Digital Signature Legitimateness for Administration in Mexico

How to eSign a document: digital signature legitimateness for Administration in Mexico

hello and welcome to star usa training today is tuesday june 7th and we'll be talking about the usmca free trade agreement we are recording the webinar the slides and recording and any other materials will be made available after the broadcast later on this week all participants are currently muted but please do use the question and answer feature of the webinar software uh we'll have time for questions at the end and this webinar is eligible for one ces credit email train at starusa.org after the session with your id number and we'll get you those credits so today we'll be digging into some of the practical aspects of usmca like with everything else in this field of trade compliance that's going to begin with having that proper foundation and understanding of what the program is how it works and then using that understanding to build out a workable plan of action that we can put into motion in our own organizations and then lastly at the end uh it's nice to know where to go to get help so uh we'll touch on that in that part three and before we dive in i do want to make a quick note that my slides are worthy on purpose whenever i attend seminars i very much prefer having slides that i can refer back to that have useful information on them so since we make our materials available after each session i want you to be able to get value from those next time around as well and i've also only got an hour so there's a lot to cover i do tend to talk very quickly so if you're happy to watch this back over on youtube feel free to slow me down to half speed i won't take it personally okay some quick background um my name is mike easton i have my customs brokers license and i've been in the international trade compliance field for more than 15 years during that time i've worked with clients pretty much every scope and size across most industries star usa is a trade compliance consulting advice training and services firm we handle in and out sourced operations important export policies and procedures development and implementation audits things like hts classification determination of origin proper values and we do handle free trade grant programs for more than 15 companies full gamut we do also provide training in all areas of trading compliance if you want to find out about more about us either visit our website starusa.org or email us at train starters.org okay part one in this first part we'll be talking about the agreement clarifying what the term originating means looking at some of the key roles that are defined in the usmca and how the uh the role of the hts fits into the usmca and then we'll look at a contrast between the usmca and the legacy nafta program i will be citing my sources they'll be in the bottom left corner for your reference and then they'll be summarized again at the end of the presentation which again you will have a copy of after this session okay so the united states mexico canada agreement establishes the parameters for free and reduced duty when trading originating goods between the member countries of us canada and mexico usmca has multiple names it's important to be aware that different companies different organizations in different countries will refer to it by a different name here in the u.s we call it usmca sometimes nafta 2.0 or new nafta in canada they call it kuzma which is canada u.s mexico agreement and in mexico they call it the tmac usmca entered into force almost a year ago on july the 1st 2020. renewal is not set until six years after the date of renewal which will be july 1st 2026 and at that renewal period they have the option to extend it for an additional 16 years or if they choose not to renew the agreement then they will meet each year uh to potentially renew it and um if they elect not to renew it at all then it will expire on the 30th of june 2036. that's kind of the base baseline of uh how long we can expect this to be in play over the next 16 years one of the key concepts that i see particularly people that are new to the industry and new to the concept of usmca struggle with is the concept of origination and one of the conflicting factors there is the fact that there are multiple ways to define origin or originating and uh there's a definition in the code of federal regulations the cfr defined by customs and border protection they define the term country of origin to mean the country of manufacture production or growth of any article of foreign origin and in the united states further work or material added to an article must affect a substantial transformation in order to render such other country the country of origin and this is codified as part of the import process it is an extremely relevant aspect for country of origin marking upon importation but it has no bearing no direct bearing on the usmca term originating that's defined separately under usmca chapter 4 rules of origin and we'll look at some of the ways that we can identify how to achieve the originating status under usmca but it's important to note that it is not the same as u.s origin or canada origin or mexico origin and the last term that people often try to lump in with these other two is the the phrase made in usa that is administered by the federal trade commission the ftc uh and it has a different standard that is applied by a different uh entity a different agency of the u.s and it has no relationship to originating or country of origin no direct relationship there is a new rule proposed for the maiden usa standard that is currently being reviewed by the federal trade commission and i do expect to see new developments on that front later but that's going to be out of the scope of today's session i just want to put it out there that there are three entirely separate standards we are focusing on usmca originating the middle one on this chart here some of the key roles defined within the usmca agreement itself uh the parties anytime you see the the term uh parties within the texas agreement they are talking about the member countries canada mexico and u.s they are not talking about the parties to the sale they are not talking about the parties that are listed on the certifications uh they are talking about the member countries so anywhere you see the parties in the text they mean the actual member countries for the actual transactions and for the certifications they have the roles of certifier producer exporter and importer and the certifier is identified as the entity who prepares and signs the official certification and this is going to be either the producer the exporter or the importer producer is also known as the manufacturer exporter is going to be the entity delivering the goods to another party in a different member country and generally this will correlate with the u.s ppi that's defined in the export regulations the foreign trade regulations under 15 cfr 30.1 importer by contrast is the entity receiving the goods from another party in a different member country and generally this is going to be the fpbi defined in the foreign trade regulations the agreement does not define