It’s been three years since the Canada-United States-Mexico (CUSMA) agreement came into force, replacing its predecessor, the North American Free Trade Agreement (NAFTA). While CUSMA boasts all of the same benefits of NAFTA, politicians in all three member countries have criticized that none of the three countries is fully complying with CUSMA regulations.
The Head of the US Chamber of Commerce, Suzanne Clark, complained that “compliance is falling short” on the trade deal earlier in 2023. Both Canadian and Mexican officials pointed out that the US was changing the rules and regulations regarding importing and exporting automotive parts.
While all three member countries are still smoothing out what these regulations look like in practice, all companies in Canada, the US, and Mexico must abide by CUSMA rules and regulations. If your Canadian business has yet to navigate international trade with other member countries, you’re in luck–small and medium-sized enterprises (SMEs) may benefit the most from CUSMA.
Key Rules and Regulations for Importers and Exporters
Ready to take your company to global markets with the US and Mexico? Here, we’ll outline some key changes from NAFTA that currently apply for CUSMA:
Certificate of Origin Changes
If your business exports to the US or Mexico, your importer needs to present a certificate of origin in order for your products to qualify for CUSMA’s preferential tariff treatment. Unlike NAFTA, CUSMA does not have a prescribed format. The Agreement requires a minimum set of data elements that indicate that the good is an originating good from North America.
These elements include:
- Identification and address of the certifier
- Exporter
- Importer
- Producer
- Description of good
- The rule of origin
Your certification can be captured on an invoice or any other type of document, so long as all of the criteria are included. It can be completed, signed, and submitted electronically.
De Minimis Thresholds
CUSMA now requires a higher de minimis threshold for waiving customs duties and taxes for courier shipments from the US or Mexico. The previous de minimis threshold was $20 Canadian dollars (CAD) and is now raised to $40 CAD for taxes and $150 CAD for customs duties.
These higher thresholds apply to goods of any origin that have entered commerce in the US or Mexico. Corresponding de minimis thresholds include:
- Courier shipments to Mexico for taxes: $50 US dollars USD
- Courier shipments to Mexico for customs duties: $117 USD
- Tax-free de minimis threshold for United States: $800 USD
Advance Rulings
Advance rulings for origin that were issued under NAFTA only remain valid for goods imported under NAFTA’s preferential tariff treatment. If you hope to have an advance ruling for origin under CUSMA, you will need to submit a new application to the Canada Border Services Agency (CBSA).
Low-Value Shipment Thresholds
Low-value shipment thresholds will increase for all commercial imports to an estimated value for duty not exceeding $3,300 CAD. This includes importations for express shipments.
CBSA still applies this threshold across all commercial programs no matter the mode, stream of importation, or free trade agreement under which the preferential tariff treatment is claimed. Always refer back to the CBSA’s customs notice (specifically, 20-15: Increase to the Low Value Shipment Threshold for Goods Imported into Canada). This threshold is not limited to the Courier Low-Value Shipment Program.
The Bottom Line
If you are a business owner taking your company to global markets, starting with the member countries of CUSMA can be extremely beneficial. This article tackles just the tip of the iceberg regarding streamlining your imports or exports. If you are an SME, the Canadian government offers resources to help your business shine in the global market.
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