USMCA | Everything You Need To Know About NAFTA 2.0 - Part 4

The US - Canada - Mexico agreement’s implementation is less than three weeks away on July 1, 2020. If you are just joining us, this is the last of a 4-part continuation of the previous 4-part series.

In Part 1, Part 2 and Part 3 we explained how in the previous series we primarily focused on rules that are the same for all countries, and where different, the information was specific to the rules associated with entries into Canada, under CUSMA. In these parts we have focused on the rules associated with entries into the United States under USMCA. 

Before we dive in one last time - prior to the implementation date that is - below is a quick recap of the series to date, and we will of course keep you up to date as it unfolds.

Part 1 Covered:

• Aren’t The Rules The Same For Each Country?
• What Can I Do In Preparation For The Transition To USMCA?
• How Will USMCA Impact My Day-To-Day Operations?

Part 2 Covered:

• Can I Make A USMCA Claim Without A Declaration?
• Who Can Complete The USMCA Declaration?
• What If I Am Not The Producer Of The Goods?

Part 3 Covered:

• Can I Make A USMCA Claim For Reduced Duties After The Entry Has Already Been Filed?
• Is There A Provision Under USMCA For Imports To Be Completely Duty And Tax Free?
• USMCA - Highlighting Notable Differences

Auto Manufacturing

• A total of 75% of a vehicle's parts are to be made in one of the three USMCA territories (an increase from 62.5% under NAFTA). Part content will be divided into three parts, Core 75%, Principal 65% and Complementary 60%
• 40% of automobile parts and 45% of light truck parts must be made by a worker earning at least $16.00USD ($20.91CAD, $304.31MXN) an hour
• 70% of all steel, aluminum and glass used in the production of the automobile must originate in North America. (The definition of steel was amended to require that the steel must be “melted and poured” in North America in order to qualify for the duty exemption. This amendment will not take effect until seven years after implementation of USMCA (2017))

Textile Rules Of Origin

The treatment of garment sets under each agreement are as follows:

NAFTA

The set was only required to meet the rule of origin change for the item that determined the classification for the set.

USMCA

Each of the items in a set must satisfy the rule of origin change unless the non-originating good in the set does not exceed 10% of the value of the set.

Labor Laws

Under USMCA Labor rules are strengthened to create a more level playing field for American workers. 

This rule allows for the inspection of factories and facilities that may be in violation of workers’ rights.

Allows for the enforcement of these laws by way of additional duties or penalties on products made at those facilities.

Continue reading on:

Part 1

Part 2

Part 3

How To Fill Out A Certification Of Origin Under The CUSMA/USMCA/T-MEC