June 22 2020

Are you ready for USMCA to take effect July 1?

Sunset Mexico & Canadian Shippers:

The replacement for NAFTA, known in the U.S. as USMCA, will take effect July 1, 2020.  This will affect ALL SHIPMENTS flowing through U.S. borders with Canada and Mexico.  The new trilateral trade agreement is known in Canada as CUSMA; in Mexico it is known as T-MEC.

How does it affect my shipments in the NAFTA/USMCA region?

USMCA may trigger new requirements that could affect the qualification of your product into the trade agreement.  Qualification means that your NAFTA product is paying less duties than if they were bringing them from other part of the world.

Below are the most relevant requirements to have accounted for on July 1, 2020:

1. Rules of Origin (Chapter 4, USMCA)

  • Automotive Rules of Origin and Regional Value Content high impact changes
    • Total North American content of a vehicle must equal 75% (up from 62.5%).
    • 70% of all steel, aluminum, and glass used in the production of the automobile must originate in North America. In the Protocol of Amendment, the definition of steel was modified to note that it must be “melted and poured” in North America in order to qualify for duty exemption. The new definition will take effect seven (7) years after the USCMA’s implementation. The definition of aluminum remains the same as under NAFTA but will be revisited 10 years after the USMCA’s implementation.
    • Part content will be divided up into core, principal, and complementary parts with content requirements of 75%, 65%, and 60% respectively.
    • 40% of an automobile and 45% of a light truck must be produced using an average labor wage of $16/hour.

2. Origin Procedures (Chapter 5, Annex 5-A, USMCA).

  • New Certification of Origin rules:
    • Under the USMCA, importers will no longer be required to complete a formal certification document.
    • Certification of origin can be achieved using informal documentation, such as commercial invoices and can be completed by importer, exporter or producer.
    • Previous NAFTA certificates and certification documentation under USMCA must be kept for a minimum of five (5) years.

Certification of Origin

The following minimum requirements can be presented in the commercial invoice or any other document that serves a commercial purpose (minimum requirements per Annex 5-A of Chapter 5):

  • Origin certification by the importer, exporter or producer
  • Individual certifying the origin as legal representative
  • Exporter
  • Producer
  • Importer
  • Product description and classification per harmonized tariff schedule
  • Origin criteria
  • Period or date range certified
  • Authorized signature and date
  • The period of validity of this certification will be for four (4) years

For more information, please contact Sunset Transportation’s Laredo office at [email protected].  

Related content:
https://www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements/USMCA

https://www.gob.mx/t-mec

https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement