Posts Tagged ‘NAFTA’


 

USMCA Details | United States Mexico Canada Agreement | NAFTA 2.0

USMCA Details

The United States Mexico Canada Agreement (USMCA)

The U.S., Mexico and Canada reached a revamped NAFTA deal in the 11th hour on Sunday September 30th, 2018. NAFTA 2.0 has been renamed the United States Mexico Canada Agreement.

After more than a year of intense negotiations, the U.S., Mexico and Canada reached an agreement to update NAFTA. NAFTA dates back to 1994 when the pact was originally signed by all three countries to govern the $1.2 trillion worth of trade between the countries.

In August, the U.S. and Mexico resolved an issue over auto manufacturing but Canada and the U.S. still had some contentious points to resolve. The U.S. wanted Canada to open its dairy market to U.S. farmers and Canada wanted to preserve a mechanism for resolving disputes. These goals were eventually achieved which resulted in the new USMCA.

Auto Industry

Starting in 2020, to qualify for zero tariffs, a car or truck must have 75% of its components manufactured in the U.S., Mexico, or Canada, a boost from the current 62.5% requirement. In addition, also starting in 2020, cars and trucks should have at least 30% of the work on the vehicle done by workers earning at least $16 an hour, which will gradually move to 40% for cars by 2023.

Supply Management Agriculture Sector

Canada agreed to set new quotas for dairy imports from the U.S. Canada will still put tariffs on dairy products that exceed quotas. The new quotas will give the U.S. access to 3.6% of Canada’s market. U.S. farmers will now be able to export 120 million eggs into Canada the first year. This will grow 1% per year for the next 10 years. The chicken concession will allow 57,000 metric tons phased in over six years and in year 7 will increase 1% per year for the next 10 years.

Chapter 19

Canada wanted to keep Chapter 19 in place and in the end Chapter 19 remained intact. Chapter 19 allows the U.S., Mexico and Canada to challenge anti-dumping and countervailing duties in front of a panel of representatives from each country. In the past, Canada has successfully used Chapter 19 to challenge the U.S. on its softwood lumber restrictions.

Intellectual Properties Protections

The USMCA has a new IP chapter, which is 63 pages long and contains stricter protections for patents and trademarks, including biotech, financial services and even domain names. Copyright terms in Canada now extend for 70 years beyond the year the creator of the work dies, bringing Canada in line with those of the U.S. and Europe. The IP chapter also includes an extension of the length of time new biological drugs will be protected from generic drug competition, up 2 years from Canada’s previously agreed upon 8 years to 10 years of exclusivity. This was necessary for all sides to update this field as the original agreement was over 25 years old.

De Minimis Threshold

The de minimis threshold or the duty-free amount Canadians can buy in the U.S. and import into Canada without having to pay a duty has increased from $20 to $150. Mexico agreed to raise their de minimis from $50 to $100.

The tax portion of the de minimis threshold has been separated. The new rules will see the tax threshold rise to $40.

For example, when someone in Canada buys something online in the U.S. for $149 they will be spared the duty but they will pay anywhere from $17 to $22 in taxes depending on the province and the tax rate for that province.

Labor & Environmental Rights

Significant upgrades to environmental and labor regulations were made, especially in Mexico. Mexican trucks crossing the border must meet higher safety regulations and Mexican workers must have the ability to organize and form unions.

Chapter 11

Chapter 11 provided companies and investors a special process to resolve disputes with one of the governments of the agreement. The premise being that if an investor put money into a project and then the government changed the rules, there is a dispute process outside the court system where the investor could get their problem resolved. Chapter 11 is essentially gone with the exception of few industries such as energy and telecommunications.

USMCA Timeline

The USMCA will not go into effect right away. Most of the key provisions will not start until 2020. The leader of each country still has to sign the agreement, and then congress in the U.S. and the legislatures in Canada and Mexico have to approve it. This process is expected to take months.

How Will The USMCA Affect You?

You have the opportunity to get an early edge on your competitors with the advantage of a trade advisor. Pacific Customs Brokers has you covered with expert trade advisors who are able to help you navigate the changes that will affect you with the new United States Mexico Canada Agreement.

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Jan Brock | Author

U.S. Customs To Pilot Test Blockchain Viability

blockchain

In September 2018, U.S. Customs and Border Protection (CBP) will start pilot testing the viability of blockchain technology in international trade. One of the first tests will be to see if they can successfully receive Certifications of Origin to identify if a product can qualify for preferential treatment under the North American Free Trade Agreement (NAFTA).

