NAFTA Parties Agree to Scrap Paper Certificates of Origin, Considering New de Minimis Levels

The U.S., Canada and Mexico have agreed in principle to NAFTA language that would forbid countries from requiring paper certificates of origin to qualify for NAFTA treatment, and Canada and Mexico are now considering increasing their de minimis levels closer to the U.S.’s $800 level, according to lobbyists close to negotiations. The NAFTA parties easily agreed to language to eliminate the use of paper documents in any customs processes that currently call for such credentials, including paper certificates of origin, said a lobbyist who is a cleared adviser for NAFTA negotiations. The countries hope that this will help drive a shared goal to modernize trade facilitation and everyday customs procedures across North America, he said. Parties are conducting the fourth round of NAFTA renegotiations Oct. 11-17 in Arlington, Virginia.

Finalization of the language depends on whether negotiators can settle differences on some of the talks’ more controversial issues. Such issues include a U.S. proposal to add a five-year NAFTA sunset clause (see 1709150013), to removal of the binational antidumping and countervailing duty dispute settlement process (see 1710120034), and loosened requirements for initiation of AD and CV duty cases on seasonal and perishable imports (see 1709130031), the adviser said.

Further, after resisting an initial U.S. push to raise their de minimis levels to the U.S.’s threshold (see 1709010029), Canada and Mexico are now seriously considering a compromise to raise their de minimis levels to the $250-$300 range, the adviser said. Canada and Mexico have $15 and $50 de minimis levels, respectively. Canada has lingering concerns about how a de minimis increase would affect collection of their goods and services tax, but there is “strategic thinking” among the parties as to how Canada can bump up its level without significant damages to its government revenue. The three countries appear to be on a “glide path” to Canada and Mexico agreeing to higher de minimises, the adviser said. “I also understand MX and CA are leaning toward an increase,” said another cleared NAFTA adviser, noting he hasn’t heard about a specific amount being considered.

As some U.S. government officials, including in CBP, still feel consternation about the U.S.’s de minimis increase to $800 in 2016, there’s a good chance that the Office of the U.S. Trade Representative will be content to claim victory on the issue if Canada and Mexico increase to a level lower than the U.S.’s initial $800 proposal, the first adviser said. An express industry official said in an email that the three parties agreed on “major portions” of the customs/trade facilitation chapter, but haven’t finalized updates because of “differences remaining over a few issues (presumably de minimis, among others).”

Similar to the customs documentation issue, final agreement on an increase in Canadian and Mexican de minimises rests on whether the more bothersome issues for those countries can be resolved, the first adviser said. Mexico appears to be on a “war footing” against the U.S.’s proposal for a set-aside process for seasonal and perishable AD/CV duty cases, that adviser said. While Mexico has repeatedly stated its opposition to the proposal, which it understands could potentially lead to more actions against U.S. winter specialty crop imports from the country, Canada is also concerned that such a provision would have a chilling effect on their summer produce exports to the U.S., including tomatoes from Ontario, for example, the adviser said. The U.S. hasn’t shown any signs about the degree to which it would be willing to compromise on that proposal, he said. “No one is there yet.”

Finally, Mexico and Canada are believed to be still working on counterproposals to a U.S. pitch during the third negotiating round to remove tariff preference levels for textiles and apparel and replace the framework with “some kind of new short supply process,” said a retail industry lobbyist who is not a cleared NAFTA adviser. U.S. textile groups earlier this month called for bipartisan backing from the Senate Finance and House Ways and Means committees to support their effort to eliminate the TPL system (see 1710050044).