Customs-Trade Partnership Research Articles

Supply chain security certification and operational performance: The role of upstream complexity

Supply chain security (SCS) incidents increasingly cause financial losses to manufacturing facilities and logistics service providers. Thus, supply chain security certification can have implications for production economics, particularly for importing firms who rely on a smooth logistics flow across country borders. However, it largely remains unknown regarding how such certification could influence a firm's operational performance. To this end, we empirically examine whether and how the adoption of Customs-Trade Partnership Against Terrorism (C-TPAT) certification, initiated by the U.S. Customs and Border Protection (CBP), could improve operational performance in adopter firms. This study draws upon signaling theory to empirically investigate the value of C-TPAT certification on U.S. publicly-traded importer firms' operational performance by analyzing the longitudinal data of properly-matched sample-control groups. The data come from multiple sources: public announcements of C-TPAT certification from the News Retrieval Service database, import data from lading records, and financial data from Standard & Poor's COMPUSTAT database. Employing a coarsened exact matching (CEM) method and a difference-in-difference (DID) analysis, we find that C-TPAT certified importers have better operational performance than that of non-certified importers. We also find that the level of upstream supply chain complexity (detail, dynamic, and spatial complexity) enhances the operational performance derived from C-TPAT certification. This study sheds light on the performance value of a management standard that is attributed to the non-process mechanism (not due to process improvements) enabled by the signaling effectiveness incorporating the upstream supply chain complexities. Our findings have important theoretical and practical implications for production economics and supply chain management studies.

Intermodal maritime supply chains: assessing factors for resiliency and security

Much of the value exchanged in international trade is transported as containerized freight. While this transport mode has become ubiquitous for manufactured goods, offering a fast and efficient service, it does pose security threats in the post-9/11 era. Even though containerization offers security from pilferage, it provides a means for obscuring contraband as well as opportunities to tamper with goods in shipment. Although the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-PAT) are high profile initiatives seeking to improve the security of global supply chains, vulnerability still remains from the port of origin and on the high seas to the port of discharge. This research is based on interviews from a wide range of supply chain participants that includes regulatory agencies, transportation providers, importers, exporters, and trade intermediaries. These provide the basis for a decomposition of the global maritime supply chain into those elements up to that point when goods are cleared by U.S. Customs. Analysis of the informational and physical flows suggests that the greatest vulnerabilities lie in those transportation segments between the origin of the goods and that point when they await shipment at a foreign port.

Certificación de hoteles en materia de seguridad en Ciudad Juárez: sistematización de la experiencia

This article is derived from the entailment between productive sector, academia and social organizations. The purpose was to present the technical and analytical necessary elements to document the academic experience, related to hotel security certification process in Ciudad Juarez during 2018. Following criteria stablished by C-TPAT (The Customs Trade Partnership Against Terrorism), which are: physical security, access control, security procedures, security staff, education and capacity development. The used method was a systematization that holds concepts used as criteria for a hotel security audit with the purpose of certification that provide result analysis and offers revision suggestions if needed. It formulates pre-audit suggestions and propose required steps for the process; it stablish restrictions and address recommendations for successful audits.

The Authorized Economic Operator in the Pacific Alliance

This paper portrays an up-to-date status of the Authorized Economic Operator (AEO) Programs in the Pacific Alliance (PA), shining a light on the different obstacles these programs have encountered and what their probable outcomes will be in the coming years. The main goal with this investigation is to answer two questions: (1) What is the current situation of the AEO programs within the Pacific Alliance? (2) What impact will the PA’s AEO programs have in the medium term? Can these programs become as successful as the Customs-Trade Partnership Against Terrorism (C-TPAT)?

Espionage and the optimal standard of the Customs-Trade Partnership against Terrorism (C-TPAT) program in maritime security

We examine the design of a trusted trader program in the U.S. known as C-TPAT (Customs-Trade Partnership against Terrorism). For this, we consider a game between the government, an importer and a terrorist group. The government provides maritime security using three policies: (i) Standard of the C-TPAT program, that is, the degree of security of the supply chain that is required of a member, (ii) Quality of intelligence about the terrorist group, and (iii) Inspection of Cargo. In equilibrium, the government sets the standard of the program at a level that minimizes congestion. However, the optimal espionage expenditure is less than the level that minimizes congestion. We also endogenously determine the membership size of the program and show that it depends non-monotonically on policies such as the standard of the program or the quality of intelligence. Finally, we examine the impact of parametric changes on these policies.

