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ASCM Insights

What Does USMCA Mean for Your Supply Chain?

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The United States-Mexico-Canada Agreement (USMCA) took effect this week, replacing the 25-year-old North American Free Trade Agreement (NAFTA). Many supply chain professionals have already factored in the related changes. For others, there are some important updates to note — particularly new regulations, which tend to be very product-specific. Unsurprisingly, the key will be working with your partners to ensure high levels of visibility and to position your supply chain for success.

According to CNN, there are five main points to consider:

1. Auto manufacturing boost. The USMCA incentivizes companies to build cars and trucks in North America by requiring 75% of a vehicle’s parts to be made in one of the three countries to remain free from tariffs when moving between the nations. It also says more vehicle parts must be made by workers earning at least $16 an hour. These changes are expected to cause a small increase in the price of vehicles while adding 28,000 automotive jobs over six years.

2. Stronger labor laws. An interagency committee will monitor Mexico’s compliance with labor obligations and labor reform implementation. And, for the first time in any U.S. trade agreement, USMCA allows for rapid-response panels to review and potentially fine any facilities suspected of violating worker rights.

3. More access for U.S. dairy farmers. NAFTA had eliminated tariffs on most agricultural products traded among Canada, Mexico and the United States, and the USMCA will keep those tariffs at zero. It also opens up the Canadian market to U.S. dairy, poultry and eggs. In exchange, the United States will accept more Canadian dairy, peanut products and sugar.

4. Updates for the digital age. “The USMCA includes sweeping new benefits for the technology sector,” Katie Lobosco writes in the CNN article. The new provisions could provide a boost to U.S. businesses by prohibiting Canada and Mexico from forcing U.S. companies to store their data on in-country servers.

5. Environmental protections. The agreement allocates $600 million for environmental advancements and makes regulations easier to enforce by eliminating a requirement to prove a violation affects trade.

In addition to these five points, some experts note that new rules of origin will add complexity for shippers and require heightened visibility throughout their networks.

Knowledge is power

The APICS Certified Supply Chain Professional (CSCP) designation explores global supply chain management with a specific focus on international trade. Globally recognized as the industry standard, APICS CSCP designees gain the skills to effectively manage global supply chain activities that involve suppliers, plants, distributors and customers across the globe.

Now is the perfect time to start your CSCP journey, as ASCM has just launched the APICS Summer Certification Challenge. The rules are simple:

1. Complete your APICS certification by September 30, 2020.

2. Share an image of your electronic certificate on social media with the hashtag #APICSCertificationChallenge.

3. Challenge your friends and colleagues to participate.

APICS certifications and the body of knowledge have been a global standard in supply chain learning and professional development for more than 60 years. And people who hold at least one APICS certification report 21% higher median salary than those without. I hope you will join the challenge – it’s a great first step toward a more rewarding career.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer at ASCM, the largest nonprofit association for supply chain and the global leader in supply chain organizational transformation and innovation. Prior to this, he was the managing director for the Operations Consulting Group of American Express Tax and Business Services. His leadership roles have included project management, business process redesign, and individual and organizational alignment. Eshkenazi may be contacted through editorial@ascm.org.

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