CBP withdraws ‘first sale’ proposal

CBP withdraws æfirst saleÆ proposal    U.S. Customs and Border Protection has withdrawn a proposed interpretation of the expression “sold for exportation to the United States,” the agency said in a Federal Register notice Wednesday.
   The interpretation of the so-called “first sale” doctrine, first proposed by CBP in Jan. 24, 2008, brought strong protests from some importer groups, including the American Apparel & Footwear Association (AAFA), which said CBP did not have the legal authority to propose a reinterpretation, which it said would raise import costs.
   CBP had proposed that “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.”
   Groups like AAFA complained that the practical effect of the CBP proposal “would be to increase the costs of a variety of imported goods,” and force companies to absorb those costs by reducing expenses including through layoffs, or by charging consumers more.
   After CBP published its proposed interpretation document, Congress enacted the Food, Conservation and Energy Act of 2008. A ‘sense of Congress’ provision in that law advised CBP not to amend its interpretation of ‘sold for exportation to the United States’ before Jan. 1, 2011. CBP’s notice Wednesday withdraws efforts to change the first sale rule in an interim rule published in the Federal Register on Aug. 25, 2008.
   Congress also required CBP to collect data from importers for one year as to whether the declared value was based on a ‘first sale’ in a series of sales transactions. CBP gave that data to the International Trade Commission (ITC), which issued a report last December that found during the 12 month period ending Aug. 31, 2009 that 23,520, or about 8.5 percent of importers, reported using the first sale accounting for about $38.5 billion, or 2.4 percent of the $1.635 trillion in total U.S. imports over the period. The ITC noted the textiles, apparel and footwear sector had both above-average first-sale use and an above-average tariff rates.
   The American Manufacturing Trade Action Coalition and National Textile Association told ITC 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 groups also said it “encourages importers to circumvent the policy choices made by Congress and the administration.” ‘ Chris Dupin