Why be first if it doesn’t pay? The case of early adopters of C-TPAT supply chain security certification

PurposeThe purpose of this paper is to focus on adoption of certified management standards, specifically public standards. Such standards play an increasingly important role in today’s business environment. However, to generate adoption benefits, they must be first widely accepted – a situation where they have become viewed as the de facto norms. For this state to occur early adopters play a critical role. Past research has argued that early adopters, in exchange for assuming more risk, are rewarded with higher economic returns. Yet, these findings are based on private, not public standards. With public standards, early adopters do not receive such benefits. There is evidence that public standards are becoming more important. This situation leads to a simple but important question addressed in this study – if early adopters assume the risks of embracing a new public standard without economic benefits, then what is their motivation? To resolve this question, this study draws on agency theory and prospect theory. The authors argue that early adopters embrace such standards because of their desire to minimize risk resulting from failure to support the goal at the heart of the public standards.Design/methodology/approachData were obtained from the Customs-Trade Partnership Against Terrorism (C-TPAT) Partners Cost Benefit Survey and analyzed through structural equation modeling.FindingsEarly adopters of public standards are not driven by economic benefits but rather by the need to minimize their exposure to the risks associated with failing to satisfy the goals associated with a public standard. In other words, they were motivated by the need to minimize costs. In the case of C-TPAT, these costs are those of failing to provide or improve network security.Research limitations/implicationsThis study has shed new light on the standards adoption process by clarifying the specific motivations that drive early adoption of a public standard. In addition to identifying the loss aversion motives of early adopters and economic benefit motives of later adopters, the authors have also elaborated on the notion that standards have differing levels of precedence, particularly when comparing private with public standards.Practical implicationsIn a world characterized by increasing demands for outcomes such as improved security and where governmental funding is falling, due to growing deficits and governments that are becoming more conservative, the authors expect the use of public standards to increase.Originality/valueDifferent from prior research on private standard, the paper focuses on the organizations involved in the adoption and diffusion of a public standard, with special attention being devoted to the early adopters. The paper provides a theoretical explanation for the actions of early adopters of a public standard through the theoretical lens of prospect theory.

The Multiplicity of Actors Involved in Securing America's Food Imports

The paper attempts to accentuate the significance of multiple players’ (both public and private) involvement for safeguarding U.S. food imports, particularly at maritime prots of entry.The task of ensuring food import safety is a responsibility shared by a multitude of actors in the food industry, encompassing everyone from farmers, producers, and retailers to federal and state regulatory agencies. If America’s food supply is to remain secure, it is critical that everyone involved in this process remain vigilant and knowledgeable about the requirements of food safety, particularly within the context of international trade involving multiple players. The manuscript talks about the various multiple actor programs like Container Security Initiative (CSI), the Customs Trade Partnership Against Terrorism (C-TPAT), Free and Secure Trade (FAST), the Maritime Transportation Security Act (MTSA 2002), Bio-terrorism Act, the International Ship and Port Facility Security Code (ISPS, adopted in 2002 as an international counterpart for the MTSA), the 24-hour Rule, Automated Targeting System (ATS), Operation Safe Commerce (OSC), and the Smart and Secure Tradelanes (SST) initiative. Port security encompasses numerous issues ranging from the security of actual port facilities to the verification of passenger identities and the investigation of threats posed by cargo container shipments. The paper highlights that greater linkage of resources, expertise, and initiatives are needed at all levels of government and in the private sector in order to achieve the shared objectives of security and emergency preparedness. It is important to note that preventing problems that can arise outside the United States is a more effective approach than merely attempting to identify and catch problems when products arrive at our borders. The paper concludes by reiterating that public-private partnership must become stronger in order to improve the quality and safety networks upon which the U.S. relies to supply the food we eat and the products we use.

The impact of emerging institutional norms on adoption timing decisions: evidence from C‐TPAT—A government antiterrorism initiative

AbstractDrawing upon an institutional theoretic perspective, this study explores the performance outcomes associated with adoption timing and level of investment in a government antiterrorism initiative—the Customs Trade Partnership Against Terrorism (C‐TPAT). Using a large‐scale sample of C‐TPAT certified importers, this study found that performance outcomes for high levels of investment in adoption processes differ depending upon the strength of institutional forces. Specifically, early adopters of C‐TPAT processes in a weak institutional context that reported high levels of investment performed no better than firms who invested nominally in the processes, while late adopters in a strong institutional context that reported high investment levels outperformed those that invested nominally. This finding can be explained by viewing C‐TPAT as an ‘emerging’ institution, where forces are coalescing. Copyright © 2011 John Wiley & Sons, Ltd.

