CTPAT Program Benefits For Your Company

*Machine Operated Script*

Karma Ruiz 0:00
By going through the steps and jumping through the hurdles, because all of this other compliance stuff is coming in from CDP, you’re going to be in compliance with just by following CTC path.

Lalo 0:11
Welcome to simply trade. Brought to you by global Training Center. My name is Lalo, and together with my co host, Andy, we have well over 60 years of combined trade logistics and supply chain experience along the way. We have seen and witnessed different challenges in trade compliance. We’ve decided to put the show together and call on our friends and colleagues in the business to hang out with us and share their knowledge in all things trade. Thank you for spending some time with us. Enjoy the show.

Andy 0:40
Lalo, I tell you, we’re going to have a good show today. We’re talking about the CT Pat program, which is the customs Trade Partnership Against Terrorism, hence CT pad. And we’re going to get to talk about what the big deal is. You know, it’s going to be cargo security. It’s going to be like an importer self audit or self assessment. There’s a lot in covering that umbrella of the ctpa program, right?

Lalo 1:08
And I guess this is kind of a good place to have this show only because in recent shows, we’ve had guests talk about different things that affect your supply chain, and, for example, forced labor that obviously you need to check your suppliers, and sometimes anti dumping and countervailing duties as well, you know, just need to make sure that you’re dealing with suppliers that are not going to, you know, dump, let’s call it products and and cause higher duties. And so I think this is a good place to talk about this. And like you said, this does involve both your supply chain security and your trade compliance. But let’s go ahead and just concentrate on that one theme, because we do have karma. Ruiz coming on, and so she’ll be telling us about that part of the program, the core part of which is what everybody understands or knows CT Pat for.

Andy 2:04
It’s a good program. It’s been around for a while, but on the same token, there’s some upsides and downsides, so karma is going to be able to help us understand a lot more of that. So let’s bring karma on. Well, Cara, I we’re going to, obviously, as we told everybody, we’re talking about the CT Pat program, and then there is a lot of it’s been around for a while. Obviously, it’s a Trusted Trader type of a program. So as far as getting into it, I’m just going to jump into something. You go, why would anybody go through all the time, effort and expense to become, to become CT Pat certified, is, are there any benefits to it, and all that. So once you jump in and just tell us about the program, what you think about it? Is it worth it or not?

Karma Ruiz 2:52
Well, I’ve asked that question several times, because when someone approaches me, I want to make sure I’m, you know, doing right by them. So I do definitely think there’s some pros and cons. Some of the benefits, I’d say, are just the ones that are on the surface, because they have, you know, reduced inspection. It increases your competitiveness. But, you know, the one thing that I think people need to realize whenever they’re looking at this is that if you aren’t in the program and you think that you’re going to be able to bid for one of these large importers and get their business, you’re going to have a problem, because what’s going to happen is they’re getting, they might say, if you’re not CT, pap member, then you can’t be part of the program. We can’t even, you can’t even bid on our, you know, do our RFP. So, I mean, that’s, that’s one big things that people have to take into consideration. And once you do apply, it takes a few months. I do think a big benefit, though, is that with that Trusted Trader that you were speaking about, there’s mutual recognition programs with countries overseas. And if you are working with the company overseas and they’re in that mutual recognition program, then you’re considered a Trusted Trader internationally. And it works really, you know, then you don’t have to go through that vetting process for your overseas vendors. Makes it a lot easier.

Andy 4:08
So to your point, there is that, is there a list that Customs has, or the State Department or whomever, on the list of reciprocal countries?

Karma Ruiz 4:20
Oh, yes, there’s 13 of them. I don’t have them listed off the top of my head right now, but they’re, they’re expanding more. What happens is they’ll shoot them up on

Lalo 4:30
the screen here. Yeah, okay,

Andy 4:32
well, we’ll put, we’ll post that up on itself. Yeah. Okay, so that’s one thing to what you’re saying, as far as a reciprocal program, is that if your company has become certified or a member of their Trusted Trader program in that country, then in the ctpap program, it should be a recognized as. A entity, if you will, right? Yeah, basically, how? Question, before we go too much further to go ahead, go ahead, finish up. Well,

Karma Ruiz 5:08
no, the way it would work is the advantage to you being a ctpa participant is if they chose to do a validation in that overseas country, if they’re in that mutual recognition program, then they’re already accepted and considered a vetted, you know, so you don’t have to go through that whole process overseas.

