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Border business: NAFTA replacement begins this week

USMCA will govern billions in cross-border trade
Posted at 7:24 PM, Jun 29, 2020
and last updated 2020-06-30 12:46:07-04

NOGALES, Ariz. - Billions in business pass back and forth between Arizona and Mexico. A new trade agreement to manage that trade kicks in this week. KGUN9 On Your Side has more on how the trade deal called the USMCA could affect Southern Arizona.

Jaime Chamberlain says, “You know, we were doing anywhere between 30 and 30 plus billion dollars worth of cross border trade here in the last five, six, seven years, I think that that number is only poised to increase.”

Chamberlain is talking about the big business that flows back and forth between Arizona and Mexico. He owns Chamberlain Distributing, a packing house that brings tons of produce from Mexico and he chairs the port authority for Santa Cruz County. The USMCA, the US, Mexico, Canada Agreement that officially kicks in this week replaces NAFTA, the North American Free Trade Agreement and does things like modernizing record keeping for the digital age.

Chamberlain says cross border trade does not mean U.S. jobs lost to Mexico. He says, It’s a two-way highway that helps both sides.

“There's a tremendous amount of American products going into Mexico. In fact, the majority of the raw products going into make a lot of the products coming out of Mexico especially out of the Maquila industry are American based companies that are that are supplying that raw product into Mexico.”

Josh Rubin’s companyJavid LLC/Javid De Mexico operates many of those Maquilas--factories U.S. companies operate in Mexico. He says, “I represent 27 different facilities over 3500 employees here in Nogales, Mexico, for our customers.”

Customs charges are based on where a product is made. Rubin says one of the challenges under USMCA is defining country of origins when the parts come from all over the world.

He holds up a pen as an example as says, “The metal from the pen might come from one country or from one location, the spring might come from another location, the plastic around the pen might come from somewhere else that he might come from somewhere else.”

Rubin says some companies may feel they’re better off just paying ordinary customs duties and avoid record keeping and other requirements of USMCA, especially if they make small items that result in small customs fees.

There is an element of wait and see for some companies especially as US Customs and Border Protection works out exactly how it will enforce the new trade rules.