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U.S. – Mexico – Canada Agreement (USMCA) Frequently Asked Questions

What is the U.S. – Mexico – Canada Agreement (USMCA)?

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).

Please note: in Canada, this agreement is referred to as the Canada – United States – Mexico Agreement (CUSMA); in Mexico, this agreement is referred to as Tratado entre México, Estados Unidos y Canadá (T-MEC).  All three names refer to the same trade agreement.

When will the U.S. – Mexico – Canada Agreement (USMCA) be implemented?

The USMCA will enter into force on July 1, 2020, per the U.S. Trade Representative.

For merchandise entered into commerce on or before June 30, 2020, NAFTA rules will continue to apply.

Is there a required certificate of origin / form for the U.S. – Mexico – Canada Agreement (USMCA)?

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. 

For more information see Chapter 5 Origin Procedures, Article 5.2 and Annex 5-A.

Additional guidance materials will be published by U.S. Customs and Border Protection in advance of the USMCA’s entry into force.

How should the trade community prepare to comply with the new U.S. – Mexico – Canada Agreement (USMCA) rules and requirements?

U.S. Customs and Border Protection (CBP) is actively preparing for U.S. – Mexico – Canada Agreement (USMCA) implementation.  CBP is planning for needed changes to our automated systems, regulations, training for personnel, and outreach to private sector stakeholders.

As CBP prepares for implementation and the publishing of regulations and compliance guidance, the trade community should read and review the following materials:

CBP will distribute compliance guidance and other information in advance of entry-into-force.

How long will the U.S. – Mexico – Canada Agreement (USMCA) remain in force?

The U.S. – Mexico – Canada Agreement (USMCA) requires a “joint review” of the Agreement six years after entry-into-force.  At this joint review, the Parties will review the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions.

For more information, see USMCA, Article 34.7: “Review and Term Extension”.

What is the definition of textile or apparel goods under USMCA?

The USMCA defines a textile and apparel good as “textile or apparel good classified in HS subheading 4202.12, 4202.22, 4202.32, or 4202.92 (luggage, handbags and similar articles with an outer surface of textile materials), heading 50.04 through 50.07, 51.04 through 51.13, 52.04 through 52.12, 53.03 through 53.11, Chapter 54 through 63, heading 66.01 (umbrellas) or heading 70.19 (yarns and fabrics of glass fiber), subheading 9404.90 (articles of bedding and similar furnishing), or heading 96.19 (babies diapers and other sanitary textile articles).” Select here to see Chapter 1 Initial Provisions and General Definitions.

What is CBP’s role in the implementation of the U.S. – Mexico – Canada Agreement (USMCA)?

The USMCA will replace the North American Free Trade Agreement (NAFTA). U.S. Customs and Border Protection (CBP) is the United States’ lead implementing agency with respect to the USMCA. To this end, CBP has launched an internal USMCA Coordination Center, which will ensure, coordinate, and guide the implementation of the USMCA for CBP and our stakeholders.

CBP will communicate with trade stakeholders throughout the implementation process as we transition from NAFTA to USMCA. 

What provisions has CBP put in place to engage with the private sector during this transition phase?

On March 16, 2020, CBP launched a working group for the USMCA under the Commercial Operations Advisory Council (COAC). Additional information on COAC can be found at: https://www.cbp.gov/trade/stakeholder-engagement/coac.

In addition, CBP has created a webpage for USMCA information on CBP.gov, where compliance guidance, announcements, points of contact, and FAQs will be posted and kept updated. For more information see https://www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements/USMCA.

CBP will also disseminate information regarding specific commodities through the appropriate Centers of Excellence and Expertise. Additional information on these plans is pending.

What activities has CBP identified to be completed prior and subsequent to the USMCA’s Entry into Force?

CBP is preparing for USMCA implementation to ensure that the private sector receives compliance guidance in advance of the Agreement’s entry into force.