the roles or responsibilities for entities like brokers or forwarders suppliers distributors resellers or any other third party if they're not also either the producer the exporter or the importer so it's important to recognize the limitations of the parties within the usmca as well as the people that do have a direct responsibility and one of the other key concerns when looking at the framing of the usmca is understanding the role of the hts the harmonized tariff schedule hts is the basis for application of duty worldwide virtually all countries share that same first six digits and then they add digits beyond those first six uh and those extra digits will determine the application of duty uh and statistical reporting requirements an acura hts is an absolute prerequisite for usmca certifications you cannot do usmca without accurate hts the us and canada use a 10-digit system mexico uses an 8-digit system in the hts us there are more than 18 000 classifications if you don't have a reliable process for determining your classification of goods uh then you're not going to be able to execute your certifications correctly you're not going to be able to follow the rules of origin correctly so it it must be part of your approach to usmca to obtain determine accurate reliable hts classifications quick note that the schedule b and the hts us are different schemes they are both based on the hts the six digits but schedule b is used for exports while hts us is used for imports there's a little bit nuance that i'm not going to get into it but it's important to recognize that a schedule b and an hts us are not the same thing schedule b only has about 9 000 classifications about half of what the hts us uses and whenever you're preparing your usmca certifications you should be including the hts only up to the six digit level since that is the universal and the certifications are intended for use by other customs authorities other countries also we will not be learning how to classify in today's session that's an entirely different field of study and frankly far more complex than usmca in my opinion uh but if you do have interest in understanding how to classify your goods properly if you recognize that as a deficiency in your organization absolutely get that short up you can reach out to us for more information we do free webinars on classification and and we can talk to you in your organization about what your limitations are challenges there are okay we have a quick uh look at the contrast between usmca and nafta on paper and in practice these these two agreements are very very similar there are not any major fundamental differences between the organizations that would uh make it so that you could not take advantage of usmca if you were already taking advantage of nafta but there are some special inclusions that are addressed within the agreement that have some play for various industries sectors uh we're going to talk about the concepts of terror shift and regional value content what has changed what has stayed the same and how they work uh we'll look at the de minimis rule and then we'll take a look at some of the chemical and plastic rules which are very very different from nafta as well as the automotive rules which have a kind of a difficult implementation we will not be going into super deep depth on either of those two categories but we will touch on them briefly so the special inclusions these are part of the act of negotiating between these three countries uh these are priority issues that all three countries came to an agreement and an understanding on how to provide in the first case uh protections for specific types of industries we have small medium enterprises the agricultural industry automotive textiles and apparel and telecommunications obviously these are hot button issues that have been debated for decades between us canada and mexico and around the world so they are going to have a special inclusion here there are particular sectors that get a special consideration particularly intellectual property that is a big deal for u.s interests um as well as the distribution of investments and financial services across those borders between those countries then there are side letters that are between usually two of the parties two member countries uh the deal with a section 232 aluminum and steel tariffs auto safety standards energy and and r d expenditures as well as environmental operation all these have special considerations that are baked in if you're in any of these industries i would highly recommend researching these sections and ensuring you understand how those special inclusions might make your roles and responsibilities a little bit different than the average participant in usmca okay tariff shift so under the usmca goods are going to continue to qualify using the same two basic methods used by nafta and other free trade agreements those two methods are tare shift and regional value content when i use the term tariff shift i'm talking about the the concept that a good transitions from one article in the hts to another are fluently hts at this basis that's what tariff shift means it is a different article because of some active manufacturing or a combination with other raw materials carrier shift can happen at different levels the chapter level the heading level or the subheading level for those of you that are not familiar with the hts i would strongly encourage you to uh bone up on your understanding of the differences between chapter heading and sub-heading levels of the tariff i'm not going to be going into too much detail on that today but recognizing that there are different layers chapter being the first two digits heading be the first four digits subheading being the first six digits of the hts uh is it's important understand how those come into play when reading the tariff shift rules and then lastly you'll have the phrase meet the shift and that means that a particular good has transformed at the appropriate tariff level in order to meet the origination requirements under the usmca if a good is said said to have met the shift that means they have met that shift rule that tariff shift rule and so we're going to take a look at some of the tariff-shift examples uh that exists i've got uh broken up into three segments here chapter shift heading shift and subheading shift and these can be represented in the terror in the usmca uh in different ways uh here's three examples for chapter shift we can have something as simple as a change to heading 7201 from any other chapter if it's not chapter 72 and it becomes chapter 72 then it is said to have met the shift and then you can have a little bit more uh specific with uh uh still being chapter shift but being a little bit more um particular on which hts's are meeting that chapter shift and this is a change to subheading 720211 through 72 or 260 inclusive from any other chapter so again if it's coming from a chapter outside of 72 into one of these these subheadings 720 to 11 through 72 or 260 then it is going to meet the shift i'm going to take a little bit of a look at this uh next one here which is uh 720270 which is the tariff classification for ferromolybdenum uh which is a the