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    Canadian Government to Ratify the USMCA

    January 22, 2020 – The Canadian government will introduce and unveil legislation in Parliament to ratify the United States-Mexico-Canada trade deal during the week of Jan. 27, 2020. Canada is moving forward on ratifying the trilateral agreement, known as USMCA, with the United States and Mexico. The USA ratified the USMCA earlier this month on 16 January 2020, which was passed by the U.S. Senate. U.S President Trump is expected to sign the agreement sometime in the coming weeks.

    Canada is to ratify the revamp of the 26-year-old North American Free Trade Agreement (NAFTA) that includes tougher rules on labor and automotive content. The agreement cannot take effect until it has been ratified by all three-member nations.

    For Canada, the USMCA is referred to Canada-US-Mexico Free Trade Agreement (CUSMA). For Mexico the agreement is referred as T-MEC.

    Once ratified by all three countries the agreement may come into force on the 1st day after the 90-day period. We anticipate that we may see the agreement may come into force before June 2020.

    Highlights on upcoming changes.

    • NAFTA certificate – replaced with a Certification of Origin (not a certificate of origin)
    • Automotive sector rules – 70% of components must be manufactured in Canada, Mexico or the US.
    • Agriculture and Dairy Products – New market access in the form of tariff rate quotas (TRQ)
    • Chapter 19 – Trade remedies and related dispute settlement
    • Intellectual property – updated with obligations on copyright and other related rights,
    • Rules of Origin – Annex 4B product specific rules of origin and automotive rules
    • De Minimus Rules –
      United States $800 USD.
      Mexico $117 USD for customs and $50 USD for taxes.

    Canada $150 CAD for customs and $40 CAD for taxes.

    Under the new De Minimus rule for Canada here is how the duties and taxes will apply.

    • Goods Shipped by Courier* to Canada from the United States or Mexico
      a) Goods valued at $40 and less – No duty or GST/HST/PST payable.
      b) Goods valued at more than $40 up to and including $150- No duty payable. GST/HST/PST payable.
      c) Goods valued at more than $150 up to and including $3300 – Duty and GST/HST/PST payable. Declaration of origin not required for goods valued at US$1000 or less. Simplified origin declaration for goods valued over US$1000.
      *Definition of courier as defined in the Courier Imports Remission Order
    • Goods shipped, other than by courier, to Canada from the United States or Mexico
      a) Goods valued at $20 and less – No duty or GST/HST/PST payable.
      b) Goods valued at over $20 – Duty and GST/HST/PST payable.
    • Good Shipped by Courier to Canada from a Country other than the United States or Mexico
      Goods valued at $20 and less – No duty or GST/HST/PST payable.
      Goods valued at over $20 – Duty and GST/HST/PST payable.
    • Goods Shipped to Canada, other than by Courier or Post, from a Country other than the United States or Mexico.
      All goods – Duty and GST/HST/PST payable

    The Office of the United States Trade Representative (USTR) and the Canada’s Dept of Finance advises that there will be no transition period to meet the new requirements for rules of origin. When NAFTA sunsets the new rules will take effect immediately providing a 3-month window for companies to ensure parts qualified under NAFTA will meet the new rules under USMCA.

    Functional guidance will also be provided from Dept of Commerce and Finance as well as Customs administrations for implementation on the new agreement.

    More Information

    Visit our Livingston dedicated webpage containing more details – From NAFTA to USMCA
    and also Amendments to The New Canada-United States-Mexico Agreement (CUSMA) Agreement

    View the Global Affairs Canada website on Canada-United States-Mexico Agreement (CUSMA)

    Contact your Livingston account representative should you have any questions.

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