How will the trade communicate with CBP during the implementation of the USMCA?

On March 16, 2020, CBP launched a working group for the U.S. – Mexico – Canada Agreement (USMCA) under the Commercial Operations Advisory Council (COAC).  Additional information on COAC can be found at https://www.cbp.gov/trade/stakeholder-engagement/coac.

In addition, CBP’s USMCA Coordination Center will support CBP’s cross-agency and interdepartmental efforts to implement the Agreement. 

Importers should communicate with their assigned Centers of Excellence and Expertise regarding their specific importations. For more information see https://www.cbp.gov/trade/centers-excellence-and-expertise-information.

CBP will distribute compliance guidance and other information to the private sector in advance of entry into force.

How will the transition from NAFTA to USMCA work?

NAFTA rules will remain in effect until the USMCA enters into force.

For automotive products under headings 87.01 through 87.08, there is a transitional period for up to three years, and alternative staging regime options (coordinated by the U.S. Trade Representative) for up to five years. Additional compliance guidance for the USMCA’s automotive rules of origin is pending. For more information see USMCA Ch. 4 – Rules of Origin.

For all other commodities, USMCA rules will replace NAFTA rules on the date the Agreement enters into force.

There will be a new Special Program Indicator (SPI) for USMCA claims. NAFTA’s SPI Indicator will be accepted for claims on merchandise that are entered prior to the USMCA’s entry into force.

What is the role of the Department of Labor in USMCA implementation and enforcement?

CBP is coordinating with the U.S. Department of Labor on the verification process of USMCA claims on automotive goods. The rules of origin for such goods include the new criterion of Labor Value Content, which requires that a specified percentage of a vehicle’s value be derived from manufacturing facilities that pay an average wage of at least $16 USD per hour.   

The U.S. Department of Labor will assess the wage practices of the manufacturing facilities involved in the production of such vehicles and their components. This information will be used in CBP’s calculation of Labor Value Content. Additional guidance on compliance with this new requirement is pending.

What should the Trade community do to comply with the new USMCA rules and requirements?

CBP will ensure implementing instructions and other compliance guidance are available in advance of the Agreement entering into force.

In the interim, please read and review the Agreement text to determine if your import qualifies as an originating good under the USMCA.  Resources include:

Are there any changes that the textile industry should be aware of?

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.

Which industries will have the most impact from the changes from NAFTA to the USMCA?

The USMCA contains new criteria for the Rules of Origin for automotive and automotive part imports.  These new criteria include increases in the regional value content, new North American steel and aluminum procurement requirements, and labor value content.  These new criteria will require additional attention by importers to ensure compliance.  For more information see USMCA Ch. 4 – Rules of Origin

Other impacted industry groups include manufactured goods, textile and apparel, and ]agricultural good sectors.  Additional information is available via the International Trade Commission.

United States-Mexico-Canada Agreement: Likely Impact on the U.S. Economy and Specific Industry Sectors; ITC Publication No. 4889; Investigation No. TPA 105-003

What commodities do the Tariff Rate Quotas (TRQs) impact?

The USMCA includes provisions to exclude a certain quantity of Mexican and Canadian automobiles and automobile parts from any Section 232 trade remedy actions. For more information see USMCA Side Letters at the links below:

For agricultural goods, the USMCA maintains NAFTA’s zero-tariff treatment and includes adjustments to tariff-rate quota volumes to provide greater U.S. access to Canadian dairy, poultry, and egg markets.

For more information see USMCA Ch. 3 – Agriculture

What are the changes involving remanufactured goods?

The USMCA prohibits Parties from applying unnecessary restrictions on imports of remanufactured goods.  If a Party adopts or maintains a prohibition or a restriction on a used good, it shall not apply the measure to a remanufactured good.

For more information see USMCA Ch. 4 – Rules of Origin, Article 4.4

What are the new criteria for imported automobiles and automotive parts?

