Recently, members of both the U.S. House and Senate sent letters to U.S. Trade Representative Robert Lighthizer in response to troubling language included in the new U.S.-Canada-Mexico Agreement (USMCA). As the trade agreement replacing NAFTA, the USMCA includes several strong new digital trade provisions but falls far short of gaining meaningful improvements on de minimis levels that enhance frictionless trade for U.S. small businesses. In fact, not only does the USMCA not secure commitments from Canada and Mexico to significantly increase their already very low de minimis levels, but contains a footnote indicating a willingness to lower the U.S. de minimis level, which was raised from $200 to $800 by Congress in 2015 after years of negotiations.
Like these House and Senate members, we are deeply concerned by the missed opportunity to significantly improve the Canadian and Mexican de minimis levels in the agreement. As stated in the House letter to Ambassador Lighthizer:
Since Congress increased the U.S. de minimis threshold to $800…American small businesses and consumers have benefited from increased frictionless trade at the border for low-value shipments. The benefits to our small businesses would increase if they were no longer subject to duties and taxes…that apply today when they send shipments above $16 and $50 to Canada and Mexico, respectively.
Furthermore, the de minimis system outlined in the new USMCA is unnecessarily complicated, with separate levels for Canadian and Mexican tax and duty thresholds, amongst other complications. As the House Members state in their letter “… [this system] threatens to result in more cumbersome and costly procedures for U.S. small businesses exporting to Mexico and Canada, acting as potential new barriers to trade.”
We applaud all the Members of Congress who have recognized this import U.S. small business trade issue and we will continue to work with members of the House, the Senate and the office of the U.S. Trade Representative to promote small business trade. We encourage you to read the House letter to learn more.