Informed Compliance Six Months Begins in January for Auto Industry
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.
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Smith said it would be a challenge for companies to change production or administrative processes that they've had for years and years, in the areas of the trade agreement that are different from NAFTA in the replacement, the U.S.-Mexico-Canada Agreement. CBP says that about 20% of USMCA is a change from NAFTA.
The biggest changes are in the auto industry -- and that industry accounts for nearly 30% of the total imports from Mexico and Canada, Smith said.
However, that industry will have the longest time to get its affairs in order. Technically, for a pickup truck that enters July 1, in order to qualify for the duty benefit, 66 percent of the truck by value must be made in North America, and 66% of the value of core parts, such as engines, must also originate in North America. Before that date, those figures were 62.5% and 60%. Smith said that while CBP expects that companies will only claim the benefits if they think they meet those standards, auto companies have until the end of December to understand “exactly what we require,” and then the first six months of 2021 will be a period of informed compliance.
“We will not be in a 'gotcha' mode, but we certainly want to make sure the industry is making a good faith effort to comply with the agreement,” she said.