The Trusted Trader Program is on the Horizon

trusted-trader-programBy Adrienne Braumiller

For over a year now, Customs has periodically mentioned the development of another pilot program which seeks to increase the agency’s flexibility and company specific understanding of trade compliance and supply chain security. The new program, which is currently named the Trusted Trader Program, would consolidate Customs-Trade Partnership Against Terrorism with Importer Self- Assessment. A better description might say that C-TPAT will be swallowing ISA since the Office of Field Operations, which oversees C-TPAT, will be taking over the functions currently delegated to the Office of International Trade, which oversees the ISA program. Under the newly combined programs, importers will have several options in terms of whether they want to be a member of a trade compliance program, supply chain security program, or both. The options are:

  1. Join C-TPAT, but not the Trusted Trader Program;
  2. Join C-TPAT and the Trusted Trader Program; or
  3. Join neither program

For those importers already participating in C-TPAT, they will have the opportunity to join the Trusted Trader Program. Those importers already participating in C-TPAT and ISA will automatically be transitioned into the new Trusted Trader Program. What this means for importers is that there will no longer be a program only dedicated to encouraging importers to be trade compliant. Instead, importers will first be encouraged to join C-TPAT, which emphasizes supply chain security. If they want to further improve their trade compliance, then they can join the Trusted Trader Program. This change is not monumental, since many importers joined ISA through first qualifying for C-TPAT.

Customs is providing a number of carrots to importers to encourage them to participate in the program including retroactive flagging for any of the four reconcilable entries and exemptions from non-intrusive inspections (NII), except in cases where there is a major concern. For many importers, these incentives may have a huge impact in terms of duty savings. Importers may find after review that they have entries qualifying for reconciliation that they failed to flag within the applicable time frame. Importers should review these entries and determine if the retroactive flagging incentive can result in duty refunds and cost savings. Additionally, Customs maintains that this program will reduce the time and costs associated with applying for C-TPAT and ISA.  Finally, CBP is also holding out the possibility of offering additional incentives to low-risk industries.

Another potential advantage to both Customs and importers, is that the new program will leverage the resources and expertise provided by the newly created Centers for Excellence and Expertise (CEE), which will manage Trusted Trader Accounts. The newly consolidated C-TPAT and ISA program, working in conjunction with CEEs, should help Customs to adopt a more holistic approach when dealing with importers.

Customs’ goal is to select applicants for the Trusted Trader program this month, according to Valerie Neuhart, the Director of Industry & Account Management for the Office of Field Operations. Applicants to the program will be vetted within 30 days of Customs receiving their applications. In deciding which importers may join the program, Customs will be looking at:

  • Enforcement risks;
  • Compliance history;
  • Prior audits;
  • Documented system of internal controls;
  • Financial reviews; and
  • Corporate history, structure, and ownership.

Although it has not launched yet, Customs envisions possible future changes to the program including the development of a tiered system, as exists in the C-TPAT program, and the inclusion of Non-Resident Importers that have an affiliated business unit staffed and operating from the U.S. or Canada.

Braumiller Law Group,PLLC urges importers to consider how valuable the new program will be to  their company, especially in light of the incentives Customs has put on the table. Programs like C-TPAT and ISA have resulted in huge cost savings and a reduction in import procedure headaches for our clients. The newly created program should also offer those same benefits while consolidating two separate application processes. Furthermore, the incentives currently offered may result in large duty refunds for many participants in addition to reduced shipment processing time as a result of the exemption from NII. We recommend businesses consider these potential advantages in deciding whether to participate.