Oct 2, 2018
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NAFTA now called USMCA, e-comm implications revealed

Oct 2, 2018

The North American Free Trade Agreement on Sunday became the U.S.-Mexico-Canada Agreement, or USMCA, with the Office of the U.S. Trade Representative releasing key implications for e-commerce as a result of the new pact.

Photo: Fibre2Fashion

The USMCA trade agreement forged between U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto covers several new trilateral trade policies across industries such as automobiles, dairy and intellectual property, as well as key breaks for online retailers and consumers.

By country, Mexico and Canada will increase their 'de minimis' shipment value levels (the minimum value of an imported shipment that is subject to duty collection and customs documentation), with Mexico doubling its de minimis threshold to $100 from $50, and Canada lifting to C$40 from C$20.

On a consumer level, Canadians will avoid paying duty for cross-border online orders that are C$150 or less and Mexican shoppers have duty-free cross-border online orders on $117 or less. 

The deal also facilitates the shipment of orders across the three states, meaning small- and mid-sized businesses are more inclined to commence cross-border trading.

“Increasing the de minimis level with key trading partners like Mexico and Canada is a significant outcome for United States small- and medium-sized enterprises (SMEs),” said the Office of the U.S. Trade Representative, in a document released online.

“These SMEs often lack resources to pay customs duties and taxes, and bear the increased compliance costs that low, trade-restrictive de minimis levels place on lower-value shipments, which SMEs often have due to their smaller trade volumes. New traders, just entering Mexico’s and Canada’s markets, will also benefit from lower costs to reach consumers. United States express delivery carriers, who carry many low-value shipments for these traders, also stand to benefit through lower costs and improved efficiency.”

According to a joint statement made on Sunday, the USMCA will expire in 16 years. The three offices in Mexico City, Ottawa, and Washington will jointly review the deal six years after it begins, with an option to extend the deal beyond the 16-year term.

In November, the USMCA is expected to be written into the legislatures of each country, before it is ratified. Most of the new agreement's provisions are expected to go into effect in 2020, according to U.S. media reports.

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