CTPAT Outlines Procedures to Prevent Illegal Transshipping, Uses Traditional Definition
CBP's CTPAT program has published an alert outlining how the trade community can be vigilant against illegal transshipping. Although the document is dated July 16, it was posted just last week on CBP's website.
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The alert reminds CTPAT members that they are required to conduct "a strong risk assessment process" that could flag shipments of potential concern. Industries and products that may warrant increased scrutiny include steel and aluminum, textiles and apparel, automobiles and auto parts, electronics and solar panels, according to the alert.
CTPAT members also should have notification procedures in place that detect anomalies, with suspicious activities reported to CBP or the respective CTPAT supply chain security specialists, according to the alert. CTPAT members within the agricultural space also should vet their foreign suppliers, the alert continued.
Last week's document also lists several "red flag indicators" that the CTPAT members should watch out for as they process entries. These include: no substantial transformation occurring in the transshipping country, especially as repackaging the product does not mean there was substantial transformation; country of origin labeling not matching manufacturing capabilities; discrepancies in trade volume exports/imports reported to Customs; routing through low-cost or FTA-friendly countries with no logical supply chain reason; relying on an unjustified transaction structure that does not show a clear and legitimate commercial purpose or some reasonable justification; and deviating from normal trade activities, which is when a business partner significantly deviates from their historical pattern of trade activity with dubious pricing of goods and services.
The CTPAT alert also provided tips for exporters, noting that they should be aware of diversion risks through transshipments. These best practices, published by the Bureau of Industry and Security, include using vetted trade facilitators and freight forwarders, as well as knowing foreign customers' potential risk of diversion, which might involve using due-diligence measures or information technology.
By not conducting due diligence, importers and exporters may potentially face steep fines, inventory seizures, loss of import privileges and criminal charges, among other outcomes, according to the alert. A company's reputation may suffer, and illegal transshipments run the risk of tangling up the supply chain and creating disruptions, the alert said.
The document appears to define transshipping along the lines of how the term has been more traditionally defined, despite discussions in the Trump administration about turning to a value content approach (see 2508210060).