Customs –Trade Partnership Against Terrorism ATEC Welcome to today's presentation. By 2:00 on Sept 11, 2001, the world knew of the terrorist attacks on our country. The days of identifiable, monolithic post-cold war enemies were replaced with invisible enemies scattered across the globe. Customs role of drug interdiction and trade regulation changed to preventing terrorists and terrorist weapons from entering the U.S. Customs –Trade Partnership Against Terrorism (Insert Company Name) Copyright © 2005, 2006 ATEC Systems, Ltd.

Agenda Background What is C-TPAT? Who comprises the Supply Chain? What does participation in C-TPAT require? What are the benefits? What are the threats? How criminals circumvent security measures What are the foundations of cargo security? Securing the Supply Chain at (Insert name). What can we/you do? Recognizing potential security risks Documentation fraud Failure is not an option! Questions? This morning/afternoon, we’ll review the following items. Read the agenda items. At the end of the presentation, you’ll have a good understanding of what C-TPAT is and what you can do as an individual to help protect the supply chain. We’ll have a short Q&A session after the presentation to discuss any questions or comments that come up. Also, feel free to ask questions during the course of the presentation.

Customs and Border Protection (CBP) Part of the Department of Homeland Security Formed in the years following 9/11, by merging: U.S. Customs Service Agricultural and Plant Health Inspection Immigration and Naturalization Services U.S. Border Patrol Customs and Border Protection is a part of the Department of Homeland Security which was formed post 9/11 Formerly the U.S. Customs Service, it was decided to focus efforts on border security and resulted in the merging of read the names of the agencies from the slide

Customs and Border Protection (CBP) Customs and Border Protection assumes responsibility for: 7,514 miles of border 95,000 miles of shoreline 350 ports of entry 750 million people annually 51,000 foreign vessel calls 11.2 million trucks 2.2 million rail cars The following data will give you an idea of the formidable task CBP has in protecting our country. Read the slide text

What is C-TPAT? The Customs-Trade Partnership Against Terrorism (C-TPAT) is a major program initiative to help protect the United States from future atrocities like Sept 11, 2001 Read the slide. Immediately following 9/11, the U.S. Government went to Level One alert. Commercial traffic at the land border points of entry came to a halt. By Sept 14, automobile manufacturing plants dependent on JIT inventory began to shut down. Given that over $1billion in trade moves each day across just the US/Canada border, it became obvious the government needed the cooperation of the private sector,

What is C-TPAT? Customs-Trade Partnership Against Terrorism A joint government business initiative to build cooperative relationships that strengthen the overall supply chain and border security Customs recognizes that they can only be successful with industry cooperation www.cbp.gov www.dhs.gov Read the bullets. CBP’s strategy, focused on the continuing threat of future terrorist attacks was rooted in a basic military strategy “push the border out”. The C-TPAT initiative is based on that wisdom. Today C-TPAT has over 8,000 private sector partners

Who comprises the Supply Chain? Manufacturers, shippers, suppliers, vendors Carriers Ocean lines Airlines Railroads Truck lines Warehouses Read the bullets. Many of these are our partners in each and every shipment. On any given transaction, there are any number of opportunities for terrorists to introduce trouble into the supply chain. If all companies get on board and conscientiously do their job, our supply chain and country will be more secure.

Who comprises the Supply Chain? NVOCC’s Cargo handlers Inspectors Fumigators Government agencies Freight forwarders Longshoremen Customs brokers Importers Read the bullets.

What does participation in C-TPAT Require? A signed Agreement with Customs and Border Protection (CBP) Conduct a comprehensive assessment of the importers global supply chain based on C-TPAT criteria Develop a written and verifiable process for determining risk throughout the supply chain and selection of business partners Implement and maintain security measures Read the bullet. We complete an agreement to work cooperatively with Customs to improve supply chain security. In the process, we assess our current security status, develop written documentation to support the program and implement and maintain our security plan.

