For many years, the trilateral trade bloc in North America has worked together to minimize the tariff and non-tariff barriers of trade between the United States, Canada and Mexico. The United States enacted a special trade program with Canada in 1988, called the Canada-United States Free Trade Agreement (CFTA). A few years later, Mexico joined the agreement with Canada and the United States to form the North American Free Trade Agreement (NAFTA), which entered into force on January 1, 1994. This agreement has been in force for 26 years, and the current administration believed it was time for some updates.

Origin of the USMCA

Negotiations for the USMCA began in 2017, and in January of 2020, the United States administration signed the USMCA Implementation Act into law. By March 13, 2020, the United States, Canada and Mexico passed the United States-Mexico-Canada Agreement (USMCA) through their national legislative bodies. The USMCA will go into effect on July 1, 2020.

What Changes Can Be Expected When the USMCA Goes Into Effect?

The USMCA will not change 80 percent of the current NAFTA tariff structure on most manufacturing and agricultural goods. The majority of the change provisions are in the Automotive sector, which includes some of the following:

• Regional Value Content percentages will be higher
• Required RVC percentages for passenger vehicles and light trucks will be 75 percent and 70 percent for heavy trucks
• Labor Value Content is another new criterion under USMCA and requires the manufacturing facility to pay at least $16 USD per hour
• Passenger vehicles, light trucks or heavy trucks must have 70 percent of the producer’s annual purchases of steel and aluminum originating in the United States, Mexico or Canada

The USMCA must be reevaluated every six years and has a 16-year sunset clause, unlike its predecessor. The primary responsibility for compliance has shifted from the exporter/manufacturer to the importer.

Will There Be a New USMCA Form?

Many have asked about the new form – will there be a new USMCA form that mirrors the NAFTA form? Customs has advised that they are creating a USMCA template that provides the shell that can be used, and it will be made available on the USMCA website. A form is not required – just the data that validates the claim at the time of entry.

The required data can be provided electronically, on a Certificate of Origin or on the Commercial Invoice itself. If Customs does request additional supporting documentation at the time of entry, or a later date, the importer will need to provide this information on a document to submit to CBP. This can be included on a Certificate of Origin, Commercial Invoice or a self-created USMCA form.

The following nine pieces of data must be provided at the time of entry to be eligible for USMCA duty deferral, including the Merchandise Processing Fee. If the importer can validate the USMCA claim at a later time, they can file a Post Summary Amendment or a Protest to request a duty refund. Still, they will not be eligible for the Merchandise Processing Fee – as the law is currently written. Discussion is underway to have this portion of the law corrected to allow for a full refund of all eligible duty at the time of PSC or Protest approval.

Below are the nine pieces of information that must be provided electronically to CBP at the time of entry.

Minimum Data Elements

A certification of origin that is the basis for a claim for preferential tariff treatment under this Agreement shall include the following elements:

• Importer, Exporter or Producer Certification of Origin
  • Indicate whether the certifier is the exporter, producer or importer in accordance with Article 5.2 (Claims for Preferential Tariff Treatment).
• Certifier
  • Provide the certifier’s name, title, address (including country), telephone number and email address.
• Exporter
  • Provide the exporter’s name, address (including country), email address and telephone number, if different from the certifier. This information is not required if the producer is completing the certification of origin and does not know the identity of the exporter. The address of the exporter shall be the place of export of the good in a Party’s territory.
• Producer
  • Provide the producer’s name, address (including country), email address and telephone number, if different from the certifier or exporter or, if there are multiple producers, state “Various” or provide a list of producers. A person that wishes for this information to remain confidential may state, “Available upon request by the importing authorities.” The address of a producer shall be the place of production of the good in a Party’s territory.
• Importer
  • Provide, if known, the importer’s name, address, email address and telephone number. The address of the importer shall be in a Party’s territory.
• Description and HS Tariff Classification of the Good
  • Provide a description of the good and the HS tariff classification of the good to the six-digit level. The description should be sufficient to relate it to the good covered by the certification; and
  • If the certification of origin covers a single shipment of a good, indicate, if known, the invoice number related to the exportation.
• Origin Criteria
  • Specify the origin criteria under which the good qualifies, as set out in Article 4.2 (Originating Goods).
• Blanket Period
  • Include the period if the certification covers multiple shipments of identical goods for a specified period of up to 12 months, as set out in Article 5.2 (Claims for Preferential Tariff Treatment).
• Authorized Signature and Date
  • The certification must be signed and dated by the certifier and accompanied by 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 proving such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification.

USMCA Resources

On Tuesday, June 16, 2020, CBP published the Interim Implementing Instructions, including the Phased approach to the new trade program. Phase I Implementation will be from July 1, 2020, through December 31, 2020. This six-month period will give Customs and Trade time to work through some of the challenges that will arise with new guidelines. For more information, please view the resources provided in the USMCA Overview located on CBP’s website or contact CBP at [email protected].

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