Best PracticesCTPATImportU.S. Consumer Product Safety Commission (CPSC)U.S. Customs and Border Protection (CBP)U.S. Food and Drug Administration (FDA)

Do You Want to be a “Trusted Trader”? C-TPAT is No Longer Enough

posted by Jennifer Diaz June 25, 2014 1 Comment


U.S. Customs and Border Protection (CBP) recently published the long awaited Federal Register Notice, dated June 16, 2014, discussing the “Announcement of Trusted Trader Program Test.”

This new “Trusted Trader” program is big news for U.S. and non-resident Canadian importers, and if implemented will combine the Customs-Trade Partnership Against Terrorism (C-TPAT) and Importer Self Assessment (ISA) programs, making ISA extinct.  CBP is currently recruiting test companies that have to be willing to go through an 18 month program test. Continue Reading

CTPATU.S. Customs and Border Protection (CBP)

What You Missed at the C-TPAT Conference

posted by Jennifer Diaz January 18, 2013 0 comments

The Customs-Trade Partnership Against Terrorism is a voluntary government-business initiative that builds cooperative relationships that strengthen and improve overall international supply chain and U.S. border security. C-TPAT is widely recognized as one of the most effective means of providing the highest level of cargo security through close cooperation with international supply chain businesses such as importers, carriers, consolidators, licensed customs brokers, and manufacturers. At CBP’s C-TPAT Conference held on January 8-9, 2013, CBP announced major updates to C-TPAT – lucky for you, I’ve recapped the highlights for you below.

Trusted Trader Program

  • CBP proposes to combine CBP’s ISA program with C-TPAT.  Additionally, if importers choose to be part of the Trusted Trader Program, they can take advantage of “joint validations” with other government agencies (OGA’s).  CBP and TSA have already been performing joint validations for 9 months.  Trade is concerned that OGA’s will go on fishing expeditions while validating and no guarantees have been made from CBP that OGA’s won’t. This is a major concern for some (rightfully so!).
  • CBP is seeking comments regarding its new Trusted Trader Program. Please email any comments here.

Internal Conspiracies

Top conspiracy indicators to look for are:

  • Anyone taking photos of entrances, fencing, hours of operation, etc..
  • Anyone interested in stow plans, employee schedules, transit routes, and GPS
  • Anyone in financial distress
  • Anyone attempting to access a system that they have no authorization to access
  • Anyone showing up to work on a day off or with large bags
  • Anyone entering restricted zones without access

Container Inspection

Use the VVTT process:

  • View seal and container locking hardware
  • Verify seal #
  • Tug on seal to make sure it is on right
  • Twist and turn seal to make sure it doesn’t unscrew.

Most Common Areas of Failed Criteria:

  • Conveyance Security – tracking an monitoring                    51%
  • Container Security – sealing/ container inspection               49%
  • Business Partners – screening and subcontracting              46%
  • Personnel Security – background checks                            31%

SW Border Strategies 

  • 86% of the time the drivers are responsible and have some involvement in conspiracies
  • There were 41 seizures representing C-TPAT companies in 2012
  • There are 160 underground tunnels from Mexico the U.S. or Canada to the U.S.

Evidence of Implementation

Suspensions and removals from January 2002-November 2012:

  • 403 importers suspended due to validation issues
  • 339 were removed from C-TPAT

CBP expects:

  • C-TPAT Manuals including all minimum security procedures
  • Documentation of audits, checklists, appropriate training
  • Assurance that all documentation is uploaded into the portal
  • Checklists to be uploaded that are filled out (blank forms will no longer be acceptable)
  • Photo and video evidence of implementation may be requested
  • If you DON’T contact your CBP Supply Chain Security Specialist (SCSS) when illegal activity is detected, it is a STRIKE against you

Visitor logs

  • Only for unknown visitors
  • Don’t let visitors sign themselves in!

C-TPAT Portal 2.0 

  • Expect changes to the portal in the summer, it’s in early prototype stages now
  • You will not have to be a C-TPAT member to create a user account
  • SVI numbers will go away, tracking will be done using a business name and type
  • Members will have the ability to share documents
  • The new structure will give you the ability to combine common security practices, this is beneficial if you have more than one user account

Thomas Winkowski, Acting COO of CBP 

  • Over 55% of goods entering the U.S. are from C-TPAT certified partners
  • CBP is pushing for more Mutual Recognition Agreements (MRA’s)
  • CBP currently has 7 MRA’s in place
  • MRA’s on the horizon with Taiwan, China, Israel and Mexico

Kevin McAleenan, Acting Assistant Commissioner, Office of Field Operations (OFO) 

  • CBP is working on advancing benefits to C-TPAT members
  • New CBP Director Lauren Koffer was announced!  

