USMCA

UNDERSTANDING NORTH AMERICA’S NEW TRADE DEAL

The United States – Mexico – Canada Agreement (USMCA) free trade agreement took effect on July 1, 2020, replacing the NAFTA agreement.

For businesses engaged in cross-border trade with Canada and Mexico, this means new opportunities as well as new risks as they navigate the new rules and regulations of the new U.S. – Mexico – Canada Agreement.

USMCA Overview

What is USMCA? 

The United States – Mexico – Canada Agreement (USMCA) is a trade agreement between the United States, Mexico, and Canada. USMCA replaces the North American Free Trade Agreement (NAFTA), which has been in effect since January 1994. NAFTA sought to eliminate tariff and non-tariff related trade and investment barriers between the three North American countries, and tariffs on various agricultural products, textiles, automobiles, and other goods were either reduced or eliminated. 

USMCA preserves NAFTA’s trilateral trade pact and modernizes the trade relationship by: 

Addressing developments in technology and trade practices
Adding new criteria to certain commodities, including textiles and automotive goods

All goods entered into commerce will receive preferential treatment under USMCA, only if preferential treatment is claimed.

It is important to note that USMCA is referred to by different names in Canada and Mexico. In Canada, it is called the Canada-United States-Mexico Agreement (CUSMA), while in Mexico it is referred to as the Tratado entre Mexico Estados Unidos y Canada (T-MEC). 

What’s Changed Since NAFTA? 

NAFTA eligibility and procedures will cease to apply and will be replaced with a number of new procedural terms.

While the new USMCA Agreement modernizes many of NAFTA provisions, it also features new provisions related to automotive goods, dairy, agricultural produce, homelessness, manufactured products, labor conditions, and digital trade, among others.

USMCA will not change the zeroed-out tariffs on most manufacturing and agricultural goods.

Rules of Origin

Rules of originating status have remained the same for most commodities. However, there are significant changes to certain commodities, including automotive and textile apparel. Under USMCA, a good is considered originating when:

The good is wholly produced or obtained entirely in the territory of one or more of the Parties
The good is produced entirely in the territory of one or more of the Parties exclusively from originating materials
The good is produced entirely in the territory of one or more of the Parties using non-originating materials, provided the good satisfies all applicable requirements of product-specific rules of origin
The good satisfies all other applicable origin requirements
Except for goods provided for in HTSUS Chapters 61 to 63, the good is:
- produced entirely in the territory of one or more of the Parties;
- is classified with its materials or satisfies the “unassembled goods” requirement;
- meets a regional value content threshold of:
  - not less than 60%, if the transaction value method is used; or
  - not less than 50%, if the net cost method is used (not including RVC for autos)

Certificate of Origin

Under USMCA, a Certificate of Origin may be submitted by either the Importer, Exporter, or Producer.

The Certifier must have supporting documentation which demonstrates the good’s origin and records must be kept for five years from the date of entry. While NAFTA certificates are no longer required, previous NAFTA certificates and certification documentation must be kept for a minimum of five years.

The certification can cover one shipment or a series of shipments within a 12-month period. NOTE: A Certificate of origin is not required for imports valuing less than $2,500.

There is no specific format or USMCA form required for a Certificate of Origin. The information can be made available on any document, including a commercial invoice, as long as it contains the data elements described below. Please note that a commercial document issued by a non-USMCA Party will not be accepted as certification of origin. For your convenience, we recommend that you use the form below to ensure consistency and compliance.

Required Data Elements

The following data elements are must be listed on all USMCA Certificates of Origin:

The Certifier must note whether they are the Importer, Exporter or Producer of the good
Certifier’s name, title, address, email address, and phone number
Exporter’s name, address, email address, and phone number
Producer’s name, address, email address, and phone number
Importer’s name , address, email address, and phone number
Product description and six-digit HS tariff classification number
Origin criteria under which the good qualifies
Blanket period
The certification must be signed and dated and include the following statement:

“I certify that the goods described in this document qualify as originating and the information contained in this document is true and accurate. I assume responsibility for providing such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification.”

Initial USMCA Provisions

Dairy

De Minimis

Labor

Local Presence

Intellectual Property

Copyrights will be extended to life plus 70 years and 75 years for sound recordings
Trademarks will be protected for 10 years (renewable)
Biotech firms would have at least 10 years exclusivity for agricultural chemicals
The industrial designs period would jump to 15 years

Sunset Clause

Dispute Settlement

Automobiles

Claims for Preferential Tariff Treatment

Making a Claim

When making a claim under USMCA, continue using Entry Type 08, which will be renamed Entry Type 08, USMCA Duty Deferral. When filing a claim, the Filer certifies that the goods comply with all Rules of Origin (RoO) and record keeping requirements.

The Special Program Indicators “MX” and “CA” used by NAFTA are replaced with “S” and ”S+” for USMCA claims.

Special Program Indicator (SPI)

Items eligible for preferential tariff treatment will be indicated with a new Special Program Indicator (SPI) of “S”.

When filing a claim, the Filer certifies that the goods comply with all Rules of Origin (RoO) and record keeping requirements

USMCA preference may also be claimed on unconditionally free tariff items in order to receive an exemption from Merchandise Processing Fees (MPF), provided the goods meet all requisite USMCA requirements.

SPI “S” will not appear in the Special column of the HTSUS, but is required when filing an MPF exemption claim

An “S+” SPI designation will also be available.

Further guidance on scope and use for this new designation is expected to be released soon from the USTR and CBP.

Post-Importation Claims

Importers can file a post-importation claim to request a refund of excess duties paid on qualifying goods, pursuant to 19 USC 1520(d). There are no changes to requirements between NAFTA and USMCA.

Eligibility: Good qualifies for preferential treatment
Effective Period: One year after date of importation
Responsible Party: Importer

Post-importations claims must include the following documents:

Declaration of USMCA Qualification
Certificate Of Origin
Statement on Whether Doc was Provided to Anyone
Statement on Whether Protests or Petitions were Filed

Claim Deficiencies and Corrections

Deficiencies

Post-importation claims will be denied, with a statement specifying deficiencies, if any of the following apply:

Certificate of Origin is illegible, incomplete, or contains incorrect information
Claim does not comply with requirements

Corrections

Corrections are allowed on post-importation claims up to the one-year expiration period.

Exception: Corrections will not be permitted if the claim has already been reviewed and decided upon.

NOTE: Post-summary corrections are not allowed for USMCA claims.

Country of Origin

Country of Origin Markings

For marking purposes, the Rules of Origin (RoO) contained in 19 CFR 102 determine the country of origin for goods imported from Canada or Mexico.

For most goods, only product-specific RoO contained in GN 11 is needed to determine whether a good is originating.

Changes from NAFTA

Goods, with the exception of certain agricultural goods, no longer need to qualify for marking as a good from Canada or Mexico in order to receive preferential tariff treatment.

Goods with a non-foreign origin (i.e., a U.S. origin good) are also eligible for preferential tariff treatment, and the U.S. will now be accepted as a country of origin on USMCA claims.

Resources

CBP Information Center

USMCA Center (Email Address): USMCA@cbp.dhs.gov

AskCBP Search Engine: https://help.CBP.gov

CBP Call Center: 877.227.5511

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