USMCA The United States-Mexico-Canada (USMCA) free trade agreement is intended to promote work between the Unites States, Canada and Mexico and to strengthen the economy of those countries. It basically modernizes and adds new elements to the NAFTA (North American Free Trade Agreement) which was in effect since January 1st, 1994. Therefore, the USMCA will replace NAFTA and go into effect as of July 1st, 2020. It will be reviewed jointly after six years of it being in effect. However, NAFTA rules will remain in effect for merchandise which was brought to market on or before June 30th, 2020.
NAFTA vs USMCA
What are some of the changes and what stays the same?
All products that have zero tariffs under NAFTA will remain at zero
Under USMCA a specific certificate of origin is not needed
USMCA requires a simple “certification of origin” containing the following elements:
Importer, Exporter or Producer (indicate who is certifier and provide names and addresses), Description and HS Tariff Classification of the Commodity, Origin Criteria, Blanket Period (if applicable), Authorized Signature and Date
Starting July 1st, 2020 CBP is no longer accepting the NAFTA Certificate of Origin (Form 434)
CBP has provided an optional certificate template on its website: https://www.cbp.gov/document/guidance/certification-origin-template
Customs Administration and Trade Facilitation
Decreases costs and brings more predictability to contracts
The USMCA prevents parties from having needless constraints on imports of remanufactured goods
De Minimis
De minimis regulates if a parcel is allowed to be dispatched internationally without having to pay taxes or tariffs.
United States: is going to keep its de minimis level at USD 800.00
Mexico: is going to resume to give tax-free treatment to express shipments up to USD 50.00 and duty-free treatment for express shipments up to USD 117.00
Canada: is going to increase its level for North American express shipments: doubling it to CAD 40.00 for taxes and it will allow duty-free express shipments up to CAD 150
Additional Resources:
Customs and Border Protection - USMCA Center https://www.cbp.gov/trade/priority-issues/trade-agreements/free-tradeagreements/USMCA
Customs and Border Protection - FAQs https://www.cbp.gov/trade/priority-issues/trade-agreements/free-tradeagreements/USMCA/FAQs
United States Trade Representative https://www.trade.gov/usmca
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