What is Blockchain?

Blockchain allows for digital information to be shared but not copied. It was originally created for financial transactions however, tech communities are starting to get more creative on what it can be used for. This includes smart contracts, transparent voting for elections, file storage, and in the world of trade, supply chain auditing.

Blockchain acts as a large database spread over a network of many, many computers. By not storing the data in any one location decentralizes the data. By decentralizing the data, it makes it difficult for a “hacker” to corrupt, thus making it a safe way for many people to access the data simultaneously.

Another interesting fact about blockchain is it can be setup to share with the entire public, or only shared with a few selected individuals. This allows for it to be used on massive scales, such as an election, or small scales, such as a one-on-one contract between you and a supplier.

History is another important factor. Blockchain has the ability to collect and maintain all transactions and previous data. In the trade industry this could be vital since records are required to be kept by Customs for multiple years in case of an audit. With a clear history that is accessible at any time, it can make it easier on Customs and the individual or business being audited.

What is Your Commodities Origin?

The goal is to certify the backstories of commodities are genuine. Is your sweater really made in Canada? Is every part from your laptop obtained or produced entirely in Canada, the U.S. or Mexico? Probably not, however with the assistance of blockchain technology and supply chain auditing, the answer could be quick and easy for CBP to discover.

Why This Potentially Helps U.S. Customs?

The reason CBP is excited for the viability of blockchain technology is because it can permanently verify transaction records in a fast and secure way. Being able to work fast and safe is any businesses dream, and CBP wants to start testing the technology in the early stages to make sure they are ready to handle the demand for blockchain technology once more companies adopt the relatively new idea.

How Supply Chain Auditing Can Help You?

It is easy to drown in the science behind blockchain technology, but what matters most to you is blockchain can allow you to do business easier and safer than before. The introduction of Electronic Data Interchange (EDI) has eliminated the need for faxing, mailing or hand delivering paper documents. By having a safe way to transport the same “paper documents” digitally in only a way where you, the sender, and CBP, the receiver, can access it, than business will become better for you.

If You Need An Expert

With pilot testing to begin in September it will be interesting to see what the findings are from CBP. This might be the first step U.S. Customs takes to adopting blockchain technology and electronic supply chain auditing. For the latest in trade news and expert advice feel free to contact an experienced trade advisor to help you navigate the world of trade.

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Will CPTPP Impact NAFTA Negotiations?

North America

Prior to the latest NAFTA negotiations, Canada entered into the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In this blog, we look at how this may impact the next round of NAFTA negotiations in late February, early March.

Before the January NAFTA Negotiations

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Canada and Mexico has agreed to the new CPTPP. An international trade agreement between 11 countries the U.S. previously withdrew from on January 23rd, 2017.

With the U.S. adopting a bilateral trade agreement philosophy, while Canada and Mexico have joined the multilateral CPTPP agreement. How will this impact the NAFTA negotiations going forward?

 

New U.S. Duties on Solar-Panels and Washing Machines

Also, the U.S. recently introduced new import duties on solar-panels and washing machines. Solar-panel duties have increased by 30%, while washing machines duties have increased by 50%. The new duty on solar-panels will have a minor impact on Canada and Mexico. The new washing machine duty will only impact Mexico.

 

January’s NAFTA Negotiations: Round Six

Tuesday, January 23rd, Canadian, American and Mexican representatives met in Montreal for the sixth round of NAFTA negotiations. Let us focus on the four main focal points surrounding the latest NAFTA negotiations. Chapter 19, the auto parts industry, the dairy industry and the sunset clause.

Chapter 19: Trade Disputes

The U.S. is looking to eliminate Chapter 19 in the NAFTA negotiations. Currently, Chapter 19 allows for trade disputes between two NAFTA countries to go through an independent third party arbitrator. This prevents Canada and Mexico from having to enter into the U.S. legal review process for anti-dumping and countervailing duties imposed by the U.S. government.

Previous Chapter 19 rulings have favored Canada. Most recently Boeing made a bid to increase import duties by 300% on Bombardier’s CSeries. An independent third party arbitrator, the U.S. International Trade Commission (USITC), voted 4-0 to reject the 300% duty because it did not have a negative impact on the U.S. aircraft industry.

The Auto Parts Industry

With the new CPTPP in place, the NAFTA negotiations are going to feel some extra pressure in the auto parts industry. At the moment, NAFTA allows for 37.5% of a cars parts to come from outside of Canada, the U.S. and Mexico. However, in the new CPTPP agreement, the percentage of allowable foreign composition is 55%. This difference will create a more competitive market for auto parts in Canada and Mexico, while at the same time acting as a disadvantage for Canadian and Mexican companies creating auto parts.