Andy 5:26
Okay, okay, so that is so from a validation perspective, it definitely would streamline that that process, which is good. Let me ask this question, though, as we’re going into it, is there a difference of becoming a CT Pat member of the program or as well as then being a CT Pat certified member.

Karma Ruiz 5:51
Well, yes, you can apply, and if you’re not validated already, then that could take up to three months to a year to get validated. You have a number, but really you’re not getting any benefits, and you’re not providing any benefits to your clients. But once you are validated, then you actually have tier one or tier two status. Tier Two means you’re the minimum requirements, and tier three means you the best of the best you. And that’s only, I think, reserved to 4% of the companies that are ctpap members.

Andy 6:21
Well, it’s interesting on that. Here’s something else that I’m going to jump in on now, because I have personally, you know, years ago I was with FedEx. I was with working with other importers and exporters and whatnot, when the CT pap program started becoming to fruition, and there were discussions on it. The concept is great. The theory is there would be fewer inspection inspections of your freight. But the question I’ve got is, can the government prove it? Because there was an issue with that, that they really didn’t, or couldn’t provide the statistical data, and it’s like, you know what? It’s not really it’s an effort, and it has some expense to it, to become certified and validated and whatnot. But is it really worth it? Is there? Are there statistics now that show the difference of CT, Pat, certified companies getting, shall we say, the equivalent of the old paperless release, right, versus those that don’t?

Karma Ruiz 7:30
Well, that’s a problem with our government sometimes. And they like to say, Okay, well, if you haven’t received an increase in your inspection, you’re actually getting a benefit because we’ve increased inspections. So it’s very difficult for you to qualify that or quantify that for a company whenever they are asking about tangible benefits. But if I could sort of elaborate on that, I have found some really solid benefits we have. There’s a new a new part of the program that came out with the new 2020, MSCs, and that’s on forced labor. So I’ve been speaking with a lot of my larger importers, and I have been finding out that as they’re not really certain how they’re going to be moving towards enforcement, that’s the US government with speaking to these importers. What’s been happening is they’re going and getting they’re getting these requests for information or these detention notices because they believe that some of their products may be made with forced labor. So for a company that gets in the ctpa program and is concerned about, you know, following all the protocols, especially with the new MSC, you’ve already gone through this process. You’ve already vetted your vendors, you’ve already, you know, you can prove with documentation that they’re not using forced labor or they’re doing money laundering, so that if you do get this withhold release order from customs and a detention notice, you’re able to comply within that 60 to 90 day window to get that information to them. But if you haven’t been preparing, if you haven’t looked at your forced labor, your social compliance issues, then you’re probably not going to be able to comply with all the information they want, because they’re talking about going back and getting time cards for people that pick cotton in the fields and and, you know, having video surveillance of the working conditions that these people are working under. And these are not just your vendors. These are the people that you got your cotton or your fabric from. So I do believe that is a major tangible benefit.

Andy 9:33
Well, that’s one thing. And I will say that it’s been interesting that the example of going all the way down to get the time, cards for the laborers has been something that that has been circulating around, but it’s also one where there needs to be some there right now, there doesn’t seem to be any consistency. But you answered the question because of that is, the reason for that is the government isn’t quite sure. Sure how to enforce the forced labor Prevention Act legislation. As that is taking shape, I can see where a CT pet company remember you’ve generally you’re going to have a custom specialist assigned to your account Correct? Yes, and they should be able to help navigate within customs and be an advocate for you if you’ve if you’re crossing the T’s and dotting the i’s. So I can see where that should become. A very positive is this forced labor prevention activities are taking shape. So to help navigate through the port, there

