Mutual Recognition (MR) refers to those activities associated with the signing of a document of arrangement between U.S. Customs and Border Protection (CBP) and a foreign Customs Administration that provides the platform for the exchange of membership information and recognizes the compatibility of the respective supply chain security program. The document, referred to as an “arrangement”, indicates that the security requirements or standards of the foreign industry partnership program, as well as its verification procedures, are the same or similar to those of the Customs Trade Partnership Against Terrorism (CTPAT) program. Mutual Recognition Arrangements (MRA), therefore, are bilateral understandings between two Customs Administrations.
The essential concept of MR is that CTPAT and the foreign Customs Administration program have established a standard set of security requirements which allows one business partnership program to recognize the validation findings of the other program which benefits both Customs Administrations and the private sector participants.
The goal of MR is to link the various international industry partnership programs together to collaborate and create a unified and sustainable security posture that assists in securing and facilitating global cargo trade. Mutual Recognition promotes end-to-end supply chain security based on program membership.
The CTPAT MR process involves four (4) phases:
- A side-by-side comparison of the program requirements and an overview of the implemented Authorized Economic Operator (AEO) program. This is designed to determine if the programs align on basic principles and to determine if there is a security aspect in the AEO program.
- A pilot program of joint validation/observation visits. This is designed to determine if the programs align in basic practice.
- The signing of an MRA.
- The development of MR operational procedures, primarily those associated with information sharing. This is also referred to as the implementation phase.
- Currently, MRAs are only based on security. Arrangements do not address Customs compliance issues.
- Mutual Recognition can only occur to the extent permitted by law, regulations, and is subject to national security considerations.
- Mutual Recognition does not exempt any partner, whether domestic or foreign, from complying with other CBP mandated requirements and cargo enforcement strategies. Importers, for instance, still need to comply with the importer security filing requirements: electronic submittal of the 10+2 trade data elements to CBP 24 hours prior to lading.
- Finally, CBP has developed guidance for maintaining the continuity and/or restoring the flow of trade across the Nation’s borders during and after an incident that disrupts the flow of trade at the border ports of entry. Business resumption privileges, however, while envisioned for CTPAT partners, is not a factor that is included in any MRA.
Before CBP engages a foreign Customs Administrations towards Mutual Recognition, four prerequisites must be met:
- The foreign Customs Administration must have a full-fledged operational program in place –i.e. not a program in development or a pilot program.
- The foreign partnership program must have a strong validation process built into its program.
- The foreign partnership program must have a strong security component built into its program.
- The foreign Customs Administration must have a Customs Mutual Assistance Agreement (CMAA) in place with the US.
Benefits envisioned by an MRA include:
- Efficiency: CTPAT will not have to expend resources to send staff overseas to validate a facility that has been certified by a foreign partnership program.
- Risk Assessment Tool: The status of the foreign partnership program participant is recognized by CTPAT and is used as a risk-assessment factor. A CTPAT validation visit will be conducted on a different segment of the CTPAT importer’s supply chain.
- Less Redundancy/Duplication of Efforts: Foreign companies do not have to go through two separate validation visits. The first validation conducted by the local Customs Administration as the company is initially certified by its business partnership program would be recognized as a CTPAT validation if an MRA is in place.
- Common Standard/Trade Facilitation: Companies only have to adhere to one set of security requirements. Avoiding multiple sets of requirements facilitates international trade as shipments will move more efficiently through different countries. Since Mutual Recognition is based on having equally stringent minimum security criteria, a CTPAT compliant company essentially complies with the security criteria of those countries with which the U.S. has reached an MRA. Common standards among programs also aid companies in conducting and documenting their security self-assessments.
- Transparency: Closer collaboration among and between Customs Administrations' and their partnership program companies lead to more transparency in international commerce. Similar security platforms and the exchange of information between all of these partners expedite and facilitate the movement of commerce across nations.
As of September 2022, CBP has signed 18 MRA’s:
- New Zealand - June 2007 – New Zealand Customs Service’s Secure Export Scheme Program
- Canada - June 2008 – Canada Border Services Agency’s Partners in Protection Program
- Jordan - June 2008 – Jordan Customs Department’s Golden List Program
- Japan - June 2009 – Japan Customs and Tariff Bureau’s Authorized Economic Operator Program
- Korea - June 2010 – Korean Customs Service’s Authorized Economic Operator Program
- European Union - May 2012 – European Union’s Authorized Economic Operator Program
- Taiwan - November 2012– Directorate General of Customs, Taiwan Ministry of Finance’s – Authorized Economic Operator Program*
- Israel – June 2014 - Israel Tax Authority’s Authorized Economic Operator Program.
- Mexico - October 2014 - Authorized Economic Operator Program
- Singapore – December 2014 – Singapore Customs’ Secure Trade Partnership (STP) Program
- Dominican Republic - December 2015 – Authorized Economic Operator Program
- Peru - September 2018 - Authorized Economic Operator Program
- United Kingdom - January 2021- Her Majesty's Revenue and Customs' Authorized Economic Operator Program
- India - September 2021- Central Board of Indirect Taxes and Customs (CBIC) - Authorized Economic Operator Program
- Uruguay - July 2022 - National Customs Directorate of the Oriental Republic of Uruguay - Qualified Economic Operator Program
- Brazil - September 2022 - Federative Republic of Brazil - Brazil Authorized Economic Operator Program
- Guatemala – April 2023 – The Superintendence of Tax Administration of Guatemala – Authorized Economic Operator Program
- Colombia – April 2023 – Special Administrative Unit Directorate of National Taxes and Customs Republic of Colombia – Authorized Economic Operator Program
*Note: This MRA is signed between the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office (TECRO) in the United States. CTPAT and Taiwan AEO are the designated parties responsible for implementing the MRA.
CBP and CTPAT are always open to suggestions of potential benefits and welcome feedback from our partners, the trade community, and partners of other supply chain security programs.