CUSMA / USMCA / T-MEC
The new Trade Agreement for North America
On July 1, 2020, the new CUSMA/USMCA/T-MEC replaces the existing NAFTA free trade agreement for imports into Canada, USA and Mexico. The one agreement has 3 names – one for each of the participating countries:
Canada – CUSMA
Canada-United States-Mexico Agreement
USA – USMCA
United States-Mexico-Canada Agreement
Mexico – T-MEC
Tratado entre Mexico, Estados Unidos y Canada
When the current NAFTA ceases to exist, will you be paying duty on your US, Canada or Mexico origin goods? On July 1, 2020, NAFTA is no longer in effect and the new CUSMA/USMCA/T-MEC rules are in play.
Here's what you need to know:
NAFTA Certificates of Origin are no longer valid as proof of origin on future shipments
New Rules of Origin determine whether your goods will now qualify under the new agreement
New origin certification is required to benefit from the preferential, duty free status of CUSMA/USMCA/T-MEC
If you do not have new certifications in place on July 1, 2020 – duty will be applicable on all goods previously duty free with NAFTA!
To take advantage of the duty free status that CUSMA/USMCA offers, your goods must qualify as “originating” in the territory (applying the CUSMA/USMCA Rules of Origin) and you must have valid certification in place.
Valid certification requires 9 data elements and a signed statement of verification for each commodity. Certification can be completed on a single-shipment basis or with a blanket certification. The validation can be done on each commercial invoice (single-shipment basis) or with a blanket certification to cover multiple products for a 12-month validity period (similar to Blanket NAFTA Certificates).
If you require assistance in determining whether your product line will qualify under the new Rules of Origin, or if you would like assistance in managing your CUSMA/USMCA certification process, Universal can help.
Working with Universal Logistics to manage your Blanket Certifications is the best way to ensure a compliant, duty-free entry. Our Customs Consulting team offers various service options to manage, prepare and verify the certification of your products while maintaining the origin status and validity period for each commodity in your Client Tariff Resume. Also, the review can be completed in advance rather than in the rush of a live-shipment environment.
Blanket Certification Management Services
For each Certification, Universal Logistics will perform the following services:
- Conduct a cursory review to ensure all fields have been completed
- Enter revised CUSMA/USMCA expiry date for each product into your Client Tariff Resume
- Claim preferential status (i.e. duty free) at time of import, on all eligible shipments, until Certification expires
- Provide a copy of Certification to Canada Border Services Agency (CBSA) upon request
For each Certification, Universal Logistics will perform the following services:
- Prepare Blanket Certification based upon information currently in your Client Tariff Resume
- Forward Certification directly to your vendor for review and confirmation of accuracy
- Obtain endorsed/authenticated Certification from your vendor
- Enter revised CUSMA/USMCA expiry date for each product into your Client Tariff Resume
- Claim preferential status (i.e. duty free) at time of import, on all eligible shipments, until Certification expires
- Provide a copy of Certification to Canada Border Services Agency (CBSA) upon request
- Enrol Client in an annual renewal process by providing a Certification Status Report – a worry-free management tool to account for all Blanket Certifications
Certification of Origin
Unlike NAFTA, the new agreement does not have a specific Certificate of Origin template to certify goods as qualifying. Instead, there are 9 Data Elements which may be included on any document by the importer, exporter or producer as the Certification.
Unlike the NAFTA Certificate of Origin, there is no specific form for the USMCA / CUSMA / T-MEC certification, however, documentation must be provided that contains 9 minimum data elements. If you wish to use a Certificate of Origin template, please see the buttons below for forms for your reference and use. If you use an alternate format, please be sure to include all 9 required data elements.
- Which party is making the certification (importer, exporter, or producer)
- Certifier details: name, title, address, phone#, email
- Exporter details: name, address, email, phone
- Producer details: name, address, email, phone
- Importer details: name, address, email, phone
- Description and HTS#
- Origin Criteria
- Blanket period (if applicable)
- Signature and date, including the following statement: “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 proving such representations, and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification.”
Although the new agreement does not have a formal Blanket Certification form, Universal Logistics has prepared a Certification template for your use:
Certification of Origin & completion instructions
Updated Rules of Origin
To determine if your NAFTA originating goods will still qualify for preferential, duty-free status under CUSMA/USMCA you must compare the old NAFTA Rules of Origin to the new Rules of Origin. If the Rule of Origin under CUSMA/USMCA is the same as what it was under NAFTA, and you have not made any sourcing/material changes, then your goods will continue to qualify. If the Rule of Origin has changed, however, you must undertake a full review to determine if your goods qualify.
FAQ (Frequently Asked Questions)
No, there is no transition period from NAFTA to CUSMA/USMCA/T-MEC – NAFTA expired June 30, 2020 and CUSMA/USMCA/T-MEC took effect July 1, 2020.
The Importer, Exporter or Producer of the good(s) may certify the goods as originating. The “certifier” must attest to the information declared and be able to provide supporting documentation to Customs upon request (e.g. bill of materials, component certification of originating status, etc.). Although, the importer may certify the goods as being originating under CUSMA/USMCA/T-MEC, the required supporting documentation must be on hand to demonstrate that the goods are originating.
No, if you have an advance origin ruling under NAFTA it will not be valid under the new agreement. New advance rulings will be required based on the new Rules of Origin specific to CUSMA/USMCA/T-MEC.
Yes, even after CUSMA/USMCA/T-MEC takes effect, NAFTA certificates are still required for audit purposes and must be kept in accordance to record keeping requirements (6 years, plus the current year).
The following sectors are most affected with changes relating to tariff shift rules and regional value content calculations:
- Motor vehicles
- Agriculture products
- Dairy products
- Chemicals and paints
- Textile products
On July 1, 2020, the value threshold for courier LVS entries into Canada increases from $2,500.00 CAD to $3,300.00 CAD.
De minimis is a Latin term meaning “negligible amount” and is used in the Agreement for both Regional Value Content calculation for non-originating materials (within the Rules of Origin) and also as a measure to omit duty/tax payment for low value shipments.
De Minimis threshold for non-originating content
- Under the Regional Value Content calculation, the de minimis rate of 7% under NAFTA has been increased to 10% under CUSMA/USMCA/T-MEC. This provision allows for up to 10% of a product’s components/materials, that do not undergo a required tariff shift, to be disregarded and still qualify as originating
De Minimis threshold to relieve duty and tax for low value shipments
- The Agreement also provides a provision for low value shipments entering a participating country to be exempt from the payment of duty and/or tax (subject to exclusions):
- Canada: up to $40 CAD for duty and taxes; over $40.00 to $150 CAD are subject to GST tax but not duty for goods imported under the Courier Imports Remission Order (CIRO)
- USA: although the agreement provides for a $100 USD limit, current U.S. regulations have the de minimis set at $800 USD for both duty and fees
- Mexico: up to $50 USD for duty and taxes; over $50.00 to $117 USD are subject to taxes but not duty
