More Than 100 Firms and Associations Ask Congress to Preserve First Sale Rule
On March 24, 2010, 74 companies and 37 trade association wrote the leadership of the House Ways and Means and Senate Finance Committees to express their support for the preservation of the First Sale Rule, which allows U.S. importers to value imported merchandise using the "first sale" in a series of transactions as the basis for determining duties on products that come into the U.S.
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(Most of the companies writing are retail importers, their Customs brokers, attorneys, and the related associations of these groups. The companies and associations that signed the letter include J.C. Penney Corporation, Inc., NIKE, Inc., Nordstrom, Inc., Target, A.N. Deringer, Inc., the American Association of Exporters and Importers, Coalition for New England Companies for Trade, the National Customs Brokers and Forwarders Association of America, etc.)
Congress Had Delayed CBP's Proposal to Revoke First Sale Rule Until Jan 2011
The letter states that in 2008 U.S. Customs and Border Protection proposed to revoke the First Sale Rule. Congress then delayed their proposed revocation by adding language to the Farm Bill prohibiting CBP from implementing any change to the First Sale Rule until January 1, 2011.
Those signing the letter ask for the support of the leadership of these two committees to maintain the First Sale Rule and to ensure that CBP does not attempt to revoke the long-standing policy again.
ITC Found That 23,000 Importing Entities Use First Sale Rule
In December 2009 the International Trade Commission published a report on the First Sale Rule based on data collected in connection its use. The report found that 23,000 importing entities use First Sale in the U.S., amounting to $38.5 billion imports in products such as apparel, electronics, footwear, machinery, beverages, and pharmaceutical products. Collectively, this amount represents 8.5% of all importing entities and about 2.4% by value of total U.S. trade.
Volume of Trade Relying on First Sale Rule Same or Greater Than GSP
From these results alone, the letter states it is clear that there is widespread use of, and support for, the First Sale Rule. The ITC's report documents the use of First Sale for many industries and for a variety of situations. The volume of trade affected by the First Sale Rule is the same or greater than other popular trade programs, such as the Generalized System of Preferences, which also have widespread support.
For 20 Years, First Sale Rule Has Been Recognized as Viable Valuation Method
For over 20 years, the courts and CBP have recognized the First Sale Rule as a viable customs valuation methodology used to determine the appraised value of imported products for customs purposes. If the First Sale Rule were revoked or even threatened to be revoked, our business models would be compromised due to prospects of increased duties, fees and taxes.
Those signing the letter urged in the strongest possible terms that the First Sale Rule continue to be supported.
(See ITT's Online Archives or 12/24/09 news, 09122405, for BP summary of ITC report on the use of the First Sale Rule.
See ITT's Online Archives or 08/19/09 news, 09081905, for BP summary announcing that the "first sale" declaration requirement ended August 19, 2009.
See ITT's Online Archives or 06/26/08 news, 08062605, for BP summary on CBP testimony that it would shelve its proposal to eliminate the first sale rule.
See ITT's 05/19/08 news, 08051905, for BP summary of the Farm Bill, including its provisions related to first sale.
See ITT's Online Archives or 01/24/08 and 01/25/08 news, 08012405, and 08012505, for earlier BP summaries of CBP's proposed interpretation.)
Letter (dated 03/24/10) available at http://www.apparelandfootwear.org/userfiles/file/letters/2010/032410firstsaleindustryltr.pdf