The United States–Mexico–Canada Agreement (USMCA)

The United States, Mexico, and Canada updated NAFTA to create the new USMCA. USMCA is mutually beneficial for North American workers, farmers, ranchers, and businesses. The new agreement, which goes into effect on July 1, 2020, will create a more balanced environment for trade, will support high paying jobs for Americans, and will grow the North American economy.

The new Agreement has several names:

  • USMCA (US Mexico Canada Agreement)
  • CUSMA (Canada US Mexico Agreement)
  • ACEUM (Accord Canada Etats Unis Mexique)
  • TMEC (Tratado entre Mexico, Estados Unidos y Canada)

What are the differences between USMCA and NAFTA?

  • USMCA has specific rules of origin that apply to each good, which are not always the same rules that applied under NAFTA.
  • USMCA replaced the NAFTA Certificate of Origin with a USMCA Certification of Origin.
  • All products that have zero tarrifs under NAFTA will remain at zero under USMCA.

Origin Procedures

  • Claims for Preferential Tariff Treatment are done through either a Statement or Certificate of Origin (CoO) or other document
  • A formal certificate of origin is no longer required. A document containing a set of nine data elements must be submitted with the shipment to prove origin.
  • Single CoO may be used for a single shipment of goods or More than one shipment of goods if cleared together
  • A “valid certificate of origin’ is a certificate of origin that the exporter, producer, or importer provides
  • Blanket certification, which will cover all shipments of goods that qualify for preferential treatment for up to 1 year.
  • A certification of origin is not required when the value is at or below the low value thresholds established by each country, provided that the importation does not form part of a series of importations.
  • Record-keeping requirements must be met.

De Minimis Thresholds

To help make trade easier, faster, and cheaper, the following De Minimis shipment values will be followed. These De Minimis threshold sets the value of goods below which no duties or taxes are collected by customs. Shipments up to these De Minimis values will generally enter with minimal formal entry.

Low value thresholds for each country:

  • US$ 1,000 for goods destined to Mexico from Canada or US
  • US$ 2,500 for goods destined to US from Canada or Mexico
  • CAD$ 3,300 for goods destined to Canada from US or Mexico

Canada will raise its de minimis level for North American express shipments from C$20 to C$40 for taxes. It will also provide for duty-free treatment for express shipments up to C$150.

Mexico will continue to provide US$50 tax-free de minimis and also provide duty-free treatment for express shipments up to the equivalent level of US$117.

The United States will maintain its de minimis level at US$800.

Origin Verification – Rules of Origin

  • The USMCA includes strong rules of origin. It is the responsibility of the Exporter and Importer to make sure their goods qualify under the rules of origin and that a proper certification of the goods is provided
  • The USMCA certification of origin may be completed by the importer, exporter, or producer of the goods, and may be in any form/format but must contain the 9 minimum data elements
  • Importers, Exporters and producers that are required to maintain records and shall make the records available for inspection by an officer of the customs administration of a party conducting a verification inspection
  • The parties of the shipment must first determine who will make the certification
    (importer, exporter, or producer)
  • The parties (importer, exporter or producer) may calculate the Regional Value Content of the good based on a transaction value or net cost method as required, using RVC calculation formulas
  • Originating Goods are goods that are wholly obtained or produced entirely in the territory of one or more of the USMCA countries or produced in one or more USMCA countries using non-originating materials provide the goods satisfies all product-specific rules of origin
  • If the good is determined by customs authority to be a non-originating good, the exporter must tell anyone it gave CoO to goods that have Special Rules of Origin

How does each country define “Series of Importations”?

  • Canada: two or more importations of a good accounted for separately but covered by one commercial invoice issue by the seller of the good to the purchaser of the good
  • Mexico: two or more customs entries covering a good arriving the same day or released the same day. And consigned to. Or imported by any person but covered by one commercial invoice.
  • The United States: two or more customs entries covering a good arriving the same day from the same exporter and consigned to the same person.

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