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USMCA In Effect As Of July 1, Replaces NAFTA

The United States-Mexico-Canada Agreement (USMCA), which replaces NAFTA, took effect on July 1, 2020. While many rules established under NAFTA remain in effect, there are new rules that companies need to comply with, noted Richard Mojica, Riyaz Dattu and Eduardo Sotelo, three lawyers who authored “Five Takeaways for Corporate Counsel on the USMCA.”

Some highlights of the article include:

Product-specific Rules. In many respects, the product-specific rules of origin, which are used to determine whether a product qualifies for preferential tariff treatment, are unchanged. But, there are some important exceptions, particularly the changes to the rules of origin for automobiles and auto parts, which include labor value content and steel and aluminum content requirements.  Other commodities, including, but not limited to, chemicals and textiles, also have different rules of origin.

Certification of Origin. Unlike the previously used NAFTA Certificate of Origin, USMCA requires a certification of origin, which has no prescribed format, but requires certain data elements to be set forth (e.g., a product description, the contact details for the parties to the transaction, the applicable origin criteria).

The USMCA certification of origin may be completed by an importer, however “it should be kept in mind that an importer who certifies must be prepared to substantiate the claim (i.e., prove that the products covered by the certification ‘originate’ in the USMCA territory).”

Uniform Regulations. The customs administrations of the U.S., Mexico and Canada issued Uniform Regulations to help the trade community comply with USMCA, including the free trade pact’s new origin procedures and rules of origin.

Meanwhile, U.S. Customs and Border Protection (CBP) launched the USMCA Center—a virtual resource center staffed with trade experts from the three USMCA countries—to provide guidance to the private sector.

Action Plan. Finally, the article notes that companies should begin reviewing their current NAFTA compliance policies and procedures and make any changes or improvements necessary to ensure compliance with USMCA requirements.

For instance, companies’ recordkeeping systems is another area that should be reviewed to make sure origin-related documents can be quickly produced in the case of customs inquiries

USMCA Enforcement. The authors noted that, “U.S. Customs officials have stated the agency will grant importers a six-month grace period before issuing penalties for noncompliance with the USMCA’s requirements.”

Source: Law.com

CBSA Issues Regulatory Amendments, New Regulations To USMCA

On June 26, 2020, Canada Border Services Agency (CBSA) issued Customs Notice 20-22, “The Canada-United States-Mexico Agreement’s (CUSMA), Regulatory Amendments and New Regulations Made Pursuant to the Customs Act.”

This CBSA Customs Notice contains the latest information on new regulations and regulatory amendments regarding certification of origin, proof of origin, and other requirements under the USMCA (referred to as CUSMA in Canada).

Note: The URL for Customs Notice 18-27 (dated December 27, 2018) referenced in Customs Notice 20-22 incorrectly links to Customs Notice 20-18 (dated May 2, 2020), so please be advised.  Customs Notice 18-27 can be accessed here.

Source: CBSA-ASFC.gc.ca

CBP Issues Interim Guidance For Drawback Under USMCA

U.S. Customs and Border Protection (CBP) advised the trade community not to file United States-Mexico-Canada Agreement (USMCA) drawback claims until technical changes to the Automated Commercial Environment (ACE) system are deployed.

In its CSMS #43227909 dated July 1, 2020, CBP stated the following:

  • The trade community should continue to file NAFTA drawback claims, if applicable, under NAFTA requirements.
  • Filers will not be allowed to comingle NAFTA and USMCA imports on the same drawback claim. The date of entry determines which agreement controls, not the date of claim.

Source: Content.GovDelivery.com

New Date for Sunsetting Canada OGD Release Service Options

The Canada Border Services Agency (CBSA) advises that the Agency will decommission the legacy other government department (OGD) release service options (OGD PARS [SO463] and OGD RMD [SO471]) on August 17, 2020.

CBSA extended the sunset of OGD release service options PARS and OMD several times, including most recently in March due to the COVID-19 pandemic.

Effective August 17, 2020 importers or customs brokers on importers’ behalf will be required to provide electronic Integrated Import Declaration (IID) to CBSA and nine Participating Government Departments and Agencies (PGAs) through the Single Window Initiative.

All details are available on CBSA Single Window Initiative website.

USTR Threatens New Tariffs On $3.1 Billion Worth Of European Exports

The Trump administration is considering new tariffs on $3.1 billion worth of European exports in the long running dispute between the U.S. and European Union over aircraft subsidies for Boeing and Airbus.

Retaliatory tariffs of up to 100 percent on European products, including olives, beer, gin and trucks, are among those items targeted by the U.S.

The tariffs would likely take effect in September.

