Interviews
'First Sale Rule' to include textiles & apparel sector, AMTAC & NTA
30 Dec '09
3 min read
The United States International Trade Commission, an independent, nonpartisan, factfinding federal agency, recently concluded a review of the "first sale rule" as required by the Food, Conservation, and Energy Act of 2008. The report was submitted to the U.S. House of Representatives' Committee on Ways and Means and the U.S. Senate's Committee on Finance on December 23, 2009.
The "first sale rule" can be used to determine the transaction value of imported goods in certain circumstances. An item that is imported into the United States may have been subject to several transactions, with each interim buyer adding to the ultimate price paid by the U.S. importer. Current law allows U.S. importers, under certain conditions, to base the valuation of a product entering the United States on the first or earlier sale in a series of transactions, rather than the last one. For example, an item may be produced in China, sold to a middleman in Hong Kong, and in turn sold to a buyer/importer in Los Angeles; the "first sale rule" would allow the U.S. importer to declare the product's value, for import duty purposes, as the price of the original China-Hong Kong transaction.
Over the 12-month period investigated, from September 1, 2008, to August 31, 2009, a total of 23,520 unique importing entities reported using the "first sale rule." These account for 8.5 percent of all U.S. importing entities. In the textile, apparel and footwear sector the percentage of importers using the "first sale rule" was 14 percent.
In terms of import value, of the $1.63 trillion in total U.S. imports over the period, $38.5 billion was imported using the "first sale rule," or about 2.4 percent of total U.S. imports. In the textile, apparel and footwear sector the percentage of importers using the "first sale rule" was about 6 percent.
In their written submission, the American Manufacturing Trade Action Coalition and the National Textile Association had urged the Commission to include in its report an analysis of the percent of textile and apparel imports entered under the first sale rule method during the reviewed period, both by value and by volume.
In providing background information on the First Sale rule, AMTAC and NTA contended that the first sale rule is inconsistent with this longstanding use by the United States Government of tariffs on imports to provide not only revenue, but also a level of protection appropriate to domestic industry. The first sale rule encourages importers to circumvent the policy choices made by Congress and the Administration.
The "first sale rule" can be used to determine the transaction value of imported goods in certain circumstances. An item that is imported into the United States may have been subject to several transactions, with each interim buyer adding to the ultimate price paid by the U.S. importer. Current law allows U.S. importers, under certain conditions, to base the valuation of a product entering the United States on the first or earlier sale in a series of transactions, rather than the last one. For example, an item may be produced in China, sold to a middleman in Hong Kong, and in turn sold to a buyer/importer in Los Angeles; the "first sale rule" would allow the U.S. importer to declare the product's value, for import duty purposes, as the price of the original China-Hong Kong transaction.
Over the 12-month period investigated, from September 1, 2008, to August 31, 2009, a total of 23,520 unique importing entities reported using the "first sale rule." These account for 8.5 percent of all U.S. importing entities. In the textile, apparel and footwear sector the percentage of importers using the "first sale rule" was 14 percent.
In terms of import value, of the $1.63 trillion in total U.S. imports over the period, $38.5 billion was imported using the "first sale rule," or about 2.4 percent of total U.S. imports. In the textile, apparel and footwear sector the percentage of importers using the "first sale rule" was about 6 percent.
In their written submission, the American Manufacturing Trade Action Coalition and the National Textile Association had urged the Commission to include in its report an analysis of the percent of textile and apparel imports entered under the first sale rule method during the reviewed period, both by value and by volume.
In providing background information on the First Sale rule, AMTAC and NTA contended that the first sale rule is inconsistent with this longstanding use by the United States Government of tariffs on imports to provide not only revenue, but also a level of protection appropriate to domestic industry. The first sale rule encourages importers to circumvent the policy choices made by Congress and the Administration.
National Textile Association
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