UPS Customs Brokerage - USMCA/CUSMA Implementation and Transition

2020 UPS® Tradenomics Webcast Series
USMCA – Implementation and Transition
April 15, 2020
For USMCA questions please contact:
US: solutions@sttas.com
CA: tmscanada@ups.com

Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by UPS. This document is for informational purposes
only. It does not constitute legal advice – please consult with your own legal counsel for such advice. Also, do not rely on this information without performing your own research.
© 2019 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.
USMCA
Greg Maddaleni
LCB, JD
Customs Brokerage
Sr. Manager
UPS Customs
Brokerage
Maria Luisa
Boyce
Public Affairs Vice
President
UPS Public Affairs
Kelly Wilton
LCB
Customs Brokerage
Compliance
Manager
UPS Customs
Brokerage
Allison Gifford
Public Affairs
Director
UPS Public Affairs
Host Panelists

2020 UPS® Tradenomics
Webcast Series
3
Previous (recording available)
• February 6 - U.S. Export Compliance Year in Review
• March 12 – Brexit: the transition period
Upcoming (more to be scheduled)
• April 15 – USMCA – Transitioning to the new free trade agreement
• May 20 – U.S. Trade Policy and Trader Implications
• June 10 – Section 301: imminent exclusions expirations & possible renewal
• Sept 24 – Brexit: Transition / new trade agreement update
Link to registration and recordings: http://bit.ly/2020Tradenomics
Dates subject to change

2020 UPS® Canada Customs Brokerage Webinar Series
4
UPS Webinars
• April 15 – CUSMA – Transitioning to the new free trade agreement
• May 12 – CBSA Assessment and Revenue Management (CARM)
• June 23 – Canadian Export Reporting System (CERS)
3PM ET, 45 minute duration
Registration:
http://bit.ly/UPSCUSMA
http://bit.ly/UPS_CARM
http://bit.ly/UPS_CERS
Please join UPS’s customs brokerage and public affairs subject matter experts as we
explore how these topics could impact your international trade Dates subject to change

This presentation will be available upon check out to all attendees
as well as a link to the event recording.

This presentation is for informational purposes only.
It does not constitute legal advice - please consult with your own legal
counsel for such advice.
Do not rely on this information without performing your own research.

7
Any questions?
Ask our panelists
using the “Q&A”
function
1 CCS/CES/MES
Credit
Agenda
• Introduction
• Timing / state of play
• Shift in process
• Trade facilitation
• Policy changes
• Tradenomics

8
• Introduction
• Policy changes
• Tradenomics
Agenda

21st Century trade and new rules
21st Century Trade
1. Revised processes
2. Trade facilitation
3. Digital trade
New rules
• What qualifies for USMCA
9

10
37 Million People
$1.7 Trillion
$1.00 USD = C$1.41
US Exports: $337 B
MX Exports : $6 B
United States – 75.0%
China – 4.7%
UK – 2.8%
(Mexico ranked #5 – 1.4%)
C$40 for Tax-Free & Duty-Free
C$150 for Duty-Free Shipments
327 Million People
$20.5 Trillion
$1.00 USD Standard
CA Exports : $300 B
MX Exports : $265 B
Canada – 18.0%
Mexico – 15.9%
China – 7.2%
$800
126 Million People
$1.2 Trillion
$1.00 USD = ₱24.77 MXN
CA Exports : $14. B
US Exports : $344 B
United States – 76.5%
Canada – 3.2%
China – 1.6%
$50
$117 For Duty Free Shipments
Sources: Office of USTR Gob.MX Economic Figures https://wits.worldbank.org/countrysnapshot/en/CAN
Population
2018 GDP
Currency
North American
Export Value (2018)
Top Trading
Partners
(Exports 2018)
De Minimis
Exchange Rates as of 4/6/2020
Canada United States Mexico
USMCA – Country Statistics At A Glance

11
• Introduction
• Policy changes
• Tradenomics
Agenda

Issuance of joint uniform regulations and
other implementing legislative and
regulatory actions
1. All 3 countries have ratified the agreement
2. Next step is each country certifies
completion of internal procedures to
implement the Agreement by issuing a letter
(Mexico and Canada have done so; the
United States has not)
3. Agreement goes into full force and effect
the 1st day of the 3rd month following the last
certification
Note: Despite issuing certifications, many
implementing regulations are not yet in place. The
countries continue to negotiate the Uniform
Regulations and implementation of the rules of
origin.
What is required for
implementation?

