Executive Briefings

Customs Backs Off Proposal to Alter "First-Sale" Rule for Figuring Duty Assessment--For Now

U.S. Customs and Border Protection has backed away from its proposal to eliminate the "first-sale" method of determining the value of import transactions. Under the plan, Customs would no longer have allowed an importer to calculate the duty it owed based on the lower value of two separate import transactions--that between manufacturer and reseller, and between the middleman and U.S. purchaser. Customs wanted to base duty exclusively on the last sale that occurred before the goods entered the U.S. The agency cited the difficulty of proving that the goods in question were really headed for the U.S., and that the first sale was really an "arm's-length" transaction, not affiliated with the ultimate importer. Opponents said the change would reverse hundreds of previous rulings over the 16-plus years that the first-sale rule has been in effect, and greatly increase importers' cost of doing business. Now, the agency has changed its mind, at least for the time being. "We are not going forward with any further action before 2011," Customs commissioner Ralph Basham recently told the Senate Finance Committee. Customs attorney David Cohen said the decision will restore predictability to importers' supply chains. Along with other opponents of the proposal, he argued that Customs had failed to consult with Congress and the importer community prior to making it, and that the agency had relied largely on the recommendations of a foreign advisory board with no authority over U.S. law.
http://www.cbp.gov

U.S. Customs and Border Protection has backed away from its proposal to eliminate the "first-sale" method of determining the value of import transactions. Under the plan, Customs would no longer have allowed an importer to calculate the duty it owed based on the lower value of two separate import transactions--that between manufacturer and reseller, and between the middleman and U.S. purchaser. Customs wanted to base duty exclusively on the last sale that occurred before the goods entered the U.S. The agency cited the difficulty of proving that the goods in question were really headed for the U.S., and that the first sale was really an "arm's-length" transaction, not affiliated with the ultimate importer. Opponents said the change would reverse hundreds of previous rulings over the 16-plus years that the first-sale rule has been in effect, and greatly increase importers' cost of doing business. Now, the agency has changed its mind, at least for the time being. "We are not going forward with any further action before 2011," Customs commissioner Ralph Basham recently told the Senate Finance Committee. Customs attorney David Cohen said the decision will restore predictability to importers' supply chains. Along with other opponents of the proposal, he argued that Customs had failed to consult with Congress and the importer community prior to making it, and that the agency had relied largely on the recommendations of a foreign advisory board with no authority over U.S. law.
http://www.cbp.gov