The U.S. is aiming to decrease the percentage of car parts that come from outside of North America to 15%. Translating to more job opportunities for Americans in the auto industry.

Canadians are trying to introduce a line of thinking that auto industry software and other high-tech equipment should be taken into consideration when talking about the net cost of auto parts since a higher percentage of software and high-tech equipment is created and produced in Canada, the U.S. and Mexico. Thus adding to the auto parts percentages.

The Dairy Industry

The CPTPP agreement has also opened up the dairy debate as well. Since there has been a small opening to Canada’s originally closed market, the U.S. wants greater access to Canadian consumers. Currently, if a U.S. dairy farmer was to export milk to Canada, they would face a 270% duty. Eliminating dairy trade barriers would be beneficial to Canadian consumers, but would deal a great blow to Canadian dairy farmers who presently enjoy the benefits of the ongoing trade barrier.

The Sunset Clause

The U.S. also wants to implement a sunset clause. A sunset clause would allow any of the three NAFTA countries to walk away from the proposed agreement after five years. If the sunset clause was to be implemented it would almost certainly mean the end of the current NAFTA agreement in five years, since it would be unlikely for all three countries to be happy with the state of the agreement in five years.

 

NAFTA Negotiations and Trade

Despite all of the uncertainty with NAFTA, trade between the three countries has remained steady and consistent. Everyday airplanes, trains, cargo ships, and trucks transport essentially everything you use daily. If you would like to explore international trade opportunities, give us a call. We can provide you assistance with customs clearance, freight forwarding, trade education and trade advisory services.

 

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Your Designation Maintenance Begins with our Professional Development Courses

Image: Seminar Room

 

Your Professional Development starts with Pacific Customs Brokers! If you have never attended one of our Professional Development Courses, the following information might help you decide on attending the next one.

Professional Development Courses – Seminars and Workshops

At our in-person courses you learn the best practices of being a compliant importer and/or exporter which will help you expedite your commercial shipments to and avoiding costly delay triggers. Our experts share their knowledge and stories on international and cross-border shipping regulations to keep you current with customs and partner government agency requirements.  Benefits of attending an in-person seminar or workshop include:

  • All day access – Get our experts to answer your questions one-on-one
  • Case studies and real-life examples – Examine other attendees’ trade compliance hurdles
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wide variety of topics
  • Certificate of Completion – Receive a certificate for each course you attend
  • Handouts – Take home your own set of course material
  • Industry accreditation – Earn points towards maintenance of your industry designations
  • Networking – Connect with other like-minded professionals

Professional Development Courses – On-Demand *COMING SOON*

Our on-demand library is designed to meet the demands of the global trade community. These sessions are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. Benefits of attending an on-demand course include:

  • Global accessibility – Travel is removed from the equation for companies with multiple locations or branches
  • Convenience – Attend from the comfort of your desk or home at any time that is best for you
  • Concise training – In a fast-paced industry, efficiency becomes just as important as staying compliant, watch in parts or “binge” on the full course
  • Industry accreditation – Earn points towards maintenance of your industry designations

 

Taking any of our courses may earn you maintenance points, credits, and hours towards a variety of professional designations. Some examples of eligible designations are:

  • Certified Customs Specialist (CCS)
  • Certified Trade Compliance Specialist (CTCS)
  • Certified Export Specialist (CES)
  • Designate with the Law Society of British Columbia (LSBC)
  • Accounting Professional

Registration for Fall 2018 is now open!

Review and plan your professional development maintenance for the second half of 2018 by clicking on the hyperlinked course names below. 

  CSCB NEI LSBC
Course Name CCS CTCS CCS CES  
How To Import Into Canada Part 1 5 5
How To Import Into Canada Part 2 5 5 3
How To Import Into Canada (Series) 5 5 3
How To Classify A Product 5 6 4
How To Import Into The US Part 1 5 5 3
How To Import Into The US Part 2 5 5 3 3
How To Import Into The US (Series) 5 5 3
How To Value A Product For Customs 5 5
*How To Choose The Best Incoterm 5 3 3
*How To Import CFIA Regulated Goods 5 5
*How To Import FDA Regulated Goods 5 5 3

 

*Registration for spring 2019 courses coming soon.

 

 

Have questions or comments about any of our courses? Call 888.538.1566 or email us today!