What does participation in C-TPAT Require? Self-assessment of our supply chain security using C-TPAT best practice guidelines Business Partner Requirements Cargo Security Container Security Physical Access Controls Personnel Security Procedural Security Security Training and Threat Awareness Physical Security Information Technology Security Read the bullet. Our job is to assess our current supply chain security status using the “best practice” guidelines published on Customs web site.

What does participation in C-TPAT Require? Submission of a supply chain Security Profile to CBP Development and implementation of a program to enhance our supply chain security Verification within 3 years Read the bullets. After we make our assessment, we compile a profile of our companies security which is sent to Customs for review. Customs will either accept our profile or come back with recommendations we should take prior to certification. During our assessment, we’ll likely find some security items we can institute or improve. We’ll create a plan to make changes. Once Customs accepts our application, we will be come C-TPAT “certified”. Within three years of our certification, Customs will visit our facility to validate the information provided in our profile, review our Security Policy and continue to work with us to improve security.

What are the benefits of participating in C-TPAT? A reduced number of cargo inspections Access to FAST lane at land borders An assigned account manager at Customs Access to C-TPAT membership list An emphasis on self policing, not verifications An opportunity to play an active role in the war against terrorism A secure supply chain for employees, suppliers and customers Read the first bullet. The number of Customs exams of non-CTPAT companies is increasing daily. A single “intensive exam” by CBP can cost our company over $800. By becoming C-TPAT certified, Customs agrees to reduce the number of cargo inspections our company is subjected to. Read the second bullet. For our U.S./Canada or U.S./Mexico shipments, we will have access to expedited clearance. Read the third bullet. Customs will assign us an Account Manager to help us achieve our goal of improving our supply chain security as well as working out issues with our imports. Read the fourth bullet. Access to the C-TPAT list will enable us to identify which of our partners or future partners are currently C-TPAT certified. We will look to conduct business with C-TPAT certified companies first. Read the fifth bullet. C-TPAT participants will be asked to develop a policy to self-police their supply chain security. This allow CBP to focus on higher risk companies. Read the remaining bullets

What are the benefits of participating in C-TPAT? Companies that spend on supply chain security can expect an advantage far outweighing the costs of implementing security processes, according to a study by Stanford University. The study quantified for the first time the benefits of investing in supply chain security: Companies collectively reduced their Customs inspections by 48% Increased the automated handling of their imports by 43% Saw a 29% reduction in transit times Asset visibility in the supply chain improved by 50% 30% improvement in on-time shipping to their customers Reduced time taken to identify problems by 21% Reduced time taken for problem solving dropped by 31% Reduced inventory theft by 38% Excess inventory was reduced by 14% Reduced customer attrition by 26% Read the first bullet. The number of Customs exams of non-CTPAT companies is increasing daily. A single “intensive exam” by CBP can cost our company over $800. By becoming C-TPAT certified, Customs agrees to reduce the number of cargo inspections our company is subjected to. Read the second bullet. For our U.S./Canada or U.S./Mexico shipments, we will have access to expedited clearance. Read the third bullet. Customs will assign us an Account Manager to help us achieve our goal of improving our supply chain security as well as working out issues with our imports. Read the fourth bullet. Access to the C-TPAT list will enable us to identify which of our partners or future partners are currently C-TPAT certified. We will look to conduct business with C-TPAT certified companies first. Read the fifth bullet. C-TPAT participants will be asked to develop a policy to self-police their supply chain security. This allow CBP to focus on higher risk companies. Read the remaining bullets

What are the threats? Terrorism, sabotage Trafficking – drugs; conventional, nuclear, chemical or biological weapons Illegal entry – stowaways in containers, trailers Theft of cargo, personal property or information Read the bullets. The threats are real and many are on-going every day. This program will enable us to reduce these risks.