usmca rule is a change to headings subheading 720270 from any other chapter except from subheading 26 1310 that's the rule in the usmca and if you go and look up the the tariff classifications again 720270 is ferromolybdenum and 26 1310 is molybdenum ores and concentrates roasted uh so they're saying that there is not a substantial trans substantial enough transformation from those roasted ores and concentrates uh to become a pharaoh molybdenum to meet that shift so you can you can become a 720270 from any other chapter unless you're coming specifically from subheading 26 13 10. hopefully that was clear again if there's questions uh feel free to type them into the question answer box i will get to them uh heading shift heading shift is basically represented by the text here we've got a heading of 7206 to 7207. a change to those subheadings from any heading outside that group so if you have a 7204 and it becomes a 7206 you've met the shift if you have a 7206 and it becomes a 7207 you have not met the shift because that is within that group that's how the the heading shift works and then an example of a subheading shift here a change to subbing sub heading 40 12 11 through 40 12 19 from any subheading outside that group again outside that group uh 4012 11 through 40 12 19 is inclusive so it uh you cannot have a 40 12 uh 12 become a 40 12 14 and meet the shift you have to come from outside of that group and it does include 40 12 19 within that group hopefully that kind of paints a clear picture of the tariff shift because now we're going to look at regional value content and again the two the two primary rule baselines for usmca just like nafta are tariff shift and regional value content so the calculation methods have not changed between nafta and usmca you still use the transaction value method or the net cost method represented by the equations that you see on on your screen there where vnm stands for the value of non-originating materials so you take the transaction value subtract out the non-original materials and divide that by the transaction value again to get the the percentage of regional value content of that finished item even though the calculations have not changed some of the thresholds may have changed for example under nafta heading 405 you needed 60 transaction value or 50 net cost but under usmca heading for 4005 you you can use 35 transaction value or 25 net cost so there could be different values than what you were using before generally these are going to skew to be more advantageous under usmca easier to hit those thresholds than they were under nafta although i can't say that across the board that will always be the case and absolutely you want to be sure that you're reading the section heading and terrified of notes before looking at the hts item for qualification they will include particular restrictions or additional considerations higher up in the rules of origin under the usmca before they actually identify the specific rule so you always want to make sure you're reading the text before you're just jumping ahead to the specific tariff item level in the usmca rules of origin so here's a an example of a regional value content calculation we're going to look at the usmca rule on a b12 vitamin supplement that's classified under hgs-30450 the rule says a change to heading 3004 from any other heading except from heading 3003 so it's a tariff shift rule or no required change in tariff classification to heading 3004 provided there is a regional value content of not less than 60 transaction value method or 50 where the net cost method is used if we take a look at the middle portion of this slide here we've got a bill of materials on our b12 vitamin supplement and a hypothetical bill of materials has some water classified under 220190 coming from japan valued at 12 cents some vitamin b12 coming from the u.s classified under 29 36 26 valued at 41 cents and then there's some ground powder of 3045 from italy valued at 63 cents and lastly we've got some u.s labor and overhead of 34 cents so we take this build materials this is a you know baseline simplified representation of a costed bomb and we run some calculations by looking at uh first we look at whether or not we met the shift and in this case we have some ground powder under the same heading 300 450 3004 in fact that does not meet the ship it comes from italy it cannot be considered to be originating under the usmca because it's not produced uh it's not defined as originating under the usmca uh being produced in u.s canada or mexico so we cannot use the tariff shift rule and we need to look at the regional value content calculations in order to determine if we're going to achieve certification using those methods so the material cost for these four components add up to a buck 50. the sale price after you add on a 20 profit is a buck 80. we can use either of the two regional value content calculations to determine if our good is going to uh meet the threshold required and uh under usmca and under nafta you get to use the one that is most favorable to you so in our example here we use the transaction value method to subtract out 75 cents from 1.80 divide that into 1.80 and achieve 58 percent under the transaction value method that is lower than our 60 requirement in the rule above so we cannot qualify for usmca using the transaction value method so we don't qualify in tariff shift and we don't qualify on rbc transaction value our last option is looking at the net cost method and here we take the total value of the raw materials at buck 50 subtract out 75 cents of foreign content non-original material and divide that into the 150 material cost and we achieved 50 that is the threshold for the net cost method and therefore we do qualify for usmca because we have met that requirement so even though we didn't pass on two of them uh we do pass on one and we can consider our finished good our b12 vitamin supplement to be eligible for usmca there's a lot of numbers a lot of words on this slide feel free to take a look at this after the session as well just to break it down again there are a lot of questions about uh using the de minimis rule to your advantage and the diminished rule does allow basically for the exclusion of non-original materials the rule as written states the value of all non-original materials used in the production that do not undergo an applicable tariff shift ing to the product specific rule is not more than ten percent of the transaction value the total cost of good provided all other requirements are met so you can actually eliminate up to 10 percent of non-originating content that does not undergo the tariff shift rule and that 10 percent is a value increase from uh seven under nafta and now 10 under usmca which makes again again makes it easier for you to qualify for usmca than you had under nafta there are limitations to how you employ this rule um first of all you have to add up all the non-emerging values uh prior to determining whether that 10 threshold is met so you can't just uh cherry pick which one you wanted to minimize out because they're below 10 so i don't want to count those ones you need to count the entirety of your non-original materials and