The Office of the U.S. Trade Representative (USTR) is accepting comments on the proposed tariffs until July 26, 2020. Interested parties must submit comments through the online portal located here.

For more information, se Federal Register notices 85 FR 38488 and 85 FR 39661.

Source: Bloomberg.com

USTR Accepting Comments On Possible Extension Of Section 301 Exclusions

The Office of the U.S. Trade Representative (USTR) is accepting comments through July 30, 2020 on two proposed extensions of exclusions from the $16 billion action against certain goods from China under Section 301:

  • Federal Register notice 85 FR 38237 covers the second set of exclusions, which was granted in September 2019 and is scheduled to expire on September 20, 2020.
  • Federal Register notice 85 FR 38243 covers the third set of exclusions, which was granted in October 2019 and is scheduled to expire on October 2, 2020.

Comments must be submitted through the online portal https://comments.USTR.gov.

Source: USTR.gov- Request for Comments Concerning the Extension of Particular Exclusions Expiring September 2020 and October 2020.

Chinese Ports Testing Meat Imports For Coronavirus

China’s Port of Tianjin, the largest port in Northern China and the gateway port to Beijing, started testing all containerized meat and seafood imports for coronavirus in mid-June.

A spokesman for the U.S. Food and Drug Administration said the agency was aware that China was beginning to test meat and seafood imports.

However, he added that, “The FDA is not currently aware of any evidence to suggest that food produced in the United States or imported from countries affected by COVID-19 can transmit this respiratory virus.”

The Shanghai government said its customs authorities would also step up inspections of meat, seafood and fresh fruit and vegetables, but it didn’t specify if it would test for coronavirus.

No major disruptions to U.S. shipments have been reported so far, according to the United States Meat Export Federation.

Source: Reuters.com

USTR Highly Critical Of WTO, Calls It “A Mess”

U.S. Trade Representative Robert Lighthizer was highly critical of the World Trade Organization (WTO) during a hearing before the U.S. House of Representatives Ways and Means Committee in June, calling the global trade body “a mess” and petitioning for a broad reset of “outdated tariff determinations.”

Not surprisingly, Lighthizer singled out China, and said the WTO has failed to hold China accountable for unfair trade practices. He added that China should no longer be treated as a developing country given that it’s the second-largest economy in the world.

Reuters reported that Lighthizer also denounced the WTO’s Appellate Body for treating the U.S. as “the world’s greatest trade abuser,” and ruling against the U.S. in 90 percent of disputes, which he said was responsible for WTO members’ use of litigation as opposed to negotiations for resolving trade disputes.

During the hearing, the USTR also said the Trump administration is looking at reducing the current $800 de minimis threshold because it’s much higher than the duty-free threshold imposed by other major trading partners.

Therefore, “China and others are likely exploiting the high U.S. de minimis threshold to avoid paying duties” for shipments to the U.S., said Lighthizer.

Source: Reuters.com

American Beer Industry Opposed To Reinstating Tariffs On Canadian Aluminum

U.S. industry groups representing beer makers and can manufacturers are urging the Trump administration to refrain from reinstating tariffs on aluminum imports from Canada, warning that it could affect brewers’ ability to bring beer to the market.

In a letter addressed to U.S. Trade Representative Robert Lighthizer, executives from the Beer Institute, American Beverage Association, Can Manufacturers Institute, and the Aluminum Association, stated that, “Constraints on imports of aluminum from our country’s closest ally, whether in the form of a quota or a tariff, will significantly increase the cost of aluminum in this country.”

Over 60 percent of American beer is packaged in aluminum cans and bottles, and imposing tariffs or quotas on Canadian aluminum could impact the beer supply chain, according to Jim McGreevy, chief executive of the Washington D.C.-based Beer Institute.

Furthermore, the Aluminum Association noted that U.S. primary aluminum producers can only supply one-third of the material needed to satisfy aluminum demand in the U.S.

The Trump administration imposed 10 percent tariffs under Section 232 on Canadian aluminum imports in March 2018, but lifted those tariffs in May 2018, following an agreement to monitor and limit aluminum shipments.

Source: Business.FinancialPost.co

UK, EU Remain Divided Over Brexit Trade Deal

There is a chance that the UK and European Union will not reach an agreement on a Brexit trade deal before the end of the year.

Reuters reports that the UK and EU “remain far apart in negotiations” to complete a trade deal by the end of the year, and Britain is refusing to extend the deadline for a deal beyond 2020.

Leading banks have weighed in on the probability of a “no-trade-deal” Brexit, with Standard Chartered among the least hopeful.

