CUSMA origin and textile duty amendments

Summary#

These are final regulations (SOR/2020-158) that update several rules under the Customs Tariff so they work with the new Canada–United States–Mexico Agreement (CUSMA) instead of NAFTA. They mostly change how country-of-origin is determined and marked, update a textile/apparel duty-remission order for imports from the United States and Mexico, and tie a steel surtax order to CUSMA origin rules. The instrument was registered June 30, 2020 and published in the Canada Gazette, Part II on July 22, 2020.

What it does#

• Renames and updates marking-of-origin regulations:

  • Changes the title and rules of the Determination of Country of Origin for the Purpose of Marking Goods (Non-CUSMA Countries) Regulations (previously “Non-NAFTA”).
  • Changes the title and rules of the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations (previously “NAFTA”).
  • Adds a definition that a “CUSMA country” means a party to CUSMA and changes several marking rules to refer to CUSMA rules of origin.
  • Updates how origin is decided when materials are fungible or commingled, and lets importers choose certain inventory methods listed in the CUSMA Rules of Origin Regulations.

• Adjusts value and origin calculations:

  • Refers to the Customs Act and the CUSMA Rules of Origin Regulations (including Schedule 6 and Schedule 8) for how to value materials and determine origin for marking.

• Changes the textile/apparel duty remission order for imports from the United States and Mexico:

  • Revises definitions for apparel, fabric and made-up goods, and spun yarn in the Imports of Certain Textile and Apparel Goods from Mexico or the United States Customs Duty Remission Order.
  • States that duty remission is limited to the annual quantitative limits set out in Annex 6–A to Chapter 6 of CUSMA.
  • Requires an exporter’s certificate (a new schedule) identifying the quantity available for remission or refund.

• Links the steel surtax order to CUSMA origin rules:

  • Revises the Order Imposing a Surtax on the Importation of Certain Steel Goods so origin is determined under the updated CUSMA marking regulations.

• Coming into force:

  • These amendments come into force on the day that section 190 of the Canada–United States–Mexico Agreement Implementation Act comes into force; if the regulations are registered after that day, they come into force on the day they are registered.

Who's affected#

• Importers and exporters who ship goods to Canada from the United States, Mexico, or other countries.
• Customs brokers and agents who prepare import paperwork and origin declarations.
• Textile and apparel manufacturers, wholesalers, and retailers that rely on duty remissions for goods from the United States or Mexico.
• Steel importers whose surtax exposure depends on origin rules.
• Canadian businesses that source fungible materials (where origin is harder to trace).

If you deal with country-of-origin marking, certificates of origin, or textile quota-like limits under CUSMA, you will likely notice these changes.

Why it matters#

• Labels and paperwork will change: origin-marking rules and the language in certificates must match the new CUSMA-based rules. That affects packaging, invoices, and customs entries.
• Textile/apparel duty relief is now explicitly tied to the yearly quantity limits in CUSMA’s Annex 6–A. That can limit how much duty remission is available and could affect sourcing or costs for clothing and fabric businesses.
• For goods made from commingled or fungible materials, importers get clearer options (including specific inventory methods) to determine origin. That affects whether a product can be marked as originating in a CUSMA country.
• The steel surtax will use the same updated origin tests, which can change whether an import is subject to the surtax.
• Overall, these are administrative changes to align Canada’s customs rules with CUSMA. They can affect costs, paperwork, and sourcing decisions for businesses that import into Canada.