Shared Services Group
Supply Chain Security
SCRLC
Regulatory/Security Track
January 29, 2008
BOEING is a trademark of Boeing Management Company.
Copyright © 2007 Boeing. All rights reserved.
Topics/Agenda
Shared Services Group | Supplier Management | Supply Chain Security
 Import Safety Overview
Brian Gill, FedEx
 TSA Certified Cargo Screening Program
Ely Kahn, TSA
 “10+2” Rule, COAC/WCO PSCG Update
Bruce Leeds, Boeing
 Various topic updates
Ken Konigsmark, Boeing
 Aerospace Industry Assoc initiative
 WCO SAFE Framework Conference
 One page summary of supply chain
security initiatives
Copyright © 2007 Boeing. All rights reserved.
Why Important to SCRLC Members?
Shared Services Group | Supplier Management | Supply Chain Security
 Import safety issues/regulations a hot topic: may impact SCRLC members
 New law mandates TSA cargo screening program:
 will impact all cargo on passenger aircraft
 may add cost/potential delays to shipments
 may require security enhancements to SCRLC member shipping sites
 “10+2” requirements will affect future US imports; SCRLC members can
offer feedback to COAC and WCO PSCG thru B. Leeds
 Many initiatives underway around the world may impact SCRLC members
Copyright © 2007 Boeing. All rights reserved.
Regulatory/Security Track Scope
Shared Services Group | Supplier Management | Supply Chain Security
Included:
- Understand existing supply chain security programs; track proposed changes
- Track emerging supply chain security programs (AEO, other)
- Monitor legislation/ policies related to supply chain security
- Monitor other regulatory initiatives (beyond supply chain security)
- Track supply chain security best practices
- Monitor open source intelligence reports; identify supply chain security risks
- Contingency planning/continued operations in post-incident scenarios
- Monitor latest technological solutions to supply chain security concerns
- Monitor international regulations and policies impacting supply chain security
Excluded:
- Import/export compliance regulations or policies
- Security/reliability risks to supply chains from non-human sources
Copyright © 2007 Boeing. All rights reserved.
U.S. Actions to
Improve Import Product Safety
Brian Gill/Alan Black
2007 Events
Multiple product safety events occurred in 2007 involving
imported product safety, with significant public reaction.
– Contaminated toothpaste
– Contaminated pet food
– Defective automobile tires
– Chinese seafood
– Unsafe toys (lead paint, small parts, product design
issues, etc.)
Import Safety Working Group
• Pres. Bush issued Executive Order 13439, 7/17/07,
creating the President’s Working Group on Import Safety
• Working Group consists of Cabinet heads from 12 Federal
agencies and departments
• Mission is threefold:
– Review and assess current import procedures
– Identify means to enhance product safety
– Survey authorities of governmental agencies to identify best
practices and enhance coordination
ISWG Strategic Framework (Sept, 2007)
• Three Organizing Principles
– Prevention
– Intervention
– Response
• Six “Cross Cutting Building Blocks”
– Advance Common Vision
– Increase Accountability
– Focus on Risk over product life cycle
– Build Interoperable Systems
– Foster a culture of collaboration
– Promote technological Innovation
Examples of ISWG Principles in Action
• N.O.A.A. fee-based seafood inspection program
• FDA Prior Notice for imported foods
–Utilizes a single data stream submitted to Customs and Border
Protection
• USDA staff offshore for fruit and vegetable inspections
Each of these examples supports the ISWG principle of
“prevention”.
ISWG Action Plan (Nov, 2007)
Action Plan contains 14 broad recommendations and
50 action steps.
– Action Plan proposes strategy focused on risk-based prevention
– Magnitude of import and export volume precludes the nation
inspecting itself to safety
– Action Plan reflects Administration commitment to continually
strengthen and improve the import safety system.
Highlights of Action Plan Recommendations
• Create a stronger certification process.
– FDA should have authority to require certain foreign producers to
certify that products meet U.S. FDA standards
– Voluntary certification should be encouraged for foreign
manufacturers of other products
• Encourage Good Import Practices
– Incentives would be provided to maintain highest standards
• Increase Transparency
– Names of certified producers and importers would be made
public for use by consumers and distributors.
• Exchange of Import Data
– Information sharing between private industry and Federal
agencies, for better decisions on import shipments.
–
Additional Recommendations
• Increased U.S. Presence Overseas
– Product safety to become a guiding principle of U.S. agreements
with foreign governments
– Increased training for foreign inspection agencies
• Enhanced Standards
– Congress should give import safety and inspection agencies the
ability to strengthen standards, as needed.
