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USMCA and Small BusinessesAlmost a month ago, the Senate put forward the USMCA or the United States, Mexico, and Canada Agreement. Several days later, the President signed off on it, replacing the North America Free Trade Agreement. Since the latter was in effect ever since 1994, many SMB owners want to know what changed between USMCAvs. NAFTA. First of all, the USMCA is the only trade agreement that mentions SMEs specifically. But that isn’t all. You’ll find the following changes interesting:
SME Dialogue Framework and CommitteeThe USMCA Agreement provides not only useful information for SMEs in the relevant regions. It also mentions tools that will allow the sharing of that information and the benefits that are now available. For instance, a committee that will discuss SME issues is now in place. It comprises of government officials from the partner countries. There’s also a framework that encourages the ongoing SME Dialogue. As a business owner, you can take part in it, and ensure that the benefits only grow.
Unspooling the Border Red TapeIn the chapter on Customs and Trade Facilitation in the USMCA Trade Agreement, you will see some of the benefits we mentioned above. For instance, the informal level of shipment, i.e., $2,500, reduces the paperwork needed for express shipments within it. Then there’s the elevation of Canada’s de minimis level for express shipments. According to the agreement, shipments from C$40-150 are exempt from taxes and duties – previously, it was C$20. If you’re calculating in USD, one Canadian dollar was equal to $1.32 in 2019. Besides that, Mexico’s de minimis level that is exempt from duties and taxes is now from US$50 to US$117 for express shipments.
Tech SupportYou’ll also discover advantages to SMEs in the Digital Trade chapter, such as:
- Absence of customs duties on digital and electronically distributed products, including games, e-books, software, videos, and music
- Limiting requirements for data localization and protection of cross- border data flow
- Restrictions on how much proprietary algorithms or source code must be disclosed
Agricultural SupportThe USMCA Overview will show you that, like NAFTA, it maintains the tariff rate on certain food and agricultural products at zero. Additionally, Canada will lower current tariffs on poultry and dairy too.
Government ProcurementLook for specific support for the SMEs in the eponymous chapter of the agreement, including:
- Encouragement for more SME participation in government procurement by making tender documentation free and structuring procurements so small businesses can compete
- Maintaining the same exclusion as under the NAFTA