13
• Introduction
• Policy changes
• Tradenomics
Agenda

Shift in process
Changes to:
• Certificate of origin
• Commodity-specific rules of
origin
14

Changes to certificate of origin
• Loosened format
• Minimum set of data elements
• Changes and elimination of certain preference
criteria
15

Certificates of Origin
USMCA, Article 5.2: Claims for Preferential Treatment
16
USMCA Requirements:
Certificate of origin may be prepared/signed by the
exporter, producer or importer.
Importer of Record must make the claim for preferential
treatment.
Certificate of origin need not follow a prescribed format,
but must contain a minimum set of data elements.
• May be provided on an invoice or any other document,
including electronically with a digital signature.
Preference Criteria A, B, C remain unchanged. Significant
changes to D; E & F are eliminated.
NAFTA Requirements:
NAFTA Certificate of Origin may be
prepared/signed by Exporter of the goods.
Importer of Record must have valid NAFTA
Certificate of Origin (Form 434) on hand at time
of claim.
Preference Criteria: A, B, C, D, E, F.
• Statement about the origin of a product
Source: https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/05_Origin_Procedures.pdf
What you should be considering:
• Familiarize yourself with the USMCA COO minimum data elements
• Determine form/format you will use and/or what you will accept from your suppliers

Changes to commodity-specific rules of origin
• Tariff shift vs regional value content
calculations
• Incremental increase in RVC for automotive
• See upcoming slides
• De Minimis increase from 7% to 10%
17

Rules of Origin – tariff shift and regional value content
18
USMCA
A change to subheading
8414.90 from any other
heading, or
No required change in tariff
classification to subheading
8414.90, provided there is a
regional value content of
not less than
a) 60% where the
transaction value method
is used, or
b) 50% where the net cost
method is used.
NAFTA
heading, or
No required change in
tariff classification to
subheading 8414.90,
provided there is a
regional value content of
not less than
a) 60% where the
transaction value
method is used, or
b) 50% where the net
cost method is used.
NAFTA USMCA
subheading, or
8708.10 from subheading
8708.99, whether or not
there is also a change from
any other heading, provided
there is a regional value
content of not less than
70% when the net cost
method is used.
subheading, or
8708.10 from
subheading 8708.99,
whether or not there is
also a change from any
other heading, provided
there is a regional value
content of not less than
50% when the net cost
method is used.
https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/agreement-between
HTS# 8414.90
(parts of air compressors)
HTS# 8708.10
(bumpers for passenger vehicles)

USMCA
Schedule of Increased regional value content for automotive
Based on previous example (8708.10, passenger vehicles, Table B)
62.5%
65.0%
67.5%
70.0%
72.5%
75.0%
77.5%
80.0%
50%
55%
60%
65%
70%
75%
80%
85%
Day 1 Year 1 Year 2 Year 3
Net Cost Method
Transaction Value
Method

Automotive rules of origin,
cont’d
• Steel and Aluminum
 70% must come from North American sources
• Labor Value Content (LVC)
 Phased-in requirement that 40% of product
value of passenger vehicles (45% of trucks)
must be made in facilities where workers are
paid $ 16.00 per hour
Complete vehicles additional USMCA
requirements
What you should be considering:
• Review specific rule of origin for your commodities
• Conduct a side-by-side comparison between NAFTA and USMCA
• If rule changed, and your good no longer qualifies, consider sourcing adjustments to incorporate more NA
components.
• Consult with a professional to assist with your management USMCA qualification

21
• Introduction
• Policy changes
• Tradenomics
Agenda

Trade Facilitation Aspects of USMCA
Procedures for efficient
release of goods
22
Most already in place for US and Canada
Online publication of
informational resources
Expedited express
shipment release
Rules for advance
customs rulings

23
• Introduction
• Policy changes
• Tradenomics
Agenda

Policy Changes
24
• De minimis
• Digital trade
• Small & medium businesses

25
• Introduction
• Policy changes
• Tradenomics
Agenda

UPS® Tradenomics:
The economic impact of trade on your business
26
USMCA
How should a current NAFTA importer
shift to the new USMCA?
Many NAFTA subject matter experts
have since retired
Great opportunity to build deep
USMCA understanding
Day two of USMCA – what happens to
NAFTA?

Questions and Answers
USMCA
• Check Out:
• Feedback / value
• Follow up inquiry or consultation
• For more information contact Greg Maddaleni at gmaddaleni@ups.com
https://fas.org/sgp/crs/row/R44981.pdfGeneral:
Agreement text:
Canada: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-
commerciaux/agr-acc/cusma-aceum/text-texte/toc-tdm.aspx?lang=eng
US:https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-
agreement/agreement-between

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