July 1, 2021 marked one year since the United States-Mexico-Canada Agreement (USMCA) took effect, replacing the North American Free Trade Agreement (NAFTA). And on that day, international trade attorney, Andrea Ewart, caught up with Tamica Solomon, Acting Director of the USMCA Center created by the US Customs and Border Protection (CBP) agency to support implementation of the Agreement.
Tamica explained that the Center was established to serve as a one-stop shop for information about the USMCA. With trained personnel at the Center and Ports, the USMCA Center’s staff has been equipped to address questions and concerns at the local level. Their website (www.cbp.gov/usmca) is replete with information and resources, including a 24-hour chatbot.
Trade stakeholders are being kept abreast about the implementation process as USMCA completes the transition from NAFTA. At the time of the interview, the USMCA had already trained more than 2000 customs brokers, trade attorneys, traders, freight forwarders and producers in the three countries. The Center continued training during the six-month grace period provided to facilitate a smooth transition from NAFTA to the USMCA, giving traders time to adjust to the new requirements. Additionally the USMCA Center will continue to support traders for the next 3 to 5 years.
The Acting Director of the USMCA Center shared with Andrea key differences between USMCA and NAFTA:
- The USMCA will be reviewed by the three parties every six years and sunsets after sixteen years, allowing the U.S. to renegotiate the provisions with its Mexican and Canadian partners.
- To qualify for duty-free treatment, 75% of automobile parts must be built in North America. This is an increase from NAFTA’s 62.5% Regional Value Content requirement.
- Under a new Labor Value Content requirement, new automotive goods will receive preferential treatment only if the workers were paid a minimum of US $16.00 per hour.
- USMCA’s Certification of Origin requirements allow for any format to be used so long as it contains the number of data elements set out in the USMCA’s Annex 5-A and the CBP’s implementing instructions.
- Under the new USMCA Agreement, Canada will give increased access to the American dairy products as a result of higher import quotas.
- Provisions on e-commerce and digital trade, which did not exist in NAFTA include a prohibition on the application of custom duties to products distributed electronically; the use of electronic authentication and signatures; and limitations on governments’ ability to require disclosure of confidential computer source code and algorithms, allowing digital suppliers to protect their competitiveness.
Tamica expressed confidence that the USMCA is a good replacement for NAFTA and encouraged traders and other interests to reach out to the USMCA Center for further information. Additionally, you may contact us to learn more and to discuss how we can support you in effectively making the transition to the new US-Mexico-Canada Agreement. DevelopTradeLaw LLC in Washington DC provides customs and trade law consulting services. The interview can be heard in its entirety here.