CBP Explains Informed Compliance Further; Parses Details of Entry Dates, Documents

In calls hosted by CBP on the last day of NAFTA, and the first day of USMCA, trade professionals were anxious to understand what they should change in paperwork.

Some details are small, but they matter. For instance, should a company with multiple locations use the address on file with CBP as its corporate address when it is the party certifying that a good qualifies for USMCA? Or should it use the address where it produces the good? The answer is: where it produces the good. If the corporation produces goods in both Mexico and the U.S., and both might cross borders, there should be separate certificates for each location.

CBP officials told importers who use post-entry reconciliation that they can choose to calculate the merchandise processing fee or not, either choice will not result in a rejection of the reconciliation filing. The advantage to including it is that if Congress later makes the merchandise processing fee refundable back to the start of the trade deal, CBP will know how much to refund. But, given that it's not refundable currently, leaving it off is also fine.

One trader asked about whether goods that entered a foreign-trade zone before July 1, but exit after, could still qualify under NAFTA rules, not USMCA rules of origin. CBP said that as long as that good entered in privileged foreign status, the computer system will understand it.

Another trader asked if goods cleared customs on June 30, but had an entry summary in July, would it be USMCA or NAFTA? CBP said it would be NAFTA.

“Regardless of what you think, the system will not allow you to file incorrectly,” a CBP staffer reassured the questioner.

Another trader said, “I understand the 'entry date' is the magic date to determine the difference between NAFTA or USMCA, but my land border shipments use the summary date as the entry date. Example, shipment crossed the border on June 27, but entry date shows July 10. What FTA applies, when the shipment physically crossed the border and delivered in June but entry summary shows entry date July 10th?”

CBP said that because the company reports the entry date as July 10, even though that's not the real entry date, that will be the date that ACE regards as determinative, so it will be USMCA.

A lot of traders wondered what informed compliance really means. CBP explained that while you're supposed to know that your good meets the USMCA rule of origin from now on, the agency will not be verifying that by asking for documentation before Jan. 1, 2021. “Although they should be in possession [of certification], we are allowing the six-month period for business to get their affairs in order,” a CBP staffer said.

But, CBP clarified, in response to someone in the heavy truck supply chain, that doesn't mean that NAFTA rules of origin will continue to apply through the end of the year, even if they're not checking.

If an exporter is sending a completed heavy truck to the U.S. from Canada or Mexico, however, the regional value content is the same under both NAFTA and USMCA initially -- 60%. There are additional layers of regional value requirements for various parts.

Auto industry professionals continued to express confusion about details of the new rules.

One woman said that while CBP had said the day before that labor value content and steel and aluminum purchase requirements apply to vehicle producers, not parts suppliers, they also said they will need to document wages and purchases. A CBP attorney said that parts suppliers will not have to give any of this information to CBP, but that their customers may need the information so that their contributions can be rolled up in order for the vehicle manufacturer to meet the labor value content standard or the steel and aluminum purchase standard.

Another trader asked if the North American steel and aluminum purchases have to meet the threshold company-wide, or only for vehicles that will be sold in North America. A CBP official said the company doesn't have to show that any of those purchases ended up in any vehicle, it just has to show the company bought the metals locally.

CBP also received questions about the differences between qualifying parts in passenger cars and light trucks and in heavy trucks. The agency could not immediately answer how parts that are sold in both classes should be classified.