Explore key changes from NAFTA to CUSMA for importers and exporters
Most Canadians companies will not notice a large difference in the transition from NAFTA to CUSMA. CUSMA maintains NAFTA’s tariff-free market access for goods traded between Canada, the U.S. and Mexico.
For more information on key changes for importers, see the on the website.
Overview of new and modernized chapters
The new Agreement has 34 chapters (12 more than the original) that help North America move forward, and remain resilient and competitive. These chapters include:
- Good regulatory practices: A new chapter that increases transparency and predictability in the regulatory systems, which helps reduce trade barriers between CUSMA partners.
- Digital trade: A new chapter that helps facilitate economic growth and increases trade in digital products transmitted electronically, while protecting the free flow of information across borders and maintaining the legal frameworks for the protection of personal information of users.
- Labour: A comprehensive chapter, fully subject to the dispute settlement provisions of the Agreement, which aims to level the playing field, and improve labour standards and working conditions in all three countries by building on international labour principles and rights.
- Environment: A robust chapter that is subject to dispute settlement and is designed to address global environmental challenges, including provisions to implement the Parties’ obligations under specific Multilateral Environmental Agreements, help combat illegal wildlife trade and illegal fishing, help conserve species at risk and biological diversity, and control ozone-depleting substances and marine pollution.
The new agreement does not include government procurement obligations between Canada, the U.S. and Mexico.
Changes regarding the certification of origin
If you export to the U.S. or Mexico, your importer needs to present a certificate of origin in order for your products to benefit from CUSMA’s preferential treatment (lower or no tariffs).
With CUSMA, the process for the certification of origin is simplified. Unlike NAFTA, under CUSMA there is no prescribed format, and the Agreement only requires a set of minimum data elements be provided that indicates that the good is an originating good. These elements include:
- identification and address of the certifier
- exporter
- producer
- importer
- description of the good
- the rule of origin
IMPORTANT: Canadian importers of goods will also be impacted as of July 1st. Importers can consult CBSA’s dedicated page on .
New certification process
The former NAFTA form has been replaced with a new origin certification process, which is no longer a prescribed form but a set of data elements that can be captured on an invoice or any other document.
The certification of origin may be completed by either the exporter, producer, or importer of the goods and may be placed on an invoice or any other document. Furthermore, the certification of origin may be completed, signed and submitted electronically.
Consult the , including an example of a valid certificate of origin, and see on the Canada Border Services Agency website for more information.
In line with all of Canada’s FTAs, the ultimate responsibility to provide records to prove that the good meets the rule of origin falls to whomever completes the certification of origin.
If you have questions regarding rules of origin, please contact the North America Trade Policy team.
Key sector-focused changes
Exporters in the following sectors may also see some changes in rules of origin:
Agriculture
Canada secured several beneficial outcomes for agriculture, including:
- a modernized Committee on Agricultural Trade which provides a forum for Parties to address issues and trade barriers
- a consultation mechanism for Parties to address domestic support that may be trade distorting
- maintains commitments that reflect the unique character of the sale of wine and spirits in Canada
- builds on commitments from the original agreement’s chapter on sanitary and phytosanitary (SPS) measures, while maintaining a CUSMA Party’s ability to protect human, animal and plant life or health
- CUSMA includes new market access for Canada into the U.S. for sugar and sugar containing products. For more information, consult the notice on export tariff rate quotas for refined sugar and sugar-containing products.
- The agriculture Chapter also includes ambitious obligations for agricultural biotechnology, including provisions that:
- provide more transparency and predictability on regulations affecting the trade of products derived from current and future technologies
- provide transparent and predictable management of low-level presence occurrences based on their risk and in a timely and pragmatic way
- establishes a platform for deepened cooperation by CUSMA partners in areas of mutual interest and benefit related to agricultural biotechnology
Read the agriculture chapter summary.
Automotive
There are modernized rules of origin for the automotive industry. The outcome on automotive rules of origin includes:
- a 75% regional value content requirement
- strong content requirements for core parts such as engines and transmissions
- a 70% North American steel and aluminum requirement
- a labour value content requirement off 40% for a car and 45% for a light truck to be produced by workers earning at least US$16 per hour
- The labour value content requirement means that a significant percentage of the value of a vehicle must be produced by workers earning the equivalent of at least US$16 per hour. This provision has the potential to improve Canadian automotive manufacturing’s competitiveness compared to that of Mexico.
- The outcome also strengthens rules of origin for auto parts and ensures that all parts used in the production of a vehicle are taken into consideration in determining whether it qualifies as originating.
Read the automotive rules of origin summary.
Digital trade
CUSMA includes a new chapter to facilitate digital trade (digital products distributed electronically):
- digital trade is growing exponentially and guarantees need to be made to exporters that the borders will stay open as we go forward
- CUSMA guarantees exporters that no tariffs, customs duties and other discriminatory measures can be applied to digital products distributed electronically, such as e-books, videos, music, software, and games.