Securing the Containerized Supply Chain: Analysis of Government Incentives for Private Investment

To mitigate the threat that terrorists smuggle weapons of mass destruction into the United States through maritime containers, the U.S. Bureau of Customs and Border Protection (CBP) inspects containers upon entry to domestic ports. Inspection-driven congestion is costly, and CBP provides incentives to firms to improve security upstream in the supply chain, thereby reducing the inspection burden at U.S. ports. We perform an economic analysis of this incentive program, called Customs-Trade Partnership Against Terrorism (C-TPAT), modeling in a game-theoretic framework the strategic interaction between CBP, trading firms, and terrorists. Our equilibrium results highlight the possibility that a properly run program can efficiently shift some of CBP's security burden to private industry. These results also suggest that CBP may have the opportunity to use strategic delay as an incentive for firms to join. Analysis of comparative statics shows that, with increasing capacity, membership in C-TPAT systematically declines.

The WCO SAFE Framework of Standards: Avoiding Excess in Global Supply Chain Security Policy

Prior to the terrorist attacks of 11 September 2001, customs controls related to national security threats did not feature highly on the policy priorities of the World Customs Organization’s (WCO). After 9/11 and implementation of several US Customs programs such as the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT), and regulations such as the 24-Hour Rule, the WCO began to focus much more of its work on supply chain security. This transition culminated in 2005 with the adoption of the WCO SAFE Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework), a non-binding instrument comprised of technical customs standards aimed at securing without impeding international trade. This article will discuss the intricacies of the SAFE Framework including its history, political context, and technical elements (especially risk management and the Authorized Economic Operator (AEO) concept) and antecedents. This article will also consider the 2007 US legislation mandating 100% scanning of US-bound cargo containers at foreign ports that clouds and constrains the SAFE Framework’s future. The article concludes that policymakers should seek to avoid excess in formulating supply chain security policies.

C-TPAT: major challenges

Since its implementation after the 9/11 attack on the World Trade Center, the Customs Trade Partnership Against Terrorism (C-TPAT) has grown to be one of the largest public/private partnerships in the world. The focus of C-TPAT is on the United States’ vulnerability to the smuggling of weapons of mass destruction (WMD) across its borders. As a system, C-TPAT has achieved great success; however, there remain a number of serious deficiencies that C-TPAT, by itself, cannot overcome. Very few cargo containers are currently being inspected by Customs and Border Protection (CBP). This is due to lack of funding and manpower deficiencies as well as the practical need to allow the flow of trade to continue as swiftly as possible. Instead of mass inspection of containers, CBP relies on its ability to identify and further question or inspect “high risk” containers before they are shipped or prior to their entry to the United States. Identifying “high risk” containers results in a far lower number of CBP inspections, thereby offering less interference with the trade process. It is well known amongst shipping experts that the contents of many containers are mislabeled or misdeclared. Combine the fact that many cargo containers contain misdeclared contents with the current model of inspecting very few containers and one can conclude that the potential for problems is enormous. Furthermore, concerns over specificity of standards related to C-TPAT security requirements and the likelihood that membership in C-TPAT increases an organization’s potential for attack and the situation continues to deteriorate. C-TPAT began as and remains an initiative with honorable goals; however, we cannot rely upon increasing numbers of C-TPAT members as a measure of its effectiveness.

Achieving Resource Efficiency by Customs Administrations in a Constrained Economic Climate: A Critical Examination

Handling Customs’ ever-expanding portfolio of goals requires significant expenditure, for example, for trade security programs such as the Customs-Trade Partnership Against Terrorism (C-TPAT). Simultaneously, economic depression jeopardises resource allocation to Customs. Thus, a crucial question is ‘How can Customs utilise its limited resources most efficiently to achieve its mandated goals?’ This paper addresses this question by examining initiatives requiring Customs to collaborate with external organisations in order to reap resource efficiencies. Among the paper’s central contributions are guidelines to maximise and assess the resource efficiency value of these collaborations. The paper draws on theories such as inter-organisational citizenship theory and research methods such as computer simulation.