TradeTalk |BC Trees and Trade Agreements

Softwood, Hardwood and Forestry - NAFTA Re-Negotiations

 

A year after the initial signing of the Trans-Pacific Partnership (TPP) on February 4th, 2016, the U.S. pulls out and presses forward on renegotiations of NAFTA as well. Will these U.S. Trade actions impact Hardwood, Forestry Trade or Softwood Lumber Agreement negotiations between the U.S. and Canada?

With the October 12, 2015 expiration of the Softwood Lumber Agreement (SLA) and looming concern over tariff increases due to the December 16, 2016, United States Department of Commerce decision to initiate countervailing and anti-dumping investigations into imports of certain Canadian softwood lumber products the conversation and its topics seems to have changed between these two countries – or has it? Let’s have a look at what the goals for the forestry industry were in that conversation by both sides, and then let’s look realistically on the status of those goals today.

On the U.S. side the concern is:

Q – Were too many concessions made to get trades agreements in place (TPP or NAFTA) or others?

Q – Are U.S. companies facing hardships because of current lumber trading activities?

 

On the Canadian side of the conversation:

Q – Did the Canadians press more feverently to get the TPP Agreement signed?

Q – Why claim our crown land lumber is subsidized – it has been proven otherwise in court.

Hardwood, Softwood and BC Trees:

 

Let us first take a look at Forestry and TPP. According to Joel Neuheimer Canadians did press into it, and for what appears to be clear reasoning and benefit to Canada:

The reason, as noted by Joel Neuheimer, Senior Director of International Business at the Association of Canadian forest products , is that with this ratification, the industry will be opening new outlets and increase the level of exports on the international market, particularly to countries such as Japan, Vietnam and Malaysia.

Canadian forestry companies export about $33 billion worth of goods each year In more than 180 countries, primarily in Asia.

NOTE*** NOT primarily in the U.S. as many believe.

The TPP Agreement would have removed customs barriers for Canada’s forest products currently subject to tariffs of up to 31% in Vietnam, 40% in Malaysia, 20% in Brunei and 10% in Japan as reported by Etienne Dumont / Canadian Broadcasting Corporation.

NAFTA Renegotiations

 

Second, let’s review the NAFTA Re-negotiations and their impact on softwood lumber.

Trevor Nichols, of Castanet News says – There is hope for softwood lumber!

According to Mr. Nichols, B.C. Premier Christy Clark, while speaking at a breakfast event in West Kelowna on January 27, said Trump’s promise to rebuild the American economy might work in Canada’s favour.

 

“While the Americans are getting more protectionist, Donald Trump, as a builder, knows intuitively that residential housing starts is a major driver for economic growth for Americans. They cannot grow their housing industry without Canadian softwood going into their country, because it’s just too expensive to build and buy without our lumber.

Because the U.S. can’t produce enough lumber on its own to drive residential building, it’s actually in the country’s best interest to make sure Canadian lumber is filling the void.”

Nick Arkle, the co-CEO of Gorman Bros. Lumber Ltd. agrees with Clark, saying Canadian lumber is “critically important” to the U.S.

Additionally, B.C. Forest Minister Steve Thomson shares his thoughts here:

“Since 1982, softwood lumber exports from Canada to the U.S. have been subject to five rounds of U.S. trade litigation. “This is round 5 of this process and the Canadian industry has always been successful in defending its softwood lumber policy,” said Thomson.”

Local update February 05, 2017 | B.C. Forest Minister Steve Thomson flew to Ottawa on Sunday to start working toward a new trade agreement on softwood lumber with the U.S. as officials anticipated release today of the latest U.S. International Trade Commission report on their investigation into the import of Canadian softwood lumber.

You can read this full article in more detail | HERE

For access to a copy of the Fed Register notice issued which means that preliminary reviews are starting for the softwood tariffs listed, you can review what is published so far in regards to the Softwood Lumber Agreement negotiations  HERE  a full scope has not been written as yet.

We know that you also want to know how to have your voices heard in that discussion, especially when you are directly affected.

You have questions:

  • How are the field experts responding to the Trade Deals / Negotiations/ Issues?
  • What are the experts discussing amongst their peers??
  • How is your voice heard in these conversations?

One way to share your voice is to publish your concerns, insights, ideas or expertise online. Each week we publish and share industry news, our insights and reports that impact you as our readers. Do you have something that you would like us to share? Ask? Research for you? Let us know and we will add your requests to our weekly research and publishing goals.