April 9, 2020 – Customs Notice CN20-14 Implementation of the Canada-United States-Mexico Agreement (CUSMA) issued on April 3, 2020 by Canada Border Services Agency (CBSA) provides information on the changes to the Customs Tariff.
The Deputy Prime Minister, Chrystia Freeland also issued a statement on Canada’s ratification of the new NAFTA.
CN20-14 provides information on the changes that will occur on implementation of the Canada-United States-Mexico Agreement (CUSMA) and summarizes the requirements to benefit from the CUSMA’s preferential rates of duty, once the CUSMA enters info force.
Implementation of the Canada – United States – Mexico Agreement (CUSMA)
The CUSMA’s implementing legislation, Bill C-4, received Royal Assent on March 13, 2020. Upon entry into force of the Agreement, except for a few agricultural goods, all qualifying imports into Canada from a CUSMA country will be customs duty free.
More information regarding the CUSMA and the text of the agreement can be found on the Global Affairs Canada website.
Regulatory amendments and new regulations made under the Customs Act as a result of the CUSMA’s implementation will be announced in a separate customs notice. Here below are some of the changes:
Tariff Provisions
Entitlement to the CUSMA’s preferential tariff treatment is determined in accordance with the following provisions of the CUSMA: the rules of origin set out in Chapter 4 Rules of Origin, the origin procedures set out in Chapter 5 Origin Procedures, provisions of Chapter 6 Textile and Apparel Goods, and paragraphs 8 through 10 of the Tariff Schedule of Canada in Annex 2-B.
CUSMA’s preferential tariff treatments are: United States Tariff (UST – tariff treatment code 10) and the Mexico Tariff (MXT – tariff treatment code 11).
The Mexico-United States Tariff (MUST – tariff treatment code 12) used under the North American Free Trade Agreement (NAFTA) cannot be used for the CUSMA, which has a simplified preferential tariff treatment provision without differing start dates for tariff commitments as there were in the NAFTA.
All eligible goods imported under the CUSMA are eligible for either the United States Tariff or the Mexico Tariff. The MUST will remain in place in the interim, for adjustments pertaining to importations that occurred while the NAFTA was in effect.
Proof of Origin
The required proof of origin is referred to as a certification of origin and consists of a set of minimum data elements contained in Annex 5-A of Chapter 5 of the CUSMA, that may be placed on an invoice or any other document. The certification of origin may also be completed and submitted electronically including with an electronic or digital signature. Additional information concerning CUSMA’s certification of origin is contained in Article 5.2 of Chapter 5 of the CUSMA. Information concerning the electronic submission can be found in Memorandum D11-4-14, Certification of Origin Under Free Trade Agreements.
Importers, exporters or producers of CUSMA-eligible goods may complete the certification of origin. Importers are required to have the certification of origin in their possession at the time that the importer makes a claim for preferential tariff treatment.
Exemption from the requirements of 35.1 (1) of the Customs Act
If the benefit of preferential tariff treatment under CUSMA is claimed for locomotives classified under heading No. 86.01 or 86.02, or railway freight cars classified under heading No. 86.06 of the List of Tariff Provisions set out in the schedule to the Customs Tariff, the importer and owner of the goods are exempt from the requirements of subsection 35.1(1) of the Customs Act with respect to those goods if they are transported overland from the United States into Canada.
Refunds
An application for a refund under paragraph 74(1) (c.11) of the Customs Act may be made within four years from the date the goods were accounted for under subsections 32(1), (3), or (5), in respect of goods that were imported from the United States or Mexico on or after the date of entry into force of CUSMA.
For additional details on Advance Rulings, Proof of Origin, shipment requirements review CN20-14.