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USMCA: Frequently Asked Questions

Home News USMCA: Frequently Asked Questions

Q: I see different acronyms and references to the new agreement.  Why is that?

A: In the USA and Mexico, the formal name of the new agreement is USMCA (United States; Mexico; Canada Agreement).  In Canada, it is CUSMA (Canada; United States; Mexico Agreement).  The other references, including New NAFTA and NAFTA 2.0 are informal.  Confusing for sure but there is only one new agreement and in the US that is USMCA.

Q: When will it become effective?

A: July 1st, 2020.

Having said that, given the current situation in all three countries which have signed the USMCA with respect to Covid-19, there has been significant lobbying on the part of the industry to delay implementation or initiate a phase-in period. At the present time, the new agreement is slated to take effect July 1st, 2020.

Q: Will there be a transition period when either NAFTA or USMCA Rules of Origin may be used?

A: The short answer is “No”.  NAFTA Rules will expire at midnight and USMCA Rules will apply immediately thereafter on the day of implementation.  The date and time of release of shipments will determine which Rules apply.

Q: What happens to NAFTA?  Can my NAFTA Certificates still be used?

A: NAFTA will cease to remain in effect upon the implementation of USMCA.  However, NAFTA will continue in place for all goods that were imported under that Agreement which may be subject to audit or other verification policies.  Records pertaining to NAFTA must be retained for 5 years.  NAFTA Certificates will cease to be valid for all shipments released after midnight on the day USMCA is implemented.

Q: Will NAFTA Certificates of Origin continue to be valid under USMCA?

A: No, all qualifying imports under USMCA will need to be certified under the new Agreement and the former NAFTA Certificates will have no validity under USMCA.  NAFTA Certificates will be required to claim refunds of duty for goods imported while NAFTA was in effect but not claimed at the time of importation (1-year time limit is in effect).

Q: Is there a new Certificate of Origin Form for USMCA?

A: Contrary to NAFTA, there is no prescribed format required under USMCA but there is nothing to prevent use of a form either. Farrow has developed a form for the convenience of our clients that may be used as an option but there is no legal requirement. Certification of Origin may be provided in various ways, including a statement on invoices or any other document. The Farrow USMCA Form can be found here.

Q: If there is no Form how will certification work?

A: The requirement is for a set of data elements as follows: 1. Identify the organization (including name, title, full address, telephone number and e-mail address) certifying the goods (may be the Importer; Exporter; or Producer); 2. Exporter / Producer / Importer names; 3. Description of the originating goods in sufficient detail to enable identification, including Tariff Classification; 4. Origin Criteria; 5. Blanket Period (if applicable); 6. Authorized Signature and Date plus a specific statement that must be used verbatim as follows: “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 providing such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification”.

Q: What are the signature requirements?

A: Certification of Origin statements must be signed by authorized individuals.  Electronic signatures are acceptable.

Q: Is there any exemption from Certification requirements?

A: Certification is not required if the value of a single importation does not exceed $1,000 USD.

Q: Can an importer complete a Certificate of Origin under USMCA?

A: Yes, under NAFTA, a Certificate of Origin must be completed and signed by the exporter of the goods.  Only importers who possess a valid Certificate of Origin signed by the exporter may claim preferential tariff treatment for originating goods. However, USMCA provides that an importer may complete a certification of origin and claim preferential tariff treatment on the basis of the importer having information, including documents that demonstrate that the good is originating.

Q: What changes to automotive imports are there under USMCA?

A: This will continue to be complex and specific questions need to be considered. Changes include the total North American content of vehicles requirement increased from 62.5% to 75% in order to qualify under USMCA.  Other changes apply to the average labor wage; steel, aluminum and glass used in the production of vehicles must be 70% N.A. origin.

Q: Are there changes to the Rules of Origin?

A: Generally speaking the Rules of Origin under USMCA remain the same as under NAFTA.  However, this is a new Agreement and there are some changes and it is recommended that you treat the re-qualification of goods under USMCA as if you were qualifying them for the first time.

Q: Under NAFTA, changes to goods of not more than 7% of the total value could be disregarded when considering qualification.  Is this the same under USMCA?

A: In technical terms this is called “De Minimis” and is retained in the new agreement.  However, the percentage has been increased to 10%.

Q: Will it be necessary to provide Certification of Origin for each shipment?

A: No, that is not a requirement under NAFTA and will not be a requirement under USMCA.  Certificates of Origin must be provided to USCBP only upon request.  One significant difference is that when Certification is provided on invoices it will, by default, be provided on a shipment by shipment basis.

Q: Will the Tariff Treatment Codes used to identify NAFTA Preference be replaced for USMCA?

A: The New Tariff Treatment Codes have not yet been advised but it is almost certain that new codes will be assigned.

Q: We have a NAFTA Origin Determination Ruling for a product we still import.  Will that ruling still be valid under USMCA?

A: No. It is recommended that you apply for new rulings under USMCA for the product(s) you previously decided required a ruling.

Q: What expiry date should be shown on blanket certificates?

A: We recommend using December 31, 2020 as it has become an established business practice during the years of the NAFTA agreement for importers, exporters and vendors to use a calendar year expiry process.  Some of the new rules will be phased in over three years beginning January 1, it will be easier to manage your requirements by calendar year.

Q: Where can I find instructions on how to complete a USMCA/CUSMA certificate of origin?

A: Instructions on how to complete the certificate are included on the second page of the Farrow generated certificates.  If further assistance is needed (for instance, determining origin criteria), Farrow Consulting is able to help as a chargeable service.

Q: Do I need to provide a USMCA certificate to continue receiving preferential duty treatment on qualifying U.S., Mexican or Canadian made goods?

A: Under NAFTA, parties were required to use a prescribed Certificate of Origin form (completed by the exporter). Under the USMCA, parties “need not follow a prescribed format”. A certificate may be provided on an invoice or “any other document” that has the required elements.

Yes. USMCA/CUSMA is a brand new trade agreement between the three North American countries.  While some of the NAFTA rules of origin are the same under USMCA, there are many that have changed.  For example, there are new rules for specially defined mixture.

The law states that Importers are required to have the certification of origin in their possession at the time that they make a claim for preferential tariff treatment. Failure to do so could result in recordkeeping penalties issued by CBSA against the importer.

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