CBP Interim USMCA Instructions to Form Basis for New Regs, but Changes Still Possible

Interim implementation instructions for the U.S.-Mexico-Canada Agreement posted April 20 by CBP provide the technical language needed for companies to develop internal processes as they prepare for the revised NAFTA to take effect, but it will be tough for importers to meet the new guidelines in time, particularly given the disruptions resulting from the COVID-19 pandemic, trade lawyer and NAFTA specialist Dan Ujczo said following release of the document.

The interim implementation instructions provide “guidance with respect to preferential tariff claims under the USMCA,” it said. The document covers many of the USMCA provisions, including making preference claims, rules of origin for automotive goods and country of origin marking rules. Lengthy appendices cover automotive rules of origin, including labor value content requirements, as well as textile and apparel rules of origin procedures. “The procedures outlined in this memorandum are in place pending the issuance of the applicable regulations,” CBP said. The document is “not final and is subject to further revision.”

The provisions of the implementing instructions will still “need to be aligned formally with Canada and Mexico as part of the Uniform Regulations process,” Ujczo said. “The ‘Uniform Regulations’ will cover a broader scope of issues including the labor enforcement mechanisms and be subject to the formal rulemaking procedures in the U.S.,” he said.

Some changes from current NAFTA provisions detailed in the guidance include confirmation of the elimination of the NAFTA marking rules, as well as “the potentially challenging elimination of the NAFTA Certificates of Origin,” Ujczo said. “With regard to the automotive-related and labor value content annexes, suffice it to summarize that things just got real. The precise HTSUS codes for the particular parts classified as ‘core,’ including the much-awaited for provisions regarding electrical vehicle batteries, are provided. US-CBP also has provided formulas relating to labor value content (LVC) and guidance regarding interpretation," he said.

“Undoubtedly what will follow is a robust discussion on whether or not industry is ready to meet these compliance imperatives. Our experience on the ground is that the majority of the importing community would struggle to have met these instruction[s] pre-COVID. It is a near impossibility as the shutdowns continue into May,” Ujczo said.