CBP Launches the United States-Mexico-Canada Center to Coordinate Implementation of USMCA

Originally posted on the CBP website.

WASHINGTON— To help coordinate implementation of the United States-Mexico-Canada Agreement, which enters into force on July 1, U.S. Customs and Border Protection recently opened the USMCA Center.

Staffed with CBP experts from operational, legal, and audit disciplines, as well as in collaboration with Canadian and Mexican customs authorities, the USMCA Center is a cornerstone of CBP’s USMCA implementation plan and will serve as a central communication hub for CBP and the private sector community, including traders, brokers, freight forwarders and producers, ensuring a smooth and efficient transition from the North American Free Trade Agreement to USMCA.

“The Center is integral to successful implementation of USMCA, as it will focus on outreach, training, and developing new regulations and procedures, while providing consistency and transparency to the trade community,” said Brenda Smith, Executive Assistant Commissioner of CBP’s Office of Trade. “This all comes down to making sure that American consumers get their goods safely, securely and predictably, while protecting the economic security of the United States.”

USMCA is a new trade agreement that modernizes certain NAFTA provisions, reflecting developments in technology and 21st Century supply chains.  USMCA calls for new approaches to rules of origin, agricultural market access, digital trade, and financial services while protecting the labor rights of workers in key industries, and strengthening the protection of intellectual property rights.

The USMCA Center staff will be CBP’s experts on the trade provisions of USMCA, providing guidance to private and public sector stakeholders. Center staff will facilitate a smooth transition from NAFTA by coordinating and scheduling outreach events, responding to training requests, developing and distributing information resources, and updating CBP regulations on pending USMCA topics/issues, while also providing clear and transparent technical guidance on USMCA’s new compliance obligations. Center staff will work closely with Centers of Excellence and Expertise and the ports to ensure CBP’s implementation is uniform and supports U.S. economic security.

Please note: NAFTA rules will continue to apply until July 1 when USMCA enters into force.

Additional information about the agreement, compliance guidance, and implementation efforts may be found on the agency's USMCA webpage. Inquiries for the USMCA Center can be directed to USMCA@cbp.dhs.gov.

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Port Laredo once again the nation’s No. 1 gateway for international trade

Port Laredo

Originally Published in FreightWaves

Port Laredo has regained the No. 1 spot among the nation’s 450 international gateways for trade, topping the Port of Los Angeles for the second time in a year.

During February, Port Laredo recorded $18.6 billion in two-way trade, while the Port of Los Angeles had $17.2 billion, according to the latest U.S. Census Bureau data analyzed by WorldCity.

Port Laredo’s new ranking is tied to the ongoing U.S.-China trade war and the coronavirus pandemic that has hurt the Port of Los Angeles, said Ken Roberts, an economist at WorldCity.

“A stunning development the first time, the result of the impact of the U.S.-China trade war on the [Port of Los Angeles], this time it’s the one-two punch of the ongoing trade war and the coronavirus pandemic that has sent it, the U.S. economy and the global economy, reeling,” Roberts said in Forbes.

The Port of Los Angeles fell to second, largely because of its dependence on Chinese imports, Roberts said. The ports trade with the world declined 15.2% in February, according to WorldCity.

Port Laredo, located in South Texas along the U.S.-Mexico border, is made up of four international vehicle bridges, one international rail bridge and an international airport.

Around 16,000 trucks cross the port’s bridges daily, totaling $231.58 billion in imports and exports in 2019.

Port Laredo previously surpassed the Port of Los Angeles in March 2019 as the nation’s number one trade hub. It was the first time in the port’s 168-year history that it ranked first. The Port of Los Angeles regained the top spot a month later in April 2019.

Roberts predicted that Port Laredo will be the leading trade port for the foreseeable future due to its proximity to Mexico, the U.S.-China trade war and the lasting effects of the coronavirus.

Mexico finished 2019 as the leading U.S. trading partner for the first time in history and continues to be the nation’s top trading partner for the first two months of 2020.

“This time, unlike last time, it is not likely to be a one-month aberration,” Roberts said. “Port Laredo passed the Port of Los Angeles before the full brunt of the impact of coronavirus would have even hit the Los Angeles seaport.”

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What Does the New USMCA Look Like for Mexico?