Dan Baldwin, Executive Director


Currently CBP has:

  • 10,452 certified partners
  • 158 – CBP staffing level
  • 328 – Tier 3 IOR’s
  • 22,223 – Total Validations Completed since inception

Concern regarding budget and number of validations CBP will be able to complete for FY13

  • In 2012 there were 822 new companies that applied for C-TPAT & 693 of those were certified

Barry Brandman, President, Danbee Investigations


Top 5 best practices:

  1. Must enlist senior management support
  2. Culture and security excellence (Don’t meet standards, exceed them)
  3. Apply checks and balances throughout (Anticipate that your first line of defense will fail)
  4. Strategically utilize security technology
  5. Diligently audit safeguards to expose weaknesses

If you have questions regarding submitting a C-TPAT application, C-TPAT validations, advancing in tier status, or any pending C-TPAT program changes, feel free to contact me.   

U.S. Department of Homeland Security (DHS)

A Conversation with DHS Secretary Tom Ridge

posted by Jennifer Diaz February 20, 2012 0 comments

On January 26, 2012, I attended an exclusive, "off the record dinner for Florida business and community leaders to discuss the growing global national security and economic challenges our country faces today." The guest speaker was none other than the first Secretary of the U.S. Department of Homeland Security, Tom Ridge.  I was fascinated by what I heard from Secretary Ridge.

I had expected the first Assistant to the President for Homeland Security following the tragic events of September 11, 2001, and the first Secretary from 2003 to 2005 of the then new U.S. Department of Homeland Security to give the usual law enforcement speech about  securing U.S. borders and ports, counter-terrorism, deporting illegal immigrants, etc.  None of those ideas were discussed directly. Instead, the entire discussion initiated by Secretary Ridge was about promoting international trade as a way of ensuring economic security, and through our economic security, we maintain our leadership in the world.  Even after I peppered him with questions, he did not waiver.  Such a transformation was both surprising and impressive considering the current "5 Core Missions" of DHS.

The delightful dinner was sponsored by the U.S. Global Leadership Coalition. The USGLC is a broad-based, bipartisan coalition of more than 400 businesses, non-profits, faith-based, and community leaders led by Honorary Chair Colin Powell.  I am a member of the USGLC’s Florida Advisory Committee.

The new wisdom from Secretary Ridge should be seriously considered by our political leaders.  But, that’s just the view of one customs and international trade attorney. 


New Export Enforcement Priorities Come with New Names at the Bureau of Industry and Security

posted by Jennifer Diaz April 17, 2011 0 comments

On April 14, 2011, in Washington, D.C., David Mills, the new Assistant Secretary for Export Enforcement, Bureau of Industry and Security (BIS), U.S. Department of Commerce, and his Special Advisor, Bob Rarog, explained the enforcement priorities of BIS. These priorities were established by Eric Hirschhorn, who was just sworn in as Under Secretary of the U.S. Commerce Department’s Bureau of Industry and Security (BIS) on April 2, 2010, after being appointed by President Obama. This event was part of the American Bar Association’s Section of International Law’s Export Controls and Economic Sanctions Committee.

David Mills, who has an excellent perspective from recently being a private practicing attorney, and was formerly the Chief of Licensing at the Office of Foreign Assets Control (OFAC), identified the three primary initiatives of export enforcement by the BIS.

1.  Efficiency – process administrative cases faster.

2.  Education – outreach program to exporting companies.

3.  Enforcement – going for the $250,000 maximum penalty or twice the value of the transaction, whichever is greater.

David Mills stated that where both OFAC and BIS have jurisdiction over a violation, it is best to file voluntary self disclosure simultaneously with both agencies.  Generally, Special Agents from the BIS’ Office of Export Enforcement will conduct the investigation thereafter.  Another interesting point was that the Obama Administration remains focused on Iran, preventing the proliferation of weapons of mass destruction (WMD), and prohibiting any transactions with Specially Designated Nationals (SDNs). This is consistent with the U.S. Department of Justice’s recent National Counter-Proliferation Initiative to increase the detection and prosecution of export control violations. For the past two years since this Initiative started, the number of criminal and civil cases targeting violations of the ITAR, EAR and trade sanctions have greatly increased. Federal agents from the FBI, Justice, BIS, ICE, OFAC, State and Defense have investigated and prosecuted companies and individuals for illegally exporting goods and technology not only to countries such as Iran, China and Cuba, but also to close allies such as Canada, Mexico, Taiwan and Israel. 

