This message is to inform the Trade Community of the following U.S. – Mexico – Canada Agreement (USMCA) updates:

Consolidated Appropriations Act of 2021

On December 27, 2020, the Consolidated Appropriations Act of 2021 [H.R.133 — 116th Congress (2019-2020), Pub. Law No. citation pending, herein after “the Appropriations Act”] became law. It includes updates to the U.S. – Mexico – Canada Agreement’s (USMCA) treatment of goods entered through foreign trade zones (FTZ) and merchandise processing fee (MPF) refunds on post-importation claims (i.e. 520(d) and reconciliation claims). These changes, contained in the Appropriations Act’s Title VI, USMCA Implementation Act Technical Corrections, Sec. 601, are retroactively effective as of July 1, 2020.

(1)  Foreign Trade Zones

Under NAFTA, non-originating goods used in production processes in FTZs could not qualify as originating as a result of that processing.  Specifically, the special rule applicable to FTZs prohibited non-originating goods used in production processes within FTZs from ever qualifying as originating goods even if all conditions under the general rules were otherwise satisfied.

Initially, this prohibition was not incorporated into the USMCA Implementation Act [Pub. Law No: 116-113 (January 29, 2020)]. Title VI, Sec. 601(b) of the Appropriations Act now applies this FTZ prohibition to USMCA preferential treatments claims.    

(2)  Merchandise Processing Fees

Title VI, Sec. 601(e) of the Appropriations Act authorizes CBP to refund merchandise processing fees (MPF) for post-importation claims (i.e. 520(d) and reconciliation claims) for USMCA preferential treatment.

End of Restrained Enforcement

CBP elected to exercise a period of restrained enforcement, from July 1 through December 31, 2020, on USMCA preferential treatment claims. This was done in order to provide the trade sufficient time to adjust to the new requirements of the Agreement, and in consideration of the business process changes necessary to achieve full compliance. Notice of the restrained enforcement period was included on page 3 of CBP’s USMCA Implementation Instructions, which was posted on June 30, 2020 [CBP Pub. No. 1118-0620; https://www.cbp.gov/document/guidance/usmca-implementation-instructions].

This period of restrained enforcement will conclude on December 31, 2020.

Automobiles – Additional Time for Verifications

Please note that while the USMCA’s restrained enforcement period will end on December 31, 2020, CBP also announced in its USMCA Implementing Instructions that from July 1, 2020 to June 30, 2021, for automotive goods, CBP may allow additional time to respond to a verification (CBP Form 28, Request for Information). Automotive goods are defined as all goods under Harmonized Tariff Schedule of the United States headings 87.01 through 87.08, and the following miscellaneous headings: 40.09; 4009.12; 4009.22; 4009.32; 4009.42; 4010.31; 4010.32; 4010.33; 4010.34; 4010.39; 40.11; 4016.93; 4016.99; 7007.11; 7007.21; 7009.10; 9031.80; 9032.89, per the USMCA Ch. 4 – Rules of Origin – Annex 4B.

The USMCA contains no distinction between new and used automotive goods. All importers seeking USMCA preferential treatment for automotive goods must meet the USMCA's automotive rules of origin provisions.