New trade agreement could streamline cross-border shipments for Louisiana


The U.S.-Mexico-Canada Agreement went into effect July 1, and perhaps the biggest deal for Louisiana industry is the agreement’s intention to reduce government oversight. It could ultimately go a long way toward streamlining cross-border shipments between the three countries.

Stephen Hanemann, a member of the board of directors at the World Trade Center of New Orleans and a partner at Kean Miller LLP, says the USMCA removes cumbersome formalities in the Certificate of Origin application and approval process.

Previously, NAFTA and other similar FTAs required a complex and specific process for any transaction between a buyer and seller. “It was expensive and time-consuming, and prevented many transactions from happening at all,” Hanemann says. “That’s all changed with USMCA, as the transaction can be performed in a simple email. It’s now a self-certification process between seller and buyer, and all those forms have been thrown out the windows.”

In effect, USMCA has eliminated a lot of red tape. “USMCA is easier—there’s no more form and no more second party certification.”

Another significant change: USMCA maximizes the use of Foreign-Trade Zones by expanding the list of products that can use them. An FTZ is a geographic area where goods may be landed, stored, handled, manufactured, reconfigured and re-exported under specific customs regulation, and are not generally subject to customs duty.

That’s a big deal locally, as FTZ 124 at the Port of South Louisiana is the largest by volume in the nation in terms of merchandise received (warehouse/distribution) and seventh in merchandise exported. The zone is currently utilized by Valero Refinery, Marathon Oil, Shell Oil Products, Louisiana Offshore Oil Port (LOOP), Bollinger Shipyards, North American Shipbuilders LLC, Baker Hughes, Excalibar Minerals, Halliburton Energy Services, Conrad Shipyard, Kongsberg Maritime and Offshore Energy Services Inc.

Through the new USMCA verbiage, the use of local FTZs—there is another at the Port of New Orleans—could increase. “The USMCA will increase the volume and content of trade in these zones, as it has language that allows more items (commodities) to be qualified to come through and into these zones,” Hanemann says.

“There’s a very real opportunity to increase trade that immediately impacts Louisiana for the positive,” he adds. “That means additional jobs and increased state revenue. Louisiana is already creating massive amounts of revenue through these (FTZs). You get jobs, you get rental income and you attract other businesses to the area.”