Carson International is pleased to partner with Miller Thomson LLP for another instalment in our webinar series addressing Canada/U.S. cross-border trade developments and updates.
Cross-border ecommerce is plagued by a myriad of legal and financial regulations, with every country has its own regulations concerning imported goods. Customs agencies use the commodity type, quantity, and other factors to determine duties and taxes charges.
Avoid missteps that may result in border delays, financial headaches and fines by joining the conversation.
Dave Pentland, Carson International Dan Kiselbach, Miller Thomson LLP
Avoid Audits and Delays While Increasing Your eCommerce Business Wednesday, September 30, 2020 Time: 12:00 p.m. (PST) / 3:00 p.m. (EST)
Please register by September 29 at 4:00 p.m. (PST).
The webinar will be approximately 30 minutes in length.
Canada is abandoning free trade negotiations with China amid a host of disagreements on a range of topics, according to Foreign Minister Francois-Philippe Champagne.
“I do not see the conditions being present now for these discussions to continue at this time. The China of 2020 is not the China of 2016,” Champagne said about trade negotiations as quoted by The Globe and Mail.
The comments mark a major policy shift towards China that brings Canada more in line with the hardline posture adopted by the United States, Australia and parts of the European Union.
What began as an expressed interest in fostering deeper economic ties between the two countries, has now turned soured after Canadian authorities detained Huawei CFO Meng Wanzhou in 2018 at the request of the U.S., which was followed by the arrests of two Canadian nationals on charges of espionage in China.
The tense relationship has been further exacerbated by Canada’s condemnation of the newly enacted Chinese law on national security in Hong Kong and a suspension of some bilateral agreements with the special administrative region.
Beijing has said that it reserves the right to respond to any interference on Canada’s part and the Canadian side will be held accountable for all the consequences.
Despite the tensions, China remains Canada’s second-largest trading partner after the US.
As of August 16, 2020, the U.S. government restored a 10% tariff on Canadian aluminum imports. In response, the Canadian government is taking steps to target the U.S. with retaliatory tariffs, totalling $3.6 billion.
Aluminum and retaliatory tariffs will have a huge impact on North American trade.
That’s why we put together this guide to help navigate businesses through this ongoing trade situation. Download our guide today to find out what you can do to reduce impact to your business.
In September 2018, The United States, Canadian, and Mexican governments announced a new trilateral free trade agreement. As of March 2020, the agreement, known as USMCA or CUSMA, is approved by all three nations and is set to effectively replace the previous agreement, NAFTA.
The USMCA’s main goal is to implement a free-trade system that accommodates for the digital era. The agreement features several key changes that make it different from and a notable improvement to NAFTA.
What Is NAFTA and What Does It Stand for?
Prior to the introduction of the USMCA/CUSMA, the North American Free Trade Agreement (NAFTA) was in place to help reduce trade costs, increase investment opportunities, and enable North American nations to play a more integral role in the global marketplace. The agreement came into effect in 1994.
Like the newly approved USMCA, NAFTA is an agreement between Canada, the U.S., and Mexico, with the goal of liberalizing trade between the three countries.
What Is USMCA/CUSMA and What Does It Stand for?
The new agreement is known in the U.S. as the United States-Mexico-Canada Agreement (USMCA) and worldwide as the Canada-United States-Mexico Agreement (CUSMA). The main goal of the USMCA/CUSMA is to modernize free trade between the three countries and make some necessary updates to rules of origin and processes around North American trade.
How Are NAFTA and USMCA Different?
There are some main differences between the USMCA and NAFTA that will make the USMCA a more ideal replacement for NAFTA.
One big change was the threshold for duty-free entry of low-value goods into each of the three countries. The new de minimis include:
• Canada: $40 CAD for taxes and $150 CAD for customs
• U.S. – $800 USD
• Mexico – $50 USD for taxes and $117 USD for customs
Certificate of Origin
Unlike NAFTA, the USMCA won’t require importers to complete a formal certification document. Instead, importers, exporters, or producers can use informal documentation including commercial invoices. However, under the USMCA, previous NAFTA certification documentation and certificates will need to be kept for at least five years.
