The Upside of the CTPAT Trade Compliance Program

In my last video, way back in January, I mentioned that the Customs Trade Partnership Against Terrorism program now included provisions regarding enforcement of the Uyghur Forced Labor Prevention Act. That led to me getting a few questions about the CTPAT Trade Compliance Program, under which the UFLPA provisions are included. So, by popular demand, here’s a brief rundown of the requirements and benefits for participating in the Trade Compliance Program, or TCP.

As background, CTPAT is a voluntary program whereby importers and other parties involved in international trade receive more favorable treatment from Customs and Border Protection in exchange for adopting supply chain security measures. As a general rule, participants get the carrot and non-participants are more likely to get the stick, in terms of CBP enforcement oversight.

While it started as a cargo security program, CTPAT was expanded to include the TCP a couple of years ago, based on the old Importer Self-Assessment program.

The requirements for participating are set forth in the Trade Compliance Handbook, which was updated this past February. To qualify, an importer must have had its CTPAT procedures certified and validated by CBP, or else have procedures in place that exceed CTPAT’s minimum criteria. 

It must also complete a questionnaire regarding its importing activities and compliance program, as well as a Memorandum of Understanding in which it agrees to follow TCP requirements.

Before getting into the substance, one benefit that I see in applying for the program, right off the bat, is preparation of the compliance questionnaire. In fact, even if a company decides not to apply, it’s worthwhile for it to prepare a questionnaire response.

The questionnaire provides fairly comprehensive coverage of most points that any customs compliance program should include. So, first of all, it provides a benchmark against which an importer can compare its own procedures.

Preparing a response also requires evaluation of the effectiveness of the procedures which are in place. 

Doing so necessarily requires a review of those procedures, to determine whether they work in practice and identify gaps.

So, quite aside from TCP participation, this exercise provides a basis for importers to conduct a compliance self-assessment.  

The TCP now requires participants to implement a forced labor prevention program. Since UFLPA requirements are now being enforced by CBP, this too is a good idea regardless of whether an importer joins the program.  

I consider TCP’s strict and specific guidelines for forced labor compliance to be worth adopting in any event.

If an importer does apply for the program, its application will be reviewed by CBP personnel. This process can provide a reality check on the efficacy of the program and the extent to which it reduces the risk of violations or other problems. 

Once an importer is accepted into the TCP, it must maintain effective controls and avoid violations of the customs laws. I don’t see this as a particularly onerous part of the program, considering that these requirements already apply by application of law. 

Instead, in my view, TCP provides a mechanism for existing compliance obligations while providing benefits unavailable to non-participants.

What are those benefits? While this is by no means an exhaustive list, they include assignment of a National Account Manager within CBP, thereby providing a central point for presenting questions and concerns. 

Participants also have access to the CTPAT trade compliance information portal and more expedited access to their CBP data. 

They also get preferential, expedited treatment of ruling requests. Given the backlog and delays in the agency’s issuance of ruling determinations these days, this is a significant benefit. Additionally, CBP will permit participating importers to submit disclosures for certain violations even if the agency discovers them first. Participants also get a partial exemption from Focused Assessments.

These are in addition to the cargo security-related benefits of CTPAT membership, as well as those relating to UFLPA enforcement which were covered in my January presentation.

Finally, as noted, a TCP participant must submit a Memorandum of Understanding and resubmit it annually, and also communicate with CBP regarding specified changes in corporate structure and in its importing activities.

So, the way I look at it, participating in the TCP mostly requires an importer to undertake measures it’s already required to do under the Customs laws, while providing additional benefits for doing so. It’s not that I’m shilling for the program; instead, I get questions about whether it’s worth joining, and want to point out the upside of doing so.

Thanks for listening.