Source : National Textile Association News
U.S. Customs and Border Protection (CBP) published in today's Federal Register (75 FR 60134) notice of withdrawal of proposed interpretation of the expression``Sold For Exportation to the United States'' as used in the transaction value method of valuation in a series of sales importation scenario.
The "first sale rule" can be used to determine the transaction value of imported goods in certain circumstances. An item that is imported into the United States may have been subject to several transactions, with each interim buyer adding to the ultimate price paid by the U.S. importer. Current law allows U.S. importers, under certain conditions, to base the valuation of a product entering the United States on the first or earlier sale in a series of transactions, rather than the last one. For example, an item may be produced in China, sold to a middleman in Hong Kong, and in turn sold to a buyer/importer in Los Angeles; the "first sale rule" would allow the U.S. importer to declare the product's value, for import duty purposes, as the price of the original China-Hong Kong transaction.
On January 24, 2008, CBP published in the Federal Register (73 FR 4254) a notice informing interested parties that CBP was proposing a new interpretation of the expression ``sold for exportation to the United States'' for purposes of applying the transaction value method of valuation in a series of sales importation scenario. Under this proposed interpretation, in a transaction involving a series of sales, the price actually paid or payable for the imported goods when sold for exportation to the United States would be the price paid in the last sale occurring prior to the introduction of the goods into the United States, instead of the first (or earlier) sale. Accordingly, the transaction value would typically be determined on the basis of the price paid by the buyer in the United
States.
After CBP published its proposed interpretation document, Congress enacted the Food, Conservation and Energy Act of 2008 (Pub. L. 110-246, 122 Stat. 1651 (June 18, 2008)) (``the Act''), in which section 15422 required the Commissioner of CBP to collect information from importers for a one-year period as to whether the declared value was based on a ``first sale'' in a series of sales transactions. CBP was required to report the data to the International Trade Commission (ITC) on a monthly basis and, in turn, the ITC was required to submit a report to Congress within 90 days of receiving CBP's final report.
In their written submission, the American Manufacturing Trade Action Coalition AMTAC) and the National Textile Association (NTA) urged the Commission to include in its report an analysis of the percent of textile and apparel imports entered under the first sale rule method during the reviewed period, both by value and by volume.
Over the 12-month period investigated, from September 1, 2008, to August 31, 2009, a total of 23,520 unique importing entities reported using the "first sale rule." These account for 8.5 percent of all U.S. importing entities. In the textile, apparel and footwear sector the percentage of importers using the "first sale rule" was 14 percent.
In terms of import value, of the $1.63 trillion in total U.S. imports over the period, $38.5 billion was imported using the "first sale rule," or about 2.4 percent of total U.S. imports. In the textile, apparel and footwear sector the percentage of importers using the "first sale rule" was about 6 percent.
In providing background information on the First Sale rule, AMTAC and NTA contended
that the first sale rule is inconsistent with this longstanding use by the United States Government of tariffs on imports to provide not only revenue, but also a level of protection appropriate to domestic industry. The first sale rule encourages importers to circumvent the policy choices made by Congress and the Administration.
With today's notice CBP withdraws the proposed change from a "first sale" to "last sale" rule.
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