Improved Dairy Market Access
The U.S. dairy market will benefit from access to another 3.6 percent of the Canadian dairy market. The USMCA also removed restrictions on imports of ultra-filtered milk into Canada from the U.S. Canada further benefits from keeping the dairy supply management system currently in place, which maintains limits on imports of foreign dairy products.
The North American auto industry will also benefit from the changes made in the USMCA. For example, the agreement requires 75 percent of a vehicle’s parts to come from North America, an increase from the 62.5 percent rule in NAFTA. In addition, 70 percent of all glass, aluminum, and steel automotive fabrication materials must come from North America. Workers who help produce 40 percent of automobiles and 45 percent of light trucks will also be required to make at least $16 per hour.
There are several other areas that the USMCA will affect, making it a considerable improvement over NAFTA. Ultimately, the ratification of the new agreement will lead to several major changes in North American trade.
For up-to-date information regarding USMCA, visit our CUSMA page. If you need help understanding these changes, or navigating their impact, Carson International can walk you through these updates every step of the way.
Carson International is pleased to partner with Miller Thomson LLP for a webinar series addressing Canada/U.S. cross-border trade developments and updates.
Trade has always been an integral part of the Canada / United States relationship and even during times of crisis, like today, business depends on goods moving as seamlessly as possible between our countries.
Our expert panel will explore with you the following topics: duty payment deferrals; tax deferrals; new CUSMA / USMCA / T-MEC rules of origin; tariff rate quotas, advance rulings; e-commerce; customs enforcement; potential US tariffs, potential Canadian countermeasures, “Buy America” provisions, trade sanctions; and anti-dumping and countervailing duties.
Dave Pentland, Carson International Dan Kiselbach, Miller Thomson LLP
Personal Protective Equipment: What Importers Need To Know Thursday, July 23, 2020 11:00am PST
The Canada-US-Mexico Agreement: What’s New in the “New NAFTA” Thursday, August 6, 2020 11:00am PST
Non-Resident Importers: Tips and Traps Thursday, August 20, 2020 11:00am PST
Risk Minimization Strategies: Advance Rulings Thursday, September 3, 2020 11:00am PST Please note, this webinar will also include a brief overview of aluminum tariffs.
Each webinar will be approximately 30 minutes in length.
To help facilitate trade between countries, international trade agreements have been put in place to maintain efficient operations, comply with each nation’s standards, and avoid certain non-tariff and tariff barriers, among other benefits.
What Are the Different Types of International Trade Agreements?
There are two central types of international trade agreements: bilateral and multilateral. Agreements could pertain to certain types of goods and services or specific market entry barrier types.
Bilateral International Trade Agreements
Bilateral agreements facilitate trade between two countries. Some bilateral agreements include Canada-Israel., U.S.-Mexico, and E.U.-South Africa, among others.
Multilateral International Trade Agreements
Also known as regional agreements, multilateral agreements form certain international trade unions, including the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). For example, multiple treaties including the Treaty of Rome help regulate the European Union, while the General Agreement on Trade and Tariffs shapes the WTO.
How Do They Affect Trade?
Having international trade agreements in place can benefit international imports and exports in several ways, including:
• Better access to a larger customer base
• Optimized supply chain operations through dealing with foreign suppliers via the agreement
• Reduced cost of penetrating foreign markets because of more efficient and simplified customs processes, duties, and regulatory compliance
• More efficient production through partially or completely relocated operations
• Easier access to foreign financial institutions and investors along with foreign workforces and customers
Examples of International Trade Agreements
Ever since the General Agreement on Tariffs and Trade (GATT) was implemented, the world has seen an increase in multilateral trade agreements along with local trade agreements.
