News Alert

Good-bye NAFTA, hello USMCA

Toronto, October 3, 2018

The recently announced new trade agreement between Canada and the U.S. has a new name, United States-Mexico-Canada Agreement (USMCA), and some new provisions, but it is not a new deal.  Both countries had "wins" and both made concessions.

Canada's Foreign Affairs Minister, Chrystia Freeland, and U.S. Trade Representative, Robert Lighthizer, praised the agreement, saying it will "strengthen the middle class and create good, well-paying jobs and new opportunities for the nearly half billion people" in North America.

Here are the highlights:

• To qualify for preferential treatment, automobiles will require 75% North American content, up from the existing 62.5% (by 2020, in all countries);
• At least 30% of the workers producing a vehicle must earn $16.00 USD per hour (by 2020); by 2023, this raises incrementally to 40% (in all countries);
• The U.S. is introducing a quota system to protect Mexico and Canada from any future tariffs applied to vehicles and parts.  Each country has a "side letter agreement";
• Canadian supply management continues to exist but U.S. dairy producers will have greater market access in Canada;
• Chapter 11 is gone; Chapter 19 (now Chapter 31) remains for dispute settlements;
• U.S. steel and aluminum tariffs remain in place;
• Chapter 7 introduces new de minimis levels for all three countries: U.S. and Mexico, at least $100 USD; Canada, at least C$150 for customs duties and C$40 for taxes;

The new deal is expected to come into effect late-2019 or 2020.  Importers should obtain valid NAFTA Certificates of Origin for 2019 to ensure there is no lapse in preferential trade status prior to the new deal taking effect.

Read the entire agreement.

For more information please call Brian Rowe, Director – Customs Compliance & Regulatory Affairs at (905) 882-4880, ext. 213.