An Interview with [a] Self-Described Customs Groupie Michael Laden
Michael Laden is a customs compliance and supply chain regulatory expert
Michael Laden is a recognized expert in the customs compliance and the supply chain regulatory environment and has more than 35 years of experience in the international trade industry. He is a self-described customs groupie. Before founding Trade Innovations in 2005, Laden was the director of Global Trade Services for Target Corporation.
Since 1981, he has been licensed as a customs broker by U.S.Customs and Border Protection (CBP). He was involved in the development of the Customs-Trade Partnership Against Terrorism (C-TPAT), a voluntary-incentive based supply chain security program, and is the author of “Make C-TPAT Work for You,” which can be purchased at the Global Training Center (https://marketplace.mimeo.com/GTC_Books/product/e8acfee347c14daead03dce38e22428a#name=17).
I became acquainted with Mike through his feisty online commentaries about C-TPAT. When I read the articles, I had to learn more not only about Mike but also about why he is so fired up about the shortcomings of C-TPAT. Here are the articles:
C-TPAT Off the Rails (short version)
C-TPAT Off the Rails (longer version)
C-TPAT: What’s Your Opinion?
What follows is our edited interview.
Laurel Delaney: You mention in “C-TPAT Off the Rails” that it has gone bad. How so?
Michael Laden: The customs authorities dictate exactly what you need to do. They’ve raised the bar to a level that the security practices they offer are absurd for SMEs. They insist on a one-size-fits-all approach that may work for big players but not for SMEs.
LD: You state in “C-TPAT Off the Rails”: “If an importer or exporter agrees to participate in the program, the ‘partnership’ terminates there, right at that point.” Can you elaborate on that especially as it relates to small-to-medium sized businesses (SMEs)? Why does it terminate there?
ML: The whole point of C-TPAT is to make our businesses more secure, but for customs authorities to impose mind-numbing questions to small business owners is really a turn-off. Granted, a business owner has to take responsibility to raise his/her heightened awareness too by monitoring his/her own trade compliance in exchange for benefits.
LD: What happens when an SME ignores C-TPAT?
ML: First, in the eyes of customs officials you become an unknown. Customs separate companies from known or unknown based on a C-TPAT filing. When you become known, you do what’s right; officials prefer that obviously. When you are an unknown, any number of events can take place: Customs will ratchet up your rate; you are more likely to receive a penalty; and, you’ll fall further down in the queue for having your goods processed, to name just a few. Customs, for example, might dock your goods, strip and re-handle your order.
All of this causes delays and additional expenses for a business owner.
LD: What are the benefits of the C-TPAT program?
ML: Goods are processed in a secure and timely fashion where you end up lowering landed costs because you don’t lose time on the shipment. You’ll also receive a reduced C-TPAT exam rate, a risk rating (those that have a C-TPAT rating get a stronger score – the lower the score, the less risk), ability to attend member-only C-TPAT conferences and training seminars and a better understanding of a more secure supply chain. The biggest win is to get ahead – front of the line priority processing – in the customs line – pushing everything through faster and with greater efficiency on CBP inspections.
Note: Mike also brought up C-TPAT Mutual Recognition (MR), which refers to those activities associated with the signing of a document between U.S. Customs and Border Protection (CBP) and a foreign Customs Administration that provides for the exchange of information. The whole concept behind C-TPAT MR is that C-TPAT and the foreign program are compatible in theory and practice. Meaning, one program may recognize the validation findings of the other program. For a look at the 10 MRA’s that have been signed since Dec.
One other thing that Mike highlighted: C-TPAT has become a prerequisite for the Importer Self Assessment (ISA), a price of admission if you will. The ISA is a voluntary approach to trade compliance (http://www.cbp.gov/trade/programs-administration/importer-self-assessment).
For full benefits on the C-TPAT Program, refer to its reference guide:
LD: If you were running C-TPAT, what would you do differently to improve its efficiency?
ML: I’d offer what might be defined as a C-TPAT LITE for SMEs who only partake in a couple of international trade transactions a year, so they have the ability to implement secure practices and secure their supply chain without all the headaches.
LD: In your opinion, what is the biggest compliance mistake a company makes, especially smaller ones, in international trade?
ML: Not having documented procedures in place and for smaller companies, due to inadequate funding, they typically don’t have a point person to handle trade compliance issues, which can pose a problem. And for big companies, it’s also a lack of recognition from the top down on how important trade compliance is.
LD: How can SMEs exercise greater control over their trade activities without spending a ton of money or time on it?
ML: To keep yourself and your business out of jail, reach out to all players in the industry – from Customs people to trade compliance experts. For bigger companies, Customs authorities are considered the IRS’s little brother, so getting people on board to understand the legal ramifications to not following the law is critical to implementing a secure trade compliance policy and procedure. Get the ears of your CFO/general counsel because they report to the CEO.
LD: What can your firm, Trade Innovations, do for SMEs to help them stay out of trouble and on the cutting edge of trade compliance?
ML: Trade Innovations differentiates itself from other practices because our associates came directly from working for large importers and exporters. We like to say we have “real world” experience. As such, we believe that our holistic review of a company’s trade compliance practice is more operationally focused and as a result, our recommendations are more practical and meaningful.
For SMEs we have one program where we will provide assistance to the client by conference call and webinar, eliminating travel expense.