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Industry leaders urge Congress to preserve 'First Sale Rule'
Mar '10
In a letter sent today to the House Ways and Means and Senate Finance Committees and signed by 75 companies and 36 industry organizations, industry leaders expressed strong 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 United States.

“We want Congress to understand that the First Sale Rule enjoys popularity in many different industries and throughout the trade community,” stated Steve Lamar, Executive Vice President of the American Apparel & Footwear Association (AAFA). “For the past 20 years, this Rule has helped companies lower costs and pass along savings to their customers.”

“The First Sale Rule is an important tool that allows retailers to remain competitive in the global marketplace,” said Stephanie Lester, Vice President of International Trade for the Retail Industry Leaders Association (RILA).“Congress should uphold policies that help companies to navigate the worst recession in 30 years.”

The First Sale Rule allows a company to base the value of an imported finished good, for purposes of determining the duty rate, on the cost of the product at the first sale in the supply chain, rather than the value at the point of importation. This lawful, common method of valuation is utilized by businesses across the spectrum, and its elimination could potentially cost industries, and their customers, millions of dollars. The First Sale Rule has allowed U.S. importers and exporters to remain competitive in the global marketplace and has resulted in millions of dollars in savings that help generate employment opportunities or that are passed through to American consumers.

In 2008 the U.S. Customs and Border Protection (CBP) proposed to revoke the First Sale without consulting the Congress. Action was delayed because of language included in the Farm Bill prohibiting CBP from implementing any change to the First Sale Rule until January 1, 2011.

Businesses depend on the predictable rules under which they operate and are concerned that revocation may be considered again after that date.

In December 2009 the U.S. International Trade Commission published a report on the First Sale program based on data collected in connection with the use of the First Sale Rule. The results made clear the widespread use of and support for this program.

The report found that 23,000 importing entities use “First Sale” in the United States amounting to $38.5 billion imports in products such as apparel, electronics, footwear, machinery, beverages, and pharmaceutical products. Collectively, this amount represents 8.5 percent of all importing entities and about 2.4 percent by value of total U.S. trade.

“The ITC report shows that there is a significant number of companies in a diverse range of industries that depend on the First Sale Rule when conducting their day to day business. Congress should recognize the value of the First Sale Rule and provide assurances to industry that it will continue as a valuation option,” said Jennifer Mulveny, Senior Director for Trade and Government Relations at Sandler, Travis and Rosenberg.

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. Industry leaders will continue to work closely with lawmakers to ensure that the “First Sale Rule” is upheld.

American Apparel & Footwear Association (AAFA)

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