June 13, 2021

Volume XI, Number 164


June 11, 2021

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USMCA Rules of Origin: De Minimis as an Alternative To Qualify for Tariff Preferences

The United States–Mexico–Canada Agreement's (USMCA) de minimis provision allows a small percentage of outside-of-North America originating inputs that do not meet the applicable tariff shift, to be used in a qualifying USMCA good.

USCMA increased the de minimis threshold from NAFTA's 7%, to 10%. This is, through the current de minimis provision, a good shall be considered USMCA originating even when it fails to qualify as such under the relevant Rule of Origin, as long as the value of all non-originating (outside-of-North America) materials used in the production of the good do not exceed 10% of either the Transaction Value or the total cost of the end product.

Goods that were not eligible under NAFTA at 7%, may now qualify for USMCA tariff preferences under the 10% allowance. Producers may evaluate the replacement of certain USMCA-originating materials with non-originating materials as an alternative to reduce costs and still continue qualifying for preferential treatment under the de minimis rule.

Goods must still satisfy all regional content requirements (i.e. labor) and all other applicable regulations, to qualify as originating.  Still, hey, you have a 10% “free pass” that you may use in your now very strict regional-content calculations, have you taken a look to see if you may benefit from it?

Please note that we are not referring to the express (courier) shipments, at times also referred as de minimis shipments, that benefit from reduced or no duties and taxes, in a nutshell, US$800 for goods coming into the United States, US$117 with no customs duties and US$50 for tax benefits in goods coming into Mexico, and C$150 with no customs duties and C$40 for tax benefits in goods coming into Canada.

© 2021 Foley & Lardner LLPNational Law Review, Volume X, Number 259



About this Author

Marcos Carrasco Menchaca International Trade Attorney

Marcos Carrasco-Menchaca provides advisory and consulting services related to international trade compliance, customs, free trade agreements, customs litigation and taxation on foreign trade, as well as rendering services in international business transactions and administrative litigation.

Marcos has broad experience in advising the implementation of governmental exportation programs, such as the registration of companies in the Mexican Maquila Program (IMMEX), VAT certification, Sectorial Promotion Programs (PROSEC) and Drawback, among others.

A recognized international...

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Alejandro Nemo Gomez Strozzi, Foley Lardner Law Firm, Mexico, Corporate Law Attorney

Alejandro Gómez-Strozzi focuses his practice on providing advisory and consulting services related to international trade compliance, antidumping, customs, foreign trade and Mexican administrative law.

As a top international trade lawyer, he has advised major multinational companies in the automotive, steel and consumer products sectors. He provides advice regarding available foreign trade programs, tax implications of foreign trade operations, implementation of free trade agreements entered into by Mexico, customs procedures, trade compliance...

Erika Padilla Foley Gardere Arena in Mexico City Transactions Corporate

Erika Padilla is an associate at Foley Gardere Arena in Mexico City. She has experience in tax and customs litigation and controversy, representation before tax and customs authorities, corporate and international taxation (tax planning and consulting). She also has corporate counsel experience with knowledge in the legal needs of a corporation from the inside, such as drafting, reviewing and negotiating all types of contracts and legal documents, including finance and banking agreements, providing legal advice to the commercial and investment departments and developing the organization’s...