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USMCA

CHANGE IS HERE.

The question isn’t whether change is coming to North American trade. It’s whether you’re positioned to thrive in this new environment.

WHAT’S NEW

Certification of origin

Exporters are no longer required to complete a formal certificate of origin. Certification of origin can be achieved using informal documentation, such as commercial invoices, and can be completed by the importer, exporter or producer. Certification documentation under USMCA must be kept for a period of no less than five years.

De minimis

The threshold within which low-value goods can enter each country duty-free has increased. The de minimis thresholds under the USMCA are: Canada – $150 CAD for customs duties and $40 CAD for taxes Mexico – $117 USD for customs duties and $50 USD for taxes United States – $800 USD.

Intellectual property

Copyrights terms are extended from 50 years to 70 years after an author’s death. Canada has a transition period of 2.5 years on terms of protection for copyright.

Sunset clause

The terms of USMCA will remain in effect for a period of 16 years, at which time the parties can choose to revisit and/or renegotiate terms, or withdraw from the agreement altogether. However, after six years, the term of USMCA’s sunset (16 years) can be revisited and potentially extended if the parties feel doing so would be beneficial.

Automotive

70% of all steel, aluminum, and glass used in the production of the automobile must originate in North America.

Part content will be divided up into core, principal, and complementary parts with content requirements of 75%, 70%, and 65% respectively.

Quotas totaling 2.6 million Canadian and Mexican vehicles (well above the current 1.8 million) were established the USMCA.

Total North American content of a vehicle must equal 75% (up from 62.5%).

40% of an automobile and 45% of a light truck must be produced using an average labor wage of $16/hour.

Quotas of $32.4 billion on Canadian auto parts imports and $108 billion on Mexican auto parts imports were established in the USMCA.

Podcast: USMCA and the auto sector

Learn how the auto industry is preparing for the implementation of the agreement, the challenges inherent in meeting the new rules and the imminent deadline. Listen to the podcast.

Podcast: USMCA and the auto sector

Learn how the auto industry is preparing for the implementation of the agreement, the challenges inherent in meeting the new rules and the imminent deadline. Listen to the podcast.

Dairy

The restrictions on the import of U.S. ultra-filtered milk into Canada have been removed.

U.S. producers will have access to an additional 3.6% of Canada’s dairy market.

Canada’s dairy supply management system, which places limits on foreign imports is maintained.

Steel and aluminum

The United States maintains the right to impose tariffs under Section 232 of the Trade Expansion Act of 1962, which authorizes the president to impose tariffs on the grounds of national security.

A side letter was signed as part of the USMCA to provide Canada and Mexico with a consultation period of 60 days before Section 232 tariffs could be applied on Canadian or Mexican goods.

If the United States imposes Section 232 measures, the side letter guarantees an annual exemption from such measures for 2.6 million Canadian passenger vehicles and US$32.4-billion-worth of Canadian auto parts.

Light trucks are fully exempted from any Section 232 measure and do not count against the annual exemption on 2.6 million passenger vehicles.

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