Claims that NAFTA was ripped up or that it was just a rebranding are wrong and paying attention to the changes could mean big savings for businesses, said Dickinson Wright Cross-Border Practice Chair Dan Ujczo during a March 17 Global Chamber webinar. Ujczo said that one polymer and chemicals company he talked to saw that changes from NAFTA to the U.S.-Mexico-Canada Agreement “are going to save us $17 million.” He urged businesses that use NAFTA to convene their purchasing, accounting and either in-house customs teams or customs brokers to investigate their supply chains, because he predicted that CBP will pay closer attention to rules of origin, and he said many companies are relying on slapdash rules of origin certificates from suppliers (see 2002190028).
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 auto industry publicly asked the Trump administration not to rush into certifying readiness for the U.S.-Mexico-Canada Agreement's entry into force, given the fact that “a global pandemic is significantly disrupting our supply chains, and the industry is throwing all available resources into managing production through this crisis for our employees and for the broader U.S. economy.”
Canada's House of Commons approved the U.S.-Mexico-Canada Agreement -- called CUSMA in Canada -- by unanimous consent March 13, before adjourning until April 20 due to the coronavirus pandemic. The Canadian Senate passed it less than an hour later. Royal Assent, the equivalent of a presidential signature in the U.S., followed shortly, and the Senate adjourned as well. Now, all three countries must continue to work on uniform regulations so that they can certify the treaty is ready to enter into force. Efforts to slow the spread of the coronavirus disease COVID-19 may slow that process, because the countries also have to evaluate the progress toward fulfilling commitments, such as setting up labor courts in Mexico and getting new rules of origin processes in place. Once that certification is issued, NAFTA will be replaced on the first day of the third month after the announcement.
An update to the Congressional Research Service's report on rules of origin notes that some in the trade community believe that more restrictive rules of origin, such as those that will be part of the NAFTA rewrite for autos, raise compliance costs for traders and may lead companies to avoid using the free trade agreement because the rules are so onerous. Because of those critiques, Congress may want to consider that in future FTAs, the report said.
International Trade Today is providing readers with some of the top stories for Feb. 18-21 in case they were missed.
The Canadian Parliament is moving the successor to NAFTA along, so that a March ratification vote is still looking likely, news from Canada says. While the U.S.-Mexico-Canada Agreement will be reviewed by the agriculture, natural resources and industry/science/technology committees, not just the trade committee, the other committees only have until Feb. 25 for that review, a report from ipolitics said.
The effort to give Congress more say on Section 232 tariffs that has stalled so far is not broad enough to ensure that erratic tariffs are not levied, according to experts who spoke during a Feb. 5 briefing held by Rep. Stephanie Murphy, D-Fla., a Ways and Means Committee member who has hosted trade sessions three times in the last few months. No other members of the committee responsible for trade attended, but Rep. Jim Cooper, Rep. Donna Shalala and Rep. Jim Costa, all Democrats, listened for at least part of the session, in addition to many Hill staffers and some lawyers, diplomats and industry representatives.
In his State of the Union address, President Donald Trump touted a “groundbreaking new agreement with China” without alluding to the work yet to get done in phase two, and said replacing NAFTA was a promise he kept. “Unfair trade is perhaps the single biggest reason that I decided to run for President,” he said, according to a White House transcript. “Six days ago, I replaced NAFTA and signed the brand-new U.S.-Mexico-Canada Agreement into law.” Trump “also promised our citizens that I would impose tariffs to confront China's massive theft of America’s jobs,” he said. “Our strategy has worked. Days ago, we signed the groundbreaking new agreement with China that will defend our workers, protect our intellectual property, bring billions and billions of dollars into our treasury, and open vast new markets for products made and grown right here in the USA.”
International Trade Today is providing readers with some of the top stories for Jan. 27-31 in case they were missed.
The many complicated “provisions” for implementing the U.S.-Mexico-Canada Agreement on free trade plausibly means July 1 is the “absolute earliest” date it can “enter into force,” Nicole Bivens Collinson, international trade expert with Sandler, Travis, told a Sports & Fitness Industry Association webinar Jan. 29. President Donald Trump signed USMCA’s enabling legislation into law on Jan. 29 (see 2001290035), saying the agreement “contains critical protections for intellectual property, including trade secrets, digital services and financial services.”