CBP Addresses Some Open USMCA Issues as COAC Highlights Ongoing Challenges

There is a desire for more “uniformity” for country of origin and marking under USMCA, similar to the rules in Part 102 of NAFTA, said Heidi Bray, manager-U.S. and global customs compliance for Fiat Chrysler Automobiles. Bray and other Commercial Customs Operations Advisory Committee members mentioned a variety of USMCA “challenges” during the Oct. 7 COAC meeting. She said she thinks it would be a good idea to bring back a USMCA working group to discuss those issues.

The 102 rules gave “us a greater degree of objectivity,” said Amy Magnus, director of Customs Affairs and Compliance at A.N. Deringer. “It seems to be a little bit more subjective when we have to make the country of origin determination based on substantial transformation, which often results on a request for a ruling, because reasonable people can disagree.” Getting an answer to a ruling request often takes a long time, she said. “The certainty that 102 gave us I think is more helpful,” she said. The issue is the subject of at least two CBP rulings so far (see 2009160024 and 2008110037).

The idea of solidifying something similar to the 102 rules “lends itself to further discussion as a very complex application of customs law,” CBP Executive Assistant Commissioner Brenda Smith said. “We really want to understand what the impact is on you all of applying 102 rules to the right universe,” she said.

CBP is hopeful it will be able to meet the 120-day deadline required for issuing an advance ruling under USMCA, though new regulations on the subject are needed, Smith said. “Our intention now is to make the progress we can with the regulatory package,” but “if we are not able to use the new regulations before we hit the 120-day deadline, we will be issuing regulations that reflect the status quo,” she said. “There continue to be some open issues that have yet to achieve a final resolution and that requires more action on the legal framework side, whether it's from the Hill or from the executive branch.”

There is also “still a lot of confusion out there” around the USMCA and issues such as used vehicles and spare parts, Bray said. “Spare parts can sit in stock for many, many years, well beyond 10 years, and when they do cross the border, how should they be treated if there were no USMCA rules at the time the parts were manufactured, what is an importer/exporter to do with those?” Bray asked. “Same with used vehicles. If they qualified at the time they were new under NAFTA, how are they going to qualify when they cross the border again under USMCA?”

John Leonard, CBP executive director-trade policy and programs, addressed the question of used cars. “Where it is right now is those used cars are actually considered to be not qualifying for USMCA” because “there's no provision for it,” he said. That “doesn't mean it's the end of the story,” but legislative work would be required, he said.

Kate Weiner, director of North America Customs at Cargill, agreed that the USMCA working group should be resurrected. “I think it's important that we also consider how we manage exporters from the U.S. and assisting them as well with the regulations as they come out on USMCA in general, as they might be working with their Mexican and Canadian counterparts as on these issues,” she said. It's important that the U.S. have a “united voice” for both “importers and exporters,” she said. Customs broker Jose Gonzalez also mentioned the need along the southern border for “clear guidelines” for the labor value content requirements' “gray areas.”