On July 1, 2020, the United States – Mexico – Canada Agreement (USMCA) goes into effect.
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.
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:
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).
The U.S.-Mexico-Canada agreement takes effect on July 1, 2020. All goods entered into commerce on or after July 1, 2020 will receive preferential treatment under USMCA, if preferential treatment is claimed.
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.
– CBP Fact Sheets
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)
Special Column Designation
|Items eligible for preferential tariff treatment will be indicated with a new Special Program Indicator (SPI) of “S”.
|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.
|An “S+” SPI designation will also be available.
Claims for Merchandise Processing Fees (MPF) exemptions must be made at time of entry.
Currently, MPF refunds on post importation claims are not permitted under USMCA. This restriction applies to both individual and reconciliation filings.
Beginning July 1, 2020, Importers can flag an Entry Summary for a post-importation claim under USMCA for Entry Type 09 at the time of filing. While reconciliation entries are not mandatory, it is the only way to file a USMCA claim once an Entry Summary is flagged.
NOTE: After flagging an Entry Summary, any separate filing of a USMCA claim will be considered duplicative and will not be accepted.
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:
Post-importation claims will be denied, with a statement specifying deficiencies, if any of the following apply:
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.
Post-summary corrections are not allowed for USMCA claims.
TFTEA Substitution Standards have been adopted when drawback is permitted (i.e., “substitution” under the same 8-digit HTSUS subheading instead of “same kind and quality substitution”).
Conditions of Export
The NAFTA provision that applied a fee pursuant to Section 22 of the U.S. Agricultural Adjustment Act, subject to Chapter Seven (Agriculture and Sanitary and Phytosanitary Measures) has been removed.
CBP has added an ACE Indicator checkbox at the claim level to handle duty drawback. CBP anticipates that the sunset for drawback entries will be at least 5 years after USMCA EIF.
June 30, 2020
July 1, 2020
July 2, 2020
|Only NAFTA duty drawback claims can be filed on entries dated on or before 6/30/2020
|NAFTA duty drawback claims can be filed (until 2025) on entries dated on or before 6/30/2020
|NAFTA duty drawback claims can be filed (until 2025) on entries dated on or before 6/30/2020
|Must check NAFTA Indicator|
|N/A||USMCA duty drawback claims can be filed (until 2025) on entries dated 7/1/2020
|USMCA duty drawback claims can be filed (until 2025) on entries dated on or before 6/30/2020
|Must check USMCA Indicator
NOTE: Entries dated before July 1, 2020 and entries dated after July 1, 2020 will not be allowed on the same drawback claim. Claimant must file separate claims for NAFTA and USMCA based on consumptive entry date.
Under USMCA, drawback Filers can still submit claims related to Section 201 and/or Section 301 duties.
Filers are required to provide the following numbers on all claims:
I already filed a Section 201 or Section 301 claim. Now what?
If a Section 201 and/or Section 301 claim was previously filed and accepted in ACE, Filers are required to “perfect” the claim. To “perfect” a claim, Filers are requested to contact their Drawback Specialist and request the claim be returned to trade control. Filers will then need to update the claim to reflect both of the HTSUS tariff numbers (described above) and resubmit to CBP within 5 business days.
For more information, please see Cargo Systems Messaging Service #19-000050
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:
NAFTA Certifications of Origin will no longer be accepted as of July 1, 2020. While NAFTA certificates are no longer required, previous NAFTA certificates and certification documentation must be kept for a minimum of five years.
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. The certification can cover one shipment or a series of shipments within a 12-month period. 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.
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.
The de minimis provision allows a good to qualify as originating if it contains no more than 10% of non-originating materials, including goods subject to RVC requirements.
Under de minimis guidelines, the value of all non-originating materials used in the production of the good cannot exceed 10% of either:
If subject to RVC requirements, the value of de minimis materials is included in the total value of non-originating materials. Goods that qualify for de minimis are not required to satisfy RVC requirements provided the good satisfies all other applicable requirements.
An originating good will retain its status if it has been transported directly to the United States without passing through the territory of a non-USMCA Party.
If an originating good is transported outside the territories of the participating USMCA Parties, the good will retain its originating status if the good:
To help coordinate implementation of USMCA, CBP recently opened the USMCA Center. Staffed with CBP experts from operational, legal, and audit disciplines in collaboration with Canadian and Mexican customs authorities, the USMCA Center will serve as a central communication hub for CBP and the private sector community, including traders, brokers, freight forwarders and producers, ensuring a smooth and efficient transition from the North American Free Trade Agreement to USMCA.
CBP has also compiled USMCA-related resources for members of the trade community on their USMCA web page, located at www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements/USMCA.
CBP Fact Sheets
CBP has posted a series of fact sheets which highlight the significant changes in USMCA and offer a detailed side-by-side comparison to NAFTA. CBP’s fact sheets are for comparison or advisory purposes only and are not legally binding. A list of available CBP fact sheets with links is provided below: