CBP Shelves its Proposal to Eliminate First Sale Rule
In June 24, 2008 written testimony before the Senate Finance Committee, U.S. Customs and Border Protection Commissioner Basham announced that CBP has shelved its proposal to eliminate the use of its First Sale principal for valuing transactions.
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(In January 2008, CBP published a Notice of Proposed Interpretation in the Federal Register to require that the price paid by the buyer in the U.S. to the foreign distributor form the basis for valuation in a series of sales importation scenario.
This interpretation would have been a departure from the current application of the valuation statute, which allows importers to use the price paid by an intermediary to a foreign manufacturer (the first or earlier sale) as the basis for determining the transaction value of merchandise involved in a series of sales.)
CBP Does Not Intend Any Action on Proposal Before 2011
Using language that mirrors a "sense of Congress" provision in the recently enacted Farm Bill, the Commissioner stated that CBP does not intend to proceed further on its proposal before January 1, 2011.
In addition, CBP will not change its current interpretation without consulting with Congress and the private sector, or without the explicit approval of the Secretary of Treasury.
(A "sense of Congress", even if enacted, is not considered to be law. It is simply an expression of opinion.)
CBP Still Required to Implement New Importer Declaration
The Commissioner also stated that the Farm Bill instructs CBP to require for a one year period, that each importer of merchandise declare whether the transaction value of the imported merchandise has been determined on the basis of a first or earlier sale.
CBP has had preliminary discussions with the trade and is examining the most efficient means of collecting the required information while minimizing the impact on the trade.
(See ITT's Online Archives or 05/08/08 news, 08050805, for BP summary of Congressional letters sent to DHS opposing CBP's proposed elimination of first sale rule. See ITT's Online Archives or 01/24/08 and 01/25/08 news, 08012405, and 08012505, for earlier BP summaries of CBP's proposal.)
CBP Commissioner's 06/24/08 statement, available at http://www.cbp.gov/xp/cgov/newsroom/congressional_test/enforce_efforts.xml
BP Note
The Farm Bill's provisions on the First Sale Rule includes the following requirements:
Importer declaration. The CBP Commissioner shall require each importer of merchandise to provide to CBP at the time of entry of the merchandise 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 introduction of the merchandise into the U.S. This declaration requirement would take effect 90 days from enactment and remain in effect for a one-year period.
Monthly CBP report to ITC. The CBP Commissioner would also be required to submit to the International Trade Commission (ITC) on a monthly basis for the one-year period a report on the information provided by importers during the preceding month.
ITC report to Congress. Not later than 90 days after the submission of the final report as required above, the ITC would be required to submit to the selected congressional committees a report on the information contained in all reports submitted.
Sense of Congress. It is the "sense of Congress" that the CBP Commissioner 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. Beginning on January 1, 2011, the CBP Commissioner may propose to change or change CBP's interpretation of the term ''sold for exportation to the United States'' only if CBP:
consults with, and provides notice to, the appropriate congressional committees not less than 180 days prior to proposing a change and not less than 90 days prior to publishing a change;
consults with, provides notice to, and takes into consideration views expressed by, the Commercial Operations Advisory Committee (COAC) not less than 120 days prior to proposing a change and not less than 60 days prior to publishing a change; and
receives the explicit approval of the Secretary of the Treasury prior to publishing a change.