Much Still Undetermined Six Weeks Ahead of USMCA Into Force

Many details needed for the uniform regulations and the final implementing instructions for the U.S.-Mexico-Canada Agreement remain under discussion, agency officials said on May 14. Many specifics have not been agreed to, either between Mexico, Canada and the U.S., between the Office of the U.S. Trade Representative and the auto industry, or between CBP and USTR. “There's still even discussions with USTR and the [auto] industry on what constitutes a core part,” Maya Kumar, director for textiles and trade agreements, told members of the trade community on a conference call.

One of the foundational changes in auto rules of origin is that the proportion of the automobile or truck that has to be made in North America will rise gradually over the next several years. Even if a manufacturer chooses not to do the longer staging process -- or if the USTR rejects its plan -- the regional value content phases in over years.

One listener on the call asked an official when a company would have to tell CBP how it's doing its RVC averaging -- would that need to be done before July 1? “The three countries have not quite agreed how to” average, Kumar replied. “The goal is to allow for almost maximum flexibility.” She added, “We are still trying to understand what USTR meant in certain articles” in the USMCA. Separately, on a May 14 Dickinson Wright webinar, Rideau Potomac Strategy Group President Eric Miller said of supercore averaging: “That is something that is still very much in negotiation.” He said he's been told auto companies will not be allowed to average across all three countries, but it may be allowed across two countries. “There are an awful lot of unanswered questions at this point,” he said.

Asked on the CBP call how the Labor Department would be called on for post-summary verification that autos used enough $16-an-hour labor to qualify for benefits, Kumar said she's not sure what information is going to be requested to prove that. Given all the details that are yet to be released to companies, six weeks before entry into force, importers and exporters are asking if there will be a period of informed compliance. Another listener said she's heard it will only be offered to autonomous vehicles.

Automobiles are a special case, said John Leonard, CBP executive director-trade policy and programs, but, the agency said it has not gotten USTR to sign off on offering informed compliance yet (see 2005110039). Leonard said CBP will be ready to implement the deal on July 1.

It's not just autos where there are details that have not been hammered down. One caller asked whether apparel tariff preference level quotas would be pro-rated, based on what came in before June 30, or whether they will start fresh. “They're not sure how to do that, I'm hoping by tomorrow or the end of next week, they'll have determined that,” Kumar replied.

There are a few details that she was able to clarify for trade professionals, however. There will be no flexibility on waiving the merchandise fee if importers do not claim USMCA at time of entry and do post-entry claims under the agreement. “There are some legislative changes that have to occur in order for that to change,” Kumar said, and said CBP is hoping for a legislative fix for that.

While companies are waiting to find out if their plans for an alternate staging will be accepted by USTR, their customs brokers will be allowed to claim preference until the review is complete. CBP will not accept NAFTA certificates of origin after July 1, but will accept the data they include as an Excel spreadsheet on a verification check. However, the marking rules for NAFTA will continue under USMCA “until further notice,” Kumar said.