Canada-United States-Mexico Agreement (CUSMA) also known as USMCA

On November 30, 2018, Canada, the United States and Mexico signed the new Canada-United States-Mexico Agreement (CUSMA), on the margins of the G20 Leaders’ Summit in Buenos Aires.

What does it mean for importer:

• 1. Increased de minimis thresholds for non-originating content

TO CANADA -Express shipments only

Duty-free up to C$150

Tax-free up to C$40

• New provision for treatment of “recovered materials”

Recovered materials that come from one of the signatory countries will qualify as originating when they are used in remanufactured goods.

• Where non-originating material is used in the production of a good, certain things may be counted as originating for RVC

CUSMA/ USMCA also introduces changes to regional value content (RVC) calculations. Although the new agreement uses the same two methods as NAFTA to calculate RVC — net cost or transactional value — there are some differences. Under CUSMA, non-originating material may be counted as originating, depending on the value of the processing, and the value of the originating material used in the production of the non-originating material.

• Updated provision on accumulation

• New provision on sets, kits and composite goods

• Updated provision on transit and transshipment Under the CUSMA/ USMCA, an originating good that is transported outside the territories of the parties will retain its originating status if the good (1) remains under customs control in the territory of a non-Party; and (2) does not undergo an operation other than unloading; reloading; separation from a bulk shipment; storing; labeling or marking required by the importing Party; or any other operation necessary to preserve it in good condition or to transport the good to the territory of the importing Party. The NAFTA text did not expressly require a good to remain under customs control while in the territory of a non-Party in order retain its originating status, though this concept is included in US Customs and Border Protection’s NAFTA regulations. This additional requirement was also included in the TPP.

• Certificate of Origin

• Importers, exporters and producers can issue certifications based on actual knowledge or reasonable reliance following the below criteria:
• No specific format; can be included in invoice or any document
• Cannot be rejected for minor errors or discrepancies
• If issued in non-Party may require certification separate from invoice
• Actual knowledge or reasonable reliance
• Corrections to certifications
• Recordkeeping
• Verifications
• Penalties and prior disclosures
• Bases for rejection: (i) fail to meet rule of origin; (ii) insufficient information; or (iii) failure to respond to Request for Information or consent to visit

• New enforceable labor provisions

• Automobiles

Automobile rules of origin (ROO) requirements mandate that a certain portion of an automobile’s value must come from within the governed region. In NAFTA, the required portion was 62.5 percent. The USMCA (CUSMA) increases this requirement by 12.5 percentage points, to 75 percent of the automobile’s value.