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NAFTA Ends June 30, USMCA to Start July 1

Wednesday, May 13, 2020

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United States Trade Representative Robert Lighthizer recently issued a press release indicating that the United States will implement the US-Mexico-Canada Agreement (USMCA) starting July 1. As a consequence, the North American Free Trade Agreement (NAFTA) will effectively end June 30.

While importers who have not claimed NAFTA on their July 2019 through June 2020 shipments will remain able to file post-entry claims for refunds based on NAFTA until June 30, 2021, the announcement means that starting July 1, 2020, importers must be ready to claim USMCA by using the newly created "S" special program indicator (SPI) on their U.S. Customs and Border Protection (CBP) 7501 forms if they wish to avoid paying duties and merchandise processing fees (MPF) on their imports at the time of entry. To be ready to use the S SPI, importers and their suppliers in North America must familiarize themselves with the new USMCA rules of origin and certification requirements. 

Similarly, producers and exporters who certify their goods as NAFTA eligible will also need to familiarize themselves with the USMCA rules of origin and certification requirements since downstream users and purchasers of their products, not just importers in another USMCA country, will also depend upon the data that producers and exporters provide to them. While in some sectors the rule of origin changes are minimal or there is even no change, the upcoming July 1 start date still requires software, processes, and trade compliance functions to adapt in order to be able to make valid USMCA claims. In other sectors, particularly the automotive industry, which is already hard hit from the COVID-19 pandemic, the changes in the rules of origin are enormous.

So far, CBP has published an Interim Implementation Instructions guidance document, for the USMCA since it is not anticipated that USMCA implementing regulations will be ready/published by July 1. The guidance document provides some more details around CBP's view of how it will implement the USMCA, but much remains to be done.

Although questions on implementation will remain even after the July 1 start date, Roll & Harris LLP is offering a 90-minute, hands-on webinar that will guide traders through the new USMCA requirements and, more importantly, on the steps that they need to take now in order to be ready as possible for the July 1st USMCA start date.  

For more information and answers to your questions, contact Roll & Harris LLP.

Digital export documentation for Certificates of Origin, Certificates of Free Sale, and information on manufacturing practices are available through the Greater Irvine Chamber’s online processing service.

Category: Economic News, International Trade

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