The U.S., Mexico, and Canada are faced with many issues relating to security, environmental concerns, trade, immigration, transportation, and infrastructure. In 2018 we posted a few blogs about the new/proposed or modified Free Trade agreement now known in the US as US, Mexico, Canada Agreement or USMCA (Canada and Mexico have different names for this agreement).
Now is the time to review the Free Trade Agreement that is open for discussion, NAFTA 2.0. If you have not done so yet please take the time now to understand the details that this new agreement puts forth for your business.
Let's take this time to understand what changes in this agreement so that we can learn about what works for us or what might need to change.
One of the first items that we need to understand is that many of the provisions are the same as in the original agreement; for instance, the preference criteria under the rules of origin. However, many new provisions contained were part of the negotiations of the TPP agreement (which was never approved by Congress) like digital trade, SME, and labor obligations by all parties.
A welcomed improvement to the new agreement states that no specific certificate of origin form will be needed, however certification and supporting documents are required and responsibility does shift from the previous agreement from the exporter to the importer of the goods.
In the world of post-entry work, an importer will be permitted, for up to one year, to correct any entries submitted without the preferential criteria with an adjustment to collect a refund of duties already paid. This agreement also calls out that if an importer made a mistake on their documentation, possibility claiming duty-free status when it was not eligible that Governments will not be issuing any penalties for the error, however, the importer will need to correct their data and promptly submit the required duty that is owed.
There are several other changes/modifications that this new agreement brings to businesses however taking the time to understand the new provisions will help you understand many future trade agreements as NAFTA 2.0 or USMCA will become the standard.
It is very important to understand that all parties may not be 100% satisfied at all times with an agreement, and as such, NAFTA 2.0 serves as a reminder. While we may not like all that is put forth we need to make adjustments and find a way to make this fit into our supply chain.