USMCA

August 2017, trade negotiators from the United States, Mexico and Canada met for the first time in Mexico City to begin hashing out a new North American Free Trade Agreement.

Two and a half years and many negotiations later, the U.S.-Mexico-Canada Agreement (USMCA) has finally passed both chambers of the United States' Congress. The agreement — which overhauls North America's trade relations — is now poised to become U.S. law and the region's governing economic framework, as Mexico's Congress has already passed the deal and Canada's Parliament is expected to follow suit in late January.

While the political negotiations are wrapping up, the next and final step will be the agreement's implementation across North America.

In the coming months and years, these new rules will shape the region's trade realities. Some rules may unleash investment, trade and better labor conditions, but they likely won't be without additional hurdles. In Mexico, the agreement will touch most parts of the country's $1.15 trillion economy, but it will be felt most immediately and strongly in the overall investment climate, the automotive manufacturing sector and in labor conditions.

USMCA Provides Predictability

While less tangible, the agreement's biggest shift will take place at the macroeconomic level, as the USMCA solidifies trade rules and provides greater certainty for North American businesses operating across the continent. Ever since the USMCA's negotiations began, the economic climate has been wracked by uncertainty, especially when specific issues threatened to derail the agreement or every time that the U.S. administration threatened to pull out of NAFTA without any viable alternative.

With the USMCA in place, Mexico has a stronger investment framework and more transparency, clarity and protections for businesses operating in the country.

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Trump signs revised trade deal with Mexico, Canada but shuts Democrats out of celebration

USMCA signing

WASHINGTON – Still facing a divisive impeachment trial in the Senate, President Donald Trump celebrated a rare bipartisan achievement Wednesday when he signed into law a revamped trade deal with Mexico and Canada.

Surrounded by business leaders wearing hard hats, Trump portrayed the new U.S.-Mexico-Canada Agreement, or USMCA, as "a colossal victory" for American farmers, manufacturers and other workers.

"For the first time in American history, we have replaced a disastrous trade deal that rewarded outsourcing with a truly fair and reciprocal trade deal that will keep jobs, wealth and growth right here in America," Trump said during a signing ceremony on the White House South Lawn.

Trump gave a shout-out to more than two dozen Republican lawmakers whom he credited with helping push the deal through Congress.

Left off of his list of plaudits and missing from the celebration: Congressional Democrats, who put their own stamp on the agreement and whose support was pivotal to helping it secure congressional approval. House Speaker Nancy Pelosi's office said no Democrats were invited to the ceremony.

The revised trade deal, one of Trump's top legislative priorities, is the product of months of negotiations and replaces the North American Free Trade Agreement, or NAFTA, which essentially eliminated tariffs on most goods traded among the three countries.

The agreement guarantees U.S. farmers greater access to Canada's agriculture market and puts new e-commerce rules in place. It also dictates that a higher percentage of autos be made from parts manufactured in North America and requires that at least 40% of vehicle production be done by workers earning at least $16 per hour.

In addition, the pact, which is supported by labor unions and business groups, includes stronger provisions on labor, enforcement and pharmaceuticals that Democrats had sought as a condition for their approval of the agreement.

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Texas No. 1 in foreign trade during third quarter

foreign trade

Texas continues to be a leader in international trade, ranking No. 1 in exports of manufactured and non-manufactured commodities for the third quarter, according to the U.S. Census Bureau.

Year-to-date, Texas has exported an estimated $155.8 billion in manufactured goods and $68.7 billion in non-manufactured commodities, ranking it No. 1 in both categories among U.S. states.

The four top states for exports of manufactured goods year-to-date after Texas are California at an estimated $93.7 billion; Michigan, $39 billion; Illinois, $38.8 billion; and Ohio, $35.5 billion, according to the U.S. Census Bureau's Exports by Metropolitan Area Report released on Dec. 19.

Mexico was the top destination for exports from Texas at $109.7 billion in 2018, representing 35% of the state's total goods exported, according to the census bureau report as well as data from the Office of the U.S. Trade Representative. Canada was second at $27.5 billion.

Texas has accounted for 16.5% of U.S. exports of manufactured and 34.9% of non-manufactured goods so far this year, according to the bureau's report.