there are some restrictions and limitations on how to employ the domino's rule to to correct effect those rules are spelled out in annex 4a and there's an example here 4ak says any non-arranging materials that do not change at the subheading level may not be counted so there's um limitations to the use of this 10 that do make it a little more challenging it's not really difficult different different than it was under nafta but it is spelled a little more clearly and uh if you want to take advantage of this rule you have to be very very diligent about how you're employing it generally speaking i would say de minimis would be a last resort rule for example in a previous example if our net cost threshold was you know just below the 50 method then i might consider trying to use the diminished rule but i would always try and qualify without using dynamics first and foremost so in the usmca they introduced eight different chemical and plastic rules they apply to sections six and seven of the tariffs of the hts and they cover products of the chemical allied industries defined within chapters 28-38 of the hts as well as plastics and rubber and articles thereof defined in chapters 39 through 40. not all eight of these rules apply to all classifications in there definitely read those notes that i mentioned earlier because it will specify which ones you're allowed to use and in which circumstances under these rules or with these rules if you meet the chemical reaction rule or the mixtures and blends rule or any one of these you have a presumption that your good is originating under nafta even without having to look at the regional value content or the tariff shift requirements so these rules actually create more opportunity for you to become eligible if you do not meet these rules you can still use the tariff shift or the regional value content rules that are specified at that tariff item level in the rules of origin this just gives you another vehicle to get there even if you may or may not meet those specific rules one of the important things if you're going to take advantage of these chemicals and plastics rules is your record keeping practices need to be adjusted to accommodate the use of these rules if you don't have the evidence or substantiation on how you uh met the rule requirements it's as though uh there's that presumption of non-compliance there's a presumption of non-qualification uh so it's as though you don't have any proof that your claims are accurate you need to actually have records that show why you meet those rules and then the automotive rules are uh very very dense um it would have to be several hours of talking really to unpack how these work uh but do note that appendix the appendix to annex 4b contains the provisions related to the product specific rules of origin for automotive goods it uh generally applies to headings 8701-8708 there are other parts of the tariff that do refer to the automotive rules things like rubber for use for tires can have some automotive rule implications so make sure you're thoroughly reading the rules as written and referring to this nx4b unlike with the other usmca rules your product description and its use in commerce may carry more weight than the hts classification alone for most rules within the usmca the tariff classification is going to be your gospel but when it comes to automotive how your product is used in commerce may uh have a superseding rule under these automotive restrictions there are also a sliding scale of implementation there's a three four and five-year targets for implementing increasing value thresholds for rbc ensuring that uh countries have time to implement uh certain requirements in order to promote production within the member countries so today the threshold for how much regional value content you need for certain items is less than what it will be two years from now in three years from now in four years from now eventually reaching that max at that five years after implementation threshold again read the text thoroughly uh the annex 4b starts on page 224 of chapter 4 of the usmca and again there's a link to the usmca chapter 4 on the bottom left if you're in the automotive industry absolutely start by reading that text thoroughly and then there are some seven supplemental tables a through jury a through g that outline the subcomponents by hts and their use so that's that's a place that you refer to if you have a good that has multiple uses that may be used for automotive purposes and there are references to headings from chapters 40 through 94 contained within those sub the supplemental tables okay before we begin the next section i want to uh introduce everyone to our trade compliance scorecard uh this is one of the tools that we are finding to provide a lot of value to organizations by identifying gaps in trade compliance programs in providing a contextualized scorecard and an action plan that helps them target progress in critical areas the field of trade compliance is massive but using this approach we found that we're able to target specific improvements that provide meaningful progress in specific areas that are important to the organization and again uh there will be q at the end of the session so uh if you have any questions uh make sure you get them submitted i see this one and they're already that we will tackle for sure okay part two working with the fundamentals that we've just kind of laid out on how the usmca works generally we're going to take a look at some of the actions that come into play that will help set ourselves up for success um it's important to really have a good plan in place that you can work the plan because uh without without having that organization and that mindset of approach on a linear fashion and a clearly defined roles and responsibilities uh it's way too confusing to try and bite this stuff off so i i find it extremely helpful to be able to map out internally what steps we need to take what sort of external communications we need to have with our supply chain what sort of requirements that we know that we're going to need to meet so we have to gear our efforts towards those substantiation rules and then knowing what our output is going to look like what our certification is going to end up when we're all done if we've done it correctly these are very humanized elements of executing a usmca strategy and the first step to that is internal preparedness stage one is prerequisites you need to have appropriate training and practical knowledge across your key departments uh knowing what is supposed to happen when it's supposed to happen and how it gets done you've got to have your hcs classifications if you don't have good hts if you don't have good methodology for your hts you're flying blind and you've also got to know where to find the relevant text of the usmca every company is different every set of goods manufactured every process for obtaining the raw materials and manufacturing your goods is different you need to refer to the rules as written and know what you're supposed to do before you try and implement those strategies you could obviously be doing way more work than you need to or not doing uh which is way worse not doing