Clearit.ca's Blog on Customs Brokerage and News Updates
In preparation for CUSMA (or USMCA/T-MEC), we’ve put out many resources to help Canadians trade professionals — or all North Americans in general — adapt their practices. While the shift away from NAFTA caused some anxiety in the industry, it’s a trade agreement that proves to have some clear advantages over the previous one.
For those just becoming aware of this agreement, CUSMA is a free trade agreement between Canada, the United States, and Mexico. It was enacted on July 1, 2020 — coincidentally, in the thick of the COVID-19 pandemic. In Customs Notice 20-14, CBSA details the implementation of the agreement along with contact info for more information.
If you’d like to read the previous materials we released on the topic, you can catch up here:
Toronto-based law firm Blake, Cassels, and Graydon released a tool kit for trade professionals highlighting 7 key changes to watch out for: “Trade Tool Kit for A Successful Transition from NAFTA to CUSMA”.
Below, we will be doing an overview of the 7 changes and contextualizing the information for importers.
- Originating goods benefit from free trade: If the goods do not meet the stipulated rules of origin (made up of 10% of the value, cost of the goods, weight and size of the goods), it may still qualify for duty-free treatment.
- Updated Certificate of Origin rules: in the past, the Certificate of Origin was provided by the exporter, but under CUSMA, this process is more flexible and can be claimed by the importer. The format of which this can be submitted has only been made less rigid. We go into the changes more deeply in our piece here: Recommended Reading: CUSMA: Rules Of Origin & Certifying Origin.
- Advance rulings from the custom authority: All of the Advance Rules issued under NAFTA by CBSA are no longer under effect. Companies must apply for CUSMA Advance Rulings to continue to benefit from this provision. For more information, here is the CBSA website.
- Increased De Minimis threshold: CUSMA enacted separate thresholds for duties and taxes — increasing both. Duties went from $20 to $150 and taxes went from $20 to $40. These dollar amounts are in CAD.
- More flexible release & accounting measures: the threshold for qualifying as an LVS is now at $3,300 from $2,500 for commercial imports and express shipments. There will also be certain commitments on CUSMA parties to maintain a Single Window System that allows importers to submit documents online.
- Changes in government procurement: Instead of the bilateral procurement agreements that were previously in place, Canada, The US, and Mexico have agreed that relying on other existing commitments, following the World Trade Organization Agreement on Government Procurement.
- Adapted dispute resolution framework: The Free Trade Commission has been removed from the process. Under NAFTA, an arbitral panel was very difficult to establish, as parties were able to reject the formation of a panel. Now almost all of the obligations under CUSMA can be disputed on a state-to-state settlement system.
It’s been a little over a month since CUSMA has been enacted in full force, and the trade community of North America is still getting accustomed to the changes. That being said, the changes made will benefit most Canadian importers! Especially if they put forth the work to take full advantage of the agreement.
Teaming up with an experienced customs broker will help importers get the full range of benefits, or at a minimum, create a clear framework to move towards that. These agreements were made to support the organizations within the 3 countries, so getting a great grip of CUSMA will help their bottom line. To contact a customs broker with FTA expertise, click here.