Conflict resolution in supply chain security

Right after the September 11, 2001 terror attacks, the US government defined and implemented several security-oriented initiatives to prevent another terror attack. Two of the most known are the Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terror (C-TPAT). The World Customs Organization (WCO) and the United Nations (UN) have implemented collaborative, multination initiatives to promote security awareness worldwide and increase the resilience of supply chains to terror attacks. The results achieved to date in the international crusade against terrorism suggest that supply chain security is a global, multidisciplinary issue that must be addressed through collaboration and partnerships. Collaboration, however, involves conflict situations, which result naturally from the interaction of cooperating parties. These conflicts must be timely resolved through cost-effective and well-synchronised actions. This paper introduces a mathematical tool for conflict resolution based on conflict modelling and analysis.

Letter to Editor

The aims of the new regulations are to continue China Customs’ modernisation efforts, encourage informed trade compliance, improve customs-trade partnership, and implement the WCO Framework of Standards to Secure and Facilitate Global Trade. After consulting with the trade, China Customs Administration recently announced the new regulations concerning customs compliance and trade facilitation, to take effect from 1 April 2008.

A Survey of Cross-Border Trade at a Time of Heightened Security: The Case of the Niagara Bi-National Region

Introduction In a recent article on the new border security environment facing North America, Ackleson (2003) notes that much work remains to be conducted to evaluate the complex dynamics of post-9/11 tri-national commercial relationships under the North American Free Trade Agreement (NAFTA). Although his article is primarily focused upon the U.S.-Mexico border security environment, his call for more empirical research that includes normative components and expanded coverage of emergent theoretical and policy issues is equally relevant for studies of Canada-U.S. cross-border business transactions. Similarly, Cutter et al. (2003) argue that at a time of increased concern over terrorism, regional and international research priorities must be directed to understanding ... how borders function, especially flows of goods and people, and how borders constrain or enhance trans-jurisdictional responses to issues such as immigration, disaster response, refugee movements, weapons proliferation, narco-terrorism, or environmental degradation (225). Unfortunately, very little research has focused upon the potential impacts of terrorism upon cross-border commerce. This is a surprising neglect, because the short--and long-term impacts of new border security regulations have potentially profound implications for foreign commerce, international direct investments, the location of production, and the growth and development of local and regional economies. It is within the context of this call for more empirical work on the impacts of the post-9/11 security regulations that the following questions are posed. First, are the new anti-terrorism policies for cross-border commerce that have been put in place by the U.S. government since 9/11 serving, in effect, as non-tariff trade barriers and therefore trumping the long-standing objective of maintaining a relatively open international border between the U.S. and Canada? Second, what are the principal costs to those North American companies that must comply with the new security mandates in order to engage in cross-border commerce? Third, what are the likely strategic responses of U.S. and Canadian companies to these new security regulations when it comes to decisions related to supply chain logistics (e.g., shipping routes, transportation modes), direct foreign investments, and the location of production? Finally, and equally important, what are the possible long-term implications of these business decisions for North American patterns of production, direct investments, and regional economic growth and development? Background and Study Area Following the terrorist attacks of 9/11, the U.S. government introduced a number of anti-terrorist regulations that pertain specifically to the flow of goods and services through U.S. seaports and across the nation's international land borders. At least 15 security-based initiatives have been introduced and/or strengthened since 9/11 (see Table 1), and several more are in the pipeline (mentioned later). Most of these new regulations are aimed at reducing the vulnerability of the nation's trade and transportation infrastructure, which facilitates the movement of more than 16 million cargo containers and other shipments that enter the U.S. annually by ocean vessel, truck, rail, and air. For example, the Container Security Initiative (CSI) involves a partnership arrangement between the U.S. and more than 20 countries to place U.S. Customs agents within the gateways of those countries to inspect U.S.-bound cargo. Some of these initiatives are also designed to combine greater security measures with procedures for expediting commerce. Thus, for example, the Free and Secure Trade (FAST) program allows for the pre-approval of truckers for pass-through clearance at the U.S.-Canada border. In this case, however, both the companies and drivers must also qualify for the C-TPAT voluntary program (Customs Trade Partnership Against Terrorism), which means that U. …