What surprised many of the legal experts listening to David Mills who practice in the area of export controls was the statement by Mr. Mills that the filing of voluntary self disclosure by the company with BIS will not necessarily protect the employees of that company. Mr. Mills was sending a message:

Willful or knowing, as opposed to inadvertent,  violations by individuals will be punished.

Mr. Mills clearly set forth a new policy:

Special Agents of BIS are directed to focus on investigating culpable individuals for criminal prosecution or civil penalties.

He also stated that it is often an appropriate action for the company to terminate the employee who violates the laws of the United States.

SeizuresU.S. Department of Homeland Security (DHS)

Notice of Detention of Merchandise by U.S. Customs and Border Protection

posted by Jennifer Diaz February 24, 2011 4 Comments

U.S. Customs and Border Protection (CBP) issued a February 22, 2011 60-Day Notice and Request for Comments regarding its use of a "Notice of Detention".  I know, a lot of you are saying to yourselves, "When did CBP starting using Notices of Detention," and my response to you is "That’s a darn good question!"

The law, 19 U.S.C. 1499 and 19 CFR 151.16, allows CBP officers at the border to stop and search persons for merchandise.  If the CBP officer discovers something suspicious, and takes it from you, then it has been "detained".  In exchange, the CBP officer is required to send to the importer or passenger a Notice of Detention form no later than 5 business days from the date of the examination, stating that: (1) the merchandise has been detained, (2) the reason for the detention, and (3) the anticipated length of the detention. 

That all sounds reasonable, but the problem is that the legal requirement is often ignored by CBP.  Often, a Notice of Detention is never issued by CBP to the importer, or is issued late or does not state the reason for the detained merchandise.  I  have seen a few hundred Notices of Detention over the past 21 years as a customs lawyer, but have never seen one that described "the anticipated length of detention."

The Request for Comments asks the public for "ways to enhance the quality, utility, and clarity of the information to be collected."  I have a way to enhance the quality of the CBP Notice of Detention – follow the law and issue it every time, on time, and accurately.   For those who want to respond formally to CBP, click on the link for the address to address comments before April 25, 2011

U.S. Department of Homeland Security (DHS)U.S. Transportation Security Administration (TSA)

Does the U.S. Department of Homeland Security Make Us Safer?

posted by Jennifer Diaz February 17, 2011 3 Comments

I read a fascinating article entitled "HOMELAND SECURITY HASN’T MADE US SAFER," written by Anne Applebaum, a columnist for the Washington Post and Slate.  It was in the January/February issue of Foreign Policy magazine.  The article criticized the massive spending of time and money by the U.S. Department of Homeland Security.  Ms. Applebaum aimed her barbs right at the Transportation Security Administration (TSA) with the comment:  "As for the TSA, I am not aware of a single bomber or bomb plot stopped by its time-wasting procedures."

I started thinking about it, and even as a pretty well informed customs and international trade attorney, I could not recall a single incident either.  I have seen the indignities of TSA personnel at the airport force handicapped and elderly people out of their wheelchairs.  I have also been the victim of TSA officers groping around my private areas during one of their random, ‘enhanced pat down’ searches.  For a rollicking good laugh, I encourage you to read the official TSA Blog.  People say the strangest things about their air travel experiences to the TSA from the supposed privacy and safety of their computers.

The TSA submitted a budget request of $8.1 billion for fiscal year 2012. With the billions of dollars spent by both the Bush and Obama Administrations over the past 10 years in the ‘War on Terrorism’ and in support of ‘homeland security,’ the question of whether or not the TSA’s 43,000 trained and certified Transportation Security Officers make us safer through its passenger and baggage screening procedures is still debatable.

I would still like to meet the idiot savant who came up with the 3-1-1 TSA rule about carrying liquids aboard an airplane.  I can’t figure out why we had the technology to send men to the moon in 1969, but in 2011 still have to take our shoes off before walking through a TSA x-ray machine.  I guess the silver lining in all this is that, relatively speaking, the air and ocean cargo screening procedures by the TSA are much better thought out and reasonable.


Is Your Company Under Investigation by the Federal Government?

posted by Jennifer Diaz January 19, 2011 1 Comment

Every year, the numerous agencies of the United States Government send out letters to companies putting them on notice that the company is suspected of committing some serious violation.  Usually, the letter or notice demands a written response within 30 days or the company will be subject to a penalty or fine.  Knowing how to handle such letters, notices, or subpoenas is critical in terminating the investigation successfully, not paying a huge penalty, and even avoiding criminal prosecution.

