USMCA

Changes to de minimis is the most significant change from NAFTA in customs administration and trade facilitation under the rewritten agreement, practitioners say, but exactly how that will work in practice is still unknown. Shipments from the U.S. or Canada into Mexico will not face duties if they are valued at less than $117, and will not have to pay tax if they are valued at less than $50. Shipments into Canada from NAFTA partner countries will be tax-free if valued under 40 Canadian dollars, and duty-free at under 150 Canadian. (Mexico's $117 limit matches C$150 at current exchange rates.)

Autos and auto parts make up 25 percent of the NAFTA trade, and the head of the trade group that represents Detroit's Big 3 auto firms says they will push aggressively to get the NAFTA rewrite through Congress next year. Matt Blunt, CEO of the American Automotive Policy Council, said, "If party control changes in one of the chambers, that does make it more difficult to gain approval of USMCA, but I still think it's highly doable." Blunt is the former governor of Missouri, and his father Roy Blunt is in the Republican leadership in the U.S. Senate.

The chairman of the White House Council of Economic Advisers says trade negotiators have made "a heck of a lot of progress" with Europe, the United Kingdom and Japan, and "all of those agreements are going to look similar" to the rewritten NAFTA. Kevin Hassett was speaking at the Global Services Summit on Oct. 17, as he was interviewed by Laura Lane, UPS president of global public affairs. Technically, none of those trade negotiations have opened, as they are not allowed to until Congress sets priorities. The day before Hassett spoke, the Office of the U.S. Trade Representative notified Congress of its intention to begin negotiations (see 1810160057). Hassett said President Donald Trump told his staff, "Once I get a deal with one country, I bet they're really going to cascade, the deals."

While the changes are likely at least a year away, a KPMG managing director of Trade & Customs Services, Gisele Belotto, told clients that the "changes [to NAFTA] are pretty extensive, and a lot more than changing the name." KPMG held a webcast on understanding the trade implications of the United States-Mexico-Canada Agreement on Oct. 16. While media coverage has been extensive on the changes to the auto rules of origin, and how that will make it more difficult for Mexican and Canadian autos to enter the U.S. duty-free, KPMG professionals noted that many other products' rules of origin became looser, making it easier to qualify the imports as originating in one of the NAFTA countries.

The International Trade Commission is seeking testimony and submissions for its analysis of how the U.S.-Mexico-Canada Agreement will affect industry, consumers and the economy as a whole. The ITC is charged with producing such a report for Congress to use as it decides whether to ratify any new trade agreement. It must do so within 105 days of the president entering into the agreement.

U.S. Attorney General Jeff Sessions highlighted U.S. efforts to combat illegal wildlife trade, including through the U.S.-Mexico-Canada Agreement, during an Oct. 11 speech at the London Illegal Wildlife Trade Conference. "We are tackling this problem head-on in our trade agreements," he said, according to prepared remarks. The new NAFTA "includes the strongest provisions to combat wildlife trafficking of any trade agreement in history," he said. The Justice Department will also be convening an "expert forum to focus on countering the illegal wildlife trade," Sessions said. He also spoke of the continued importance of the Lacey Act, which "remains among our nation’s most powerful weapons in the fight against the illegal wildlife trade."

International Trade Today is providing readers with some of the top stories for Oct. 1-5 in case they were missed.

The U.S. will not meet with China to talk about trade until he's convinced they're ready to make a deal, President Donald Trump said, speaking with reporters after U.N. Ambassador Nikki Haley announced her resignation on Oct. 9 at the White House. Trump said the U.S. rebuilt China by purchasing so many Chinese goods, and that he wants to put an end to the unbalanced trading relationship. "China wants to make a deal. And I say they’re not ready yet. I just say they’re not ready yet. And we’ve canceled a couple of meetings because I just say they’re not ready to make a deal," he said. "It’s been a one-way street for 25 years. We’ve got to make it a two-way street. We’ve got to benefit also, OK?"

Withdrawing from NAFTA before ratification of the U.S.-Mexico-Canada Agreement would "trigger devastating negative economic consequences," the Koch Brothers' Freedom Partners organization told President Donald Trump in a letter sent Oct. 3. The letter, which commended the administration for reaching an agreement, said USMCA has positive elements on digital trade, e-commerce and finances, but the introduction of wage standards and stricter auto rules of origin "drive up costs for everyone while protecting only a few jobs at the expense of many others." Freedom Partners and Americans for Prosperity asked the administration to immediately drop the steel and aluminum tariffs on Mexico and Canada, and to end the threat of Section 232 tariffs on autos and auto parts.

When the head of the Canada Institute asked Canadian negotiators in the NAFTA talks what they were most proud of, they said modernization at the border. "The customs facilitation, the regulatory [change] makes a big difference," said Laura Dawson, director of the Wilson Center's Canada Institute. "Origin certificates used to have to be faxed to the border. The fact that they're going to use iPads is a huge win."