critical work that is uh important to the success of your your usmca program once you've got your baselines in place you now know what you need to communicate to people and you start with communicating with your internal teams this is talking to your sales and customer service teams you want to approach these individuals they're often going to be the front line with customers that need us mca certifications and you're gonna need to empower them to communicate effectively you need to talk with your purchasing teams your production teams uh potentially your finance teams and absolutely your trade compliance teams or your logistics and transportation teams so they know what to look for and how to respond to inquiries that are coming from often many different angles and you need to be able to then take that communication and allocate proper roles and responsibilities to those individuals within those areas it it requires dedicated attention if not dedicated resources for soliciting information from your suppliers managing your inbound customer requests or your broker's requests uh qualifying your products ensuring that you have the proper substantiation distributing your certifications and keeping records of what you said and to whom and then solving the problems that come up like everything in life like everything in work there is always going to be a problem if you don't have the resources to navigate through those problems then you're going to have issues problems can range from upset customers to confuse suppliers to customs asking questions having mexico customs send you a questionnaire can be a very daunting task because they want very specific information and if you don't have the resources aligned or assigned to navigate through those requests you're going to find yourself in a bad spot and then lastly once you've got all these steps kind of in play at your organization you want to focus on your execution that that means review audit and repeat make sure that you're all following the right steps the you know those steps are effective and that you just execute year after year after year once you've got your internal teams and resources aligned you need to move on to looking at your supply chain you definitely want to be coordinating with your suppliers including your distributors and resellers both foreign and domestic you want to have a curated list of who you're going to be contacting in for what purposes use the 5ws and how who am i reaching out to what's their role in the company how do they uh how do they tie in with us empty process what items are we buying from them what role do those items play in our production process how important is their information to our usmca certification for the products that we manufacture you want to have very clear introductory notifications to your suppliers letting them know this is why you need this this is why it's important to us this is how we're going to help you comply with our request and you need to have detailed clear requests and supporting data uh many suppliers uh have a hard time well they certainly don't use the same numbering scheme that you use so you're gonna have to be able to translate what you're asking for to what their systems have and where that data lives and you need to be part of that process otherwise you're going to find yourself in a position where you've got some data back from your supplier but it doesn't tie to the data that you need for usmca and you cannot claim usmca without having that substantiation that you're supposed to have on on file and making sense so the better you can communicate provide their part numbers provide purchase order data provide purchasing histories dates things like that it helps them identify what it is you need so you want to make sure that you're part of that that help and you absolutely want to follow through a lot of suppliers do not respond to the very first request and it's it's not because they don't like you it's because that they have their own process of needing to obtain information from their suppliers this is a daisy chain effect and you need to be patient with your suppliers but you also need to follow through and make sure that you're uh clear on what you need and they have all the tools and resources that they need in order to accomplish what you're asking them and that introductory notification really helps sell that need your customers meanwhile um they're going to want to see that you've acknowledged their request you're going to want to manage their expectations if if you're three months out from being able to issue your first certificates tell your customers hey guys we're backed up we're working on this this is absolutely a priority for us our our scheduled date for certifications uh begins on december the first and uh you can expect your your certification sometime within the month of december but be clear on and absolutely definitely meet those expectations that you set if you set expectations and you don't meet them that's going to create other issues and be clear on what it is that you're going to be doing for them or or what you're providing them so they know that they're getting what they need using their part numbers again is another way to help avoid that back and forth communication of what is this part i don't i didn't buy this from you well you did we call it this and call it that and your description matches this try and be as clear as you can and again follow through brokers and third parties uh as an importer or exporter you definitely want to be the initiator brokers and other third parties do not have the same onus that you do as a certifier if you are a producer exporter importer the priority lies with you and you need to communicate and initiate that communication with your brokers and service providers that are in that supply chain so you say this is what i'm going to provide you i need you to put this in your systems i need you to provide me this information back whatever it is but you want to be the initiator and have inclusionary practices um most most uh organizations are doing their best to work with you but if you have an antagonist antagonistic approach it can yield very very negative results and it can lead to breakdowns in your supply chain and and possible non-uh compliance or failing to claim things that should have been claimed or claiming things that should not have been claimed so you want to make sure that you're working together and again these are uh these third parties are made up of humans so you definitely want to review audit and correct and communicate what you're finding to them so there is appropriate accountability and then implement sops and continuous improvement towards those ends software and automation the biggest limitation here is garbage and garbage out if you don't have the right mechanisms for storing or tracking or automating the information then you're never going to be able to identify whether or not your claims are wholly accurate or substantial or provable in the grand scheme one of the biggest limitations i've seen with software particularly with the introduction of usmca is the limitation on expired data they not all softwares will adequately handle the fact