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July 21, 2014

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GOVERNMENT WATCH THE JOURNAL OF COMMERCE 17 By Mark Szakonyi THE CUSTOMS-TRADE PARTNERSHIP Against Terrorism, the import security program launched in the wake of the September 11 attacks, is getting a shot in the arm in the form of a new program that integrates C-TPAT a nd Customs' Impor ter Self Assessment program and includes addi - tional perks intended to offer benefits in return for importer participation. Members of the so-called Trusted Trader program will experience reduced inspections from the Food and Drug Administration and Consumer Product Safety Commission. That's a step toward Customs getting the 46 other agencies overseeing the import supply chain, which are often the main culprits of cargo-processing delays, to get serious about cargo facilitation after years of foot-dragging. "I think it's spectacular that (Customs) is getting participating agencies into this," said Beth Peterson, president of trade com- pliance consultant BPE Global. "These agencies don't have direct accountability (for trade facilitation), so it's a great step." With approximately 10,700 members, including about 4,300 importers and 3,100 carriers, C-TPAT in recent years has come under some criticism in terms or growth and benefits. Noting that membership growth has slowed in recent years, Customs had sug- gested the program's success should be judged more by how many countries it has mutual recognition agreement with, rather than how many members are involved. A Customs presentation slide on the new Trusted Trader program, however, highlights increasing the "pool of trusted traders" as one of its goals. Under the C-TPAT program, importers reduce the odds of their goods being singled out for inspection by Customs by proving to the agency they have secure supply chains. As a result, Customs can focus its limited resources on targeting high-risk shipments. Members of the Importer Self Assessment program in effect "tattle on themselves" and report their mistakes to avoid penalties Customs would have levied in an audit, said Jennifer Diaz, an international trade attorney at Becker & Poliakoff in Miami. Importers, for example, can discover through an inter- nal audit that they underpaid Customs duties, pay the difference, and avoid penalties. There are additional perks for Trusted Trader members beyond those already offered via C-TPAT and ISA and the prom- ise of reduced inspections from the FDA and the Consumer Product Safety Commission. Importers that have a container held up for inspection still can receive other containers on the same manifest if the other boxes don't raise red flags, allowing shippers to mitigate delivery delays, Peterson said. Participants in the Trusted Trader pro- gram also can request that a Customs penalty be reduced or waived. All importers can request such relief through disclosure forms filed after they are fined by Customs, but new guidelines suggest that Trusted Trader members' chances of getting a break would be higher than non-members' chances. Unlike a pilot that might never be expanded, the Trusted Trader program is moving toward broader incorporation, with the first 18-month phase designed to work out any kinks, said Valarie Neuhart, Customs' director of industry and account manage- ment, cargo and conveyance security. The Trusted Trader program also allows import- ers to sign up for C-TPAT and ISA at once, she said. The Trusted Trader program won't follow a one-size-fits-all model, because Cus- toms recognizes that some shippers' imports face more scrutiny than others, she said. The agency is considering whether to TRUSTED TRADER REBIRTH Customs launches a security program integrating C-TPAT and ISA that offers new benefits to importers Chinese and U.S. authorities didn't have an issue with the P3 in the trans-Pacific trade, and U.S. and European regulators would have allowed the VSA to take effect in the trans-Atlantic. According to Alphaliner's P3 analysis, Maersk would have controlled 9.1 percent of all capacity in the trans-Pacific and MSC would have had 7.1 percent. In terms of laden container share in the first five months of this year, the two had 19.1 percent of the westbound trans-Pacific trade and a 17.6 percent share eastbound, according to PIERS, the data division of JOC Group Inc. In the trans-Atlantic, which includes Canadian ports, Maersk would have con- trolled 8.3 percent of capacity and MSC would have had 32 percent, according to Alphaliner's P3 analysis. In the first five months of 2014, Maersk and MSC had 36.2 percent of laden capacity in the west- bound trans-Atlantic (northern Europe and the Mediterranean to the U.S.) lane and 36.1 percent of the market headed in the other direction, according to PIERS. A clearer view of the capacity Maersk and MSC would control in the Asia-Europe, trans- Pacific and trans-Atlantic trades is expected to become available when the carriers file the VSA with the U.S. Federal Maritime Commis- sion. Once it's filed, the FMC will conduct a 45-day review before commissioners decide whether to allow it to take effect early next year or to seek a federal court injunction against it. Third parties, including shippers and forwarders, will be able to raise concerns regarding the proposed VSA during that time. The FMC could stop the clock on the review at any time to ask Maersk and MSC further questions. Once the questions are answered, the review would restart with 45 days on the clock. FMC commissioners would decide whether to allow the 2M to proceed by determining whether it likely would cause an unreasonable increase in transportation costs, an unreasonable decrease in service, or both. Since 1984, the FMC has never sought an injunction against a VSA. That includes the now-defunct P3. JOC Contact Mark Szakonyi at and follow him on Twitter: @szakonyi_joc.

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