Many Canadian importers and exporters will welcome news that Canada’s new trade agreement with the United States and Mexico has moved closer to enactment. The United States-Canada-Mexico Agreement (USMCA), the revamped successor agreement to the North American Free Trade Agreement (NAFTA) took another significant step forward as the leaders of Canada, the United States and Mexico signed the proposed agreement at the G20 summit in Buenos Aires, Argentina on November 30, 2018. Now that the agreement has been signed, each of the countries’ legislatures are required to ratify the agreement before it enters into force.
The USMCA, which Canada reportedly intends to rename the CUSMA to put Canada first, is expected to be effective in late 2019 or 2020. As a result, companies in various industries should assess the potential impact of the agreement, including:
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Reviewing the new rules of origin for their products
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Validating product classifications and costing information
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Understanding the impact of new “de minimis” thresholds on cross-border transactions, and
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Reassessing the overall structure of their North American supply chains.
While the USMCA may not be enacted until 2020, it’s important for companies to undertake these reviews now as some changes may take time to implement.
Further details are available in the KPMG's TaxNewsFlash-Canada.