The top manufactured commodities exported by Texas include crude oil and petroleum, propane, liquified natural gas and parts/accessories for automatic data processing machines. The top non-manufactured goods produced in Texas include cattle (beef), cotton, chickens, greenhouse and nursery products and dairy products.

The top imports for Texas during the third quarter were crude oil, computers, car engines, cars and car parts and cell phones.

Houston was the top U.S. metro area in terms of exports in the third quarter at $31.3 billion, according to the study. Houston's economy is closely tied to the energy industry, particularly oil and liquefied natural gas.

Read the entire article here.

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USMCA: The Vehicle Trade and Supply Chains

USMCA: The Vehicle Trade and Supply Chains

The U.S. House of Representatives passed the new trade agreement between U.S., Mexico, and Canada (USMCA) on December 19. The agreement is expected to be ratified by the Senate in 2020.

The USMCA replaces the 25-year old North American Free Trade Agreement (NAFTA), with several changes.

One of the most significant changes for the automotive sector is the update of country of origin rules. Automobiles must have 75 percent of their components manufactured in Mexico, the U.S., or Canada to qualify for zero tariffs, up from 62.5 percent under NAFTA.

This clause and the U.S. tariffs on steel and aluminium are protectionist measures aimed at U.S. automotive manufacturing jobs. The measures are against the free trade principles that drive increase competitiveness and lower prices. The increase in prices will be supported by the consumers, and the competitiveness of North American automotive sector will decrease compared to other regions.

In addition, new labor provisions require 40 to 45 percent of automobile parts to be made by workers who earn at least $16 an hour by 2023. Mexico has agreed to pass the labor laws that allow labor unions to inspect factories to ensure the new labor provisions are implemented.

One of the main automotive plants in Canada, the GM in Oshawa, Ontario, stopped producing vehicles on December 20, as announced in 2018. GM has been in operation in Oshawa since 1953, while the company first started producing vehicles in 1918. It is estimated that nine out of 10 vehicles assembled in Oshawa were exported to U.S. GM is investing CAD 170 million to transform part of the Oshawa assembly plant into a new GM Auto Parts manufacturing operation and to create the 55-acre "McLaughlin Advanced Technology Track" for testing autonomous and electric vehicles.

Read the full article here.

Trump’s new USMCA trade deal looks a lot like NAFTA. Here are key differences between them.

USMCA Trade

President Trump and House Speaker Nancy Pelosi on Tuesday announced a deal on the United States-Mexico-Canada Agreement (USMCA) that will bring it to a vote in Congress and remove the last barrier to enact the trade pact. The Wall Street Journal reports the vote will be held next week.

The agreement between congressional Democrats and the White House comes after rounds of negotiations that stretched for more than two years between US, Mexican, and Canadian officials. Their intention to redraw the North American Free Trade Agreement, or NAFTA - the trade deal regulating international business around North America for over a quarter-century.

Trump tweeted early Tuesday morning and championed Democratic support for the deal, calling it a win-win for everyone in the United States.

"It will be the best and most important trade deal ever made by the USA. Good for everybody - Farmers, Manufacturers, Energy, Unions - tremendous support," Trump said. "Importantly, we will finally end our Country's worst Trade Deal, NAFTA!"

It was held up in the US as Democrats, particularly progressives, demanded tougher labor and environmental protections and stronger enforcement provisions. They were able to lock in those additional rules sought in the emerging deal.

The three leaders - President Donald Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Peña Nieto - signed the agreement late last year but final revisions must also be approved by each country's legislature and leadership before it comes into effect. Mexico ratified the agreement in June and Canada is on its way to doing so.

Congress is expected to pass the agreement with bipartisan support, giving the president a major trade victory as he attempts to fight off Democratic-led impeachment proceedings and campaign for reelection.

Trump and other US officials have long called NAFTA dead, saying the USMCA is a wholesale overhaul of the agreement. Despite Trump's declaration, the USMCA still maintains large swaths of the original deal and is more of an update to the existing deal than a full-on rewrite. But there are some key differences.

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Experts say Nuevo Laredo should focus on becoming a logistics and foreign trade hub

Laredo Texas

The Mexican border city of Nuevo Laredo should "bet more on logistics and foreign trade" than on attracting more maquiladoras, according to trade experts.

