Mexican Customs Begins Crackdown on USMCA Qualification Claims

Many US exporters are facing origin audits for the first time

For some time, US businesses have been able to export to Mexico with very little oversight. While the risk of audits has always been there, the likelihood has been historically low. Today though, US companies are more and more often needing to demonstrate how they qualify for USMCA. Companies are being often caught by surprise, needing to demonstrate how their product qualifies as US origin under the terms of the USMCA agreement.

The American World Trade Chamber of Commerce (AWTCC) has seen a universal increase in reports of audits and request for assistance in navigating exports to Mexico. USMCA replaced the NAFTA agreement in 2020. The agreement is referred to as T-MEC in Mexico and either CUSMA or ACEUM in Canada.

Origin under USMCA, or any free trade agreement, differs from the international standards set in place by the International Chamber of Commerce. Instead of the substantial transformation approach, it is defined explicitly in the agreement. It can be calculated based on value calculations or total net cost of components.

Understanding Your Supply Chain

Making something in the United States does not automatically qualify you for USMCA. Using Chinese steel? Electronic components for Japan? Fruits from South America? To qualify for USMCA a business needs to reach a percentage threshold. Not knowing where your distributors source their products is never an excuse. If a company cannot demonstrate how they calculated their products to qualify, then they will certainly lose an audit.  

 Simply having the last stage of the products lifecycle does not mean you qualify for preferential treatment under USMCA. Companies need to be certain ahead of time that they qualify and be able to demonstrate qualification.

Completing the USMCA Certificate of Origin

With more frequent audits occurring for US exporters the need to have your certificate of origin completed correctly is vital. While the USMCA agreement does not have an explicit requirement for a certificate of origin, it does require 9 data points to be presented to customs. Given the quantity of the data required AWTCC outlines best practices to include completing a full form certificate of origin.

As noted, 9 data points are needed as outlined in Chapter 5 Annex 5-A of the USMCA agreement which can be found here.

The data elements are mostly intuitive and the AWTCC template is effective at matching the required data elements to the sections in the form.

Origin criteria, as highlighted in data point 7, is likely the core piece to understand here. It specifies how the one completing the form has come to the conclusion that the specific product does qualify under USMCA. The specific rules for these are outlined in chapter 4 of the USMCA agreement available here.

Specifically in subsection 4.2 which outlines the methods and associated letters used on our template.

The USMCA agreement does not require a third party, such as a chamber of commerce, to stamp and validate the USMCA certificate of origin. The option is always there, but it is uncommon presently. AWTCC can provide assistance to chamber members in completing the form.

Future of USMCA

The future of USMCA is on shaky ground presently. The first sunset review is due to take place July 01, 2026. The actual term of the USMCA agreement was 16 years which would extend to 2036 and the six-year sunset meetings are meant to allow redress for any issues. That said, the sunset clause today is getting extra attention due to the possibility of disputes or the possibility that any participating country makes it clear their intention to dissolve the agreement.

We’re Here to Help

AWTCC does have a designated USMCA template available upon request by emailing to register@awtcc.org. Chamber members can get assistance on completing the template. You can find more about chamber membership on our Exporter Membership page.