that the claim that you got from your supplier was only good for the end of december and you don't have new information in your system but meanwhile you've been making your claims without any knowledge uh all throughout the the course of the year and uh when you go to ask your supplier again oh no we changed our supplier that's not coming from china it's no longer eligible for usmca and that can have a cascading effect on all the claims that you've made previously all the customers that you're selling to there can be big problems from that expired data if you're not keeping up with those renewals for substantiation you absolutely will need that valid hts these are the cornerstone you need documented accurate determination practices you also need that relevant text of the usmca read find read and apply the rules notice if you qualify for one of the chemical rules or if you need to have a tariff shift or region value content uh threshold met or both are your automotive goods covered in annex 4b are there any special provisions for use within the usmca be aware of the text of the agreement and any special provisions that might exist they can either make your job easier or harder depending on what the rule says but you want to know that they exist and then substantiating evidence knowing that your components are originating is not enough you must have that substantiating evidence in hand at the time the claims are made this is your evidence that the product meets that rule of origin if you don't have that information in hand there is a presumption of non-compliance and it will not hold up scrutiny some of the evidence might include certainly not limited to a cost to build materials uh supplier certifications uh the evidence or methodology that you use for meeting those rules of origin certificates that you've issued to your customers over the years you you need to maintain your records for five years uh do you find a financial verification of the payments made and collected production process information commercial invoices and records along those lines you want to make sure that you've got that document trail in place that you can just refer back to it and be able to cite this is why we made this decision and lastly is the certification step here usmc certifications do not have a required form this is one of the changes from nafta form 434 is no longer necessary it's no longer part of the equation you can use any format or form that you want as long as you have the minimum data elements identified on there cbp does produce a generic certificate of origin for multiple free trade agreement types you can download it from the link on the bottom of the page here again when i send this out you'll see that uh they most recently updated it in august of 2020. it is terrible i don't recommend it it does exist and you can use it if you want certification may be provided on an invoice or any other document the the rules as written say that uh you can provide the certification status on an invoice um i don't recommend using these uh invoice based claims the data elements that are required are generally not part of your standard commercial invoices certainly not your packing lists your bills of lading so it's often not worth the trouble of changing your entire invoicing structure to meet the usmca requirements versus just having an additional document that you use for the certification process but on on paper you can use the invoice we'll look at the minimum data elements here in the so we'll take a look at those certification documents may be completed by the exporter producer or importer if you are not one of those you need to question what your what your role is in the transaction so also note that importers have special proof requirements that are spelled out in 5.2 to a through d take a look at those if you're claiming as an importer you may use any language but it needs to be translated and the last one i want to kind of put a fine point on here digital certificates with electronic signatures are valid ing to the text of the usmca electronic signatures are not a picture of somebody's signature it doesn't mean that they sign their name on a piece of paper you scanned it in cropped out their photo the photo of the signature and dropped it on a piece of paper that's not electronic signature electronic signature digital signature is an encoded fingerprint embedded in the document that verifies its authenticity this is stuff like blockchain there's ways to prove the the chain of custody of electronic documents and electronic signatures are considered acceptable but most places don't have that in place today and it's not worth spinning this up just for us mca in my opinion uh versus just using ink and paper and and making a scan uh an initial document that way a picture of a signature is not electronic signature that's the main takeaway there okay minimum data elements you must identify uh whether the certifier is the exporter producer or importer you need to include the name title address phone and email of the certifier exporter producer and importer with some exceptions your blanket period can be up to 12 months it must have an authorized signature and date you must include product information this includes a full description in hcs classification up to six digits the origin criteria should be specified as outlined in chapter 4.2 under originating goods and you must have a statement of certification i certify that the goods described in this document qualify as originating and the information contained in this document was true and accurate i assume responsibility for proving such representations and agree to maintain present upon request or to make available during a verification visit documentation necessary to support the certification these are the minimum data elements kind of nutshell you can see them spelled out in annex 5a called minimum data elements and again you can put these on any format of document you want but that document must contain all of these things okay before we jump in the last section um i do want to mention that our customs broker course uh will be resuming uh here in late july early august um if anybody's interested in getting their customs broker license uh our program is awesome i took it many years ago we have a fantastic instructor joe harper who administers the course a lot of it is delivered actually all of it's delivered electronically now so there's a lot more availability so if you're interested in getting your license definitely look us up after the uh after the session here there's a link on this slide that you'll be able to click okay for the last uh part uh start to wrap up i want to give you some last tips addressing any questions you might have and then we'll be on our ways some tips and best practices here uh modifying documents uh if your product is not eligible for usmca you do not have to issue any sort of document one way or another however it's very helpful to your customers or your brokers to issue a non-certification statement that provides the hts in origin and state that the goods don't qualify be clear that that record is way more reliable than having no record at all so um you definitely want to