The Executive Branch departments, bureaus, and agencies of the Federal Government  all have the legal authority to investigate and assess penalties against companies that violate that particular Government agency’s regulations. This is especially true of companies which are importers, exporters, or otherwise involved in international trade such as customs brokers, international freight forwarders, airlines, and indirect air carriers.  The U.S. Food and Drug Administration (FDA) would issue an "Administrative Subpoena" or a"Notice of FDA Action", the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) would issue an "Administrative Subpoena" while the U.S. Department of Transportation’s Federal Aviation Administration (FAA) would call it a "Notice of Proposed Civil Penalty", the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) describes it as a "Notice of Action" and "Pre-Penalty Notice", the Environmental Protection Agency (EPA) calls it a "Request for Information", the U.S. Commerce Department’s Bureau of Industry and Security (BIS) calls it a "Proposed Charging Letter", and the Transportation Security Administration (TSA) would call it a "Letter of investigation". 

Whatever pseudonym or term is used, the Government documents are all similar in that they:

(1) are a legal demand from the Government,

(2) require a written response by the addressee,

(3) describe briefly the factual basis for the demand,

(4) threaten action against the company for not providing a timely response, and

(5) threaten action against an individual if false information is provided to the Government.

The first response by the President of the company (or its General Counsel) who receives the letter is – you guessed it – identify and call a lawyer very knowledgeable and experienced in handling these investigations.  All communications between the company and its outside lawyer are considered to be under the attorney-client privilege. That means that anything the President or other employees of the company say to the attorney are entirely confidential.  The inquiry by the outside legal expert is also confidential, so anything the attorney discovers or discusses with the company’s employees do not have to be subsequently disclosed to the Government.

In my over 20 years of practice as a customs and international trade lawyer routinely involved in defending companies under investigation by the U.S. Government, the biggest error by company officers is that they respond directly to the U.S. Government without seeking proper legal advice.  Only after the company receives a large penalty do I finally get the call to straighten it all out. Fortunately, whether the letter of investigation is from Washington, D.C. to a company located in California, Florida, New York, or elsewhere in the United States, the administrative procedures are identical.

ExportU.S. Bureau of Industry and Security (BIS)

Save Money by Admitting Your Export Violations to the U.S. Commerce Department

posted by Jennifer Diaz December 12, 2010 0 comments

Sometimes it is beneficial for an exporter to voluntarily self-disclose its export violations to the U.S. Government.  Maybe an exportation of an item occurred without first obtaining the necessary license, or maybe the item was shipped to a company overseas other than allowed in a license. Both situations are violations of the Export Administration Regulations, and both violations could result in $250,000 penalties against the exporter. By voluntarily self-disclosing the violation, the exporter would reduce, and might even eliminate, such a penalty.

For a suspected violation of 15 CFR 764.2 of the Export Administration Regulations (EAR) enforced by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, an exporter may submit a voluntary self-disclosure (popularly known as a "VSD") to the Office of Export Enforcement of BIS at its Washington, D.C. headquarters office.  The contents of what must be included in a VSD are established in 15 CFR 764.5.

Procedurally, once a properly filed VSD is received by the BIS, it is investigated by a Special Agent from the Office of Export Enforcement. If a penalty or other sanction is contemplated, the case is referred to an attorney with the Office of Chief Counsel of BIS.  The BIS attorney will contact the exporter’s attorney, eventually resulting in a written Settlement Agreement between the exporter and the BIS.  Negotiating the terms of the Settlement Agreement is critical.

The Obama Administration is actively pursuing export control reforms. Importantly, Kevin Wolf, Assistant Secretary of Commerce for Export Administration, on November 9, 2010, at the Global Trade Controls Conference in London, England, stated:

Enforcement will become an even higher priority…We have long promoted the submission of voluntary self-disclosures (VSDs).  We view VSDs, along with internal compliance programs, as important mitigating factors. 

There will always be occasional errors by exporters.  Exporters should consult with knowledgeable and experienced international trade attorneys before submitting a VSD.  With more enforcement, there are sure to be more investigations and more penalties assessed by the Government against exporters, and likely more VSDs submitted to the Government by exporters.

U.S. Department of Homeland Security (DHS)

Is $56 Billion of Your Money For Homeland Security Too Much, Too Little, or Just Right?

posted by Jennifer Diaz February 16, 2010 0 comments

On February 1, 2010, Department of Homeland Security Secretary Janet Napolitano announced that the Department’s budget for fiscal year 2011 would be $56 billion.  This was the first time for the Democratic Obama Administration to formally unveil its budget priorities after taking over from the Republican Bush Administration.  Guess what – it’s more of the same.

