How can you prepare for changes in NAFTA under the USMCA?

1 Understand the new rules of origin

One of the main changes under the USMCA is the increase in the regional value content (RVC) requirement for some products to qualify for tariff-free trade. This means that a higher percentage of the materials and labor used to make a product must originate from the US, Mexico, or Canada. For example, the RVC for automobiles has increased from 62.5% to 75%. To prepare for this change, you need to review your sourcing and production strategies and ensure that you have the documentation to prove the origin of your goods.

2 Leverage the digital trade provisions

Another key change under the USMCA is the modernization of the trade facilitation and customs procedures. The USMCA promotes the use of electronic signatures, electronic payments, and online platforms for submitting and processing trade documents. It also allows for the use of a single window system for submitting all the required information to the customs authorities of each country. These provisions can help you reduce the administrative costs and delays associated with cross-border trade and improve your operational efficiency.

4 Monitor the labor and environmental standards

The USMCA also introduces new labor and environmental standards that aim to protect the rights and welfare of workers and the environment in the region. These standards include the enforcement of minimum wages, the prevention of forced labor and child labor, the protection of collective bargaining and union rights, and the implementation of measures to address climate change and conserve biodiversity. To prepare for these standards, you need to ensure that your suppliers and partners comply with them and that you have the mechanisms to monitor and report on their performance.

5 Stay updated on the implementation and review process

The USMCA is not a static agreement. It is subject to regular reviews and consultations among the parties to address any issues or disputes that may arise during its implementation. The USMCA also has a sunset clause that requires the parties to confirm their continued participation every six years, and a termination clause that allows any party to withdraw from the agreement after 16 years. To prepare for these possibilities, you need to stay updated on the developments and outcomes of the implementation and review process and be ready to adjust your plans and strategies accordingly.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?