With the trade deal replacing the North American Free Trade Agreement set to come into force July 1, 2020, importers and exporters with advance rulings that were obtained under NAFTA should be aware that these will no longer be valid as of that date.
Therefore, in order to maintain the certainty provided up to now by existing NAFTA rulings, it will be necessary to request new advance rulings made in accordance with the Canada-United States-Mexico Agreement (CUSMA, aka the United States-Mexico-Canada Agreement or USMCA).
The reason for this is owing to the fact that the Rules of Origin under CUSMA/USMCA are substantially different in some cases, most notably in the automotive sector.
Scope of Advance Rulings Under CUSMA/USMCA
Unlike NAFTA which sets out nine categories of inquiry customs may address, including duty-free re-entry of goods and satisfaction of origin marking requirements (but not tariff classification), the more limited scope of the CUSMA/USMCA (Article 7.5) directs the three country’s customs administrations to provide advance rulings with regards to just four issues:
- Tariff classification;
- Application of customs valuation criteria for a particular case in accordance with the Customs Valuation Agreement;
- Origin of the good, including whether it qualifies as an originating good; and
- Whether a good is subject to a quota or a tariff-rate quota; in addition to other matters.
Time is of the Essence
The USMCA requires that customs authorities must issue advance rulings “in no case later than 120 days after it has obtained all necessary information,” which is similar to the existing NAFTA procedures. What this means in effect is that a request for an advance ruling submitted now could take until mid-September before it is issued.
Companies in this position need to be alert to the fact they will no longer be able to depend on the NAFTA advance ruling after the implementation of CUSMA/USMCA. In Customs Notice 20-14 concerning the implementation of CUSMA, the CBSA clearly states that NAFTA origin advance rulings will no longer be valid once CUSMA enters into effect.
Seeking a new advance ruling under the terms of CUSMA/USMCA as quickly as possible will help to minimize the lapse in coverage between when the new trade agreement takes force and the date a new ruling is issued by Customs.
How to Get an Advance Ruling
The process for obtaining an advance ruling from CBSA pertaining to questions of origin related to free trade agreements is described in Customs Memorandum D11-4-16. With regards to application instructions and required information for rulings concerning the tariff classification of goods, this is covered by Memo D-11-11-3.
The advance ruling request must be sent by mail or by email to the appropriate regional CBSA Trade Operations Divisions office.
It is expected that updated guidance will be published in due course to reflect various technical changes made by the CUSMA/USMCA.
Need More Information
Advance rulings under CUSMA/USMCA can be an important part of your company’s risk mitigation strategy, one that provides clarity and certainty your goods qualify for duty-free tariff treatment and/or are properly classified according to Customs. Should you have questions about obtaining an advance ruling or need assistance preparing your request, don’t hesitate to contact one of our helpful trade experts.
Find USMCA/CUSMA Certificate of Origin within “USMCA/CUSMA & Free Trade Documents”