One important trade agreement that helped pave the way for multilateral regionalism was the 1944 Bretton Woods Agreement, which gave rise to the International Trade Organization (ITO), the International Monetary Fund (IMF), and the World Bank. The Bretton Woods Agreement began when both the U.S. and Britain came out of World War II as the world’s foremost economic leaders, which led them to develop a more liberated and cooperative trade system.
The GATT came along in 1947 as the ITO dissolved following the Bretton Woods Agreement. The GATT would help reduce tariffs for member nations, allowing for expanding multilateral trade, but a growing number of regional trade agreements also came out of it. Part of what would develop from the GATT just five years after its implementation would be the European Union.
Another key trade agreement to come about in the early 1990s would be the North American Free Trade Agreement (NAFTA), which formed in the U.S. between Mexico and Canada. By 1995, the GATT would be replaced by the World Trade Organization (WTO), which would work to develop and implement policies on far more than goods, covering services, investment, and intellectual property.
Another major recent development is the development and implementation of the United States-Mexico-Canada Agreement (USMCA), which is set to replace NAFTA. The USMCA will boost auto manufacturing, strengthen labor laws, provide more market access for dairy farmers, upgrade NAFTA to accommodate the technology sector, and more.
Understanding the ins and outs of international trade, particularly the impacts of international trade agreements, will help you stay up to date with trade law and keep your operations running as smoothly as possible. If you’re finding it difficult to keep up with trade laws or navigate the different agreements–let us do it for you. The knowledgeable trade experts at Carson International can provide reliable assistance on all things trade, from start to finish.
As the COVID-19 pandemic has spread in North America, it’s had a certain impact on customs and trade. The following is a timeline of all of the major announcements and updates that we’ve been tracking at Carson International.
April 8 – WTO and WCO Combine to Maintain Efficient Cross-Border Trade
Both the World Trade Organization (WTO) and the World Customs Organization (WCO) released a joint statement in early April revealing that they would join forces to enable trade for essential goods including food, medical supplies, and energy across the border. They also pledged to work toward ensuring that goods would reach those who need it the most.
April 15 – CBP Launches a New Website Dedicated to COVID-19
U.S. Customs and Border Protection developed and launched a website dedicated specifically to COVID-19-related updates and other information about how the pandemic would affect trade. Some of the information available on the website includes Cargo Systems Messaging Service communications along with Federal Register Notices in addition to regular announcements and updates regarding security and various trade programs.
April 23 – Temporarily Limited Service at Land Border Crossings in Canada
In an effort to help prevent the spread of COVID-19, the CBSA made a temporary reduction to Canadian land border crossing service hours. The service hour reduction affected a total of 27 border locations throughout the country.
April 27 – WCO and ICC Join Forces to Enable Global Trade Action
The World Customs Organization (WCO) and the International Chamber of Commerce (ICC) announced in a joint statement that they would work to facilitate customs and trade on an international level to help maintain operations during the pandemic.
April 30 – UNCTAD Puts Action Plan in Place to Further Maintain International Trade and Transportation
As the pandemic continued to spread, the United Nations Conference on Trade and Development (UNCTAD) released an action plan consisting of 10 points to help facilitate international trade and transportation. The policy would help mitigate some of the potential long-term risks that the pandemic posed.
May 5 – USTR Considers Extending China Tariff Exclusions for One Year
The U.S. Trade Trade Representative (USTR) for the Trump administration was deciding whether it would be best to implement a one-year extension for China tariff extensions to provide some relief for U.S. businesses amid the pandemic. The extension would apply to certain products that are excluded from the 25 percent China tariffs put in place for Chinese goods.
May 7 – CBSA Offers Duty Relief for Goods Related to COVID-19
Canada Border Services Agency (CBSA) offered duty relief for some products imported into Canada. The products the duty relief applied to included gloves, face and eye protection, and other supplies used to help prevent the spread of COVID-19.
May 14 – Fourth Round of China Section 301 List 4A Exclusions
The USTR enabled the fourth round of exclusions from Section 301 List 4A tariffs in place for China-imported goods. Some of the products that the exclusions applied to included COVID-19-related medical products.