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Proposed USMCA Rule Change Has Implications for Oil & Gas

U.S. Customs and Border Protection (CBP) issued a notice of proposed rulemaking and request for comments on the Federal Register last week. The new rules are related to United States-Mexico-Canada Agreement (USMCA) and have implications for oil and gas industry supply chains.

The proposed policy could make Canada and Mexico more desirable manufacturing locations for companies looking to diversify their supply chains to avoid section 301 duties, commonly referred to as China Tariffs.

The regulatory change seeks to address an increasingly disconnected country of origin determination process by CBP. Customarily the U.S. uses both a subjective transformational test and an objective tariff shift-based test to determine the origin of goods imported to the U.S. from Canada or Mexico. These assessments should result in the same result, but increasingly does not. To resolve this disconnect, the proposed rule would implement NAFTA Marking Rules to non-preferential customs-related determinations like government procurement and section 301 duties.

The official notice on the Federal Register can be found here. The public comment period runs until August 5, 2021. The Council urges Member Companies with manufacturing in Canada and Mexico to analyze this ruling closely. 

If you are interested in the Council’s advocacy efforts or would like to join the Government Affairs Committee, contact SVP Government Affairs & Counsel Tim Tarpley.

Deidre Kohlrus, Director Government Affairs, writes about industry-specific policies for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.


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