“We think there is a 50-50 chance of a no-trade-deal Brexit,” said Sarah Hewin, chief economist at Standard Chartered. “There are big hurdles still and no one is really talking about Northern Ireland at the moment,” she said, in reference to what has become a major sticking point in previous negotiations.

James Smith, an economist at ING, thinks there is a 40 percent probability that a deal won’t be reached by the end of the year.

Societe Generale FX strategist Kit Juckes put the likelihood of not reaching a deal at 16.7 percent, but foresees the possibility of the UK proposing a “bare-bones agreement,” according to Reuters.

For its part, Commerzbank is not convinced that the UK will refuse to extend the negotiation period to reach an agreement beyond 2020. However, the bank also said that any deal between the UK and EU would be “weak with very limited reach.”

Meanwhile, a growing number of Brits say they would support staying in the European Union if they could vote again.

Specifically, the latest European Social Survey, completed in 2019, found that 57 percent of Brits said they would vote to be inside the EU, compared to 50 percent who expressed that sentiment in the 2018 survey, according to a BusinessInsider.com article.

Source: Reuters.com

Brown Marmorated Stink Bug (BMSB) Season 2020-21 in Australia and New Zealand

The Australian Department of Agriculture announce it will reintroduce seasonal import measures to manage the risk of Brown marmorated stink bug (BMSB) during the high-risk season effective September 1, 2020. These measures will impact certain ocean exports from countries identified as target risk countries, including Canada and the United States.

The Department indicates it has closely worked with the New Zealand Ministry for Primary Industries (MPI) to ensure both Australia and New Zealand’s BMSB seasonal measures are consistent across the two countries (where possible).

For the 2020-21 BMSB risk season, heightened biosecurity measures will apply to:

  • Certain goods manufactured in, or shipped from target risk countries, and/or
  • Vessels that berth at, load or tranship from target risk countries.

The regulated goods, manufactured in or shipped from the target risk countries as sea cargo during the risk season, must be treated (fumigated) by an approved treatment provider unless otherwise indicated in the BMSB standards.

Visit Seasonal measures for BMSB – Australian Government Department of Agriculture for full details of the Australian DAWR requirements, including treatment conditions for target high risk or target risk goods, break bulk shipments or containerized goods.

Visit BMSB Requirements – Biosecurity New Zealand for full details of the New Zealand Biosecurity requirements.

Visit Seasonal measures for BMSB – Australian Government Department of Agriculture for full details of the Australian DAWR requirements, including treatment conditions for target high risk or target risk goods, break bulk shipments or containerized goods.

Visit BMSB Requirements – Biosecurity New Zealand for full details of the New Zealand Biosecurity requirements. 

Trade Shows/ Conferences

Trade Shows/Conferences Location Date
2020 IWLA Virtual Convention & Expo https://www.iwla.com/convention/ Aug 5 – Sept 2
American Apparel & Footwear Association’s Virtual : Global Supply Chain & Trade Conference https://www.aafaglobal.org/AAFA/Events/Event_Display.aspx?EventKey=GSCT2020 Aug 25 – 27
 ASCM Connect New Orleans, LA Sept 13 – 15
ProcureCon Indirect West Scottsdale, AZ Sept 21-23
(Virtual) CSCMP Edge https://cscmpedge.org/website/14708/ Sept 20 – 23
Supply Chain USA Virtual https://events.eft.com/3pl/ Oct 7 – 8
Transportation Marketing & Sales Leadership Conference Chicago, IL Oct 20 – 23
Home Delivery World Philadelphia, PA Oct 29 – 30

Given the current environment, certain information in this Trade Broadcast may change from the date of distribution. Please note the disclaimer below.

2020 UPS® Tradenomics Webcast Series

All webcasts are complimentary

Register for the series here

August 26: U.S. Export Compliance: New U.S. Government rules that could impact your export business

Time: 3:00-3:45PM ET

UPS Customs & Trade Compliance and STTAS, a UPS company, will help explain the potential impact of recent changes to U.S. Dept. of Commerce (EAR) export rules

Register for the webinar here

September 24: Brexit Update – Status of a UK-EY Trade Agreement

Time: 11:00-11:45AM ET (Note the morning start in the US)

This year of transition, 2020, is focused on putting together a trade deal between the EU and the UK for implementation in 2021. We will address the current status of the deal and how it might impact trade upon implementation.

Register for the webinar here

 Especially for our Canadian customers, but available to all:

September 15: Canada’s CARM: CBSA Assessment and Revenue Management

Time: 3:00-3:45PM ET

CBSA’s CARM project is a multi-year initiative designed to modernize and streamline the collection of tax and duty for goods imported into Canada. We will review the program and what is means for the Canadian importer.

Register for the webinar here

Note: dates subject to change


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