CBP, the Office of the U.S. Trade Representative and the U.S.-Mexico-Canada Agreement partners “should delay USMCA’s entry into force until no earlier than January 1, 2021,” the Commercial Customs Operations Advisory Committee (COAC) said in a recommendation during its April 15 meeting. “Now is not the time to implement a trade agreement that contains so many important and meaningful changes that will impact certain industries in a significant financial manner,” it said. “The trade simply is not, and will not be, ready to shift from NAFTA to USMCA on June 1, 2020.”
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
CBP posted multiple documents ahead of the April 15 Commercial Customs Operations Advisory Committee (COAC) meeting:
CBP has drafted some interim implementing instructions for the U.S.-Mexico-Canada Agreement that could be released as soon as April 17, a CBP official said during an April 16 conference call. The draft is being circulated within the government and is planned to eventually go up on CBP's website, she said. The instructions will detail how to file an entry, and the Special Program Indicator code will be S, she said. There's also some discussion about an S+ code for agricultural goods with special requirements, similar to the CAFTA-DR codes, she said. A CSMS message would announce the release of the instructions, she said.
As a date of entry into force, June 1 “is too aggressive and unrealistic,” said The American Association of Exporters and Importers in a letter sent April 15 to the U.S. trade representative. The organization did not say what day would be late enough for traders, who are affected by the COVID-19 public health emergency. “Many companies have personnel working from home due to COVID-19, which will make responses to queries for data slower, thereby causing delays in the certification process for USMCA,” they said. But they noted that without final regulations, “it is impossible for companies to know if there will be an impact or if supply chains may need to be shifted.” Once the regulations are in place, AAEI said, it will take time to solicit documents from suppliers. The group asked that NAFTA certificates of origin for 2020 continue to be valid during a period of informed compliance until Jan. 1, 2021.
CBP is prepared to start U.S.-Mexico-Canada Agreement implementation whether it goes forward as originally planned or is delayed, Brenda Smith, executive assistant commissioner for the Office of Trade, said in a statement. “There is a great deal of effort to ensure the legal, operational and automation frameworks are in place and to provide guidance around the Agreement requirements,” she said. “CBP is working closely with [the Office of the U.S. Trade Representative], Treasury, and Labor [departments,] and is prepared to implement our effort -- whether that is June 1 as announced by USTR or later as requested by a number of stakeholders.” While there's been some indication the administration might push back some components of the trade deal (see 2004140046), the USTR hasn't announced such a delay.
Sen. Chuck Grassley, R-Iowa, who last week said that U.S. Trade Representative Robert Lighthizer is not sympathetic to auto industry complaints about U.S.-Mexico-Canada Agreement implementation, said that after talking to Lighthizer again, he has a different view. Lawmakers recently asked the USTR to delay the USMCA rules of origin requirements (see 2004130035).
International Trade Today is providing readers with some of the top stories for April 6-10 in case they were missed.
A group of 31 House lawmakers, led by Rep. Haley Stevens, D-Mich., and Rep. Jackie Walorski, R-Ind., is asking the U.S. trade representative to delay the switch-over to the U.S.-Mexico-Canada Agreement auto rules of origin (ROO), even as the USMCA takes over from NAFTA. The group's letter, sent April 10, said the delay “is necessary to allow the auto industry an appropriate adjustment period and account for delays caused by the COVID-19 pandemic. Alternatively, we ask that you seriously consider other accommodations or flexibilities that will allow the automotive sector to avoid being penalized by the new requirements upon the agreement’s entry into force.”
The draft regulations for auto rules of origin that have been circulating suggest that the rules won't be as flexible or practical as automakers would like, said David Bause, a project manager at MIC Customs Solutions. Bause, who spoke about the new NAFTA on a webinar April 9, used to be a customs manager for General Motors. Bause said stakeholders don't even know what the date of entry into force will be, or if the uniform regulations will be released by then. He said, “Logically one would think the earliest EIF is July 1 at this point, but from what we’re hearing, the U.S. government is still talking about June. Not sure that is technically possible.”
Mexico's undersecretary for foreign trade said July 1 is the earliest the new NAFTA could go into effect, but also suggested that an August or September date of entry into force would be fine. Luz Maria de la Mora spoke on a webinar hosted by the Wilson Center's Mexico Institute on April 7.