- it ensures that data can be transferred across borders (subject to a transition period)
- it facilitates digital transactions by permitting the use of electronic authentication and electronic signatures, while protecting consumers’ and businesses’ confidential information and guaranteeing that enforceable consumer protections are applied to the digital marketplace
- CUSMA cracks down on data localization measures used to restrict where data can be stored and processed, enhancing and protecting the global digital ecosystem
- protects against forced disclosure of proprietary computer source code and algorithms
- CUSMA enhances the viability of internet platforms that depend on interaction between users by limiting civil liability for third-party content, except regarding intellectual property enforcement
- it guarantees enforceable consumer protections apply to the digital marketplace, including those for privacy and unsolicited communication such as spam
Read the digital trade chapter summary.
Intellectual property
- CUSMA establishes a legal framework of minimum standards for the protection and enforcement of IP rights in North America.
- The chapter includes obligations on copyright and related rights, trademarks, geographical indications, industrial designs, patents, data protection for pharmaceutical and agricultural chemical products, trade secrets, and IP rights enforcement.
- Outcomes of CUSMA are largely consistent with our existing IP law and policy, but require some changes such as:
- Providing more power to border authorities to investigate suspected counterfeit or pirated goods in transit, as well as charge criminal offenses for the unauthorized and wilful misappropriation of trade secrets.
- In other areas, Canada has transition periods to implement its commitments. For instance, on the obligation to provide a copyright term of “life of the author” plus 70 years, Canada currently provides a term of “life plus 50”, and has a 2.5 year transition period to implement this obligation following the entry into force of the Agreement.
Read the intellectual property chapter summary.
Investment
- CUSMA provides transparent and predictable access to Canadian markets to U.S. and Mexican investors, including through reciprocal, legally binding rights and obligations.
- It’s time to show the rest of the world that there is reliability in North America and prove that this is a market in which other countries should be looking to invest.
- The investment chapter contains a comprehensive and robust set of protections to foreign and Canadian investors similar to those found in other FTAs, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
- It also includes a corporate social responsibility (CSR) provision that reaffirms the importance of encouraging businesses to respect CSR standards, such as the OECD Guidelines for Multinational Enterprises. This CSR provision provides an illustrative list of CSR areas, including gender equality and Indigenous and Aboriginal peoples’ rights.
- CUSMA will not include a trilateral investor-state dispute settlement (ISDS) mechanism.
- Under CUSMA, the United States and Mexico have agreed to maintain a bilateral ISDS mechanism for a narrow set of disciplines and sectors.
- The Parties have also agreed to a transitional period of three years, during which ISDS under the original NAFTA will continue to apply only for investments made prior to the entry into force of CUSMA.
Read the Investment chapter summary.
Textiles and apparel
- CUSMA includes a new stand-alone chapter on rules of origin and origin procedures for textiles and apparel. The highlights of this new stand-alone chapter include:
- provides greater flexibility for producers that use small amounts of non-originating materials—a measure that will help such goods qualify for preferential treatment
- expands on an existing NAFTA provision to provide a special, facilitative pathway to origin for Indigenous textile and apparel goods
- maintains the yarn-forward rules of origin while relaxing the approach for niche, vegetable-based yarns and fabrics that are often sourced from outside the CUSMA region
- preserves existing trade under Canada’s tariff preference levels (TPLs), as revised volumes remain well above current utilization rates
- Includes new measures designed to encourage the use of North American sewing thread, narrow elastics and pocketing fabric.
- Introduces measures designed to increase transparency associated with the administration and allocation of Tariff Preference Levels (TPL) by all Parties.
- Access more information on how to qualify for Tariff Preference Levels.
- Provides for enhanced cooperation measures and procedures to address the additional challenges faced by the customs administrations in ensuring compliance in this sector.
- Specifically includes enhanced cooperation among the customs administrations, as well as a streamlined approach to origin verification visits.
Read the textiles and apparel chapter summary and Canada Border Services Agency’s .
- CUSMA includes a new stand-alone chapter on rules of origin and origin procedures for textiles and apparel. The highlights of this new stand-alone chapter include:
Other changes and outcomes
- CUSMA requires higher de minimis thresholds for the waiving customs duties and taxes for courier shipments from the U.S. or Mexico from the current CAD$20 to CAD$40 for taxes and CAD$150 for customs duties. These higher thresholds apply to goods of any origin that have entered the commerce of the U.S. or Mexico. The corresponding de minimis thresholds for courier shipments to Mexico are US$50 for taxes and US$117 for customs duties. The current tax free de minimis threshold in the United States is US$800. For more information
- Timeframe for adjustments: Importers of NAFTA-eligible goods are entitled to 12 months to submit adjustments. When CUSMA enters into force, the timeframe for adjustments will extend to 4 years for adjustments on goods imported under CUSMA. For more information .
- Low Value Shipment thresholds will increase for all commercial importations (in addition to those for express shipments) to an estimated value for duty not exceeding CAD$3,300. For more on thresholds and which programs are affected, , as well as .
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