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Reading USMCA effective on July 1st, 2020- how importers benefit from it?

2020 is an election year. I see a lot of effort from all candidates, especially Trump. Actually i pretty enjoy his reality shows throughout the year. The way he talks politics is, quite laughable, sometimes in a good way and sometimes in a bad way.

Well, as a businessman in his nature, let us exam what kind of potential benefits brought us in a newly effective USMCA trade agreement. The terms of this agreement will accompany US Importers for about 16 years, so it better to be a good deal for us. >.<

  • Significant protection for digital trade and intellectual property

The trade agreement includes new provisions to deal with the digital economy, such as prohibiting duties on things like music and ebooks, and protections for internet companies so they’re not liable for content their users produce. This is not existing in NAFTA ever because the digital trade is not quite popular during that time. USMCA is actually the first U.S. free trade agreement with a digital trade chapter, creating a strong foundation for the expansion of trade and investment in innovative digital products and services.

  • Stronger protection for intellectual property

The deal extends the terms of copyright to 70 years beyond the life of the author (up from 50). It also includes 10 years of regulatory data protection for biologic drugs. Both 3 country comes into the same agreement in this deal that stronger protection is needed to fight against counterfeit goods.

  • Encourage auto manufactures jobs back to U.S Base

Mexico is known for the cheap labor force, that is why all the major auto plants are built in Mexico to save the labor cost. USMCA ruled that 40 to 45 percent of automobile parts must be made by workers who earn at least $16 an hour by 2023 to be qualified USMCA preferential tariff treatment. Mexico agreed to pass new labor laws to give greater protection to workers, including migrants and women. As a result, Mexico will not be able to supply cheap labor, causing major auto companies may shift back to the U.S base to hire local workers.

In addition, the auto rules of origins increase from 62.5% to 75%. This will increase U.S. jobs in the automotive sector by incentivizing production in the United States and North America.

  • Easier access to import/ export from/ to Canada and Mexico

Both Canada and Mexico raise the “de minimis” level so that U.S. businesses may export to Canada and Mexico with reduced paperwork and without paying taxes or duties

Canada: CAD $40 and less not subject to duties and taxes and CAD $40.01-$150 not subject to duties; taxes apply

Mexico: USD $50 and less not subject to duties and taxes and USD $50.01-$117 not subject to duties; taxes apply

United States: USD $800 and less (no change) 

  • U.S importers get to exercise "Reasonable Care" to certify the country of origin

To claim USMCA preferential tariff treatment, U.S importers, exporter, and producer, any party now is able to make the country of origin claim. To make such a claim, you do not need to get a specific form, just to make sure you declare the necessary 9 elements in the commercial invoice or in a separate sheet.

CBP is currently is working on a lot of changes for a smooth transition from NAFTA to USMCA, if you have specific questions, you may refer to the resources below

Maya Kamar, Director, Textiles, and Trade Agreements Division at email FTA@CBP.DHS.GOV.

Questions regarding the USMCA automotive certification submission process for Labor Value Content certification, Steel certification, and Aluminum certification can be directed to the USMCA Center email at USMCA@CBP.DHS.GOV.

The USMCA Implementing Instructions – June 30, 2020 The USMCA Implementation Act (Public Law No: 116-113) The USMCA Agreement, Final Text USTR Federal Register Notice on USMCA Alternative Staging Regimes for Automotive Imports - 85 FRN 22238, April 21, 2020 CSMS #43197567 - USMCA Post-Importation Claims and MPF Processing

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