What NAFTA Replacement, USMCA, Means for Ecommerce

Announced early this month, NAFTA is no more and has been replaced by a new deal: USMCA. In an effort to salvage the basic framework of the 24-year-old North American Free Trade Agreement, U.S. and Canadian negotiators have been meeting to discuss the details. This new deal includes a few key provisions that will yield key benefits for online retailers.

This new deal – now called the U.S.-Mexico-Canada Agreement – will increase their de minimis shipment value levels; this is the minimum value of an imported shipment that is subject to duty collection and customs documentation. According to recent reports, Mexico is doubling its de minimis threshold to $100 from $50. Canada is also doubling its threshold, from C$20 to C$40.

Another benefit of the new deal, Canadian consumers will not have to pay duty for cross-border online orders that are C$50 or less. In addition, Mexican shoppers will not have to pay duty on cross-border online orders that are equivalent of $117 or less. The aim of this deal is to make it easier overall for orders to ship across borders. In turn, simplifying the process for businesses (especially small- and mid-sized businesses).

The fact sheet released by the Office of the U.S. Trade Representative explains that “These SMEs often lack resources to pay customs duties and taxes, and bear the increased compliance costs that low, trade-restrictive de minimis levels place on lower-value shipments, which SMEs often have due to their smaller trade volumes.”

It goes on to explain that “New traders, just entering Mexico’s and Canada’s markets, will also benefit from lower costs to reach consumers. United States express delivery carriers, who carry many low-value shipments for these traders, also stand to benefit through lower costs and improved efficiency.”

There have been a few changes ecommerce merchants need to know about:

  • Digital product protections.Custom duties on digital products are now prohibited. This ensures suppliers are not restricted in their use of electronic authentication or electronic signatures, thereby facilitating digital transactions.
  • Intellectual property (IP) protections.The new deal also contains more rigid protections for patents and trademarks that go beyond the scope of the original agreement.

How can your business take advantage of these changes, keep customers’ information safe and expand? Make sure you do some research on the different payment processing options you have, including a Canadian merchant account with a high risk processor.

Author Bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing and Canadian merchant account company eMerchantBroker. He’s just as passionate about his business as he is with traveling and spending time with his dog Cooper.

News Reporter