Will NAFTA’s Replacement Impact Your Small Package Shipping?

The United States, Mexico, Canada Agreement (USMCA) will soon go into effect, replacing the North American Free Trade Agreement (NAFTA) that has governed the trilateral trade bloc in North America since 1994. All three countries have now submitted the formal notification of their ratification, and the new agreement will come into force on July 1, 2020.

This is a hard transition date, meaning that shipments that arrive in the US, Mexico, or Canada on July 1 will follow USMCA regulations. So what does this mean for your small package shipping environment?

If you’re shipping packages between these three countries, USMCA regulations may require new data elements in order to clear customs and receive the appropriate duty treatment. There are several key changes that differentiate the USMCA from NAFTA. For specifics on the details, check out the links at the end of this overview.

Certificate of Origin

The USMCA does not require a specific certificate of origin document like NAFTA does. A claim for preferential tariff treatment under the USMCA requires nine minimum data elements on an invoice or separate documents that describes the originating goods with sufficient detail to enable their identification. The claim must also be accompanied by a specific statement, signed and dated by the certifier.

Minimum Value Thresholds

While the U.S. threshold remains at $800USD, there are new de minimis value thresholds for shipments into Canada and Mexico. The de minimis is the price threshold below which fewer or no taxes are charged on a shipment. These thresholds are different for both duties and taxes, so make sure you know the new rates and how they apply to your normal shipments.

Auto & Dairy

There are new economic growth and market access requirements for the automotive and dairy industries.

Under USMCA, 75% of auto content and components must be manufactured in one of the USMCA countries to attain a zero-tariff rate.

The agreement also increases market access to Canada for certain U.S. dairy products and introduces new tariff rate quotas to allow more dairy imported to Canada duty rate.

Exemptions for Low-Value Shipments

Thankfully, the USMCA provides that there is no certification of origin requirements for shipments value below $1,000 USD or its equivalent in currency as established by the importing USMCA country. A written statement certifying the goods will still be required.

For details on how the agreement might affect your shipping, you can read compliance guidelines at the U.S. Customs and Border Protection website at www.cbp.gov. The USMCA in full can be found on the Office of the United States Trade Representative’s website at www.ustr.gov.