Preparing for USMCA: 6 Steps for Importers and Exporters
1. While NAFTA originally required automakers to use 62.5% of North American-made parts in their cars to be imported duty free, the new agreement gradually raises the bar to 75% by 2023, which will incentivize automakers to increase the amount of North American parts they use in their cars and light trucks.
The USMCA Cross-Border Trade in Services Chapter enhances market access. U.S. small business services can now be provided market access across North America without requirements for a foreign office or foreign representative.
Instructions for Completing a USMCA Certificate of Origin
The USMCA provides new market access for all U.S. agricultural products, a fair non-discriminatory pricing plan, and improved grading standards for products going forward. The USMCA offers a fair free trade agreement that focuses on modernization and impartiality.
The U.S. – Mexico – Canada Agreement (USMCA) is a trade agreement between the named parties. The USMCA replaced the North American Free Trade Agreement (NAFTA).
NAFTA has contributed to the growth of integrated automotive production and supply networks within the North American region, and significant changes to the tariff structure will have major ramifications for automotive manufacturers and suppliers.
Vehicle Makers are Concerned
78% of automotive executives believe that the changes required by USMCA will have a positive impact on their company in the long term. 53% say USMCA will ultimately increase North American vehicle manufacturing and provide a net improvement for workers and consumers.
Any future imposition of tariffs on car parts and vehicle imports would severely impact the industry, most probably leading to increasing insolvencies. CAR studies estimate that this tax could result in a 2-million unit reduction in vehicles sold and a total job loss of more than 700,000 across the sector.
USMCA Pros and Cons
In the eyes of the US, the biggest changes under USMCA give more attention to the regulation of steel products and automotive products. Companies selling large and high value goods (like cars) are affected in more regions and more aspects of their supply chain.
The USMCA facilitates the participation of U.S. and Mexican SMEs in government procurement by providing notices of intended procurement in a single electronic portal, and encouraging the conduct of procurement by electronic means, thus increasing transparency and efficiency for small and medium-sized businesses.
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