Karma Ruiz 10:47
are some additional things that I found that is a con with working with the program. So we find that now that with CT pad and these new MSC they’re introducing what’s called a trade compliance component. Now initially, when CT Pat was ramping up, the AEO program came out in Europe, the AEO program is more of a trade compliance program as opposed to a security program like ctpa. So at first, Customs and Border Protection was extremely reluctant to actually borrow anything from the AEO program. Well, now with all these mutual recognition programs that we have, they’re trying to move ctpa More from a security program to trade compliance. Now this has angered a lot of members in the community, because that was not the initial purpose of them to get into the program, and they don’t really want to have to deal with the trade compliance aspect. Now, whether that’s going to bode, you know, negatively on the importer, that remains to be seen. But I think that you can’t get someone in under a guise of it being security and then change the rules afterwards. So we do expect the membership will fall off, and and that is a concern for ccpad, because they don’t, of course, want to have anybody leave the program

Andy 12:06
well, and to that point is in today’s world, I mean, you made a note, you know, comment in some of the notes, as we’ve exchanged here is that the world is changing so rapidly. One of the things, though, I would also say in that is that the compliance, be it trade compliance, being import compliance, being export compliant, you know, when and when I put trade compliance, I’m talking about everything from the a widget being sourced, you know, again, trade compliance being, is it forced labor or not? Have you taken due diligence in that? Is it the valuation on it, appropriate country of origin, market, all those kinds of things. That’s what I’m looking as far as those trade compliance, especially trade programs. But when you’re actually exporting the goods, then you have a whole nother realm of the you know, restricted parties, denied parties, screening, the importing, same thing, all that kind of stuff, though, that comes into play, needs to be looked at somewhat holistically. So I can see where a ctpa program, where the intent was there initially, but it’s been out there for what, 15 years or 20 years now, I’d say it’s like, has it been 20? I know it’s 15. Yeah, it’s like 20 years. Yeah, I was, I think, six years old when it started. Yeah, anyway. Yeah, right, okay. But seriously, the the programs are not there, it’s going to evolve. The question that I have is, is it possible for some of these other programs to merge into one program, or, you know, so you’re not replicating efforts in two different programs that are governed by two different groups. So again, as we’re getting into that, the pushback is, I think, in some of the regulatory and industry affairs activities of a company you just mentioned, some of the cons on that is that, and the other thing is about customs saying, Well, if you’ve not seen an increase in the exams, then you’re seeing a benefit, because we’re increasing exams. I’m sorry, that’s go pound sand. That’s bogus. The issue there is government. You guys need to be able to show what you’re doing or forget the program. You can’t talk a good game and then turn around and go, Oh no, just trust me, it’s better. No. Show me. And that’s some of the things that as the importing and exporting community needs to, you know, to hold the government accountable. Go, you need to show us. If you want participation, you need to show us. What do you think about that? I.

Karma Ruiz 14:59
Oh, well, most definitely. I mean, we’re, I feel that these companies really jump through hurdles to make this program work, and it is very intrusive to their day to day operations. And, you know, they put stipulations on some of the importers that they don’t like, you know, for them to use consultants. And you know, during the day to day operations, when you’re trying to make revenue, it’s extremely difficult for you to stay up with this program, because you need monitoring of all your vendors. You need to do summary of deficiencies. You know. You need to do risk matrix, match your cargo, knowing your car goes at rest. All of this stuff can be facilitated if you’re using someone who can basically focus on it by using a consultant or a full time employee. But what’s been happening now is this, this relationship with Customs has become adversarial between the consultants and US Customs, because a lot of them are getting ready to retire. They have that 20 year window. They’re getting ready to leave customs, and so they want to start a consulting firm, and they want to take their their clients with them, and so they’ve been pushing out the consultants, and this is really leaving a bad taste in the mouth for a lot of the importers and a lot of the people that are in the program, because they need help, and if they’re choosing to bring someone in to help them with the program, customs shouldn’t have a problem with it.

