The North American Free Trade Agreement was historic in its scope and benefit to Canada, The US and Mexico. If the New NAFTA (CUSMA) is considered historic it will be for affirming the value of a decades old free trade agreement in a time of increased protectionist rhetoric.
After 20 + years and countless political attacks, the value of NAFTA to North American countries has been officially recognized (if not yet officially confirmed).
Jet Worldwide provides parcel delivery solutions to NAFTA countries taking advantage of LVS, ECCF and parcel import processes to Mexico.
The CUSMA facilitates the movement, release and clearance of good via a simplified framework and standardized customs procedures. Trade facilitations includes fewer clearance formalities for “express shipments” valued under CA$3,000 (to Canada) and US$2,500 (to the USA and Canada).
View video: Taking advantage of North American Free Trade
The origin‑certification process (that is no longer a prescribed form) is to include a set of data on the shipping paperwork (most commonly including on the invoice).
The data elements required at a minimum to claim origin underCUSMA:
- Importer/exporter or producer (indicate which is certifier)
- Name and address of certifier or
- Name and address of exporter or
- Name and address of producer
- Name and address of importer (if known)
- Description and harmonized system (HS) tariff classification of the good
- Specific origin of criteria
- Blanket period (certification is valid up to 12months in the case of multiple shipments of identical goods)
- Authorized signature and date
Check out theCanadian Border Services Agency (CBSA) page that describes the new requirements for more information and an example of a valid CUSMA certification of origin.
Read More: Useful information regarding certification of origin
What is NAFTA/ USMCA/ CUSMA / T-MEC?
Before going a little bit deeper, I thought it useful to first layout the fundamental premise of the agreement. Trade agreements can be incredibly complex and NAFTA is no exception.
The basic of concept of the NAFTA/ CUSMA is simple:
Anything grown (agriculture), raised (cattle, poultry) or manufactured in North America (Mexico, Canada and the US) can be entered duty free to other North America countries.
What is it about the name?
To score the political points, the name was changed from NAFTA (you cannot appear to win by essentially updating an old agreement so a name change was needed).
- The USA: USMCA (putting US first)
- Canada : CUSMA (putting Canada first)
- Mexico: T-MEC (putting Mexico first and reducing the USA and Canada letters from 2 to 1. (E= Estados Unidos)
The fight over the new name reflects the reality of emotionally charged politics that can over ride the pragmatism of this trade agreement. For simplicity, we prefer to call it simply "New NAFTA."
Read More: Country from where goods were shipped versus country of origin
CUSMA/USMCA Shipping to Canada from the USA and Mexico
Key provisions of CUSMA for parcel shipping to Canada via courier* include:
- Duty free and tax free entry for most US and Mexican parcels valued under CA$40
- Duty free entry for most US and Mexican parcels valued under CA$150
- Simplified "Certification of Origin" for shipments valued under CA$3,300*
For low value shipments (under CAD $3,300 to Canada) a certifying statement added to the commercial invoice or any shipping document
“I hereby certify that the goods covered by this shipment qualifies as an originating good for the purposes of preferential tariff treatment under USMCA/T-MEC/CUSMA.”
This statement can be included on the commercial invoice as long as shipment values fall below these thresholds shown the graphic below.
Different duty assessment for goods shipped via USPS versus Courier (see above regarding new USMCA/CUSMA duty free thresholds): Shipments shipped via USPS to Canada are assessed duty and taxes for shipments over CA$20 (versus the levels mentioned above for items shipped via parcel carriers/ courier):
- CA $20 (around US$14.75) and under: duty and tax free
- Above CA $20duties and taxes apply
What is historic is that NAFTA has been reaffirmed.
The big deal about the New NAFTA agreement is that it renews the old NAFTA.
While are still some jitters about final ratification, there is also a sense of relief that the core NAFTA provisions have been preserved.
The architects and visionaries of the original NAFTA should be congratulated.
After over 2 decades and despite extreme political rhetoric, the value of the agreement has been affirmed by a new agreement that maintains NAFTA's core principles.
The "biggest and best" part about the new NAFTA agreement is that it upholds the core principles of the original agreement!
New NAFTA: What Changes?
Here are some notable changes in the New NAFTA:
- The U.S. gained more access to the Canadian dairy market, similar to what was agreed by Canada in their European and Asian trade pacts ( Europe/CETA Asia/ CPTPP).
- The Chapter 19 dispute settlement system was preserved.
- Agreement to not subject digital sales to duties and agreeing to some data localization requirements.
- The de minimis thresholds express shipments to Canada increased (but the Canadian and Mexican de minimis levels remain much less than the $800 US American de minimis*).
- There is a standard agreement on regulatory co-operation subject to dispute settlement, which goes beyond CPTPP and CETA.
- The 2010 Canada-U.S. Agreement on Government Procurement remains in effect
* Note on USA de minimis: The $800 de minimis level allows duty free importation of direct on-line international orders to the US market. This level applies to Express Consignment Clearance processes only (Part 128 of the Code of Federal Regulations).
Jet Worldwide can assist international companies to gain cross border e-commerce access via Section 321 processes to the USA, LVS clearance in Canada and high volume parcel import processes to Mexico.
From Commodities to online orders:
To facilitate the movement of e-commerce parcels, the USMCA allows simplified certifying statements o of origin.
Political Rhetoric and Economic Reality
Virtually all leading economist say that free trade helps the world. The more a country is open to free trade, the stronger its economy is likely to be. Of course, the theory of free trade also comes up against the stark reality of lost jobs and the demise of entire industries and fear of unfair competition.
The undisputed benefit of NAFTA was confirmed by the supported by opposing political parties in all three countries and despite nationalist rhetoric to the contrary.
American companies becoming a Canadian Importer or Record
Canada’s non-resident importer program enables United States exporters to obtain a business number and act as the “importer of record.” Being able to act as the importer of record removes the burden of customs clearance from the Canadian customer and can facilitates the sale.
North America: A Special Free Trade Zone
Canadians, Mexicans and Americans citizens generally do not think of themselves as "North Americans" but sharing a closer a connection to your neighbours seems like a good thing.
For over 2 decades, NAFTA has enabled stronger cultural, civic and political connections between all three countries. And taking a step of confirming the value of NAFTA, no matter the name, is a great thing for North America.
