President Donald Trump on June 30 released the annexes to Presidential Proclamation 10053, including provisions to implement the U.S.-Mexico-Canada Agreement, scheduling it for publication in the July 1 Federal Register. Among the annexes are new General Note 11 to the Harmonized Tariff Schedule, which lays out USMCA rules of origin. The proclamation also adds new special program indicators (SPIs) “S” and “S+” throughout the tariff schedule for goods eligible for USMCA treatment. These changes take effect July 1.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
The Labor Department is seeking comments on its interim rules for how automakers can establish that enough of their vehicles were produced with $16/hour labor. Stakeholders have until Aug. 31 to comment.
CBP Executive Assistant Commissioner for Trade Brenda Smith told reporters June 30 that CBP staffers “are very well-prepared to implement the agreement” that takes over from NAFTA at midnight.
Mexican companies may struggle to comply with U.S.-Mexico-Canada Agreement provisions due to uncertainty caused by the COVID-19 pandemic and confusion about certificate of origin provisions, two former Mexican government officials said. Some Mexican businesses may opt to forgo the preferential treatment under USMCA, which takes effect July 1, and instead pay most favored nation rates on imports until they better understand the agreement’s provisions, the former officials said.
CBP is issuing an interim final rule to implement rules of origin provisions for the U.S.-Mexico-Canada Agreement that will take effect July 1. The interim rule creates new Part 182 to the customs regulations for USMCA, and amends existing NAFTA regulations under 19 CFR Part 181 so that they no longer apply to entries on or after July 1. Most of 19 CFR Part 182 is vacant, but CBP says it will fill out the regulations over the coming year. Comments on the interim regulations are due Aug. 31.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, celebrated the switchover from NAFTA to the U.S.-Mexico-Canada Agreement -- coming July 1 -- but also talked about a trade irritant with Canada and one with Mexico in a conference call with reporters June 30.
The process to submit written complaints for either the rapid response mechanism or for violations of the U.S.-Mexico-Canada Agreement's labor chapter will be published in the Federal Register June 30, and the Office of the U.S. Trade Representative is soliciting comments on the submission procedures. Comments are due by Aug. 15.
CBP issued the following releases on commercial trade and related matters:
Although lawmakers thought eliminating the NAFTA certificate would be helpful, some importers are more comfortable with structure, so there will be a certificate template available on CBP's trade agreements web page “as soon as possible,” Adam Sulewski, USMCA Center project leader at CBP, said during a conference call June 29. He reminded importers, “We can accept those required nine data elements in any form.”
CBP on June 29 posted a series of fact sheets on upcoming requirements under the U.S.-Mexico-Canada Agreement that are set to take effect July 1. The fact sheets highlight key differences between USMCA and NAFTA, including in the areas of customs duties, temporary admission, treatment of customs duties, most favored nation tariff rates, indirect materials and intermediate materials. Others cover USMCA provisions on regional value content, accumulation, recovered materials, sets and kits, accessories, remanufactured goods and fungible materials. The fact sheets should be considered guidance documents for informational and advisory purposes only, and are not intended to have legal or binding effect, CBP said.