The "new NAFTA" is now a reality for shippers in Mexico, Canada and the United States. One of the focuses of the new North American Free Trade Agreement is e-commerce parcel imports to Canada. E-commerce online orders can be more shipped to Canada and benefit from preferential duty free clearance.
In this post, we focus on the benefits for e-commerce parcel shippers to Canada from the US and Mexico.
Key CUSMA benefits for e-commerce orders shipping to Canada from Mexico and US:
- Higher low value duty free / tax free threshold to Canada to $40 CAD*
- Higher low value duty free threshold $150 CAD*
- Higher value for shipments to qualify for LVS parcel processes to $3,300 CAD
- Easier certification of origin for LVS shipments to Canada from US and Mexico
For a shipments shipped via USPS and Correos Mexican Post for import via Canada Post: The duty is free threshold is different than for parcels shipped via parcel carriers/ courier (mentioned above):
- CA $20 (around US$14.75) and under: duty and tax free
- Above CA $20duties and taxes apply
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The CUSMA facilitates the movement, release and clearance of good via a simplified framework and standardized customs procedures. Trade facilitations includes fewer clearance formalities for “express shipments” valued under CA$3,000 (to Canada) and US$2,500 (to the USA and Canada).
The origin‑certification process (that is no longer a prescribed form) is to include a set of data on the shipping paperwork (most commonly including on the invoice).
The data elements required at a minimum to claim origin underCUSMA:
- Importer/exporter or producer (indicate which is certifier)
- Name and address of certifier or
- Name and address of exporter or
- Name and address of producer
- Name and address of importer (if known)
- Description and harmonized system (HS) tariff classification of the good
- Specific origin of criteria
- Blanket period (certification is valid up to 12months in the case of multiple shipments of identical goods)
- Authorized signature and date
Check out theCanadian Border Services Agency (CBSA) pagethat describes the new requirements for more information and an example of a valid CUSMA certification oforigin.
Different Names, one North American Free Trade agreement
In this post, we refer to the new North American Free Trade Agreement as CUSMA as it focuses on the new opportunities for e-commerce shipping to Canada and shipping from Canada to Mexico and the US. But it is known as USMCA, CUSMA and T-MEC: Three names, one free trade agreement.
READ MORE: UNDERSTANDING HOW DUTY IS CALCULATED
Increased low value thresholds for duty free entry to Canada from Mexico and USA
Canada's higher low value threshold for goods imported from the USA is particularly helpful for Canadian parcel imports cleared under the LVS system. Parcels containing goods less than CA$150 can be cleared duty free (but are subject to provincial sales tax). Goods valued under CA$40 benefit both from duty free and duty tax free.
Canadian duty free import from Mexico and the US is possible under USMCA/ T-MEC/ CUSMA.
CUSMA LVS Parcel Clearance Process to Canada Expanded
Canada parcel clearance processes or LVS (Low Value Shipments) System has been expanded to include parcels valued up to CA$3,300. Shipments valued under CA$3,300 (and not containing goods otherwise restricted) benefit from simpler LVA processes including not being subject to formal entries processes. A statement certifying the imported goods originate from the US or Mexico may >be required.
USMCA CUSMA T-MEC makes it easier to ship individual orders to and from Canada to Mexico and the US.
New Certificate of origin updates of CUSMA:
The essential elements of duty free entry under NAFTA have been preserved under CUSMA.
NAFTA, USMCA, CUSMA, T-MEC Rules of Origin: Basically, if the item is grown, raised or made in the three North American countries, it can be transited duty free between the three North American Countries.
READ MORE: CERTIFICATE OF ORIGIN AND WHEN IT IS NEEDED.
The rules of origin can get complex - especially when the goods contain non-North American origin parts and labour. The importer, exporter or producer are three parties than can certify origin. All should confirm with CUSMA experts to ensure their goods qualify as originating before shipping.
CUSMA has the added benefit of not requiring a separate Certificate of Origin. Rather, a "Certification of Origin" /COO can be included with the shipping documents (such as the invoice).
Required Date Elements for CUSMA Certification of Origin/ COO include:
- Indicate the status of the certifier (importer, exporter or producer)
- Certifier name, full address and contact details
- Exporter name, address and contact info (if different than certifier)
- Producer name, address and contact info (if different than certifier)
- Importer name, address and contact info (if different than certifier)
- Description of goods including HS tariff classification number
- Origin criterion
- Blanket date range of certificate (up to 12 months is permitted)
- Signed and dated by the certifier and accompanied by the following statement:“I certify that the goods described in this document qualify as originating and the information contained in this document is true and accurate. I assume responsibility for proving such representations and agree to maintain and present upon request or to make available during a verification visit, documentation necessary to support this certification.”
Read More: Country from where goods were shipped versus country of origin
CUSMA COO process for parcels to Canada with low-value shipments
For low value shipments (see graphic below), a COO as outlined above is not required. In its place, customs will accept a shorter certifying statement added to the commercial invoice (or any shipping document):
“I hereby certify that the goods covered by this shipment qualifies as an originating good for the purposes of preferential tariff treatment under USMCA/T-MEC/CUSMA.”
CUSMA for direct order parcel shipments to Canada
The benefit of duty free entry for parcels to Canada from Mexico and the US is significant. Jet can assist shippers to send economy express from Mexico and the US to Canada and include reverse logistics processes.
Shipping to Canada from the US via low cost express with customs entry included can be the best solution for US origin goods valued under $3,300 CAD with a CUSMA certification of origin statement.
CUSMA Low Value Thresholds from Rest of the World
The traditional de minimis /low value duty free threshold of CA$20 to Canada will remain for parcels shipping from outside North America. In other words, e-commerce parcels from Europe and Asia will continue to be subject to duty and taxes for shipments valued over CA$20.
Jet is here to help
As our industry leading blog shows, Jet is a leading source of information for shipping to / from and within North America. This information is being provided as a courtesy only and we advise all shippers to consult with their carriers, brokers, regulators and legal experts as necessary.
USMCA Text on US Trade office website
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