USMCA Goes Live

The highly anticipated USMCA goes live on July 1, 2020. The North American Free Trade Agreement (NAFTA), which went into effect in 1994, is expiring at the end of June. Over the 25 plus years since implementation, trade among the three-member nations blossomed, import prices for key industries such as oil and food have remained relatively low, and economic growth has remained strong.

USMCA should increase benefits for some vital US industries, namely the auto and dairy industries, while also addressing new present-day issues like digital trade and increased protections for intellectual property.  

Shipments that have previously imported under the terms of NAFTA will need to follow the new USMCA rules for preferential treatment to be claimed. 

It is vital for importers to proactively prepare for the upcoming changes. Not being ready for the implementation of USMCA will show a lack of reasonable care and could result in increased duties, delayed shipments, and potential penalties.

Importers should work closely with their supply chain partners to prepare for the rapidly approaching changeover to USMCA. Some procedures that might need updating include:

• Part Qualification: You will have to requalify your parts; just because something was qualified for NAFTA, does not mean it will automatically qualify for USMCA.
• Broker Management: Procedures need to be updated to reflect USMCA.
• Documentation flows: This could include the solicitation of supplier certificates and the submission of certificates to your brokers and customers.
• Parts lists: If you automatically feed FTA Qualification information to your broker, you may need to update your interchanges.
• Entry Data Feeds: If your broker feeds entry data back to you, you will need to make the applicable changes to your system.
• Recordkeeping: Ensure that you will retain the required info even though the documents might be different.

Listed below are notable differences between the two agreements.

NAFTA                                                             USMCA

Certificate	Specific NAFTA Certificate of Origin Required	No standard format but must meet minimum standards set out by Chapter 5 of the USMCA.
Automotive	62.5% RVC	75% RVC with 70% of steel
Digital Trade	No chapter on digital trade	Digital trade has been included
De Minimis MX	De Minimis is $50 USD	$117 USD for duty-free, $50 USD for tax-free
De Minimis CA	De Minimis is $20 CAD	$150 CAD for duty-free, $40 CAD for tax-free
SPI	MX or CA	S

 

For more details or guidance on USMCA, please email Allyn International at customs@allynintl.com.  Allyn is currently working with our clients, suppliers, and brokers to ensure a seamless, prompt and compliant implementation. 

Contributor: Matthew Dreckman 

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.