The United States–Mexico–Canada Agreement (USMCA) entered into force on July 1, 2020. This marks the beginning of a new trade chapter in North American trade relations. The USMCA is designed to offer a more balanced and reciprocal approach to trade while promoting freer market forces and what many believe is a more fair set of trade rules than its predecessor, the North American Free Trade Agreement (NAFTA), which became effective on January 1, 1994.
To coordinate implementation of the USMCA, the U.S. Customs and Border Protection (CBP) recently opened the USMCA Center. The USMCA Center is staffed with operational, legal, and accounting experts and will collaborate with Canadian and Mexican customs authorities to ensure a smooth and consistent transition from NAFTA. The Center will provide comprehensive guidance to internal U.S. and external stakeholders, especially during the initial implementation phase. Brenda Smith, Executive Assistant Commissioner of CBP’s Office of Trade, is quoted as saying, “The Center is integral to successful implementation of the USMCA, as it will focus on outreach, training, and developing new regulations and procedures, while providing consistency and transparency to the trade community.”
Many in the business community welcome the market certainty the USMCA brings and believe its modernization of the 26-year old NAFTA agreement will support mutually beneficial trade leading to more robust economic growth in North America. In particular, many U.S. businesses hail the intellectual property and trade secret protections, which are the strongest of any prior free trade agreements and have broad protection against theft, including from state-owned enterprises.
For the first time in a U.S. trade agreement, there is a dedicated section on Small- and Medium-Sized Businesses or Enterprises (SMEs). The USMCA establishes a committee on SME issues that creates a framework for ongoing dialogue. Other provisions that are beneficial to SMEs include:
- Creating an informal shipment level of $2,500, so that express shipments under that amount may be expedited due to a reduced paperwork burden
- Raising the de minimis level for Canada for express shipments to exempt from duties and taxes to C$40-C$150 (the lower level was increased from C$20)
- Establishing the de minimis level for Mexico up to US$50 exempt from duties and taxes, and raising it up to US$117 duty-free for express shipments.