We’re closer than ever before to seeing the U.S.-Mexico-Canada Agreement (USMCA) get implemented. USMCA has been ratified by Mexico, overwhelmingly approved by the U.S. Senate, and signed by President Trump. Canada’s parliament just started reviewing it, but will likely endorse it. Additions and changes to the USMCA improve supply-chain efficiencies by embracing a more modern, systematic approach and use of information technology that wasn’t present in the old North American Free Trade Agreement (NAFTA).
USMCA incorporates new and updated sections on topics such as intellectual property rights, enforcement, digital trade and labor rights based on the original NAFTA. The agreement addresses many existing cross-border issues and red tape.
USMCA introduces the concept of a “single window” for the filing of documents with multiple government agencies. The original NAFTA did not address any such systematic requirements among the parties. USMCA not only requires each party to have a single-window system, it mandates that any person using the system must be able to view the status of their goods, including which agency is holding up release. It encourages the parties to use World Customs Organization standards, and develop systems that are like those of the other party. And it requests that the parties “streamline its single-window system, including by adding functionality to facilitate trade, improve transparency, and reduce release times and costs.”
Another improvement is an increase to the de minimis amount, granting exemption from customs duties and expedited release of shipments based on minimum documentation or a single submission of information. For Canada, the de minimis levels went from C$15 to C$40, no duty or taxes payable and C$150, and no duty payable but subject to taxes (GST, HST, DTA, etc.). For Mexico, there is no change in the original amount of US$50, no duty or taxes payable but adding a level of up to US$117, and no duty payable but subject to taxes (GST, HST, DTA, etc.). For the U.S., there was no change to the current US$800 level that was put in place back in 2016. This means small-parcel shippers will be able to clear more low-dollar shipments faster, and small businesses will get a break.
The agreement also emphasizes the need for uniform treatment of imports across ports and border crossings. It states that each party shall apply its customs procedures related to the importation, exportation, and transit of goods in a manner that is “transparent, predictable, and consistent throughout its territory.” This includes application of customs procedures, including determinations on tariff classification and customs valuation of goods. As many U.S. importers know, one port might treat a tariff classification or item value differently than another, so the agreement emphasizes the need for ports to work together in the event of a discrepancy.
The agreement almost eliminates the need for any hard-copy documentation to be presented for customs clearance. For instance, electronic document submissions will be treated equally with paper documents. Parties receiving electronic copies of shipment documentation are to “minimize the extent to which paper documents are required.”
There are many other areas of the USMCA that have been controversial in terms of their benefits, but setting out modern standards to assist the flow of information for customs clearance will benefit all shippers, especially small businesses, as well as supply-chain service providers. The next few years should see improvements in these areas for the USMCA trading bloc.
