The US Customs and Border Protection (CBP) and US Food and Drug Administration (FDA) have announced the launch of a new "Trusted Trader" program meant to expedite the import of products made by companies that meet a rigorous selection process.
FDA and CBP have long sought to make improvements to the process used to import of products, and particularly pharmaceuticals. As explained in numerous Federal Register announcements over the years, the problem is that both agencies know there are certain companies that are highly reliable when importing products as a result of the strength of their respective supply chains, the controls used by the companies and their internal assessment processes.
Ideally, officials have said they would like to focus less on "trusted" companies, and instead focus more on companies they know less about, or have fewer assurances about the integrity and security of their products and supply chains.
FDA and CBP have been piloting a similar project since 2009, a program known as the Secure Supply Chain Pilot Program, which FDA recently renewed for 13 participating companies, including AbbVie, BMS, Pfizer, Novartis and Mylan.
[Read more about the Secure Supply Chain Pilot Program in our 19 February 2014 article, "FDA Program to loosen Import Restrictions for 13 Major Pharmaceutical Manufacturers."]
A core tenet of the pilot program is CBP's Customs-Trade Partnership Against Terrorism (C-TPAT) program, a program meant to help companies better protect their supply chains by identifying gaps in their security and working to close them using best practices.
As CBP notes on its website:
C‐TPAT members are considered low‐risk and are therefore less likely to be examined. This designation is based on a company's past compliance history, security profile, and the validation of a sample international supply chain.
For FDA's Secure Supply Chain Pilot Program, the agency has required that all participating companies be validated as either Tier II or Tier III, meaning the companies have either met (Tier II) or exceeded (Tier III) CBP's security criteria.
Trusted Trader Program
But now FDA and CBP have announced some changes that may have a broader effect on the import process.
On 16 June 2014, both agencies announced that they will begin testing a new program known as the Trusted Trader program, "a new program that will streamline the process through which importers can establish to CBP that they strive to secure their supply chains and strengthen their internal controls for compliance with the existing laws and regulations administered or enforced by CBP."
The program can be seen as a sort of Secure Supply Chain Pilot Program, only stripped down to its essential elements and without the abundance of benefits given to participants.
The overarching goal of the program, however, is largely the same: Create a more efficient import process that allows companies to import products more quickly while ensuring that the government can better target—and even reduce—its spending.
Explained CBP: "The Trusted Trader program will strengthen security, identify low-risk trade entities, and increase overall efficiency of trade, by segmenting risk and processing by account."
But there, the similarities taper off. FDA/CBP's new "Trusted Trader" test program is intended to "unify" two programs—its C-TPAT program and one known as the Importer Self-Assessment (ISA)—to create a new "whole of government approach to supply chain security and trade compliance … strengthening government collaboration between CBP and FDA."
The ISA program, like C-TPAT, provides incentives to companies which can show there are compliant with US laws and regulations and have strong internal controls. ISA participation is predicated on participation in C-TPAT.
Incentives and Requirements
The incentives under the Trusted Trader program will be considerable, CBP and FDA said in a Federal Register posting announcing the program. In addition to all existing incentives given to companies under the C-TPAT and ISA programs, importers will also "benefit from a reduced FDA targeting/examination risk score," the agencies said. Participants may also be eligible for reduced penalties if a problem is found, and allowed greater leeway in reconciling entry recordings for tariff purposes.
Participants will also be exempt from random Non-Intrusive Inspections (NIIs) if they wish, and allowed to choose their own "post-release environment" in which to conduct testing. Other incentives are also available, and may be found in the agencies' Federal Register posting.
To qualify for the program, companies will need to agree to comply with all FDA and CBP regulations and laws, send the agencies their internal control policies, make import records available to CBP, develop and executive an annual self-testing and risk assessment plan, maintain all test results for at least five years, and maintain audit trails for all tests, among an extensive list of other more granular requirements.
The program only now exists in a test phase, but CBP said it may implement the program in its entirety after its conclusion. The test program is expected to last 18 months, starting on 16 June 2014.
No more than 10 participants will be allowed to enroll in the program, the agencies said.
Federal Register - Announcement of Trusted Trader Program Test