• Higher Penalties
– To hold both foreign and domestic entities accountable and
discourage the sale of unsafe products
Significant Issues
• Increased civil and criminal liability, e.g. FDA refusals,
CBP penalties, CPSC fines
• Increased CBP surety bond amounts for importers
• New FDA authority for destruction of medical products
refused admission
• Mandated use of International Trade Data System (ITDS)
by CY2009
• Creation of new interactive Import Safety Information
Network
• Harmonized procedures for Federal agencies
administering imports
Intellectual Property Rights and
Consumer Safety
ISWG identified a significant correlation between violative
IPR commodities and product safety.
ISWG recommends greater IPR enforcement to enhance
consumer safety.
Actions include:
– Focus Federal Govt. and other IPR enforcement efforts on import
safety issues
– Expand information sharing about counterfeit and IPR infringing
goods across U.S. department and agencies
– Encourage rights holders to register trademarks with CBP
FDA Food Protection Plan (Nov, 2007)
FDA issued a plan concurrent with the ISWG Action Plan,
focused on imported food supply chain. FDA plan contains
extensive actions and legislative changes to extend FDA’s
authority over imported food safety.
Recommended actions include:
– Risk-based inspections and sampling
– Foreign plant inspections
– FDA personnel stationed in foreign countries
– Use of third parties for food inspections
– Use of advance screening technology at the border
– Improved data quality and handling capacity
FDA Regulated Commodities
• Medical devices (includes eyeglasses, sunglasses)
• Pharmaceuticals
• Human food
• Animal feed and drugs
• Seafood
• Cosmetics
• Biologics
• Radiation emitting devices
All these commodities will be especially affected by the
FDA Action Plan and the ISWG Action Plan.
CPSC Import Surveillance
CPSC announced on 1/07/08 a newly formed Import
Surveillance Division.
– New initiative working closely with CBP at port of entry
– Goal is to target, stop, and inspect high risk shipments at U.S.
port
– First time that CPSC personnel are assigned full time at a U.S.
port
– Program started at ports of Seattle, Oakland, Long Beach
– CPSC budget was increased 30% for Federal FY08
Major Legislative Proposals to Date
• CPSC Reform
– HR4040: Consumer Product Safety Modernization Act of 2007
– S2045: CPSC Reform Act of 2007
• FDA Reform
– HR3610: Food and Drug Import Safety Act of 2007
– S1776: Imported Food Security Act of 2007
CPSC Reform Act of 2007
HR4040 is leading legislative vehicle at this time.
Provisions include:
– Third party testing and certification
– Tracking labels for children’s products
– Substantial product hazard reporting requirements
– Identification of manufacturer for certain commodities
– Increased penalties for repeat violators
– Sale or re-export of prohibited articles would be prohibited
FDA Legislative Changes
HR3610 is the leading legislative vehicle at this time.
Provisions include:
– New $50 fee on each “line item” of imported food
– New $1000 fee on each “line item” of pharmaceuticals
– Food imports restricted to designated ports of entry
– New research required on testing techniques and sampling
methods for import inspections
– FDA would be required to develop a voluntary food safety
program within two years of enactment
What Should You Do?
• Monitor Import Safety Working Group website for updates
• Monitor regulatory agency websites
• Get involved with trade associations
• Monitor legislative activity
• Alert foreign suppliers
• Make suggestions!
Additional Actions
• Review commodity lines for potential impact
• Require foreign suppliers to provide better
documentation
– Certify all items manufactured to specifications
– Complete and accurate descriptions on AWB and commercial
invoice (CI)
– Complete and accurate CI
– Additional information that may be required for other regulatory
agencies, e.g. manufacturer name
– Include HTS classification on CI
IPR Considerations
Reminder: ISWG has identified a high correlation between
IPR violative merchandise and unsafe import products.
– Secure trademark releases from rights holder for any affected
merchandise
– Record your own trademarks with CBP
Expect increased enforcement for IPR.
Resources
• Import Safety Working Group (Action Plan):
– www.importsafety.gov
• Customs and Border Protection: www.cbp.gov
– IPR Information:
www.cbp.gov/xp/cgov/import/commercial_enforcement/ipr/
• Food and Drug (Food Protection Plan):
– http://www.fda.gov/oc/initiatives/advance/food.html
• CPSC:
www.cpsc.gov
• American Association of Exporters and Importers:
– www.AAEI.org
• Library of Congress (Legislative information):
– http://thomas.loc.gov/
• What questions do you have?
