Background

Enforcement, foreign-trade zones, and merchandise processing fees are among the changes recently announced by U.S. Customs and Border Protection concerning its continued implementation of the U.S.-Mexico-Canada Agreement. For more information on these changes, please contact Mark Tallo.

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FTZs

Under NAFTA, the special rule applicable to foreign-trade zones prohibited non-originating goods used in production processes within FTZs from ever qualifying as originating goods even if all conditions under the general rules were otherwise satisfied. Initially this prohibition was not incorporated into the USMCA Implementation Act. However, a law enacted Dec. 27, 2020, applies this FTZ prohibition to USMCA preferential treatment claims as well. This change is retroactive to July 1, 2020.

MPFs

Although the USMCA eliminated the assessment of the merchandise processing fee on qualifying goods from Canada and Mexico, the USMCA Implementation Act excluded the refund of MPFs under 19 USC 1520(d) post-importation claims for USMCA preferential treatment. However, under the Dec. 27, 2020, law, CBP may once again refund MPFs for USMCA post-importation claims, including those filed via reconciliation.

Enforcement

CBP’s period of restrained enforcement on USMCA preferential treatment claims ended Dec. 31, 2020. CBP allowed this six-month period to give the trade community time to adjust to the new requirements of the USMCA, particularly those relating to the preferential tariff treatment of goods, and in consideration of the business process changes necessary to achieve full compliance.

CBP may continue to allow, through June 30, 2021, additional time to respond to verifications for automotive goods.

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