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As the United States-Mexico-Canada (USMCA) trade agreement nears, many are approaching it as just a “new NAFTA” without fully understanding the key changes that will enter into force on July 1. While there are many similarities, there are key differences and business impacts which companies must keep in mind. Many clients have expressed confusion over how this will directly impact their business.

Top USMCA questions

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Here are the top questions we’re hearing from clients:

1. Customers are just replacing NAFTA with USMCA as a header on their forms. If I’m just being asked to supply the same information as I did under NAFTA, is that okay?

Not necessarily. Even though an official USMCA certificate hasn’t been formally released, there are companies that have developed their own internal forms for their vendors to fill out. At the end of the day, companies need to make sure they can provide the nine minimum data elements detailed in the Annex 5-A of the USMCA text.

2. Can I just assume the Harmonized Tariff Schedule (HTS) code I’ve been using remains the same under USMCA?

No, HTS codes are modified and updated on a regular basis. Due to the increased level of oversight and compliance under the USMCA, you must ensure that you’re up to date on any changes or modifications — more so than under NAFTA when enforcement was more relaxed.

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In conclusion

It’s critical to understand that USMCA enforcement will go beyond just issuing a certificate as in the NAFTA days. You’ll need to validate that you’re using the right HTS codes, understanding the rule of origin changes for your specific HTS codes, and validating and documenting the country of origin for your raw materials and finished goods. By doing this, your company will be ready to comply with requests from your customers and the customs authority.

It’s critical to understand that USMCA enforcement will go beyond just issuing a certificate as in the NAFTA days.

Avoid costly future problems by getting prepared now. If you need help reviewing your HTS codes or how rules of origin impact on your business, or have questions about compliance with USMCA requirements, give us a call. We’re here to help.

For more information, watch our on-demand webinar, “Ready or not: The USMCA is coming to replace NAFTA.”

The information provided in this alert is only a general summary and is being distributed with the understanding that Plante & Moran, PLLC, is not rendering legal, tax, accounting, or other professional advice, position, or opinions on specific facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.

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