Benefits Offered to CTPAT Participants Committed to Monitoring Compliance with Forced Labor Laws

Importers participating in the U.S. Customs-Trade Partnership Against Terrorism (“CTPAT”) trade compliance program are being offered certain benefits in connection with recently introduced program requirements regarding the prevention of forced labor within their supply chain. The CTPAT trade compliance program is a part of the larger CTPAT security program introduced in the aftermath of 9/11 to protect and strengthen foreign trade and U.S. border security. Companies that achieve CTPAT certification are considered low risk, resulting in expedited processing of their cargo and fewer customs examinations. 

The voluntary CTPAT trade compliance program is available to U.S. and Canadian-based importers that currently are Tier II or Tier III security partners in good standing and that have made a commitment of resources for monitoring their own compliance. Part of this compliance effort includes adhering to U.S. laws regarding the importation of goods made in whole, or in part, with forced labor, including the Uyghur Forced Labor Prevention Act (“UFLPA”), which entered into force in June 2022. Most major companies participate in CTPAT because the benefits received (as set forth below) are widely viewed as worth the time and effort in getting approved and maintaining membership.

New Forced Labor Supply Chain Requirements

On August 1, 2022, six new program requirements were added regarding the prevention of forced labor within the supply chain. These requirements, which can be found in the updated CTPAT Trade Compliance Handbook, include:

• Risk-based mapping – conduct risked-based mapping of supply chain partners that outlines the supply chains in their entirety and includes regions, suppliers, etc. that the importer feels pose the most risk for forced labor in order to ensure the supply chain is free from the use of forced labor.
• Code of conduct – create a code of conduct statement that represents their position against the use of forced labor within any part of their supply chain.
• Evidence of implementation – show evidence such as unredacted assessments of high-risk supply chains and mechanisms taken to show that the supply chain is completely free of forced labor. It must then be able to provide this information to CBP if requested.
• Due diligence and training – provide training and social compliance requirements that exemplify the company’s code of conduct and ensure that the company does not partner with another party that uses forced labor. 
• Remediation planning – have a remediation plan for when the company identified forced labor within its supply chain. This should include a plan for disclosing the information to CBP and providing relevant information upon request.
• Shared best practices – share best practices with CTPAT’s trade compliance program to help mitigate the risk of forced labor.

In an open letter published in November 2022, CTPAT Director Manuel A. Garza, Jr. announced the addition of three benefits for its trade compliance partners in exchange for compliance with the updated forced labor requirements. These are:

• Front of the line admissibility review: CTPAT trade compliance partners that have shipments detained due to forced labor will have their cases prioritized for review by CBP.
• Redelivery hold: CTPAT trade compliance partners with shipments held due to forced labor can hold their shipments at their facility rather than redeliver to CBP until an admissibility determination is made or physical inspection required.
• Detained withhold release order shipment move to bonded facility: CTPAT Trade Compliance partners that have shipments detained due to a Withhold Release Order (“WRO”) will be allowed to move the subject goods to a bonded facility pending an admissibility determination.

In view of the fact that CBP detentions of goods suspected of being made using forced labor have risen to $ 500 million in merchandise value and will continue to increase, it may be beneficial for CTPAT certified importers to consider participating in the voluntary CTPAT trade compliance program to avail themselves of these new, as well as other CTPAT benefits. Importers that do not participate in CTPAT should consider the benefits of CTPAT, which include:

• Reduced number of CBP examinations
• Front of the line inspections
• Possible exemption from stratified exams
• Shorter wait times at the border
• Assignment of a supply chain security specialist to the company
• Access to the Free and Secure Trade (FAST) lanes at land borders
• Access to the CTPAT web-based portal system and a library of training materials
• Possibility of enjoying additional benefits by being recognized as a trusted trade partner by foreign customs administrations that have signed Mutual Recognition arrangements with the U.S.
• Eligibility for other U.S. government pilot programs, such as the Food and Drug Administration’s Secure Supply Chain program
• Business resumption priority following a natural disaster or terrorist attack
• Importer eligibility to participate in the Importer Self-Assessment Program (ISA)
• Priority consideration at CBP’s industry-focused Centers of Excellence and Expertise

How BDO can help

BDO can assist clients with CTPAT applications and certifications, including conducting self-assessments of security chain security procedures. We can also help clients assess their supply chain risk and confirm that current procedures and processes are effective in preventing subject products or component materials made by forced labor from appearing in U.S. supply chains. With regard to Chinese-related supply chains, BDO’s staff are fluent in Mandarin and can work with suppliers in China to gather information to confirm they are able to document the provenance of material inputs to avoid violations.

Our services include: 

• Tariff classification reviews 
• FTA qualification
• Customs valuation and transfer pricing analysis
• Import and export compliance assessments
• Supply chain planning 
• Customs rulings, protests, and other administrative filings
• VAT registration