The Federal Government’s fiscal year runs from October 1 to September 30, so the Fiscal Year 2011 budget begins on October 1, 2010. Examples of more of the same include more Federal Air Marshals on international flights, 500 more machines at airport checkpoints to detect dangerous materials, 275 more explosive detection canine teams, and more machines to scan 40 foot ocean containers entering the country for weapons of mass destruction, explosives, contraband, and illegal aliens. Compare this with prior budgets or the 2008 Five Year Plan for DHS, and you too may conclude that this is more of the same.

The Department of Homeland Security includes U.S. Customs and Border Protection, the U.S. Secret Service, the U.S. Coast Guard, the Transportation Security Administration (TSA), Immigration and Customs Enforcement, FEMA, and the U.S. Citizenship and Immigration Services.  There are 230,000 employees in this mega-Department.

There are 3 items I especially like in the proposed budget.

(1) raising the journeyman level for uniformed Customs Inspectors, Border Patrol Agents and Agricultural Specialists from the GS-11 to GS-12 level (a $10,000 base salary increase to $60,000);

(2)  a substantial increase in funding for stopping counterfeit merchandise from entering the United States, something which is very serious when we are talking about medicines, car and aviation parts; and

(3)  dual immigration priorities of (a) making it easier for legal immigrants to become citizens, and (b) removing from the United States illegal aliens who have been convicted of a crime, and are serving time in state and local jails.

If people voted for Obama with the expectation of drastic changes in homeland security policies, they will be sorely disappointed.  If people who did not vote for Obama were anxious that he would change the course of national security and counter-terrorism efforts of the prior Bush Administration, they will be pleased.

For me, my desires are much simpler. If and when Secretary Napolitano announces that TSA no longer requires us to take off our shoes at the airport, then I’ll know there is progress.  When my local police department gets rid of the huge barriers in its parking lot around the police department building, I’ll be pleased. Unfortunately, the hundreds of billions of dollars spent on homeland security efforts since 9/11 will probably not result in my local library soon re-opening the after-hours book return slot.


U.S. Customs and Border Protection (CBP)

Importer Security Filing or “10+2”

posted by Jennifer Diaz January 5, 2010 1 Comment

As of January 26, 2010, U.S. Customs and Border Protection (CBP) will require that all importers comply with the Importer Security Filing (ISF), also popularly known as “10 +2” because of the 10 elements required to be provided to CBP relevant to the importer and 2 elements required to be provided to CBP relevant to the carrier.  CBP has announced that as of January 26, 2010, it will also begin to issue penalties of either $5,000 or $10,000 against importers who fail to comply with ISF; something CBP calls its “enforcement phase”. Importers who self-file ISF, or their agents, must understand the changes, comply with them, and, when a penalty is issued by CBP, respond in writing to mitigate the penalty.

Fortunately, on January 28, 2010, from 11:00 a.m. to 2:30 p.m., the South Florida Chapter of the Council of Supply Chain Management Professionals (CSCMP), is hosting a seminar entitled “ISF 10+2 Reality Sinks In…What’s Next?”  To register or learn more about CSCMP, click on http://www.cscmp-sofl.org/events.shtml. The impressive panel includes customs brokers, importers, carriers, consultants, an attorney, and Richard DiNucci, Director, Secure Freight Initiative, CBP Headquarters.

As you should know, the ISF is filed via the Automated Broker Interface (ABI) or the Automated Manifest System (AMS), and it is always sent to the Automated Targeting System (ATS) for analysis and review by CBP officials.  Hence, it is obvious that CBP will use the ISF information to target, stop, and examine imported shipments.  Incorrectly or incompletely filing ISF will result in increased delays of imported shipments.  Moreover, CBP has announced that as of January 26, 2010, it will selectively penalize the more severely non-compliant importers, and will only more frequently issue such penalties over time.

On December 24, 2009, CBP amended the Interim Final Rule on November 25, 2008 entitled “Importer Security Filing and Additional Carrier Requirements.” See  http://edocket.access.gpo.gov/2009/E9-30570.htm.  The amended rule clarified the ISF Bond Terms for all importers.  Knowing all aspects of this important new rule is necessary for the international trade community.  Click http://www.cscmp-sofl.org/events.shtml to register.  To learn more about the South Florida Chapter of the CSCMP, please contact a member of the Board of Directors at http://www.cscmp-sofl.org/board.shtml.

Happy New Year to all.