Andy 16:20
I agree wholeheartedly that’s one of those issues, again, that from a regulatory and industry affairs that needs to be an agenda item that gets discussed and talked about. Because, again, if you’re putting forth the effort, I mean to me, quite frankly, I would have to keep challenging customs, if you will. Who is it that’s saying you don’t like the the consultants, once you get to that point and say, well, then justify that. What under what premise? The premise, generally, is probably, and again, this is conjecture, on my part, is that they’re trying to make sure they can hold the company liable. So rather than you say, Oh no, a consultant gave me that, and it for any activities, the company’s ultimate liable, if, if they are the export or import, or whatever it fits, their bond, all those kinds of things. But the fact that not to get a consultant, which under the premise would be reaching out, getting an expert. Would fall under the same premise as when I go to the doctor and I have a problem with some kind of issue, I may want to get a specialist. Well, gee, guess what? That is an expert in their field. But, oh no, we can’t use a you know, I got to use just the one doctor that doesn’t work that way. Same thing here you have consultants or experts that are have that expertise and that niche and that, hey, I’m going to go and do the right thing. I’m going to get somebody on board. And if somebody within the government has a problem with that, they’re going to have to

Karma Ruiz 17:59
justify that well. And not only that, there is an accountability element too with the portal, because what they’ve done now, before other people could submit it, now it has to be an officer of the company, and consultants actually have to have their own separate sign on into the portal, and you know, and then, so they even know that you’re a consultant. So there’s no real way to get around it. It’s very visible, but I’ve noticed that some importers are actually hesitant to work with consultants now. So what we do? We stay behind the scenes, assist them, provide them with documents, and they do all of the work in the portal, which works as well, you know, just as well. But there are some other issues have with the supply chain specialists and the consistency in the way that they’re implementing the program. Now, the way I’ve had some companies that have been in CT path from the very beginning, and they passed every year, they do their due diligence. They’re very, very they really are to the to the letter of the program. They’re really following it. And then they’ll switch supply chain specialists, and they’ll be suspended because all of a sudden they’re not in compliance. Now, how do I justify that to an importer, that the program is valid and it’s doing something you know worthwhile whenever, you know, for 1015, years they’ve been passing, and then all of a sudden they get a new person that thinks that it’s not they’re, you know, that they’re not up to speed. Now, I do think the new minimum security criteria is eliminating a lot of that, you know, that open ended interpretation of how it should be, you know, the program should be implemented. I do see more of a checklist coming through. I see a lot more of that type of, you know, it’s more cut and dry, black and white, which it really, program really needed. So I do see the program moving towards a positive direction, but there’s still, I think there’s still some hurdles that we need to overcome.

Andy 19:53
Well, you’re hitting on something that, again, the trade associations that are. Involved with meeting with the different bureaucrats, you know, departments, whatever, on behalf of an industry. So it may not necessarily be a specific company, but it would be for the industry, or for the importing community or exporting community, or whatever they’re they’re moving forward on that’s one of those things that needs to be discussed, and again, to hold them accountable on that the problem is, is that if they’re not responding, which there’s been challenges in this, if they’re not responding, that association is going to have to be willing to escalate it, because it will get there. I mean, it’s it there’s we’re not the enemy. That’s the problem that I’ve seen. There are times with this, the pendulum effect, where all of a sudden the importer or that company is looked at as the enemy, right off the bat, and, to your point, going several years, being just fine, and then all of a sudden get suspended. I don’t see how they could justify that. The other is, with the CT patent, the custom supply or the supply chain specialists, they seem to operate somewhat autonomous from the what’s the other program I’ve gone blank, where they have the the C’s, isn’t it? Isn’t that what they were called the centers of excellence, yeah. And there seems to be a times where look, if, if you’re looking at suspending somebody over a CT Pat issue will are they? Chances are, they’re also going to be in a client in the seat. Don’t you think it’s like, Hey, you guys need to talk here. What’s going on?

