PESA’s International Trade Policy Committee, led by James Prince, Schlumberger, and the Mexico Chapter, led by Hugo Espinosa, Baker Hughes, hosted a panel discussion for members on how the newly implemented United Stated-Mexico-Canada Agreement (USMCA) affects the flow of goods across borders. Rocio Pacheco, Proactive Trade Acceleration; Brian Staples, Trade Facilitation Services, and Maria Vanikiotis, Crowell & Moring, shared their trade, customs and in-country expertise.
The USCMA, ratified in July of 2020, succeeds the North American Free Trade Agreement and incorporates incremental changes necessary to maintain growth in North American energy interdependence, security and integration through elimination of tariffs on crude oil, gasoline and other refined products.
MEXICO – OFFICIAL STANDARD AND INDUSTRY IMPACT
Pacheco opened the panel with analysis of how Mexican Official Standards (NOMS) would affect oil and gas imports under the new requirements of USMCA. In Mexico, NOMS are the technical regulations associated with labeling requirements as defined, issued and published in Mexico’s Diario Oficial. Understanding which NOMS are applicable to products imported into Mexico is important. Some may fall under previously established equivalence agreements, which allows importers to use a certificate issued by the U.S. or Canada to comply with Mexican standards on imports.
Pacheco said that new internal procedures under USMCA have caused customs clearance delays for the oil and gas industry. Additionally, all imports are subject to revisions by authorities during or post customs clearance. She concluded with advice on how NOM compliance for the oil and gas industry could be standardized and said to expect reforms throughout 2020 as part of the implementation of USMCA.
USCMA CUSTOMS RISKS
Staples outlined major changes for Canadian importers and exporters, including how the agreement removes Certificates of Origin and now allows for an importer to receive certification. However, Staples said country of origin is still required for customs declarations and the Harmonized System (HS) will be used to establish definitions for all goods.
Staples discussed new USCMA customs risks including using customs brokers properly and liability issues for importers and exporters. He suggested companies weigh cost cutting initiatives against the possibility that changes could lead to increased origin risk and properly manage teams by investing in educating team members on origin management manuals. Additionally, Staples reminded attendees about refunds for overpaid duties to the Canada Border Services Agencies and recommended keeping NAFTA records for six years.
KEY CHANGES AND CONSIDERATION
Vanikiotis discussed revisions to the U.S. Customs and Border Protection (CBP) processes and procedures, as well as how USMCA impacts PESA Members. As Staples highlighted, a Certificate of Origin (CBP Form 434) is no longer needed, however a Certification of Origin is required. The certification does not need to be in a prescribed format. With USMCA, certification requirements include data elements such as the HS classification. Vanikiotis said companies need to be aware of other customs matters, such as the marking rule for preferential treatment, and foreign trade zones.
Vanikiotis said PESA members could see changes in investor-state dispute settlements (ISDS) under USMCA. She said oil and gas is one of five privileged sectors in the current ISDS system. USMCA continues NAFTA’s environmental focus and plans for the U.S. to lead monitoring and enforcement of these rules.
Going forward, PESA will continue to follow the implementation of USMCA and potential new opportunities for the OFS sector. If you would like to join the International Trade Policy Committee or Mexico Chapter, please reach out to Vice President Government Affairs Tim Tarpley.