How to Use CUSMA to Your Advantage

The trade agreement between Canada, the United States, and Mexico that replaced NAFTA in July 2020 has several advantages for small businesses. Known in Canada as CUSMA, in the US as USMCA, and in Mexico as T-MEC, this trade agreement has benefitted many importers and exporters across North America. After the economic impact of the COVID-19 pandemic in 2020, CUSMA was a welcome revitalization to trade.CUSMA has several advantages for small- and medium-sized businesses, but how can you make the most of them? What tips should you keep in mind as you expand your importing and exporting to other countries in North America?

Easily export to foreign markets

As of 2019, trade between Canada, the US, and Mexico accounted for $1.5 trillion (CAD). With their geographic proximity and cultural similarities, these three countries foster a great deal of trade with each other. In Canada, for example, 81% of exporting firms exported goods to the US in 2019.Your small business can benefit from tapping into this enormous trade market, which CUSMA makes easier and more straightforward. One important aspect of CUSMA is that there’s no physical presence requirement. If your US business wants to export to Canada, for example, you don’t need a local Canadian office to do so.What are the major differences between CUSMA and NAFTA? Read our guide to find out.

Streamlined customs procedures

When moving your goods across borders in CUSMA countries, you’ll have fewer obstacles from customs. Origin certificates, which are sometimes required to move goods across borders, are much easier to get. With NAFTA, only the exporter or producer could complete the certificate of origin, and it had to be signed in wet ink.Under CUSMA, either the importer, exporter, or producer of the goods can complete the certificate of origin and they can sign it electronically. This new procedure will save your business time and hassle when moving your goods through customs. It’s also easier for importers to claim preferential tariff treatment on low-value goods. For example, Canada doesn’t require a certificate of origin if the value of the duty doesn’t exceed $3,300 (CAD).If you have questions about customs regulations under CUSMA, you can also contact a certified customs broker.

Send e-commerce goods to expanding markets

One of the most beneficial provisions of CUSMA is the facilitation of cross-border e-commerce. Consumers in each CUSMA country, Mexico in particular, are purchasing more and more goods via e-commerce. With technological updates to customs procedures and the free flow of data across the borders CUSMA guarantees, online businesses can easily expand to new markets.

Promote your digital products

CUSMA is a trade agreement for the digital age. It revamped provisions on trading digital products to boost digital services and e-commerce across borders. Under CUSMA, imported and exported digital products are duty-free. Also, no country can impose data-localization requirements, meaning that the US cannot force Canadian companies to store data on US servers.Allowing data to move easily across borders lets e-commerce businesses transfer international customer data and track product shipments. In additional efforts to encourage trade in digital products, CUSMA also implemented cybersecurity measures to prevent the counterfeiting of intellectual property.Need answers about importing digital products into Canada? Read our guide.

Reduce your shipping costs

As a small- or medium-sized business, the cost of international shipping can sometimes be prohibitive. CUSMA rules regarding de minimis values are especially important for smaller businesses that want to expand to foreign markets. De minimis is the minimum threshold a country sets for goods to be dutiable or taxable. Goods that fall under this threshold don’t require as much paperwork and can clear customs more quickly.Canada raised its de minimis value to $40 (CAD) and Mexico to $50 (USD), meaning taxes and duties are all but eliminated for orders below these thresholds. Without duties and regulatory burdens placed on low-value shipments, smaller businesses can more easily trade in other CUSMA countries.Need help determining if your goods are duty-free? Use our duty calculator.

Stabilize your importing and exporting

With higher standards of trade set by CUSMA, small businesses can benefit from more transparent, stable importing and exporting. With a single set of trade rules that apply across North America, your business will encounter fewer surprises or mishaps when moving goods across borders. More information about imports and exports is available to businesses online as well, so tracking shipments is less expensive and takes less time.

Navigating CUSMA with a customs broker

Because CUSMA is still relatively new, some businesses may not yet fully realize how to take full advantage of it. If your business wants to expand to foreign CUSMA markets, BorderBuddy can assist you with clearing customs. We’re also happy to answer all your questions about how CUSMA applies to your importing and exporting activities. Contact us today to get started.