Source: Canada US
Link: Are you ready for the new CUSMA/USMCA Auto Rules of Origin?
On September 30, 2018, Canada, the United States and Mexico announced the conclusion of the Canada-United States-Mexico Agreement (the “CUSMA” or “USMCA” or “NAFTA 2.0”), a modernized free trade agreement that will replace the existing North American Free Trade Agreement (“NAFTA”). On November 30, 2018, the CUSMA was signed by each country. However, the CUSMA is not yet in force. While each of the three countries is moving through their respective domestic ratification procedures, it is unclear when that process will be completed.
Notwithstanding the absence of the actual implementation date, auto producers and their parts suppliers should understand the new rules of origin and how they will impact their operations, their costs and their competitiveness.
The new rules of origin for vehicles and automotive parts are complex, requiring auto producers to conduct several calculations and meet several requirements before their vehicles will be eligible for duty-free treatment when they move within North America (Canada, Mexico and the United States).
Vehicle manufacturers must ensure that the automotive parts sourced for their vehicle production also satisfy new North American content requirements found in the CUSMA. If your currently sourced parts don’t provide enough North American content to ensure that your finished vehicles will qualify for duty-free treatment under the CUSMA, the time to address any shortfall is now.
Both automotive manufacturers and automotive parts suppliers need to be ready to meet and confirm the CUSMA requirements.
As you prepare for CUSMA you may wish to consider the following:
The above questions provide an overview of some of the general requirements. The specific detailed requirements including the calculation methods require a detailed assessment of the vehicle/part, the manufacturing operations and the timing of the calculation.
This is the time for auto manufacturers and auto parts makers to carefully review their sourcing, manufacturing operations and labour content. The new rules of origin are complex but achieving “originating” status for your products will help to manage costs, preserve existing customer demand and generate new sales opportunities.
Should you require any assistance, please do not hesitate to contact Heather Innes at (416) 350–1234 or firstname.lastname@example.org. For more information about Canada’s CUSMA rules, please refer to the LexSage website.