make sure that you're uh addressing your customers requests by providing them something even if it's not what they necessarily want but it is true you have that record that you did give it to them if you're not the exporter you want to include a statement on certification that it is not to be used for exporting to another country you can remove that exported field entirely remember the for the usmca a valid usmca certification the certifier needs to be an importer an exporter or a producer if you're not one of those three roles you probably should not be providing the official usmca certification and certainly you should not be using it if you are one of those other players getting those from a reseller or a distributor management uh provide your customer service teams with reasonable tools to respond to inpatient customers you will have impatient customers or brokers um i've noticed uh mostly uh on the mexican side of the border they have very particular requirements small changes that need to be made that's okay that's part of the process and you want to be able to give your teams enough knowledge and understanding that they can navigate through those conversations without making people upset along the way you want to give adequate notice to your suppliers uh and also your internal resources to complete requests manage your customers applications through open communication look if you told them december 1st and it's now december 3rd and you have a setting to them you probably need to reach out and say guys we're still working on it it'll be ready as soon as possible i apologize for the inconvenience it goes a long way blanket periods there are two active blanket period cycles happening right now with usmca i don't love it but it does exist we have january 1st through december 31st the standard calendar year and since usmca went into effect on july 1st we now have a july 1st through june 30th cycle period this puts a tremendous onus on tracking for compliance purposes because you may have uh you may be on a calendar year cycle but your suppliers are on that mid-year cycle and your certifications expire and you don't have new documentation in hand during the middle of the year you want to make sure that you're tracking these dates uh with the accuracy and that you're following through on the information you're providing also get help there are plenty of resources out there that can and will provide help including companies that do full stack support we're one of them we provide classification solicitation qualification customer request management post entry refunds 520 of these all that's part of what a full program looks like and you need to have the resources to do that if you don't have the resources now but you want to take advantage of usmca more fully you need to get help from outside if you don't want to hire out then you need to train your people and keep them updated and give them the resources meaning time to do the work properly if you don't give them the time there's no way they're going to achieve with any sort of reliable success and you can find yourself in a position where you are have been non-compliant for years and you now need to explain this to a federal agency uh so you definitely want to provide people with the adequate training and resources to do their job correctly references here that i use throughout the presentation are kind of condensed here for your reference i'm not going to go through all these but you can use these after the fact okay questions i will answer a few questions from past sessions as well as any of you may have i see some in the chat box here uh but please uh feel free to use the training series.org email address for questions after the session i'll be happy to to answer those i will stick around until all of these questions are answered but i am going to actually i'll stay here for a second okay so one of the questions here uh is who is liable for claims uh the importer is the first liable party the import is one responsible for making the claim to their customs agency for the benefit of duty preference at the time of importation so the importer has that first chain of liability and then based on how they substantiate their claim that responsibility passes up the chain and you can refer to articles 5.4 5.6 and 5.8 but effectively if an importer bases their claim on an exporter's valid certificate who based their claim on a producer's claim it's going to pass all the way up the chain to the producer so you want to make sure that uh you have your ducks in a row how does a company best handle filling in the form and the needed background information on the item being sold is not easy to obtain for example uh where parts are manufactured where are parts manufactured and what is their value or hts code so if you don't have the information if the information is too hard to obtain to make your certification you don't make a usmca certification usmca is optional you do not need a usmca in order to cross the border you may need it to keep your customers that's a different consideration in which case you need to have your supply chain working with you your suppliers uh whoever is involved in that in that procurement process they need to provide you the information that they that you need to have and it needs to be true if your supplier source from china and your customer needs a usmc ultra product and you can't get there you need to change your supplier you cannot just claim usmca because that's what your customer wants so and you need to have the the proof that backs up your claims if i'm just a reseller can i provide a usmca certification uh so yes uh resellers uh can convey the fact that the good is eligible if you have a valid certification from your supplier just remember that any claims to customs are to be made by the exporter producer or importer and if you're not one of those then you want to make sure that one of those parties is responsible for preparing that valid usmca certification so if you're just a distributor and you're neither the exporter nor the producer then you need to convey to the exporter usually that they need to provide this documentation to the customer in the foreign country okay is there any additional information on how to qualify under the polymer content rules uh chapter 39 states a change to 3901 through 3915 from any other heading including other headings in that group provided that the original polymer content of heading 3901 through 39.15 is not less than 50 by weight the total polymer content um so that's a very specific rule uh i do have something with the chemical rules uh the basically if the originating polymer content within that does not meet the heading shift uh the 3901-3915 if it's within that group uh then you cannot have it be less than 50 by weight originating so if you've got um 44 non-originating uh polymer content and 56 originated polymer content then i think you would meet that that rule uh that not less than 50 by weight of the total polymer content i would have to see a build material set to know how to answer that more accurately i have a vendor who refuses to include country of origin on the usmca blanket cert it's touching me on a required field