June 16, 2020

United States, Mexico, Canada Agreement (USMCA) Updated Interim Implementing Instructions

Updated Interim Implementing Instructions - USMCA

On January 29, 2020, the United States-Mexico-Canada Agreement Implementation Act (USMCA) was signed into law. The USMCA received final ratification on March 13, 2020 and is to enter into force on July 1, 2020.  

The Agreement provides for the immediate or staged elimination of duties and barriers to trilateral trade in goods originating in the United States, Mexico, and Canada.

Customs issued an “Updated Interim Implementing Instructions” guideline on June 16, 2020.  This document provides guidance with respect to preferential tariff claims under the USMCA. Please find the link below for further details and changes with the new Agreement here

Crane Trade Services can assist you with understanding the new USMCA program - for assistance please contact CWTSConsulting@craneww.com.


Latest information on USMCA 

UPDATED 12th May

  • The U.S. – Mexico – Canada Agreement (USMCA) is a trade agreement between the three named countries.  When implemented, it will replace the North American Free Trade Agreement (NAFTA).
  • The USMCA will enter into force on July 1, 2020, per the U.S. Trade Representative.
  • The U.S. – Mexico – Canada Agreement (USMCA) does not require a specific certificate of origin as does the North American Free Trade Agreement.  CBP Form 434 is not mandatory under the USMCA. 
  • A claim for preferential treatment under the USMCA should contain nine minimum data elements.  These data elements are set out in the USMCA’s Annex 5-A (Minimum Data Elements).  The data elements must indicate that the good claiming preferential treatment originates and meets the requirements of USMCA Chapter 5.  This information may be provided on an invoice or any other document. The information must describe the originating good in sufficient detail to enable its identification and meet the requirements as set out in the Uniform Regulations. Minimum data elements: 

1.    Importer, Exporter, or Producer Certification of Origin
2.    Certifier
3.    Exporter
4.    Producer
5.    Importer
6.    Description and HS Tariff Classification of the Good (to the 6-digit level)
7.    Origin Criteria (origin criteria under which the good qualifies, as set out in USMCA. 
8.    Blanket Period (can cover multiple shipments of identical goods for a specified period of up to 12 months)
9.    Authorized Signature and Date

Automotive Industry 

  • Increased Regional Value Content from 62.5% to 75%, increased in stages over a period three year.
  • Labor Value Content (40-45% percent of the value of the imported automobile must be sourced from manufacturing facilities where workers earn at least $16 USD per hour.  The U.S. Department of Labor will be performing the assessment of manufacturing.
  • Facility eligibility, with CBP determining value of the parts, the overall automobile, and the overall Labor Value Content determination.
  • Steel and Aluminum (At least 70% of a vehicle producer’s annual steel and aluminum procurement must originate from North America).
  • For more information select USMCA Ch. 4 – Rules of Origin.

Textile Industry

  • Revised tariff shift rules maintain the basic concepts established under NAFTA with a few modifications. These rules allow manufacturers to use textile inputs not generally available in North America (such as rayon fibers and visible lining fabric).
  • The USMCA modifies the chapter rules for goods classified in HTS chapters 61 and 62.
  • The USMCA increases the de minimis percentage of non-originating inputs allowed in qualifying goods from 7 to 10 percent (within the overall 10% cap, the total weight of elastomeric content may not exceed 7%).
  • Other changes under the USMCA require that sewing thread, pocketing fabric, narrow elastic bands, and coated fabric used in the production of apparel be made in North America in order for those products to be treated as originating (under the current NAFTA, these items can be sourced from outside the region – USMCA ensures these secondary components originate within the region). 
  • The USMCA establishes a Textiles chapter for North American trade, including textile-specific verification and customs cooperation provisions that provide new tools for strengthening customs enforcement and preventing fraud.
  • The USMCA reduces some TPLs for US imports from Canada and Mexico while substantially increasing TPLs for US exports to Canada of apparel and other finished textile goods.

De Minimis

To facilitate greater cross-border trade, the United States has reached an agreement with Mexico and Canada to raise their de minimis shipment value levels.  
Canada will raise its de minimis level for the first time in decades, from C$20 to C$40 for taxes.  Canada will also provide for duty free shipments up to C$150. 
Mexico will continue to provide USD $50 tax-free de minimis and also provide duty-free shipments up to the equivalent level of USD $117.  

Shipment values up to these levels would enter with minimal formal entry procedures, making it easier for more businesses, especially small- and medium-sized ones, to be a part of cross-border trade. 

Intellectual Property 

  • Require full national treatment for copyright and related rights so United States creators are not deprived of the same protections that domestic creators receive in a foreign market.
  • Continue to provide strong patent protection for innovators by enshrining patentability standards and patent office best practices to ensure that United States innovators, including small- and medium-sized businesses, are able to protect their inventions with patents.
  • Include strong protection for pharmaceutical and agricultural innovators.
  • Require a minimum copyright term of life of the author plus 70 years, and for those works with a copyright term that is not based on the life of a person, a minimum of 75 years after first authorized publication.
  • Require strong standards against the circumvention of technological protection measures that often protect works such as digital music, movies, and books.
  • Establish appropriate copyright safe harbors to provide protection for IP and predictability for legitimate enterprises that do not directly benefit from the infringement, consistent with United States law.
  • Provide important procedural safeguards for recognition of new geographical indications (GIs), including strong standards for protection against issuances of GIs that would prevent United States producers from using common names, as well as establish a mechanism for consultation between the Parties on future GIs pursuant to international agreements.
  • Enhance provisions for protecting trademarks, including well-known marks, to help companies that have invested effort and resources into establishing goodwill for their brands.

Digital Trade

  • Prohibit customs duties and other discriminatory measures from being applied to digital products distributed electronically (e-books, videos, music, software, games, etc.).
  • Ensure that data can be transferred cross-border, and that limits on where data can be stored and processed are minimized, thereby enhancing and protecting the global digital ecosystem.  Ensure that suppliers are not restricted in their use of electronic authentication or electronic signatures, thereby facilitating digital transactions.
  • Guarantee that enforceable consumer protections, including for privacy and unsolicited communications, apply to the digital marketplace.
  • Limit governments’ ability to require disclosure of proprietary computer source code and algorithms, to better protect the competitiveness of digital suppliers.
  • Promote collaboration in tackling cybersecurity challenges while seeking to promote industry best practices to keep networks and services secure.
  • Promote open access to government-generated public data, to enhance innovative use in commercial applications and services.
  • Limit the civil liability of Internet platforms for third-party content that such platforms host or process, outside of the realm of intellectual property enforcement, thereby enhancing the economic viability of these engines of growth that depend on user interaction and user content.

Sourcing: 
U.S. – Mexico – Canada Agreement (USMCA) https://www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements/USMCA

STATES–MEXICO–CANADA TRADE FACT SHEET Modernizing NAFTA into a 21st Century Trade Agreement https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/modernizing

Agreement between the United States of America, the United Mexican States, and Canada 12/13/19 Text https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/agreement-between

 

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