Statutes on Origin Verifications, Penalties for Misclassification Among Necessary Changes for USMCA, USTR Says
In order for importers to be able to create certificates of origin under the U.S.-Mexico-Canada Agreement, U.S. law will have to change. That's one of dozens of changes to statutes that will need to happen to accommodate the changes between NAFTA and USMCA. The U.S. trade representative shared the six-page outline of the needed changes with Congress late on Jan. 29, fulfilling one of the steps under fast-track consideration of the trade pact. The document suggests that USTR is still seeking a lowering of U.S. de minimis levels specifically for Canada and Mexico (see 1810190043), since those countries did not raise their de minimis levels as much as the U.S. negotiators wished.
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It does acknowledge that the House Ways and Means Committee and Senate Finance Committee will have some say about whether that occurs. "After consultation with the [committees], the Administration may include changes to section 901 [de minimis] of the Trade Facilitation and Trade Enforcement Act of 2015." Many members of Congress have already said they oppose such a change (see 1901170007). Finance Committee Chairman Sen. Chuck Grassley, R-Iowa, responded to the submission by saying it's an important step, and "Congress has to carefully consider the agreement and work out the details before it can be ratified."
One of the documents Congress is awaiting is the International Trade Commission's analysis of the agreement's economic effects. That report was due March 15, but that deadline will be delayed because of the federal government shutdown. A spokeswoman from ITC said it will be 35 calendar days behind, which moves the new deadline to April 19. However, there will be a Federal Register notice with more details soon.
The USTR document also says 19 USC 1592 will have to change so that it exempts "an importer from penalties for an invalid claim that a good qualifies as an originating good under the USMCA, provided that the importer on becoming aware and prior to the Government's discovery of the error voluntarily corrects the claim and pays any customs duty owed." Under the new agreement, Section 1592 penalties will also be applicable to U.S. producers and exporters "that make false certifications that goods qualify as originating goods under the USMCA."
Anyone that certifies a good qualified "must keep copies of such certifications for at least five years and render them for examination and inspection by U.S. customs officials, upon request," USTR says, and the 19 USC 1508 will need to be amended to say that. USMCA claims will also be able to be made one year after importation under 19 USC 1520(d).
There will be no merchandise processing fee for Tariff Preference Level imports, so the law will need to be updated. The TPLs themselves will also change, and the law will need to reflect that. The document says, "The USMCA implementing bill will also need to provide for specific verification procedures for textiles and apparel trade and actions to address customs offenses." An implementing bill will need to provide for a transition period for changes, including claims for preferential tariff treatment.
Duty drawback will mostly be unchanged, but there will be a change to the exception for sugar, which will expand to include sugar-containing products. If an importer brings an originating good in, but does not receive duty-free treatment at the time, the importer "has at least one year from the date of importation to claim preferential tariff treatment," the document says, and the Tariff Act of 1930 will need to say that.
USTR says the implementing bill needs to specify that agricultural imports covered by USMCA cannot have tariffs increased under an agricultural safeguard. However, industrial goods from NAFTA neighbors will no longer be protected from global safeguard actions. The document closes by saying "the Administration, in consultation with the [members of the two committees], may consider other provisions that may be strictly necessary or appropriate to provide for the fullest implementation and enforcement of the USMCA."