NAFTA vs. USMCA, CUSMA, T-MEC: Understanding Rule Changes on Duty

Effective July 1, 2020, USMCA effectively replaces NAFTA (North American Free Trade Agreement) and is known as CUSMA in Canada and T-MEC in Mexico. ​

As an exporter, you can ship your to products across North America without paying duty if you have a Certificate of Origin stating your product has been made in a USMCA, CUSMA or T-MEC country.

Under the new USMCA / CUSMA / T-MEC, certain sectors have undergone significant changes,including: agriculture, dairy and automotive.  

Certificates of Origin under NAFTA don’t apply to USMCA, CUSMA or T-MEC.  

Unfortunately, Certificates of Origin that were approved under NAFTA are not accepted under USMCA, CUSMA or T-MEC. NAFTA Certification verified that goods met the rules of origin under NAFTA, but the new trade agreements have different rules of origin and therefore, different certification is required. Importers and exporters will need updated Certificates of Origin stating their products have been made in a USMCA, CUSMA or T-MEC country.  

What are your responsibilities as an importer or exporter?  

The USMCA, CUSMA or T-MEC Certification must be signed in accordance to the guidelines of Annex 4B, in order to ship your products duty free across North America. It’s important to review the updated rules to ensure your products have an updated Certificate of Origin.  

If you are audited by U.S. or Canadian Customs and a mistake is found, they can retroactively review all your documentation. They’ll want to see a paper trail of where everything was manufactured and the value of goods and if they find additional errors, they can inflict penalties, fines and additional audits. We foresee Customs doing more audits now that updated rules are in place and strongly recommend having your CUSMA Certification updated. 

USMCA, CUSMA and T-MEC Certification Basics: How to qualify  

It’s difficult to know if something is made in a USMCA, CUSMA or T-MEC country because there are often many components that go into a final product and these components can come from all over the world. There’s a common misconception that for something to be considered Made in Canada, every piece of it needs to be made on Canadian soil and by a Canadian manufacturer, but this isn’t the case. You can import parts from outside of the country and still have a product that’s considered Made in Canada.  

Let’s use a t-shirt as an example. If you import a t-shirt from Bangladesh and put your company logo on it, the t-shirt is not considered Made in Canada even though you’ve added to the final product. If you import a roll of cotton from Bangladesh and you transform the cotton into a tshirt in Canada, the tshirt will be considered made in Canada. 

JORI Logistics provides two services to ensure importers and exporters are customs compliant and aren’t paying more duty than they have to.