Importers and exporters have long sought a comprehensive Trusted Trader program to encompass all federal agencies regulating imports and importers under one uniform system, offering meaningful benefits to both. Last year, the American Association of Exporters and Importers (AAEI) released a blueprint for such a program.

At a recent presentation for AAEI’s Healthcare Industries Committee (HIC) and Regulated Industries Committee (RIC), Integration Point Vice President-Product Management Virginia Thompson and Erika Vidal-Faulkenberry, the Director of Global Customs & Trade Compliance for The Hershey Co. relayed information about Trusted Trader as well as a scenario on importer risk.

Developing The Trusted Trader Program

Within AAEI, discussions about using risk-management models began within RIC, noting that partnering government agencies (PGA) were not using risk management tools similar to U.S. Customs & Border Protection (CBP). Concerns about mounting costs/complexity conveyed a need for greater consistency and efficiency at the border across all regulatory agencies.

In 2014, the working group with three co-chairs, including Thompson, began with a wider survey of the AAEI membership to establish what should be the scope of the project. Erik Autor--now the President of the National Association of Foreign-Trade Zones--was engaged to assist the working group, and helped to publish “A Blueprint to Trust,” introducing the concept of the Certified Compliant Commercial Entity (3CE) Program.

These 3CE companies represent low compliance risks and would be designated by all trade-regulating agencies under the AAEI proposal “3CE” following an assessment of sectoral and horizontal risks.

 Charts were introduced last year that reflect the 3CE risk categories and four compliance areas—commercial (Customs), Security, Health/Safety and Environmental and shared with the Border Interagency Executive Council. This year, the working group began running fictional companies through the scoring process. Four years of diligent work resulted in the first look at how an actual company’s score would look after being assessed in the 3CE program.

A Profile in Risk

To see how The Trusted Trader program looks in actual practice, consider the profile of a long- established industrial glass importer: annual revenue of $30 to $60 billion and no FTA usage.

Company X has a 20-year history of importing industrial glass products to the U.S, supplying glass mainly for commercial construction. Company X sources its imported glass primarily from China and Taiwan. The company does not utilize preferential trade agreements and files approximately 1,250 consumption entries a year totally between $15 and $30 million. The company has between five and 10 suppliers in China and Taiwan. It is not ISA but is C-TPAT validated (Tier 2), and does fall into the Centers for Excellence and Expertise (CEE)--Industrial Manufacturers Group but does not have a CEE Partnership Account.

Company X enters its goods through various ports on the West coast and Chicago, and occasionally through New York--exporting some scrap glass back to China. Except for safety standards for tempered (laminated) glass, there are no other federal agency regulations for this product. The company is an ACE filer. Company X’s only compliance review, a Customs audit, occurred three years ago. During the audit, Company X was certified as having adequate internal controls.

Senior management supports compliance by using automated solutions. They now have a Global Trade Management (GTM) platform that supports a process beginning with a pre-classification database that is shared with all Customs brokers, compares data elements on entries before declarations are submitted, and provides automated data comparison of the declarations submitted to Customs against source data such as Accounts Payables and Receipt records for accuracy.

All import documents are maintained by the Trade Compliance team within the GTM solution as well. Electronically, records are named, indexed and searchable by entry number, purchase order number and part number.

 New trade compliance department member training was implemented, driven by the department and topic. For example, all departments receive Supply Chain Security training and an annual refresher. The company is meeting minimum C-TPAT standards.

 The organization has developed policies about compliance with importation that require individual transactions be fully audited internally, and staff has clear procedures to ensure compliance goals are met. In the health safety and environmental areas, the company has developed and implemented clear goals and procedures in regards to the regulated areas.    

Scoring Results within the Model

The example below illustrates how Company X fared when applied within scoring in the 3CE program:

  • Commercial: 48
  • Security: 30
  • Health-Safety: 45
  • Environmental: 47 
  • Average 3CE Score: 42.5

 42.5 represents a relatively low-risk importer. The AAEI working group is looking forward to testing the concept further by running more fictional companies and company profiles based on actual member experiences through the model. That will help continue to refine and improve the proposal for an effective Trusted Trader program based on true Risk Management methodologies that can be a real win-win for both trade and U.S. regulatory agencies.