31 Jan 2020
President Trump Signs USMCA into Law
President Trump signed the United States-Mexico-Canada Trade Agreement into law on 29 January. Mexico has already approved the agreement but Canada just began its ratification process this week. As a result, the agreement is not likely to take effect until mid-2020 at the earliest. The Trump administration states that it plans to amend or issue federal regulations required to implement U.S. obligations under the agreement at the time it enters into force.
A White House statement of administrative action states that while the USMCA is a comprehensive overhaul of NAFTA, it replicates many provisions of that agreement without change; e.g., duty-free treatment for industrial goods and textiles, temporary entry for business persons, and review and dispute settlement in antidumping and countervailing duty matters. Other provisions have been reproduced with minimal changes, including those on duty drawback, the merchandise processing fee, origin procedures and customs measures.
Among other things, North American textile and apparel trade will continue to benefit from duty-free treatment under the new agreement, although under slightly different origin rules. Unlike the NAFTA but in line with other U.S. trade agreements, the USCMA includes a specific chapter for textile and apparel goods (Chapter 6). Some of the most relevant changes involve new provisions for pocket bag fabric, narrow elastic fabrics classified under HTSUS 5806.20 and/or 6002, and sewing thread of heading 5204, 5401 or 5508, or yarn of heading 5402 used as sewing thread, to originate in the parties when used in apparel, with certain exceptions. On the other hand, the NAFTA requirement that certain fabrics, when used as visible lining material in overcoats, anoraks, suits, jackets, skirts and similar articles, be formed in the parties will be eliminated.