Trade seeks repeal of “first sale” proposal

Trade seeks repeal of “first sale” proposal

Trade seeks repeal of “first sale” proposal

The U.S. Department of Homeland Security should withdraw its proposal to eliminate the so-called “first sale” rule for determining import values, nearly 100 companies and trade associations involved in import trade said Monday in a letter to Homeland Secretary Michael Chertoff.
   In January, the Customs and Border Protection agency said it planned to change the way import calculations are made to determine duties by basing the transaction value on the last sale to the U.S. importer instead of the first sale from an overseas supplier to a middleman.
   Some trade attorneys believe the change could cause tariffs to rise 8 to 15 percent and cost companies millions of dollars.
   The industry coalition said the decision is poorly timed because the increased costs will be passed to consumers at a time when the U.S. economy is stalling. It also criticized the department for making the move without consulting the import community, which also felt left out of program development for the recent Global Trade Exchange third-party database.
   “The administration and Congress have just completed work on an economic stimulus package that will promote more consumer spending, yet CBP is proposing a move that would undercut essential goals of that package.
   “Moreover, while government and business have collaborated as partners to protect our ports and boost our economy, the decision to put forward such a significant change in practice without consultation with the U.S. trade community presents a disturbing message with respect to that essential partnership. That such a change has been proposed, and would take effect, without congressional approval or oversight only exacerbates this situation,” the letter said.
   CBP’s proposal would overturn 20 years of precedent established by two U.S. Circuit Court decisions. Industry groups argue that CBP is basing its decision on a non-binding opinion issued by the World Customs Organization’s Technical Committee on Customs Valuation. The agency cited difficulties in following the paper trail to verify that the initial transaction is actually an arms-length sale between unrelated parties and that the merchandise was clearly destined for exportation to the United States at time of first sale, as well as post-entry audit verification as reasons justifying the change.
   Trade attorneys contend that the first sale in a multi-tiered transaction more often reflects the actual value of a product notwithstanding further price mark ups.
   The 97 organizations that signed the letter include the American Association of Exporters and Importers, the American Apparel & Footwear Association, Home Depot, JC Penney, Nike and the National Association of Manufacturers.
   The comment period for the notice of proposed rulemaking has been extended until April 23. ' Eric Kulisch