Electronic cargo seal for safe and secure supply chain traceability

Recently, the United Statesgovernment plans to introduce electronic container seals on all imported containers as a mandatory requirement. Further, containers without electronic seals may be prohibited or restricted for import based on this planned regulation. An electronic seal is a tamper-free seal with radio frequency identification (RFID) chips embedded in it. It could provide additional security information such as the tamper evidence and the history of tampering status. In this paper, a brief review of the types of container seals, the characteristics of electronic seals, and their system components are presented. International efforts for securing cargo security are also reviewed including Container Security Initiative (CSI), Customs Trade Partnership Against Terrorism (C-TPAT), and International Standards Organization (ISO) requirements. Finally, the current issues and the status of technology development are discussed with future directions as a final word

Electronic cargo seal for safe and secure supply chain traceability

Recently, the United Statesgovernment plans to introduce electronic container seals on all imported containers as a mandatory requirement. Further, containers without electronic seals may be prohibited or restricted for import based on this planned regulation. An electronic seal is a tamper-free seal with radio frequency identification (RFID) chips embedded in it. It could provide additional security information such as the tamper evidence and the history of tampering status. In this paper, a brief review of the types of container seals, the characteristics of electronic seals, and their system components are presented. International efforts for securing cargo security are also reviewed including Container Security Initiative (CSI), Customs Trade Partnership Against Terrorism (C-TPAT), and International Standards Organization (ISO) requirements. Finally, the current issues and the status of technology development are discussed with future directions as a final word

A Sensitivity Risk Analysis for Additional Truck Turnaround Time (ATTT) by Container Inspection Stations Derived from C-TPAT and CSI.

After World Trade Center's Terror in 2001 and promulgating Maritime Transportation Security Act (MTSA, 2002) and Security and Accountability For Every Port Act (SAFE Port Act, 2006) in the United States, most of the attention on security of international transportation including marine carrier and facility has focused increasingly. Inspection stations in foreign seaport terminal including Busan, South Korea, have been installed by Container Security Initiative (CSI) and Customs Trade Partnership against Terrorism (C-TPAT). The inspection station, however, may directly and indirectly affect delay of truck turnaround time in the seaport, especially high and severe level of security. This paper was analysed a risk for the additional average delay of truck turnaround time incurring by the inspection station under the all level of security, C-TPAT and CSI. As a result of this risk analysis, the higher weighted inspection time based on raising security level, the less number of trucks to be inspected, which will derive high delay in the inspection station.

Securing and Facilitating Trade Through U.S. Land Borders: Critical Analysis of C-TPAT and FAST Programs

A paradigm shift in U.S. policy about inbound commercial shipments has occurred in recent years. Before September 11, 2001, U.S. Customs Services' regulation of imported goods focused primarily on trade compliance. Since then, Customs' priority mission has become preventing terrorism against the United States. Two volunteer programs, the Customs Trade Partnership Against Terrorism (C-TPAT) and the Free and Secure Trade (FAST) initiative, were created to reconcile supply chain security and trade facilitation goals. Customs has successfully engaged thousands of companies in trade security by offering benefits such as fewer inspections and expedited border processing. However, this approach is viable only if resources and mechanisms exist to ensure that the shipments being facilitated are indeed more secure. The security practices of current C-TPAT enrollees may not be validated for months or years because of funding and staffing constraints. These limitations also prevent Customs from integrating stakeholde...

Securing and Facilitating Trade through U.S. Land Borders

A paradigm shift in U.S. policy about inbound commercial shipments has occurred in recent years. Before September 11, 2001, U.S. Customs Services’ regulation of imported goods focused primarily on trade compliance. Since then, Customs’ priority mission has become preventing terrorism against the United States. Two volunteer programs, the Customs Trade Partnership Against Terrorism (C-TPAT) and the Free and Secure Trade (FAST) initiative, were created to reconcile supply chain security and trade facilitation goals. Customs has successfully engaged thousands of companies in trade security by offering benefits such as fewer inspections and expedited border processing. However, this approach is viable only if resources and mechanisms exist to ensure that the shipments being facilitated are indeed more secure. The security practices of current C-TPAT enrollees may not be validated for months or years because of funding and staffing constraints. These limitations also prevent Customs from integrating stakeholders with crucial roles in U.S. trade into C-TPAT and FAST. To improve the ability of these initiatives to safeguard U.S. supply chains, the federal government must increase program funding levels. This will allow more prompt verification of the security of enrollees and expansion of the process to key stakeholders not currently covered under the programs. As technology improves and the number of FAST movements grows, Customs should consider mandating the use of tamper-evident technology as a prerequisite for participation in C-TPAT and FAST. Finally, additional applications for FAST transponders should be pursued to improve security, safety, and efficiency in the border-crossing process.