Farm Bill Asks CBP to Delay First Sale Change; Details of Haiti, CBTPA, Wine Provisions

In addition, Representative Meek's office has issued a statement on the language concerning U.S. Customs and Border Protection's proposed change to its "first sale" rule that was included in the Farm Bill conference report.

(See future issues of ITT for details of other trade provisions in the Farm Bill.)

House May Consider Conference Report on May 14th, President Threatens Veto

The Farm Bill conference report is currently scheduled for possible consideration by the House on May 14, 2008.

President Bush has said he will veto the Farm Bill conference agreement, and is asking Congress to extend current law for at least one year. If the President vetoes the measure, it would still become law if House and Senate each override his veto by a two/thirds majority.

First Sale Provision

According to Congressional sources, the "first sale" provision in the Farm Bill agreement calls on CBP to, among other things, hold off on reversing its policy of allowing importers to use the "first sale" rule to value goods. Specifically, this provision would (partial list):

express the "sense of Congress" that CBP should not implement a change to CBP's interpretation of the term "sold for exportation to the U.S.," for purposes of applying the transaction value of the imported merchandise in a series of sales, before January 1, 2011. This "sense of Congress" also lists criteria for CBP to meet should it implement such a change after January 1, 2011;

for a one year period, beginning 90 days after enactment, require each importer of merchandise to provide to CBP at the time of entry a declaration as to whether the transaction value of the imported merchandise is determined on the basis of the price paid by the buyer in the first or earlier sale occurring prior to the introduction of the merchandise into the U.S.;

require the CBP Commissioner to submit to the International Trade Commission (ITC) a report on the information provided by importers (as described above and in the legislation);

require the ITC to submit to Congress a report on the information submitted by CBP to the ITC; etc.

Haitian HOPE

The Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act provisions of the Farm Bill (referred to as "HOPE II") would provide additional, simplified ways for Haitian apparel (and some textile) products to qualify for duty-free treatment. It would also create incentives to use U.S. inputs.

HOPE II includes six stand alone rules for apparel (and some textile) products to qualify for preferential treatment:

1. A value-added rule (as provided for in the original Haitian HOPE Act), subject to a change in the cap);
2. A capped benefit for woven apparel meeting a wholly assembled/knit-to-shape rule without regard to the source of the fabric (cap is a 70 million SME);
3. A capped benefit for certain knit apparel meeting a wholly assembled/knit-to-shape rule without regard to the source of the fabric (cap is a 70 million SME);
4. An uncapped benefit for certain types of apparel meeting a wholly assembled/knit-to-shape rule without regard to the source of the fabric;
5. An uncapped benefit for apparel meeting a wholly assembled/knit-to-shape rule under the "3 for 1" Earned Import Allowance Program; and
6. An uncapped benefit for apparel meeting a wholly assembled/knit-to-shape rule, where the apparel is made from non-U.S. fabrics deemed to be in "short supply."

HOPE II would also authorize a new apparel sector monitoring program to promote compliance with core labor standards and to improve working conditions, particularly in the textile and apparel sector. Under the legislation, the President must certify, within 14 months of enactment, that Haiti has created an independent Labor Ombudsman's Office and establish a Technical Assistance Improvement and Compliance Needs Assessment and Remediation Program.

CBTPA

The Farm Bill agreement would also extend the U.S.-Caribbean Basin Trade Partnership Act (CBTPA) expiring provisions for two years (until September 30, 2010). (CBTPA is currently scheduled to expire September 30, 2008.)

Wine Duty Drawback

In addition, the Farm Bill agreement includes a wine drawback provision, which would codify CBP's current practice of allowing for the recovery of duties paid on imported wine using "commercially interchangeable" exported wine of the same color and within the same price range.

(See ITT's Online Archives or 05/12/08 news, 08051210, for previous BP summary on the trade provisions in the Farm Bill conference agreement.)

Ways and Means Committee press release (dated 05/12/08) available at http://waysandmeans.house.gov/News.asp?FormMode=release&ID=650.

Ways and Means Committee detailed summary available at http://waysandmeans.house.gov/media/pdf/110/farmbill.pdf.

President's statement on the Farm Bill conference agreement (dated 05/13/08) available at http://www.whitehouse.gov/news/releases/2008/05/20080513-2.html.

Meeks office's legislative language on the "first sale" provision available by emailing documents@brokerpower.com.

Text of Farm Bill conference report available at http://www.rules.house.gov/110/text/110_hr2419_confrpt.pdf.

BP Note

Although trade sources have stated that the Farm Bill agreement would also extend the Haitian HOPE Act as modified by the Farm Bill, the Ways and Means Committee press release and summary do not address this point. BP is checking and will update subscribers as new information is available.