The Trump Administration on April 24 notified Congress of the completion of necessary steps to move ahead with implementation of the United States-Mexico-Canada Agreement (USMCA). Accordingly, USMCA will enter into force on July 1, 2020.
The confirmation of the July 1 implementation date provides a short time frame for governments and businesses to implement changes necessary for compliance with USMCA, particularly since there is no built-in transition period from the North American Free Trade Agreement (NAFTA) to USMCA.
With that in mind, and to ease the transition, the United States Trade Representative (USTR) on April 21 published a notice (the Notice) stating procedures and guidance for North American producers of passenger vehicles and light trucks to submit petitions by July 1, 2020, to request use of the alternative staging regime for the rules of origin for automotive goods under the USMCA.
Vehicle producers affected by the changes to the USMCA rules of origin for automotive goods should act quickly to examine their potential to meet the higher RVC thresholds, including the core parts requirement, mandatory requirements for steel and aluminum purchases, and LVC requirements. Using the USTR’s published procedures and guidance, the submission of a petition to use an alternative staging regime may allow companies to take advantage of a longer transition period to meet enhanced requirements.
With USMCA entering into force on July 1, companies should assess the impacts of USMCA on their business by examining the recently published CBP Interim Implementation Instructions. Automotive producers should consider the potential benefit of petitioning USTR for an alternative staging regime.
Businesses may continue operations under the NAFTA framework until July 1.