Why this is important to Wisconsin businesses: The updated agreement provides the potential to export more dairy products to Canada.
The U.S.-Mexico-Canada free trade agreement (USMCA), known in Canada as CUSMA, took effect on July 1, 2020. Although many reviews, articles and critiques written on the agreement have concluded it is an update of its predecessor, the North American Free Trade Agreement (NAFTA), there are key changes that are important for companies relying on North American supply and value chains.
First, with USMCA in effect, there is no official certificate of origin as there was for NAFTA. USMCA requires a “certification of origin,” with any format considered acceptable, provided it contains nine minimum data elements. It is important to fully understand the USMCA Rules of Origin to make sure the form is properly completed.
There are 34 chapters in the USMCA, but significant changes can be found in those that cover the automotive, textiles, agriculture, manufacturing, e-commerce, data, intellectual property protection and digital trade industries.
Within the agriculture chapter, the dairy market provisions allow the U.S. access to an additional 3.6% of Canada’s dairy market, providing Wisconsin dairy farmers with expanded opportunities in Canada for a variety of dairy products. Canada agreed to eliminate Class 6 and 7 milk pricing programs, ultra-filtered (UF) milk restrictions, and reclassification of skim milk powder, milk protein concentrates and infant formula products. Canada and the U.S. will meet once USMCA has been in effect for five years to evaluate the conditions of the dairy industry, at which time modifications can be made with the consent of both parties.
In addition to the dairy market changes USMCA provides, there are two new chapters that could also provide opportunities for Wisconsin companies. In Chapter 19 (Digital Trade), changes to data localization rules may have an impact on financial institutions, subject to the Canadian record-keeping requirements of the Bank Act. Under Article 17.20, foreign financial institutions will no longer be required to maintain computing facilities in Canada, but must ensure that Canadian regulatory authorities have ongoing access to the information stored in any non-Canadian facility. Other key components of this chapter include safeguarding privacy while allowing cross-border flow of data and effective intellectual property rights.
USMCA includes a standalone chapter for small and midsize enterprises. For Wisconsin companies exporting to Canada, the agreement cuts red tape at the border, supports internet-enabled small businesses and e-commerce exports (shipments under $2,500 considered express) and reduces paperwork. In addition , USMCA protects intellectual property and promotes participation in government procurement, offering another way to grow and expand.