The USMCA, the handshake deal agreed to by Canada, the U.S. and Mexico to replace NAFTA, makes a number of changes related to customs administration processes. While it’s important to understand that the USMCA is only in the very preliminary stages of implementation and still requires extensive review and ratification by all parties’ legislative bodies, it’s helpful to know what the current text of the agreement put forward with respect to customs administration.
De Minimis
De Minimisis the threshold within which goods may be imported into a country free of duty. Within the USMCA, de minimisthresholds were raised from $20 to $150 for Canada and from $50 to $117 for Mexico. Therefore, the de minimisthresholds proposed by the USMCA are as follows:
- Canada = C$150 for customs duties and C$40 for taxes
- Mexico = US$100 for customs duties and US$50 for taxes;
- United States = US$800
It is important to understand that for imports into Canada, goods valued between CAD$40.01 and CAD$150 will still be subject to sales tax. Similarly, goods imported into Mexico valued from US$50.01 to $117 will be subject to jurisdictional taxes.
It is also important to note the new de minimisthreshold for Canada only applies to shipments facilitated by express carriers. Shipments brought in through Canada’s federal postal service (Canada Post) will continue to be subject to the de minimisthreshold under the North American Free Trade agreement (CA$20). Therefore, any item shipped via Canada Post with a value that exceeds $20 will be subject both to duties and taxes.
To read the full text of changes related to de minimuswithin the current text of the USMCA, please click here.
Origin Certification
Importers seeking preferential duties under the North American Free Trade Agreement (NAFTA) are obligated to provide a formal NAFTA certificate that verifies the imported goods meet NAFTA’s regional content requirements and qualify for preferential duty. The certificate provides customs officials with specific information in a very prescribed format.
However, the USMCA has changed the certification process in a manner comparable to recent free trade agreements signed internationally. Under the USMCA, the certification process is less formal, allowing importers to use transactional documents, such as invoices, as proof of origin. The lack of formality, however, does not reduce the prescriptive nature of the information required. Furthermore, the current text of the USMCA does not outline specifically which transactional documents would be acceptable or unacceptable as proof of origin. Livingston will continue to seek clarity on changes to certification and provide additional updates when they become available.
Self-Filing (Mexico)
The USMCA has provided updates to how imports into Mexico can be administered. Mexico has long required that all imports be facilitated by a licensed customs broker based in Mexico. The USMCA, however, establishes that all three parties to the agreement must provide the opportunity for individual and institutional importers to self-file their customs paperwork. In addition, all parties must provide, online and in detail, the process by which a party may self-file customs entries.
However, it is important to note the customs-entry process remains very complex, particularly in Mexico where customs requirements and processes differ significantly from the U.S. and Canada.
These changes are only proposals at this point and much could change between today and the time of the USMCA’s implementation. However, if in the interim you have any questions or require clarification on customs changes outlined within the USMCA, please contact your account representative or email [email protected].