US-Mexico-Canada Trade Agreement (USMCA) Effective July 1, 2020

​​By Sabrina D'Onofrio, CGBP, CBA​, Export Assistance Director

Beginning July 1, 2020, the United States-Mexico-Canada Trade Agreement (USMCA), or sometimes referred to as NAFTA 2.0, will replace the North America Free Trade Agreement, more commonly known as NAFTA. An agreement was made to modernize the 25-year-old agreement into a 21st century agreement with the highest standards.  

The USMCA is a trade agreement between the US, Mexico and Canada. Some of the highlights of the agreement are as follows: 

• Raising de minimis rules in Canada and Mexico to facilitate greater cross-border trade
• Automobiles must have 75 percent of their components manufactured in the US, Mexico or Canada to qualify for zero tariffs. Under NAFTA this was only 62.5 percent
• By 2023, 40-45 percent of automobile parts must be made by workers who earn at least $16 per hour
• Canada will give access to an additional 3.6 percent of its dairy market to US farmers
• Under USMCA, intellectual property and digital trade will extend 70 years beyond the life of the author for copyright IP. Under NAFTA, it was 50 years. Additionally, IP rights were expanded to digital products and will eliminate duties on digital items such as music and ebooks. Under USMCA, internet companies were also given protection from content that their users produce
•  A sunset clause was added to the USMCA. This states the expiration of the USMCA is in 16 years if it is not renewed by all parties. All parties must review the agreement every six years.
• A notable and important change with the USMCA is that NAFTA Form 434 will no longer be a valid form to use. The form will expire on June 30, 2020. That being said, there is no official certificate of origin for USMCA as there was for NAFTA. USMCA requires a “certificate of origin” in which any format is acceptable provided that it contains the following nine minimum data elements set out in USMCA, Annex 5-A:

1. Importer, Exporter, or Producer Certificate of Origin
2. Certifier
3. Exporter
4. Producer
5. Importer
6. Description and HS Classification of the Good
7. Origin Criteria
8. Blanket Period (if applicable)
9. Authorized Signature and Date

*For more information on the certification requirements and elements listed above, visit the US Trade Representative Website.

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​​Sabrina D'Onofrio, CGBP, CBA​

Sabrina D’Onofrio joined the Toledo Regional Chamber of Commerce Small Business Development Center in 2012. Sabrina is now the Export Assistance Network (EAN) Director and covers 18 counties in Northwest Ohio. ​Sabrina has regular communication with the other 6 Export Assistance Network Directors in the state to discuss questions or gather information.