Commercial Operations
Advisory Committee (COAC)
AIA Update – Jan. 24, 2008
Bruce Leeds
The Boeing Company
COAC Chair
CTPAT Updates
• New parties eligible for CTPAT
– Third party logistics providers
• Still working issue
• Definition is key
– Exporters
• COAC initiative
• Required for mutual recognition
• Resource and jurisdiction issues with CBP
• Tier 3 benefits
– Still open issue
– Hoping for at least one significant breakthrough
this year
The Big Issue – NPRM on “10+2”
• What’s the issue?
• Responses to Notice of Proposed
Rulemaking due on 3/3/08
• COAC Advance Data subcommittee
resurrected to provide comments
• COAC will also ask for extension of 60
day comment period
• Implementation date of Final Rule
could be as early as 9/1/08 – is anyone
prepared?
Future Meetings
• Next meeting: Feb. 13
– Will include demo of SBInet at border on
Feb. 12
– COAC will vote on 10+2 resolutions
• Future meetings
– May (Washington DC)
– August (Seattle)
– November (Washington DC)
AIA C-TPAT Initiative
January 2008
Background
January 2006: AIA initiated member discussions on the Customs Trade
Partnership Against Terrorism (C-TPAT) at the request of AIA’s Board of
Governors.
•
21 Members from 11 AIA member companies.
•
Six meetings over 24 months.
•
Participants agreed on an approach that:
– Defines common aerospace quality standards.
– Ensures foreign suppliers act upon consistent, established standards.
– Promotes third-party validations/certifications.
– Assures importers of supplier compliances.
– Minimizes impacts to suppliers from repetitive customer assessments
and conflicting guidance.
Process
AIA C-TPAT
Initiative
Established
AIA Importers
monitor Supplier
Status on
Database; Use it to
define their
company riskbased compliance
approach.
Market to AIA
Membership
AIA Members
Promote System
to International
Suppliers
AIA C-TPAT Supplier
Database
Successful Assessment
Completed.
International Supplier
Inputs Status to
Database
International
Supplier
Completes AIA
Questionnaire for
a Specific Facility
and Inputs Status
& Contact Info to
Database
International
Supplier
Contracts for
Optional ThirdParty
Assessment
Shared Services Group
Supply Chain Security
WCO SAFE Framework
Conference Summary
Brussels, December 11-12, 2007
BOEING is a trademark of Boeing Management Company.
Copyright © 2007 Boeing. All rights reserved.
Conference Summary
Shared Services Group | Supplier Management | Supply Chain Security
 5 WCO “principles” for Supply Chain Security
 Foster prior electronic submission of shipment data
 Use risk analysis to prioritize inspections (not 100% inspection)
 Use automated, technical means for non-intrusive inspections at
export
 Close partnership efforts between governments and industry
 Mutual recognition of programs
 Resentment at US initiatives (100% ocean container inspections)
 WCO will appeal to Congress in April on impacts of new law
 Also commenting on 10+2 requirements
 145 of 171 WCO countries will implement the SAFE Framework; 110
have asked for WCO assistance for “capacity building”
Copyright © 2007 Boeing. All rights reserved.
Summary (con’t)
Shared Services Group | Supplier Management | Supply Chain Security
 Mutual recognition in work between US and EU, Japan, Jordan, and
Canada but dependant on full implementation first
 China will support WCO efforts
 Japan has new program: Goal is 50% of all EXPORTS in their AEO
program by YE 2008
 Singapore implementing “Secure Trade Partnership” program
 Australia did pilot, will move to operational in 2008
 Road map to EU/US mutual recognition by YE 2008
 US CBP: “not precluding the need to add more requirements”
Copyright © 2007 Boeing. All rights reserved.
GLOBAL
WCO SAFE Framework of Standards
Mutual Recognition?
INTERNATIONAL
Sweden (Stairsec), EU (AEO), Canada (PIP), New
Zealand (SES), Japan (Asia Gateway Initiative),
BASC, Jordan, (Golden List), Singapore (Secure
Trade Partnership), Australia, China, US (C-TPAT)
US
Safe Port Act
Congress
9/11 Commission Act
Import Safety?
TSA
-TWIC (Transportation Worker Identity Card)
CBP
- C-TPAT
FAA, FDA, Commerce, etc
-CCSP (Certified Cargo Screening Program)
- CSI (Container Security Initiative)
- FAST (Free and Secure Trade)
- SFI (Secure Freight Initiative)
- 10+2 Advance Data Filing
- OSC (Operation Safe Commerce)
FUTURE?: US Exports? Cargo carrier screening? International air cargo? Mutual
recognition? Reciprocal requirements? Risk mgt vs. 100% screening? Import safety?