What the New Canada-United States-Mexico Agreement Means for Canadians (CUSMA)

Back in 2018 the Canadian, American, and Mexican governments replaced the North American Free Trade Agreement (NAFTA) with a new agreement called the Canada-United States-Mexico Agreement (CUSMA).

It’s important to note that each country in this deal uses a slight alteration of its name, with America referring to this agreement as the United States–Mexico–Canada Agreement (USMCA), and Mexico referring to this program as Tratado Mexico (T-MEC). This blog will continue to refer to the agreement as CUSMA.

This can all be a bit confusing, which is why Mentor Works is breaking down what this deal is, how it impacts Canadians, and what businesses can do to adapt to these changes.

Is CUSMA in Effect Yet?

The Canada-United States-Mexico Agreement will enter into force on Canada Day (July 1, 2020), replacing the North American Free Trade Agreement. This agreement is set to be in effect until 2036, at which point it will be reviewed and renegotiated by each country involved before extending its terms.

How Can Canadian Businesses Adapt to CUSMA?

The best way to adapt to the changes is to get to know them. A breakdown of some major changes and benefits for Canadian exporters can be found below:

• Certification of origin – Exporters are no longer required to complete a formal certificate of origin
• Duty-Free Goods – Each country has increased their thresholds for low-value goods that can enter duty-free. The new values are as follows:
  • Canada – $150 CAD for customs duties and $40 CAD for taxes
  • United States – $800 USD
  • Mexico – $117 USD for customs duties and $50 USD for taxes
• Digital Goods – A chapter on digital trade has been added, prohibiting future tariffs on products sent electronically
• Intellectual property – Copyright terms have been extended from 50 years to 70 years after an author’s death, with a transition period of 2.5 years on terms of protection for copyright in Canada
• Sunset clause – Unlike NAFTA, this new clause will be in effect for 16 years, at which point each country will revisit the agreement and negotiate or extend its terms

If you wish to learn more, the Canadian federal government has created a PDF called The Canada-United States-Mexico Agreement: Economic Impact Assessment New Trade Deal which has been written to facilitate public understanding.

Is CUSMA Good for Canadians?

The short answer is yes! The new agreement will be good for Canadian businesses as the world starts to recover in the wake of COVID-19; many businesses that rely on the North American supply chain will find there will be less red tape and reduced costs when cross-border transactions resume.

Just as NAFTA eliminated all tariffs between Canada, Mexico, and the US, CUSMA will retain that benefit as well as increase the products eligible for duty-free sales.

There has also been a new chapter added on customs administration and trade facilitation, which was done to modernize customs procedures throughout North America to facilitate the free-flow of goods.

Can I Get Government Funding to Help My Business Export to America and Mexico?

Yes! Canada has a wide variety of government funding programs to help businesses that are currently exporting or that plan to start exporting to new markets. Learn more about government grant and loan programs from CanExport or download our export funding guide to learn how you could receive up to 75% of eligible project costs for a maximum $75,000 grant.

During the coronavirus pandemic, the need for government funding support programs has never been stronger. View the current programs available to Canadian exporters and visit our COVID-19 support page for the latest updates on funding support options.