do you agree my broker insists the country of origin must be assert the vendor does include it on the ci's when it shipped to us country of origin is not one of the required data elements i believe it's an oversight um as a human who works in the field i would absolutely include the country of origin because it helps frame out the accuracy of the document um and particularly if you're already providing that information there's no reason not to um i agree with you that they should not do that but if they are the only way to get them to change that practice is to work with them and understand why why they're doing it that way in the first place uh even if it's not a required data element on certification it's just way more helpful to have that there so i would i would encourage a conversation with them in as constructive a manner as possible uh we have a corporation that owns different companies and there's one department that does the usmca for all companies does the name of the certifier company need to be the same as the signing company um okay so that is a question uh that deals with the transacting customs business with uh possibly without a license which runs in violation of 19 cfr 111 one entity may not represent another entity without certain protocols and provisions in place i've had to navigate this with several clients usmca is considered customs business so is hts classification so is the valuation of goods and merchandise for import purposes uh if somebody is transacting customs business on behalf of another entity there have to be certain protocols and protections in place and the name of the certifier and the company that they work for is relevant uh because it can come into play uh with the simple question of what right does this person working for this company have to claim the usmca status for this other company and without specific protocols in place there are customs rulings on this i've got um a whole chart of what you need to have in place i'm not going to buff it out here but it is actually a very in-depth question um if you don't have those protocols in place then you are said to be transacting customs business without a license so that could be a problem um feel free to reach out to me after the webinar and i can try and dig up some information for you are there questions questionnaires available yet the customers will send an orders and verification i have not seen one for usmca yet uh i have seen several for nafta i imagine that the questionnaires will be very very similar uh to what they use for nafta but um yeah i haven't uh i haven't seen one that's specific to us mca yet so i um it's a good question i'm sure they have them i'm sure they're not that different they're gonna ask for your certification process they're gonna ask for your uh production um efforts you know what goes on how how do you prove that your good is originating provides the documents from these transaction dates that that sort of same basic setup so i wouldn't expect anything different from nafta verifications who can sign the usmc8 is the person signing and needs some kind of power returning a power of attorney is needed for a licensed customs broker to sign the the certification if you're an employee of one company who is working with other divisions of the company there are protocols for identifying that this person is considered an employee of that company so one of those protocols could be a delegation of authority it's not a power of attorney but it's a delegation authority another one of the factors that influences that is how their salary is derived if their salary is wholly derived from one company and the other company is not contributing that is a presumption that they are not an employee of the other company therefore they cannot represent that company um so yeah there's several checks and balances that you have in place to actively represent a different importer or expert okay that looks like um oh there's another question here uh documents signed by ecosign are okay as electronic signatures uh potentially depending on how the ecosign system uh handles their electronic signature process and how that document is provided to the recipient one of the one of the big problems i see with digital signatures quote unquote when you have a software that does do electronic signatures correctly it creates that that verifiable blockchain evidence uh that the good uh that the document is legitimate uh people will just print that to pdf and then send that printed pdf document which breaks that authenticity chain uh because it's no longer operating within that environment uh if you uh happen to provide that electronic document with the electronic signature through the software that does maintain that that chain of custody then it should be that electronic signature should be intact and should be valid most people tend to just break that through normal practice they'll just print it to a pdf or save it to pdf separate from the system where it's made and then email that off and when you do that the the chain of custody can be broken okay that looks like all the questions whoops um follow-up questions are welcome thank you guys all for your time uh send your follow questions to trainstarsay.org when the webinar ends you'll be taken to a feedback section please feel free to complete that uh if you have ccs correct credits you can send us the trainings.org again thank you all for your time i've been mike easton and i appreciate your attention and uh close out uh if you do have internal training needs on any any trade compliance matters uh we hit a lot of different fronts feel free to reach out to us i really like educating i've been providing training on uh these topics for pretty much any industry i have a passion for supporting education wherever possible i guess lectured at ohio state university cleveland state youngstown state case western school of law many industry groups nationwide uh we do train clients on doing everything that we do uh so uh if you need more training at a more tailored level please send us an email to train startups.org i see a hand raised in a chat oh here's a question in the chat uh if we are a distributor and get a usmca from the manufacturer can we pass it along as is uh you can um a lot of times so repeat that uh if we have distributor and get a usmca cert from the manufacturer can we pass it along as is yes um if you have a if it's done by the producer you can provide that as evidence to the to the buyer most cases distributors and resellers don't want to reveal their suppliers and it's generally not the best practice but if it's a valid certification an importer can use that as the basis for a claim i think uh if i were in that position i would let my supplier know that i'm going to be using their cert to give to my customer um i think it's bad practice to expose the the supplier uh to compliance risks that the number may not be aware of but they are making the claim so it's still valid i think i saw a hand raised but i don't know what went all right thank you all for your time i appreciate the attention and again please use the follow-up feedback thing for letting us know how we did all right have a good day everyone