Revised NAFTA includes new customs procedures

Date: Wednesday, October 3rd, 2018
Source: American Shipper

New provisions to expedite express shipment clearances, normalize timelines for issuing advance customs rulings and for online publication of customs procedures are among the customs measures agreed to by the United States, Mexico and Canada during their renegotiation of NAFTA, which completed Sunday night.

According to the pact’s customs text, the new U.S.-Mexico-Canada Agreement (USMCA) — which the rebooted NAFTA is known by — sets forth that each party adopt or maintain “specific expedited customs procedures” for express shipments while maintaining appropriate customs controls.

The procedures must provide for information required to release an express shipment to be submitted and processed before the shipment arrives, allow a single submission of information such as a manifest covering all goods contained in the shipment “through, if possible, electronic means” and provide for subject shipments, “under normal circumstances,” to be released immediately after arrival, as long as all required documentation and data are submitted.

Canada agreed to raise its de minimis level from $20 (CAD) to $150 (CAD), sparing all shipments up to that amount from duties, but will collect taxes on shipments worth $40 (CAD) to $150 (CAD), according to the text. This follows Mexico’s agreement to raise its de minimis level from $50 to $100. The United States’ de minimis level is $800.
The USMCA also includes new language to prohibit member countries from requiring, as a condition of applying for an advance ruling, exporters or producers of another member country to be in a contractual or other relation with a person located in the territory of the importing party.

The pact also would newly require governments to issue advance rulings “in no case” after 120 days after obtaining all necessary information from the person requesting an advance ruling, according to the USMCA text.

Further, the pact includes language newly requiring parties to provide advance rulings regarding customs valuation.

Among the online publication provisions are a requirement for all parties to publish on the internet the documentation and data they require for importation into, exportation from or transit through their territories; a requirement to publish laws, regulations and procedures for import into, export from or transit through their territories; and a requirement to publish laws, regulations and procedures to “be a customs broker, to issue licenses and regarding the use of customs brokers,” the text says.

The customs chapter also includes a subsection regarding the use of customs brokers, which directs governments to allow self-filings for customs declarations and other import or transit documentation, meaning filings without the services of a customs broker. Mexico currently requires the use of a broker to handle customs filings.

“Each Party shall ensure that access to the electronic systems are available for self-filers on a non- discriminatory basis relative to other categories of users,” the subsection states.
The language also stipulates that no parties impose arbitrary limits to the number of ports or locations that a customs broker may operate, and that parties must allow licensed customs brokers to electronically submit a customs declaration and import documentation to electronic filing systems, at any port at which the broker is licensed to operate.

An industry official and Meeks, Sheppard, Leo & Pillsbury attorney Robert Leo agreed that the customs language represents a step forward for trade facilitation.
Leo called the USMCA customs text an upgrade over the Trans-Pacific Partnership customs language, and said it will benefit U.S. exporters who ship to Canada and those who ship to Mexico.
“It brings Mexico up to U.S. standards for customs facilitation,” he said, pointing to the requirement for parties to allow self-filings.

Both the industry official and Leo noted the establishment of a trilateral Trade Facilitation Committee, which will handle several issues, including information exchanges regarding parties’ experiences with implementing single window filing systems, and acting as a forum for the sharing of views on individual cases of tariff classification, customs valuation, other customs treatments, or “emerging industry trends and issues, with a view to reconciling inconsistencies, supporting a competitive business environment, or otherwise facilitating trade and investment among the parties,” the customs text states.

The committee should help all three parties resolve discrepancies between how the U.S., Canada and Mexico interpret the agreement’s rules of origin, including tariff-shift rules, Leo said. Such issues have recurred throughout the duration of NAFTA, he added.

There have also been inconsistent classifications between the U.S. and Mexico and U.S. and Canada, whereby the other countries classify an article differently than the U.S., and the Trade Facilitation Committee should help establish a uniform interpretation.

Leo and several of his clients have questioned, “’If you can get a ruling from the U.S., why doesn’t Mexico follow it, why doesn’t Canada follow it, and vice-versa?’” he said. “We still haven’t gotten there, but at least if you have two different rulings, you can appeal to this committee, and they’re supposed to pick it up and try to figure it out and make a uniform decision.”
Also notable is USMCA’s requirement for all parties to “establish or maintain” a single window system no later than Dec. 31, 2018, that enables electronic submission through a single entry point of the documentation and data required by the party for importation into its territory, the industry official and Leo said.

The U.S., Canada, and Mexico all have respective single-window entry platforms, so the Dec. 31 date refers less to the existence of single-window systems and more to whether the single-window platforms are capable of accepting electronic submissions from a single point, the official said.

“That could mean…it doesn’t have to include everything, but it has to be functioning,” the official said of the single window language. “And I think if you’ve heard any of the stories, I don’t think everybody’s in alignment with the well-functioning nature of the single window systems among or in between the countries.”

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