics for 2008.

Fewer Inspections (2008 CBP Statistics)

Ocean Containers Inspected:

1 out of every 11 non-CTPAT members
1 out of every 55 CTPAT members

83% were non-CTPAT members.
17% were CTPAT members.

8.50% – Tier 1 (certified) CTPAT members
4.93% – Tier 2 (validated) CTPAT members
3.57% – Tier 3 CTPAT members

Truck Inspections:

1 out of every 1.4 non-CTPAT members
1 out of every 6.5 CTPAT members

Up to 50% Off Penalty Fines Associated with ISF (10+2)

On January 17, 2016, CBP announced that for shipments that are on the water after June 30, 2016, CBP ports will no longer be required to send requests for ISF Liquidated Damages (LD) to headquarters for review, and the “three- strikes” approach to LD claims against importers’ bonds will also end.

Therefore, CBP will now be able to issue penalties against importers at the port level, and they no longer need to pass the request up to their headquarters for permission. Also there is no longer a “three-strike” approach to penalties, so if you have your first late ISF filing, CBP can penalize you right away.  Importers are legally responsible for the accuracy and timeliness of their ISF filings, regardless of whether a customs broker or other intermediary does the actual filing. Below are four violations subject to penalties.

  • Failure to file.  This is the most serious violation, subject to the most severe level of potential penalties. $5,000 fine
  • Late filing.  The Interim Final Rule requires the importer to file the ISF no later than 24 hours prior to lading at foreign origin. $5,000 fine
  • Incomplete or Inaccurate filing.  Providing incorrect data, both in an initial filing, but may also apply in subsequent filings (e.g., amended ISF). $5,000 fine
  • Failure to withdraw a filing.  Withdrawal of an ISF that is known to be invalid is required.  An invalid ISF includes an order that has been cancelled, discovery of significant change in information necessitating a new ISF, a complete change in routing, or other substantive change. $5,000 fine

 

Each of the above-listed violations is potentially subject to $5,000.00 in liquidated damages.  A single ISF could have more than one violation, and therefore, more than one penalty applied.  For instance, an importer can violate both the late-filing rule and the inaccurate-information rule.  This importer would be subject to a $10,000.00 penalty for the incorrect ISF.

On July 15, 2009, CBP announced that CTPAT members will be eligible for additional mitigation (up to 50%) of the normal mitigation amount. Based upon the projected CBP penalty fee structure, this benefit can result in significant savings to your company.

Expedited Status for CES Container Inspections

On July 7, 2009, CBP announced that it will give importers that are CTPAT members, the benefit of expeditious completion of CBP-mandated cargo examinations. Specifically; containers consigned to a CTPAT importer that are designated for drayage to a Centralized Examination Station (CES) for a CBP Enforcement, Trade, or Agriculture (USDA) examination, will clearly be designated as “CTPAT Priority.” The benefit of this initiative is that “CTPAT Priority” cargo will be examined before non-CTPAT designated containerized cargo.

Eligibility to do business with new or existing customers

Many companies have mandated that current and future vendors join the CTPAT program. CTPAT members have the ability to continue doing business with existing customers and are eligible to do business with certain prospective customers.

Preferential Status on Customs Issues

CBP will place a CTPAT member in a preferential status when the CTPAT member is working with customs officials on conventional customs’ issues such as duties, tariffs, country of origin matters and focus assessments.

CBP Liaison is Assigned to Your Company

CBP assigns the CTPAT member a Supply Chain Security Specialist (SCSS) who the CTPAT member contacts in the event of delays of cargo arrival into the U.S. A SCSS liaison is not available to non CTPAT members.

Expedited Entry for FDA Cargo

FDA will expedite entry for specific finished drug products and active pharmaceutical ingredients (APIs) intended for human use imported into the United States.

Mitigation Guidelines – Cargo Security

Airlines and Steamship Lines: CBP specifies that before any penalty assessments are made, consideration may be given to the level of cooperation received regarding cargo security from the party to be charged. Specifically, the fines, penalties and forfeitures officer (FPFO) may consider whether the party is a participant in the Customs-Trade Partnership Against Terrorism (CTPAT) and weigh the level of cooperation received regarding cargo security as a mitigating factor in any case. The FPFO will exercise the discretion to mitigate a second or subsequent violation as a first violation in the case of a penalty assessed against a cooperating party. This has resulted in significant savings to the company requesting mitigation. The SCSS explains that when a fine is being mitigated with a CTPAT member, the FPFO will contact the SCSS assigned to the CTPAT member and ask them if the CTPAT member is in good standing with the program. The SCSS is the closest contact to the CTPAT member in all of CBP.

Additional CTPAT Benefits

ISF/10+2 CTPAT Benefits

CBP has announced that it will provide significant benefits to CTPAT members who comply with the Importer Security Filing (ISF) / 10+2 program.

