U.S. Government Accountability Office's Homeland Security and Justice Team Issues New Report

Report entitled "Supply Chain Security: CBP Works with International Entities to Promote Global Customs Security Standards and Initiatives, but Challenges Remain (GAO-08-538)" is now available. Report is a spin-off from previous reports on CSI and CTPAT programs issued earlier this year. GAO captures the broader international context in this in a separate report.

According to GAO's Stephen L. Caldwell, "The report praises CBP for working with the international partners to "push out" our security envelope. One part of these working relationships is that CBP is establishing "mutual recognition" agreements with foreign governments. A "mutual recognition" agreement is an arrangement whereby the actions or decisions taken by the customs administration of one country are recognized and accepted by the customs administration of another. There are two types of "mutual recognition" agreements... customs-to-business (like CTPAT or AEO) and customs-to-customs (like CSI or maybe SFI depending on how that develops). CBP is currently focusing on customs-to-business "mutual recognition" agreements, and has signed such agreements with New Zealand, Canada, and Jordan and is negotiating with the EU, Japan, and Singapore. The report does not have any recommendations... in part due to the early nature of this program... the program is evolving and CBP has not fully defined what the "mutual recognition" agreements will mean in terms of day-to-day operations.

On the other hand, the report does highlight some trade-offs with this path CBP is embarking upon. The overall implication is that CBP is relying more heavily on foreign governments for some supply chain security functions. For example, one potential implication of the customs-to-business "mutual recognition" agreements is that a foreign company joining its own government's AEO program would be treated by CBP as a full member of CTPAT -- which could lead to a reduced ATS risk score and reduced likelihood of CBP inspection based upon a foreign government's security validation of the company. Another potential implication is that CBP trusts a foreign government's customs function as if it was our own... and CBP potentially sees this as an "exit strategy" for CSI in some ports. In general, this brings out the importance of GAO's recommendations in the CSI and CTPAT reports that CBP needs to have vigorous procedures to obtain reliable information on... and establish criteria for evaluating... the security processes used by foreign custom's departments as well as private companies. Such procedures would be critical to grant mutual recognition to foreign governments. Finally, related to all this, the 100 percent scanning requirement may substantially reduce the interest of foreign governments and companies from participating in CSI and CTPAT type initiatives (whether run by the US or a foreign government)."

MarEx readers can download this report by clicking HERE.

Contact Stephen L. Caldwell, Director, Maritime Security Issues, Homeland Security and Justice Team, U.S. Government Accountability Office at (202) 512-9610

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