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.
Under the new USMCA / CUSMA / T-MEC, certain sectors have undergone significant changes,including: agriculture, dairy and automotive.
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.
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.
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.
We’ll comb through your manufacturing processes and work with your partners to determine if your goods meet the country of origin requirements under USMCA, CUSMA or T-MEC. Our customer service representatives (CSRs) are a single point of contact that take a hands-on approach to helping you navigate customs compliance.
Common questions you should ask to determine if you should take advantage of the USMCA, CUSMA or T-MEC agreements:
A general rule of thumb is that 60% of your goods, including labor, must originate in the U.S. (to qualify for USMCA), Canada (to qualify for CUSMA), or Mexical (to qualify for T-MEC). There are two key rules to understand when applying for a Certificate of Origin.
Refers to the country that your individual materials come from.
Refers to the labor, manufacturing and overall transformation of a product.
This is a guideline and each product has its own set of rules on how it can be considered madein a USMCA, CUSMA or T-MEC country. We recommend reviewing Annex 4B, which establishes the guidelines to determine whether your product will qualify for a Certificate of Origin.