Industry Deserves More on Rationale Behind Planned Updates to CBP's ICP on First Sale, Say Commenters
CBP should provide more detail on the agency's reasoning behind planned updates to an informed compliance publication (ICP) describing first sale valuation, said the American Association of Exporters and Importers in comments to the agency. AAEI is among a number of commenters that are largely critical of the agency's planned revisions to the ICP (see 14080624 and 14081416). The draft ICP includes a controversial list of documents the agency might request from industry to verify the use of first sale pricing (see 14071025).
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The impetus behind CBP's efforts is unclear, said AAEI. "There is no reason offered in the draft ICP as to why these clarifications are needed from a legal or operational perspective," it said. "If CBP believes there is non-compliance with the First Sale rule, what are the specific issues that CBP believes need to be addressed? If there has been substantial non-compliance, we would like to know how many penalty cases under 19 U.S.C. § 1592 or denial of First Sale transactions have occurred, and what level of culpability with corresponding penalty amounts assessed and settled for non-compliance." If the agency continues with the update, it should make clear that the documents list is not mandatory and won't be required of an importer in order to validate a first sale transaction, said CBP.
CBP's planned changes would result in less clarity and the agency should take another route, said AAEI. "We believe CBP’s intention to provide more clarity in this area would be more effective if the Agency would discuss particular situations -- in addition to the published CBP rulings -- in which CBP believes the documentation provided would be inadequate to support a First Sale claim," the trade group said. "Such an analysis should include alternative documentation in case the primary documents are not available."
The Footwear Distributors and Retailers of America (FDRA) in its comments said it also believes CBP's rationale behind the changes should be better spelled out. "The introduction should state that requests for any of the documents should be accompanied by an explanation of why the document is necessary and that alternatives suggested by the importer will be considered," it said. FDRA joined several other commenters in questioning CBP's legal authority to move forward with the changes its considering. The statute cited in the ICP "makes it clear that the middleman is not among the entities that are required to maintain records," the footwear group said. "This limitation remains since the pertinent legislation has not been amended" and CBP should provide its views on its legal basis for requiring the items on the documents list, said FDRA.
There's already some concern among foreign vendors about the release of confidential financial material mentioned in the ICP, it said. "CBP will have to work out a methodology to enable foreign middlemen to provide information to CBP without having to impart the same information to their United States customers," it said. There will also be times where the middleman has public financial information and the agency "should adopt a clear preference for public information when available," said the FDRA.
Emailed Comments Request
CBP asked for industry input on the ICP in a July 9 email from Rich DiNucci, acting assistant commissioner in CBP's Office of International Trade, that describes some of the background and planned changes for the ICP. "We anticipate further dialogue as comments are received and we will maintain engagement to finalize the ICP," said DiNucci in the email. The proposed ICP is an "attempt to establish the 'ground rules' on documentation by creating an agreed upon list that reflects records that are normally kept in the ordinary course of business" and does not represent a planned change in agency policy," he said.
The email, a copy of which International Trade Today obtained, was sent to representatives from the National Customs Brokers & Forwarders Association of America, U.S. Fashion Industry Association, National Retail Federation, Retail Industry Leaders Association, American Apparel & Footwear Association, U.S. Council for International Business (USCIB), National Association of Manufacturers (NAM), AAEI and law firm Sandler Travis. All except for two of those groups submitted comments on the changes. An official from USCIB declined to say if the group had submitted comments and an executive at NAM said it did not submit comments but is following the issue. Others, such as FDRA and law firm Grunfeld Desiderio, also submitted comments despite not being on that email. CBP did not immediately comment .
Email ITTNews@warren-news.com for a copy of AAEI's and/or FDRA's comments. ITT is interested in hearing views from others that have filed their comments with CBP. Send comments to ITTNews@warren-news.com.