What the USMCA Deal Means for Shippers
Is your business ready to comply with North America’s revised trade pact? After Canada, Mexico and the United States officially settled the updated terms of the USMCA deal in September 2018, the agreement will go into effect July 1, 2020.
Read on to learn more about the differences between the North American Free Trade Agreement (NAFTA) and the USMCA.
Visit USTR.gov for details.
The USMCA stands for the United States-Mexico-Canada Trade Agreement, which replaces the North American Free Trade Agreement (NAFTA) effective July 1, 2020.
The agreement is also referred to as the Canada-United States-Mexico Agreement (CUSMA) in Canada and the Tratado entre México, Estados Unidos y Canadá (T-MEC) in Mexico.
Any document stating the goods’ origin is acceptable, including a commercial invoice or other transactional documents, provided the document contains the following nine pieces of information: certification of origin; certifier; exporter; producer; importer; description and harmonized system classification of the good; origin criteria; blanket period (if applicable); and authorized signature and date.
The value thresholds are as listed below:
Unchanged from NAFTA at US$800
The customs duties limit increased to US$117 and taxes increased to US$50
The customs duties limit increased to CA$150 and taxes increased to CA$40
U.S. Customs and Border Protection (CBP) is coordinating with the U.S. Department of Labor on the verification process of USMCA claims on automotive goods. The rules of origin for such goods include the new criterion of labor value content, which requires that a specified percentage of a vehicle’s value be derived from manufacturing facilities that pay an average wage of at least US$16 per hour.
The U.S. Department of Labor will assess the wage practices of the manufacturing facilities involved in the production of such vehicles and their components. This information will be used in CBP’s labor value calculation.
The USMCA requires new criteria for automotive goods that were not applicable under NAFTA, including:
To be increased in stages from 62.5 percent to 75 percent across a three-year period.
Forty to 45 percent of the value of the imported automobile must be sourced from manufacturing facilities where workers earn at least US$16 per hour. The U.S. Department of Labor assesses manufacturing facility eligibility, with CBP determining value of parts, the overall automobile and the overall labor value.
Steel and aluminum origin
At least 70 percent of a vehicle producer’s annual steel and aluminum procurement must originate from North America.