Karma Ruiz 21:52
Well, I mean, it’s even worse than that. I mean, the centers of excellence and expertise I under, you know, I do get your your reference there, but I mean, it goes down to a simple thing within the government where they don’t even know that a company is participating in ctpa, because whenever I mitigate penalties for companies, I have to prove that they’re in the program. And I, what I could do is cut and paste that part, you know, log into the portal and cut and paste that they’re approved in their number, or else nobody else has any visibility to their to their participation. So I mean, yes, I mean, we’re talking that’s that’s actually US Customs together comprehensively, and they can’t figure it out. So when you’re talking about a centers of excellence and expertise, you know that’s dealing with much higher level than CBP. So yeah, it doesn’t surprise me at all that there’s no communication between the two groups. But definitely something that needs to be done. There needs to be more more communication karma. What

Andy 22:50
we’ve kind of talked through some things, let’s, let’s go to again, the scenario in today’s world, chances are it would still be a wise move for somebody, a company, to become a CT Pat member, so that they are not going to knock themselves out of some of these bids or contracts. Potentially, Would you not agree with that?

Karma Ruiz 23:14
Well, yes, but I try not to look at the benefit of something is the potential business. What I try to look at as being a positive and a tangible benefit, is you are going to know your supply chain. I have had so many people shocked whenever they looked at their supply chain, and all sudden they realized that they’re, you know, $500,000 worth of equipment being taken to the port in the back of a Toyota pickup truck. You know that that type of thing, knowing when your car goes at rest, that’s very valuable, because if you know where your car goes at rest, you’re very much able to put in checks and balances to stop any type of pilferage there, you know, to your cargo. You know there’s there’s just and like I said, when you’re starting to do the social compliance, which is now a very big thing, when you assess your supply chain. You have no surprises. You’re able to provide the documentation and show the customs that you’ve done your due diligence. So yes, it is cumbersome. They’re definitely here. Go ahead.

Lalo 24:13
Yeah, I was, I was gonna say, here at global Training Center, we say you’re a good corporate citizen, right? I mean, yeah, you’re, complying with these, like you said, you know, forced labor, and I mean even cybersecurity, right? Because that’s a big component of it, and you’re making sure, well, personally, you’re making sure you’re not getting or trying not to get hacked or ransomed or whatever. So yeah, it’s

Karma Ruiz 24:39
actually with some of the other programs I work with, because I also work with TSA, and, you know, with the CBP and and they have made the cyber issue is actually a very, very big part of it. Now you can’t even, you know, reinstate your certified cargo screening program now without, you know, having a cyber person, a cyber expert. And you have to, you know, be able to explain what your your firewalls are, and your, you know, your parameters that you have for your your cyber security. So, yes, that’s also another big component. So I do think that what we’re doing is, you know, since terrorism is a moving target, CT, PACs, trying to catch up, I think they’re doing a good job. And I think it benefits the trade by going through the steps and jumping through the hurdles, because all of this other compliance stuff is coming in from CDP, you’re going to be in compliance with just by following CT path. Excellent,

Speaker 1 25:32
excellent. Okay, thank you so much.

Andy 25:37
Carmen, I tell you what you know. Some good information here if there’s anything else to that you have that you want to supply, that we can include in the show notes, we’ll we’ll add those in there, and then

Lalo 25:50
we’ll definitely have a link to your bio. I want people to know how to get a hold of you, how to talk to you if they need to. So we’ll put that on the show notes. Your your bio is also always on our website anyway, because you’re a regular instructor for global Training Center. So we’ll just keep that going, and we’ll make sure we reference that, and people can get a hold of you.

Karma Ruiz 26:15
That’s fantastic, guys. I really appreciate you having me on and and you know, I hope we can continue this talk with some other topics. Okay,

Andy 26:24
we definitely, Will, definitely, I appreciate it. Thank you, karma. You’ve been excellent. Thank

Karma 26:29
you. Thank you, my pleasure. Guys. Have a good day.