American companies are increasingly looking North to Canada with a huge opportunity created online purchases. The "new NAFTA" USMCA/ CUSMA contains the same basic provisions of NAFTA but with updates to facilitate e-commerce orders shipped from the US to Canada.
NAFTA and the new USMCA has special provisions for duty free clearance of goods valued less than $2,500 CAD.
Canadian duty free import is possible regardless of the status of NAFTA thanks to the USMCA Free Trade Agreement.
* See note below on the new$150 duty free low value threshold to Canada from the USA under the USMCA.
NAFTA / CUSMA/ USMCA
While the new NAFTA - and its potential successor CUSMA/ USMCA - languishes for approval by the relevant legislatures, it remains the most important free trade agreement for the USA. Despite all the political rhetoric, the likely successor to NAFTA is essentially a minor update to a decades old agreement.
In this blog, we use the USMCA CUSMA wording interchangeably. The different names are a legacy of how much rancour there was in negotiating even the smallest elements of the new agreement.
New Certificate of origin updates of CUSMA
Shippers will benefit from new rules of CUSMA that replaces the need for a separate Certificate of Origin with a "Certification of Origin" that can be more easily implemented into existing shipping documents such as the commercial invoice. This easier administrative aspect is already available for US shippers sending goods to Canada valued under CA$2,500.
NAFTA for direct order parcel shipments
While NAFTA is primarily written to accommodate major commodity trading - such as auto parts, energy, and agriculture - it also can be a great benefit for smaller speciality or boutique orders for parts, and other equipment. The benefit of duty free entry can be significant as Canadian import clearance costs can be substantial.
At Jet Worldwide, we encourage our customers to consider taking advantage of the preferential duty free treatment when goods qualify as US origin. By leading our clients to publicly available information, most, who had previously never considered a NAFTA benefit, now regularly take advantage of preferential duty free benefits.
Good shipped to Canada that the qualify of US origin that are valued under CA $2,500 can be cleared duty free with a statement (versus a certificate) of origin.
For commercial goods valued at less than (CAN $2,500) the exporter may provide a statement certifying that the goods qualify as originating goods. With respect to low value commercial goods imported under the NAFTA (or CCRFTA), the specific wording for the statement is contained in Appendices B and C respectively. The statement may be handwritten, stamped, or typed on the commercial contract or actual invoices.
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 $2,500 CAD with a NAFTA certification of origin statement.
Shipments valued at less than the above amounts do not require a NAFTA Certificate of Origin. Instead, the customer should type the following statement on the shipment's invoice:
"I hereby certify that the good covered by this shipment qualifies as an originating good for purposes of preferential tariff treatment under the NAFTA."
The certifying document must be completed in full by the exporter and be in the possession of the importer at the time of import (when the declaration is made). This document may also be completed voluntarily by the producer for use by the exporter.
Although the rules of origin can be complex, many parcels shipped from the US often contain orders for goods that qualify as being US origin. We advise Canadian companies to work with Canada customs CBSA to get a definitive determination prior to shipping. And American companies to do the same as, once the origin has been certified, the product becomes more attractive to Canadian companies.
Duty free for Shipments valued under $150 CAD from the USA to Canada!
As part of the USMCA (the "new NAFTA), Canada has raised their low value duty threshold ( de minimis threshold) to $150 CAD (around $110 USD). Local sales taxes will still apply (but often times, businesses can claim this charge back). This higher duty free threshold helps businesses and e-commerce merchants in the United States ship to Canadian customers.
Government of Canada website