July 2020
Making Sense of the USMCA
When NAFTA first went into effect on New Year’s Day of 1994, few in the importing/exporting industry would have guessed that we’d be learning the new ins and outs of a new trade agreement some 26 years later. But here we are. As of July 1st, 2020, there’s a new North American trade agreement—the USMCA (United States-Mexico-Canada Agreement). Winning wide, bipartisan support in the Capitol, the USMCA is redefining North American in a number of ways.
What does that mean for those of us in the import/export/production industries? Well, it means figuring out what’s changed, what’s the same, and what it all means. Of course, that’s a big oversimplification. Don’t worry, though. JF Moran is on top of things as usual. We’re happy to answer any questions that you have regarding the USMCA and its implications for your business practices. Read on, and please don’t hesitate to reach out with any questions that you may have.
From NAFTA to USMCA: What’s Changing?
Honestly? A lot. The goal of the USMCA is to resolve what our current administration identifies as many deficiencies and mistakes in the NAFTA model. The goal is to open markets in a more substantial way for North American farmers and manufacturers, and to cut down on the trade barriers faced by the US. In doing so, the USMCA aims to position the US, Mexico, and Canada more strategically in economic competition with the rest of the global market.
Key Provisions for Strengthening North American Trade
Okay, so a lot is changing and you know the goals of these changes. But what does the new agreement actually mean? There are several USMCA Key Provisions that you should be familiar with in the import/export/production industry.
Rules of Origin: encouraging the manufacturing of more goods and materials in the US, ensuring that USMCA benefits go to North American workers.
Goods Market Access: greater commitment for market access addressing non-tariff barriers relating to the trade of remanufactured goods and import/export licensing.
Intellectual Property: A modernized IP (Intellectual Property) chapter offers greater protection/enforcement of critical IP rights that drive innovation, economic growth, and US-based jobs.
Small Business: Small businesses have an uphill struggle that the USMCA seeks to level out. This agreement cuts red tape that allows small businesses easier access to profitable foreign markets.
Agriculture: America’s farmers need greater market access. The USMCA eliminates Canada’s unfair milk pricing and grants new access for chicken and egg exports to US poultry farmers.
Digital Trade: This new chapter is a vital modernization that contains the strongest regulations on digital trade in any international agreement—expanding trade and investment through innovation.
Labor: With the USMCA, enforceable labor standards are now at the core of our labor agreement. Expect better wages and labor conditions for workers throughout North America.
Customs and Trade Specifics
With everything new and different in the USMCA, where exactly does trade and Customs fall? There are some major points of interest that you should be aware of if you are in the import/export/production industry:
The USMCA makes many improvements in the facilitation of Customs and trade. These include an agreement by Mexico and Canada to raise their de minimis value levels for taxes/duties on express shipments of lower values. That means that certain shipments can now enter with minimal formal entry procedures required.
Exceeds past US agreements in helping to reduce costs and establish stability in cross-border transactions. This ensures that Customs officials can enforce the law with the right tools at their disposal.
Guarantees traders the opportunity to submit and receive Customs-related data/documentation through a single website, promoting automation and cutting back on delays currently common to the industry.
Demands consistency throughout all ports of entry within the US, Mexico, and Canada as relates to Customs procedures. Establishes new obligations that ensure integrity in all Customs work.
Requires publication of information from Canada and Mexico, including import/export/transit requires, and fees/charges/penalties on the Internet.
Reduced paperwork for express shipments valued below $2,500 USD.
Trade Is Complicated. New Regulations Are More Complicated.
Just remember that you are not in this alone. JF Moran specializes in global logistics, and major events like the implementation of the USMCA are what we live for. Feeling confused about the changes? Feeling anxious about compliance? Wish you could just go about your business without the hassle of navigating new terrain? Then get in touch with JF Moran today, and know that we’ll steer you right.
We’ve been family-owned and operated for the last 83 years. By the time NAFTA rolled along, JF Moran was nearly 6 decades into our history! We understand that the complexity of these new regulations may be new and daunting for you. For JF Moran? Not even close. You can count on us to put your best interests first.