Free Trade Agreements: Top 5 Mistakes On USMCA Claims

Free Trade Agreements: Top 5 Mistakes On USMCA Claims

The United States Mexico Canada Agreement (USMCA) free trade agreement replaced NAFTA as of July 1, 2020. Some refer to it as NAFTA 2.0, but it’s not quite that simple. There are several changes that affect everyone involved in the import and export of goods to and from the U.S., Canada, and Mexico. Being mindful of these distinctions will prevent errors that could cost you later.

Here are the top 5 mistakes on USMCA claims for U.S. imports.

1. Assuming That Goods That Qualified Under NAFTA Still Qualify Under USMCA

Let’s imagine it’s 2022. Salsa Sauces Ltd. has been importing a series of products that qualified for duty relief under NAFTA. They suddenly find themselves in the middle of a customs audit and discover that several of these same products did not qualify under USMCA. Now Salsa Sauces has to pay back Customs for duties on two years’ worth of imports, plus interest. That’s a huge expense that could have been avoided!

The Solution: Familiarize yourself with the changes to USMCA rules of origin and the content requirements. There are experts in the industry that can help you dig in and direct you on what to look for. Never assume if it qualified under NAFTA, it still qualifies. Take the time to verify that your products meet the content requirements, and if not, there may be some changes you can make to your products that will ensure a successful USMCA claim.

2. Claims That Do Not Reflect Changes To The Preference Criterion

Under NAFTA, Wonderful Widget Co.’s goods fell under Preference Criterion A. With the changes encompassed in the USMCA, some of these same goods now fall under Preference Criterion C, and other goods come under still another criterion. Once more, this is avoidable if you verify which criterion now applies to your goods under USMCA.

Note: It is an immediate red flag to U.S. Customs and Border Protection (CBP) when importers/exporters list a Preference Criterion directed at raw materials for manufactured items. Make sure you know what you are claiming, otherwise, it demonstrates that you do not know if your goods qualify in the first place. When in doubt, consult a qualified customs broker. They can smooth the way and dispel any doubts or confusion these changes create.

3. Missing Or Incomplete Declarations

You have confirmed that your goods qualify under USMCA. You have adjusted your claim under the new Preference Criterion. You are shocked and dismayed when your claim is voided. What went wrong? Your Blanket Statement was not dated! (more on this in a minute).

Believe it or not, tiny errors like this happen all too often. CBP will void claims that demonstrate inattention to detail.

The Solution: Pay close attention to all the smaller details. This includes but is not limited to things like dates, signatures, listing the title of the person making the claim, filling in all details, and checking all relevant boxes. No need to be dinged for full duty refused because of a small technicality.

4. Blanket Statements: Incorrect Dates

Incorrectly listing dates is one of the most frequent mistakes made when importing into the U.S. under USMCA. Common dating errors include:

a. Per Shipment Documentation

  1. Forgetting to update the dates for each entry
  2. Ensuring the end date allows enough time for the entry to be finalized with CBP

b. Blanket Statements

  1. Listing too long a period. Example: 1/1/21 - 1/1/22. This is invalid. Instead, it should be 1/1/21 - 12/31/2021. Standard practice is to use a calendar year, or end 12/31 of the current year.

5. Making A Claim Too Late

Timing is important when making USMCA claims. Making a claim too late could result in paying duties and fees, even if your claim is valid.

Under NAFTA, the importer/exporter could file an amendment with CBP after entry was finalized and still be entitled to duty deferral/claim/refund, as well as a refund of the Merchandise Processing Fee (MPF). This is not the case with the USMCA free trade agreement.

The Solution: Provide your carefully crafted (and double-checked!) claim statement with your documents at the time of entry. Or better yet, before.

If you do end up submitting a claim after entry is finalized, you will most likely still be entitled to duty, but forfeit the MPF.

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About Author
Breanna Leininger

Breanna has been in the industry since 2004 and has dealt with clearances and compliance concerns for a multitude of commodities for all ports of entry and all modes of transportation. She has a Bachelors in Communications, Bachelors in Political Science & Government, is a Licensed Customs Broker as well as Certified Customs Specialist. Breanna has been asked to be the speaker in a variety of events including the BC Agriculture Show, Doing Business in the US seminar and has been a contributor to Small Business BC publications. She was recently nominated for the NCBFAA Government Affairs Conference Emerging Leaders and Mentors by the NBCBA. She participates in the Northern Border Customs Brokers Association and the NCBFAA annual conferences in Washington, DC. Breanna has a deep passion for politics, global affairs, and how communication shapes policy and international business relationships. She feels very fortunate to work in an industry that allows her to take part in how policy impacts the global economy and domestic businesses of all shapes and sizes.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.
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