William Shakepeare’s infamous line “What’s In A Name?” from Romeo & Juliet rings when talking about the new CUSMA trade agreement set to go into effect July 1, 2020. The three participating North American countries have their own name for it, although the agreement itself is one in the same regardless of where you are in the world. In Canada, it is CUSMA (Canada-United States-Mexico Agreement); in the U.S. it is USMCA and in Mexico it will be T-MEC.
The new CUSMA will replace the 26 year old NAFTA (North American Free Trade Agreement) and with it will come along some changes despite the absence of any transition period. The changes implemented by CUSMA will most specifically affect the industries/trades of Auto, Dairy/Chicken, Copyright & Digital Trade (E-Commerce), and Pharmaceuticals among others.
Importers and exporters of products in Canada operating businesses since NAFTA was implemented in 1994 will notice the changes that the new CUSMA brings, the first of which will be a change in the forms used to clear goods cross-borders.
So what does this mean for the medical device industry in particular? Well when NAFTA first originated in 1994, businesses and consumers did not rely on the Internet and Digital Trade even remotely as much as they do in modern day. Even moreso with the Covid-19 situation, digital trade is increasingly an important factor in global economies and specifically a daily part of most North American lives. The new CUSMA increases thresholds for imports subject to duty collection and customs declaration. These increases will benefit online retailers that are shipping across their regional borders as well as small businesses importing small orders. In light of this, new tariff treatment codes will be assigned and any prior rulings under NAFTA will have to be reapplied for under CUSMA.
Industry group AdvaMed highlighted parts of the CUSMA that will have direct implications for medical device companies: international standards recognition, elimination of duplication in regulatory requirements, reimbursement decision processes among other international trade matters in medical devices. Essentially, many of these parts are interrelated and so collectively, they should contribute to the lowering of non-tariff barriers. As an example, the particular chapter of CUSMA on technical barriers to trade, the medical device single audit program should make it easier for medical device manufacturers to branch out into several markets vs. just one.
Want to know more? Looking to get rulings on your devices or ready to get the transition to CUSMA right the first time and avoid cross-border issues? To qualify for preferential treatment under CUSMA, enlisting the guidance of experts in import/export brokerage for medical devices will ensure the correct rates are applied to your shipments and avoid the MFN (Most Favoured Nation) duty rate! Contact us; we can help with transitioning to CUSMA.