Trade law firm says First Sale Rule for imports under threat

Trade law firm says First Sale Rule for imports under threat U.S. Customs and Border Protection is proposing to eliminate the favorable import valuation methodology available under the First Sale Rule, according to an e-mail last week from the trade law firm Sandler, Travis & Rosenberg.
   The so-called First Sale Rule allows “U.S. buyers to achieve lower landed duty-paid costs without adversely affecting the profit margins of their offshore suppliers,” according to the Hong Kong Trade Development Council. “Applicable to multi-tiered transactions where a U.S. importer purchases goods from a middleman who, in turn, has contracted with a factory for the production of the goods, (it) allows merchandise to be appraised based on the value of the sales price between the middleman and the factory.”
   A change in the law could be significant argues ST&R.
   “The implementation of this change will result in a tariff increase of between 8 percent and 15 percent for those importers using the First Sale Rule,” the e-mail said. “The First Sale Rule has been available for almost 20 years as a result of a 1988 decision by the U.S. Court of Appeals for the Federal Circuit in E.C. McAfee v. U.S., which was successfully argued by ST&R’s Len Rosenberg. CBP’s proposed interpretation, which is based on an April 2007 finding by the World Trade Organization’s Technical Committee on Customs Valuation, would revoke this rule and thus eliminate the ability of importers to use the first sale in a multi-sale transaction as the value for duty purposes.
   “ST&R is moving quickly and aggressively to challenge this proposal. We are filing a request to extend the comment period, which is currently set to expire March 24. ST&R is also putting together a coalition of importers that are or may be affected by this action. A meeting of this group is planned for the week of Jan. 28 in Washington, D.C. Importers who are currently using the First Sale Rule should continue such operations while vigorously contesting this proposal.”