USMCA implementation on July 1

The USMCA was ratified on March 13, 2020, and will go into effect on July 1, 2020. On Monday it was announced that a USMCA center would be opening in Washington, DC to assist companies with the implementation. The new agreement, which will replace the current North American Free Trade Agreement (NAFTA) with updated protections for labor, intellectual property, agriculture, and e-commerce.

The center will include experts from U.S. Customs and Border Protection along with virtual representatives from Canada and Mexico to assist public and private sector businesses with the implementation of the treaty. Officials expect the center to provide guidance, answer questions, explain issues, disseminate information and documentation, and create a single point of contact to streamline assistance.

While the new agreement does include critical modernization of labor standards, intellectual property, and pharmaceutical regulations it also covers e-commerce and digital property rights that weren’t an international issue when NAFTA was first negotiated. The automotive industry will face some strict rules regarding both labor practices and the percentage of North America parts that must be included in each vehicle; leading the industry to request an extension due to the economic impact of the Coronavirus pandemic that’s currently plaguing the country. An initial 30-day extension was granted, moving the date from June 1st to July 1st.

The USCMA will have a term of sixteen years, after which the agreement can be renewed, renegotiated, or withdrawn from but will be eligible for a review after six years. CBP expects the USCMA center to be a sufficient resource for questions and assistance on the newer parts of the agreement, as the bulk of the treaty ($1.2 billion in goods and products) will remain unchanged. If you have goods that are going to be impacted but the updated treaty, you can rest assured your Edward J. Zarach & Associates representative will have the guidance and information you need to ensure a smooth transition. We do recommend that you contact us to begin planning for the changes as soon as possible.