The USMCA requires new criteria for automotive goods that are not present in NAFTA, including:

  • Increased Regional Value Content from 62.5% to 75%, increased in stages over a period three years.
  • 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).

CBP will issue compliance guidance in advance of implementation.  For more information select USMCA Ch. 4 – Rules of Origin.

How will verifications and audits of automotive goods take place?

CBP will verify compliance of the USMCA’s automotive rules of origin.  CBP will work with the U.S. Department of Labor on the calculation of Labor Value Content.

CBP is a participant on the Committee on Trade In Automotive Goods Under Section 202a of the USMCA Implementation Act, led by the U.S. Trade Representative, to finalize processes under the USMCA for automotive goods. (For more information see Executive Order).

Additional guidance will be distributed in advance of implementation.

Will USMCA change any enforcement mechanisms?

The USMCA contains new provisions to combat AD/CVD evasion, commitments to interdict transshipped IPR infringing goods, prohibitions on the importation of goods sourced from forced labor, and requirements to prevent illegal taking of wild flora and fauna (including timber).

New enforcement tools will expand confidential trade data sharing; increase joint analysis, investigations and operations; and facilitate facility verification visits to assess production capacity.

For more information see USMCA Ch. 7 – “Customs Administration and Trade Facilitation”

How will CBP enforce the new Environmental and Labor requirements in USMCA?

Many of the provisions of the USMCA are awaiting final implementation guidance from the U.S. Trade Representative or are under development. 

Will CBP still accept CBP Form 434 (North American Free Trade Agreement (NAFTA) Certificate of Origin) for U.S. – Mexico – Canada Agreement (USMCA) claims for preferential treatment?

No.  The USMCA does not require a specific certificate of origin form. Rather, it requires nine specific data elements, which can be presented in any format, similar to other more modern trade agreements that were implemented subsequent to NAFTA [See USMCA Ch. 5 ‘Origin Procedures,’ Art. 5.2 (Claims for Preferential Tariff Treatment) and Annex 5-A (Minimum Data Elements)].  To avoid confusion, the CBP Form 434 will no longer be accepted for claims of preferential treatment under the USMCA. Even if the rule of origin for the subject good is the same under NAFTA and USMCA and all of USMCA’s required data elements are present on Form 434, the good needs to be recertified under USMCA. 

May USMCA be claimed on a U.S. good?

Yes, USCMA claims may be made on a good of U.S. origin, provided it satisfies its applicable rule of origin and all other requirements of the Agreement have been met.

How can I obtain a copy of the new USMCA certificate of origin form?

There is no official certificate of origin for USCMA, as there was for NAFTA. USCMA requires a “certification of origin.” Any format is acceptable, provided it contains the following nine minimum data elements set out in USCMA, Annex 5-A:

  1. Importer, Exporter, or Producer Certification of Origin
  2. Certifier
  3. Exporter
  4. Producer
  5. Importer
  6. Description and HS Classification of the Good
  7. Origin Criteria
  8. Blanket Period (if applicable)
  9. Authorized Signature and Date

For more information on certification requirements and the data elements listed above, please see USMCA, Article 5 and Annex 5-A, available at the U.S. Trade Representative website.                   

What is the difference between the USMCA’s Special Program Indicators (SPIs) “S” and “S+”?

SPI “S” is used for the vast majority of claims for USMCA preferential tariff treatment. SPI “S+” is used for certain agricultural goods, as well as for non-originating textile and apparel goods that are entered pursuant to tariff preference level (TPL) provisions. The Harmonized Tariff Schedule provides clarity on when “S” vs. “S+” is to be used. The most recent version of the Harmonized Tariff Schedule of the United States may be accessed via the U.S. International Trade Commission’s website at https://hts.usitc.gov/current (Chapter 98 Section 23 specifically regarding USMCA quota).

Are there exceptions to USMCA’s certification of origin requirement?

