USMCA: A Bright Light for Shippers

Many businesses around the country are suffering due to the economic impacts of COVID-19. Small and mid-sized businesses especially are being hit hard, with thousands in survival mode. Furthermore, declines in exports and global commerce are affecting the logistics and transportation sectors. However, there may be some light at the end of the tunnel.

The United States-Mexico-Canada Agreement (USMCA) was formally ratified in March 2020 and, once implemented, will create opportunities for countless companies that already do business with—or that plan to start doing business with—Canada and Mexico.

The USMCA will streamline trade among the three countries by adopting new customs procedures such as increasing Mexico and Canada’s de minimis, e-signatures, self-certification of origin, and other measures. It will boost e-commerce and the digital economy by ensuring that data moves freely across borders and prohibiting data localization.

The USMCA also contains strong protections for intellectual property rights, including enforcement tools to guard against counterfeiting and piracy.

The USMCA will replace the 25-year-old North American Free Trade Agreement (NAFTA). The Mexican legislature ratified the deal in June 2019 and the U.S. Congress followed suit in January 2020. The Parliament of Canada passed it right before Canada’s shutdown in response to COVID-19.

Unfortunately, COVID-19 may delay the agreement’s June 2020 implementation goal as the world deals with the global pandemic and looks toward economic recovery. In the meantime, companies can utilize the resources available to them—such as the programs established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act—to help provide relief for workers and their businesses.

E-Commerce Clicks with customers

Businesses should also review their e-commerce capabilities to take advantage of many customers around the world relying on online shopping as many brick-and-mortar stores remain closed. The consumer’s comfort level with online shopping has increased and e-commerce platforms have become more intuitive and ubiquitous, so the digital side of the retail business must be improved to preserve the trust of customers and retain loyalty.

For example, businesses should clearly communicate shipping options and safety measures on their websites. They should also consider updating their free shipping threshold since most brick-and-mortar stores have had to close, and online delivery may be the only way for customers to get this product. A strong logistics partner can support these efforts and guide businesses through COVID-19 changes as they prepare for USMCA implementation.

The current COVID-19 situation also highlights how relations between Canada, Mexico, and the United States are more important than ever as more companies turn to nearshoring in an effort to leverage trade opportunities closer to home. The ease of collaboration, proximity for travel, and minimal time-zone difference and cultural discrepancies make the North American countries critical partners during these uncertain times and beyond.

The agreement’s advancements in areas such as trade facilitation and customs simplification, cross-border data flows, and reduced tariffs and barriers, for example, will benefit U.S. small and mid-sized businesses and multinational corporations that ship internationally.