CBP assigns a “risk-value score” to each shipment, based on the ISF/10+2 filing.

In general, CBP will decrease the number of inspections for:

  1. CTPAT members
  2. Foreign Suppliers (if eligible) that are CTPAT members
  3. Foreign Suppliers that have been inspected (validated) by CBP

Since the ISF number must be issued in order for the container to be loaded on the steamship, CBP is made aware of the importer’s CTPAT status in advance of the container’s arrival in the U.S. Therefore, there is no confusion as to whether or not the importer is a CTPAT member, and the importer receives CTPAT benefits well before the container arrives in a domestic port.

Additional benefits to C-TPAT members include:

  • CTPAT entities will be reliably identified prior to lading
  • Tangible CTPAT benefits will be applied far upstream
  • Validation of Supply-Chain Security Reviews

Difference between CTPAT Validation with NJA and standard third-party audits

Recently, Norman Jaspan Associates, Inc. worked with a large foreign supplier in preparing them for a CTPAT validation. The company is an AEO (Authorized Economic Operator) and had  third party visits by two major retailers. After the CTPAT validation, the foreign supplier stated that they would have failed, if we did not prepare them for a validation, which they originally felt they were well prepared for. Norman Jaspan Associates, Inc. asked the company to explain the difference between a Third Party audit and a CTPAT validation, they shared the following:
CTPAT visits are more in depth, while the third party audit is superficial. In addition, the CTPAT audit is Comprehensive,  deeper in questions, more objective, much more professional and it is very obvious that the CTPAT Custom official’s prior custom experience plays a major role in enabling them to know what to ask and look for.

Up to 50% Off Penalty Fines Associated with ISF (10+2)

On January 17, 2016, CBP announced that for shipments that are on the water after June 30, 2016, CBP ports will no longer be required to send requests for ISF Liquidated Damages (LD) to headquarters for review, and the “three- strikes” approach to LD claims against importers’ bonds will also end.

Therefore, CBP will now be able to issue penalties against importers at the port level, and they no longer need to pass the request up to their headquarters for permission. Also there is no longer a “three-strike” approach to penalties, so if you have your first late ISF filing, CBP can penalize you right away. Importers are legally responsible for the accuracy and timeliness of their ISF filings, regardless of whether a customs broker or other intermediary does the actual filing. Below are four violations subject to penalties.

  • Failure to file. This is the most serious violation, subject to the most severe level of potential penalties. .-$5,000 fine
  • Late filing. The Interim Final Rule requires the importer to file the ISF no later than 24 hours prior to lading at foreign origin.-$5,000 fine
  • Incomplete or Inaccurate filing.  Providing incorrect data, both in an initial filing, but may also apply in subsequent filings (e.g., amended ISF). .-$5,000 fine
  • Failure to withdraw a filing. Withdrawal of an ISF that is known to be invalid is required.  An invalid ISF includes an order that has been cancelled, discovery of significant change in information necessitating a new ISF, a complete change in routing, or other substantive change. .-$5,000 fine

Each one of the above-listed violations is potentially subject to $5,000.00 in liquidated damages. A single ISF could have more than one violation, and therefore, more than one penalty applied. For instance, an importer can violate both the late-filing rule and the inaccurate-information rule. This importer would be subject to a $10,000.00 penalty for the incorrect ISF.

On July 15, 2009, CBP announced that CTPAT members will be eligible for additional mitigation (up to 50%) of the usual mitigation amount. Based upon the projected CBP penalty fee structure, this benefit can result in significant savings to your company.

For more information regarding the ISF/10+2 program, please visit CBP website: https://www.cbp.gov/border-security/ports-entry/cargo-security/importer-security-filing-102

Although your company may have experienced minimal or no customs inspections in the past, the ISF/10+2 program will now result in CBP scrutinizing all import shipments more closely than ever before. This intensified scrutiny may now result in increased inspections for your shipments.

New FDA CTPAT Benefits

On January 15, 2009, the Food and Drug Administration (FDA) announced an opportunity for sponsors and foreign manufacturers of finished drug products and active pharmaceutical ingredients (APIs) intended for human use, which are imported by a secure supply chain, to apply to participate in a voluntary Secure Supply Chain (SSC) pilot program. This program will expedite entry of these products imported into the United States.

In order to be eligible for this pilot program, one of the criteria is that the SSC applicant must have either a pending application or be certified with the CBP Customs Trade Partnership Against Terrorism (CTPAT) Tier II certified secure supply chain. Both applicants to the SSC pilot program and firms identified in the SSC application must be CTPAT Tier II certified or Tier II pending certification at the time an application is submitted for participation in the pilot program.

Below is the link to the FDA announcement. Please contact us for information on joining the CTPAT program (Tier I) and CTPAT validation (Tier II).

FDA CTPAT Announcement