"Nuevo Laredo no longer needs to invest in maquiladoras, because it is a city more oriented towards customs and services," said Cirila Quintero, a professor at El Colegio de la Frontera Norte (College of the Northern Border) in Tijuana, Mexico.

The college is a prestigious Mexican institute specializing in teaching and research on border issues. Quintero specializes in the research of Mexico's maquiladora industry.

Quintero was part of a recent study conducted by the Mexico City-based Economic Information Bank (BIE), which indicated in recent years the number of export maquiladoras in Nuevo Laredo has decreased.

Quintero said one reason not to rely too heavily on maquiladoras for economic growth in the future is changing technology.

"I think that if local governments want to bet on the maquiladoras, they should understand that the maquiladoras have already changed and are something else," Quintero said in an interview with Primerahora.com.

Quintero added, "the only ones [maquiladoras] that are going to exist are the ones that are going to export, and many of those are going to be robotized, and the point is that if you want to invest in maquiladoras, you should no longer see them at the local level, but in the case of Nuevo Laredo you have to see Laredo, Texas, and see which sectors in Laredo are developing the most."

Nuevo Laredo – located directly across the U.S.-Mexico border from Laredo, Texas – has 35 maquiladoras that employed 29,878 workers, according to the BIE study. In contrast, in the Mexican cities of Reynosa and Matamoros, maquiladoras are still trending upward.

Read entire article here.

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What US companies should know about expanding manufacturing to Mexico

manufacturing in Mexico

As of 2019, Mexico is the largest goods trading partner with the U.S. with over $600 billion in imported and exported goods. This relationship has created 1.2 million jobs as of 2015, according to the latest data available from the U.S. Department of Commerce. It's also been reported, as of February 2019, that U.S. trade with Mexico increased 3.36%, while trade with Canada decreased by 4.12% and with China by 13.52%. This illustrates the direct impact of the current administration's trade war with China in particular, which ultimately has had negative repercussions for the U.S.

Generally speaking, products manufactured in Mexico are high-mix, low-volume, such as automotive and aerospace parts. This level of product is more expensive to move from China to North America when compared to shipping from Mexico. They also require more engineering skills than many products manufactured in China, which trend toward low-mix, high-volume, such as sunglasses or clothing.

As a result of Mexico's cost-effectiveness, global companies with a stake in the North American market, including Nestle and the BMW Group, have increased investments in their Mexican factories in recent months. In 2014, Nestle planned a $1 billion investment over five years to build and expand three of its factories in Mexico. And earlier this year, the BMW Group announced its new automotive plant in San Luis Potosi, Mexico as a boost to their "regional production flexibility in the Americas."

Read entire article here.

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Borderlands: CBP opens new fastlane at Laredo’s World Trade Bridge

World Trade Bridge

On August 5, U.S. Customs and Border Protection (CBP) held a ribbon-cutting ceremony for the completion of the World Trade Bridge's new Free and Secure Trade (FAST) Lane.

The new $10 million paved lane is for northbound FAST empty tractor-trailers to run directly from the bridge, and will decrease wait times at cargo facilities. The FAST program allows expedited processing of trucks owned by commercial carriers that have completed background checks and fulfill certain eligibility requirements.

"The World Trade Bridge processes on average 16,000 trucks daily, carrying goods valued at more than $300 billion annually," said U.S. Rep. Henry Cuellar (D-Laredo). "The creation of this FAST Lane will streamline trade and promote economic growth in the region."

Around 500 empty trailers will be processed daily and the hours of operation for FAST Lane will be Monday through Friday, 8:00 a.m. to 4:00 p.m.

"These improvements serve as vital assets to not only Laredo, but the entire United States economy," said Laredo Mayor Pete Saenz.
CBP officials estimate they process around 8,000 northbound truckloads daily at the World Trade Bridge facility.

"The ever-growing traffic volumes have far exceeded the limits of the present facilities and we will work hand in glove with our stakeholders at the federal, state and local levels to assist with improvements that will facilitate traffic at the busiest cargo facility in the southwest border," said David P. Higgerson, director of field operations at the CBP Laredo Field Office.

There were 195,918 commercial vehicle crossings at the World Trade Bridge in June, representing a 0.7 percent increase from the same time last year, according to the latest data from the city of Laredo.

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