A certification of origin is not required for: (1) a non-commercial importation of a good, or (2) a commercial importation for which the value of the originating goods does not exceed US $2,500, provided the importation does not form part of a series of importations that may be considered to have been undertaken or arranged for purposes of evading United States laws, regulations, or procedures governing claims for preferential treatment. Note that even if the value of non-originating goods is less than US $2,500, a written statement certifying that the goods originate may still be required. Further, if CBP determines that an importation is part of a series of importations carried out or planned for purposes of evading compliance with preference requirements, the importer may be required to submit a certification of origin.

Can post entry claims for USMCA be made via a Post Summary Correction (PSC)?

No, just as with the NAFTA, post importation claims for the USMCA can only be made via a properly filed claim pursuant to 19 U.S.C. §1520(d). 

If importers file entry summary without claiming USMCA, will there be an avenue for them to request refunds of Merchandise Processing Fees (MPF) after entry summary filing?

No, claims for MPF exemptions on originating and tariff preference level goods under the USMCA must be made at time of entry.  The USMCA, unlike NAFTA, does not permit MPF refunds on post-importation claims.  All ACE programming updates needed to process MPF exemption and 19 USC 1520(d) restrictions were implemented in ACE on July 1, 2020. These restrictions apply to both individual and reconciliation fillings. 

Petroleum Industry

What is CBP's expectation regarding substantiation of origin in the case of imports of natural gas via pipeline from Canada and Mexico?

 USMCA’s product-specific rule of origin for natural gas, set out in General Note 11(o) of the Harmonized Tariff Schedule of the United States (HTSUS), indicates that liquefied natural gas that has been regassified within the USMCA territory is to be considered originating. Pursuant to USMCA, Article 5.2, an importer is permitted to complete a USMCA certification of origin in support of a claim for preferential tariff treatment. CBP may verify this claim through information that demonstrates the good originates in the territory of the one or more of the Parties. In some instances, CBP may require that importers demonstrate that their goods do not contain prohibited materials in accordance with USMCA’s Market Access provisions (see USMCA, Article 2.11.3). 

As with all importer obligations, importers of record are required to exercise reasonable care to ensure imported merchandise complies with all laws and regulations. Trade stakeholders may seek formal guidance from CBP pursuant to 19 CFR 177, Administrative Rulings. CBP issues binding advance rulings and other legal decisions in connection with the importation of merchandise into the United States. Advance rulings provide the international trade community with a transparent and efficient means of understanding how CBP will treat a prospective import or carrier transaction. Details about CBP rulings and how to submit a request can be found at www.cbp.gov/trade/rulings/

Will USMCA affect the monthly entry filing procedures?

No, the monthly entry filing procedures remain the same. 

What are the types of supporting documentation that would be needed to demonstrate compliance with the new Note 4 (diluent rule) to Chapter 27?

Pursuant to HTSUS, General Note 11(o), Chapter 27, Note 4, a good of heading 2709 is originating if the origin of diluent of heading 2709 or 2710 that is used to facilitate the transportation between Parties of crude petroleum oils and crude oils obtained from bituminous minerals of heading 2709 is disregarded, provided that the diluent constitutes no more than 40 percent by volume of the good. Importers should have documents kept in the ordinary course of business that CBP can review to verify compliance with this Note. 

As with all importer obligations, importers of record are required to exercise reasonable care to ensure imported merchandise complies with all laws and regulations. Trade stakeholders may seek formal guidance from CBP pursuant to 19 CFR 177, Administrative Rulings. CBP issues binding advance rulings and other legal decisions in connection with the importation of merchandise into the United States. Advance rulings provide the international trade community with a transparent and efficient means of understanding how CBP will treat a prospective import or carrier transaction. Details about CBP rulings and how to submit a request can be found at www.cbp.gov/trade/rulings/.  

Last modified: 
Tuesday, October 20, 2020 - 07:01
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