The following information is believed accurate at time of publication, and may be subject to change.
Q: I see different acronyms and references to the new agreement. Why is that?
A: In Canada, the formal name of the new agreement is CUSMA (Canada; United States; Mexico Agreement). In the US and Mexico it is USMCA (United States; Mexico; Canada 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 Canada that is CUSMA.
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 CUSMA with respect to Covid-19, there has been significant lobbying on the part of 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 CUSMA Rules of Origin may be used?
A: The short answer is “No”. NAFTA Rules will expire at midnight and CUSMA 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 CUSMA. 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 6 years. NAFTA Certificates will cease to be valid for all shipments released after midnight on the day CUSMA is implemented.
Q: Will NAFTA Certificates of Origin continue to be valid under CUSMA?
A: No, all qualifying imports under CUSMA will need to be certified under the new Agreement and the former NAFTA Certificates will have no validity under CUSMA. 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 CUSMA?
A: Contrary to NAFTA, there is no prescribed format required under CUSMA 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 CUSMA 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: Yes. No certification is required if the value of a single importation does not exceed US$1,000 or the Canadian equivalent. Low value limits increased from CA$20 to CA$40 for taxes and to CA$150 for duty.
Q: What changes to dairy imports are there under CUSMA?
A: The protection of the Canadian dairy industry that has historically been in place begins to change with the implementation of CUSMA. Restrictions on the importation of U.S. ultra-filtered milk into Canada have been removed; Imports of U.S. origin dairy products including milk, butter, cheese etc, will start to become duty free and U.S. producers will have access to an additional 3.6% of Canada’s dairy market.
Q: What changes to automotive imports are there under CUSMA?
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 CUSMA. 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 CUSMA 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 CUSMA 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 CUSMA?
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 CUSMA. Certification of Origin must be provided to CBSA 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 CUSMA?
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 CUSMA?
A: No. It is recommended that you apply for new rulings under CUSMA for the product(s) you previously decided required a ruling.
Q: What are the de minimus rules and definition?
A: The fixed amount’s are:
(i) for the United States, US$800,
(ii) for Mexico, US$117 for customs duties and US$50 for taxes, and
(iii) for Canada, C$150 for customs duties and C$40 for taxes.
For these shipments, each Party shall allow for the periodic assessment and payment of duties and taxes applicable at the time or point of importation.
Q: What does it mean regarding “Express Shipments” when referring to the way goods are shipped under the de minimus rules?
A: CBSA has clarified that for the purpose of the Agreement, express shipments are those that are carried by a courier. The definition of a courier is included in the Courier Imports Remission Order and states that a courier means a commercial carrier that is engaged in scheduled international transportation of shipments of goods other than goods imported by mail.
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 CUSMA/USMCA 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 CUSMA 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 CUSMA, 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. CUSMA/USMCA is a brand new trade agreement between the three North American countries. While some of the NAFTA rules of origin are the same under CUSMA, 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 Administrative Monetary Penalties (AMPS) issued by CBSA against the importer.
For further questions, or clarifications, please contact your Farrow Client Partnering Representative.