How criminals circumvent security measures Loitering near the facility observing procedures, asking questions Taking pictures, obtaining plans or making diagrams of facilities Impersonating workers i.e. pest control Calling or e-mailing employees about procedures Read the bullets. Different facilities, conveyances and situations provide different risks. These are but a few examples. Thieves, Terrorists, Smugglers, etc. look for and carefully study opportunities. Think about the potential risks in our supply chain…

What are the foundations of cargo security? Identify the risks Understand the risks Isolate the risks Allocate resources to neutralize the risks Assign ownership for action Anticipate acts Implement solutions Measure results and share best practices Read the bullets. These are the steps CBP takes in fighting terrorism. If properly employed, the actions resulting from these steps will help to improve our cargo security. These are the steps we’ll take in implementing our C-TPAT program.

Securing the Supply Chain at (Insert Name). What can we/you do? Educate employees Know our partners Create and share our security policy expectations Use C-TPAT certified service providers Implement a Security Policy and Procedures Secure our facilities, systems and conveyances Be conscious of security day to day Read the bullets. These are the things you and I can do at [insert company name] to secure the supply chain.

Securing the Supply Chain at (Insert Name). What can we/you do? Challenge unfamiliar or unidentified visitors in the office or warehouse Don’t share system passwords Report in confidence any suspected or actual anomaly (irregularity) or illegal activity to management Read the bullets. Specifically, you can help by: taking this message to heart look for potential holes in our security policy and report them to management make security a daily routine politely challenge visitors who do not have a badge when on our premises don’t share your passwords with anyone except your supervisor or manager report any suspicious or illegal behavior to you supervisor or manager without fear of reprisal don’t share security related information about our company with outside individuals. If you have a question, ask your supervisor or manager.

Securing the Supply Chain at (Insert Name). What can we/you do? Report potential security risks to management i.e. broken lock, fence, security light, etc. Don’t share information outside (Insert Name) Be wary of outside requests for information about company policies, procedures, assets, etc. Read the bullets. Constantly be on vigil.

Recognizing potential security risks Activity out of the norm Loitering out of normal sight lines Attempts to bypass security Clothing not suited to the weather Noises or odors not expected from containers Containers with holes, patches, missing or damaged seals or seal numbers that don’t match Incorrect Hazmat labels for cargo Can you think of others? Read the bullets. These are a few examples of security risks. Look for things that don’t add up, seem out of place, suddenly change, etc. Report them to your supervisor or manager.

Documentation Fraud Fraud involves the use of dishonest or deceitful conduct in order to obtain some unjust advantage over someone else. The basic motivation for fraud is greed. Fraud is the product of three factors: Motivation – someone willing to commit Victim or target Lack of a capable guardian Read the bullets. Documentation fraud exists every day. Sometimes it’s easy to spot, most times it’s very difficult. The best way for us to minimize documentation fraud is to make you aware of the potential, do business with honest partners and keep our eyes open. Look for things that don’t add up, seem out of place, suddenly change, etc. Report them to your supervisor or manager.

Documentation Fraud Three ways to limit fraud: Reduce the supply of motivated offenders Protect and educate the targets* Limit opportunities by making the crime difficult to commit* * controllable factors How to detect fraud Look for anomalies i.e. changes in lifestyle, valuation or description on documentation, increase in claims, etc. Read the bullets. Fraud will always occur. The best we can do is attempt to minimize it. By educating our employees and limiting opportunities to commit fraud, we can limit its occurrence. Be on the watch for things out of the normal.

Failure is not an option! Loss of life Trade is shut down Production lines are shut down Scarce and expensive food, clothes, etc. Layoffs and business failures Read the bullets. Failure to secure our Supply Chain could be devastating. We can’t stress enough the need for each and every individual to do their part. Take security to heart each and every day. Sometimes the smallest thing can make the difference…

Questions? "The message should be clear -- if a business takes steps to secure its cargo against terrorism, we will give it the 'fast lane' through the border...C-TPAT is a program through which businesses win, governments win, and most importantly, the American people win. "(US Customs Commissioner Robert C. Bonner, April 16, 2002) I’ll be happy to address any questions or comments at this time. Thank you for your interest.