WASHINGTON — Apparel importers, slated to face revised cargo security rules next year from U.S. Customs & Border Protection, are concerned about the costs involved and whether the government’s aims can be achieved.
The revisions are part of the agency’s fine-tuning efforts to keep U.S.-bound containers free of terrorist weaponry. They cover how importers scrutinize foreign buying agents, factories, subcontractors, cargo containers, warehouses and transportation for security weaknesses.
The new cargo rules, set to be released in early 2005, are essentially a widening of controls that stemmed from the Customs-Trade Partnership Against Terrorism that came in the aftermath of the Sept. 11, 2001 terrorist attacks. They are intended to bring uniformity to importers’ supply chain security procedures, which many companies support. But these firms are also concerned that the rules are being implemented without clear guidelines on who is responsible if there is a security breach.
C-TPAT is a voluntary program that has gained wide participation among retail importers such as Wal-Mart Stores, Federated Department Stores and Target Corp., as well as apparel producers Kellwood Co., Liz Claiborne Inc. and Jockey International. A key incentive to participate has been a pledge by Customs that the likelihood of time-consuming cargo inspections, resulting in costly delivery delays, would be lessened if importers adhere to C-TPAT standards.
The program grew out of the government’s post-9/11 awareness that cargo containers arriving from abroad are vulnerable to hidden nuclear bombs or other terrorist materials. A nightmare scenario such as a bomb going off in a cargo container or even just the threat of one from a terrorist group could bring the nation’s supply chain for imported goods to a halt.
Further alarming Customs was the realization that authorities knew little about the massive web of international supply chains leading to the doorstep of the U.S. Inspecting each of the 20,000 cargo containers that enter the country daily would pose a massive logistical challenge and financial burden.
C-TPAT has been central to Customs’ assessment of the cargo situation. Now the government is looking to step up the program’s requirements. Customs discussed some of its goals for the program at a summit with supply chain, port and government officials earlier this month.
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“What Customs is looking to do is give [C-TPAT] more teeth,” said Jonathan Gold, an international trade lobbyist with the Retail Industry Leaders Association, whose new title, vice president for global supply chain policy, reflects growing emphasis by RILA’s discount retail members on the melding of their supply chains with government antiterrorism efforts.
“Overall, [C-TPAT] is still a good program,” Gold said.
Hubert Wiesenmaier, who arranges apparel cargo transport for 200 small-to-medium-size importers, said the proposed C-TPAT changes don’t deviate much from the C-TPAT standards his clients are already deploying.
For example, Wiesenmaier, executive director of the American Import Shippers Association, said the proposed rules place “greater emphasis on inspecting containers before they are loaded and to make sure seals are attached and by whom and to make sure when containers are interchanged between truckers and the ocean terminals there is a clear trail left of seal inspections.”
However, concerns have been raised about the reach of proposed rules and the extent to which importers might be held accountable for violations of the security protocols.
“The fact that importers lack control over the facilities and operations of their foreign contract manufacturers, suppliers and vendors makes this objective impractical,” said Peter Gatti, executive vice president of the National Industrial Transportation League, in a Dec. 3 letter to Customs in response to the agency’s second draft of the new standards.
The league represents 600 port authorities, carriers and importers, including Levi Strauss & Co., Target Corp., J.C. Penney Co., Nike, Reebok International and Sara Lee Knit Products, according to NITL’s Web page.
Gatti also said Customs should spell out the consequences for security breaches.
“Would the importer be forbidden from using that supplier? Would shipments from that supplier be subject to inspections and/or delays? Would the importer forfeit its C-TPAT status?” Gatti asked.
Under current C-TPAT standards, importers are asked to perform risk assessments for all their business partners in a supply chain and “ensure pertinent security measures are in place and adhered to.” Importers should create “verifiable processes” under which business partners are picked.
All foreign factories, vendors, distributors and others involved in producing or transporting goods should answer importer-prepared questionnaires so “importers can more easily identify if outsourcing occurs at any point in their supply chain and if….[U.S. Customs’] security standards are being met or exceeded by the entity handling their merchandise.”
Other rules cover screening new employees and “periodically” checking current personnel for suspicious behavior. Before picking business partners, importers should weigh their “financial soundness, capability of meeting contractual security requirements and the ability to identify and correct security deficiencies, as needed.”
Wiesenmaier said he couldn’t quantify the costs of participating in C-TPAT, though he noted that initially there’s a lot of paperwork. He added that suppliers have been ready to participate.
“If I were an overseas manufacturer, I would want to say to my importer clients, ‘I comply with these standards as a competitive stamp of approval,’” he said.
In many cases, antiterrorism security protocols can piggyback on existing antitheft precautions taken throughout apparel supply chains, Wiesenmaier said.
“It’s not rocket science,” he said. “It’s really access control — locked doors, fences, windows.”
Wiesenmaier said he’s not worried about importers being blamed for security breaches that are out of their control.
“That is why it is important for the importer to demonstrate a serious effort has been made,” he said, and contractors should be keen on enforcing standards out of fear of losing a contract.
While importers continue to participate in the program, some are grumbling about the lack of a clear benefit for participating companies. Initial participants had hoped to be placed in a “green lane” of cargo entry that guaranteed faster processing.
“There was a tacit belief that this was going to get you in the green lane,” said Robin Lanier, executive director of the Waterfront Coalition of importers with cargo issues and a transportation consultant with the National Retail Federation. “There is no green lane. If you’re doing trade with Pakistan, you’re going to get a lot of inspections.”
Another outstanding issue is who is going to pay the billions of dollars in investments needed to bring facilities up to Customs’ rising standards.
“The government has covered the airline costs” in assuming control of passenger screening with the Transportation Security Administration, said Charles Sheldon, managing director of the Port of Seattle, who attended the C-TPAT cargo summit, “not port costs.”
Government officials at the C-TPAT summit emphasized that they would continue to need the industry’s help in improving security.
“We want you to help us work our way through the remaining…challenging and complex issues dealing with cargo security,” said Department of Homeland Security Secretary Tom Ridge.