12 February 2008

Trade opposes 'first sale' plan

This article is excerpted from the 11 February 2008 edition of “The Journal of Commerce”.

A coalition of nearly 100 trade groups and companies … sent a letter to Homeland Security Secretary Michael Chertoff objecting to Customs and Border Protection’s proposal to do away with “first sale” valuation for imported goods.

… [T]he group said that reinterpretation of rules of valuation would effectively impose a hidden tax on American consumers that would undercut the economic stimulus package that Congress and the Bush administration are putting together.

First sale methodology allows an importer to use the sale price that a foreign intermediary pays a foreign manufacturer for goods that are intended for export to the U.S. Large companies can save millions in customs duties by setting value by the lower intermediary price.

The letter said the change in interpretation would overturn 20 years of agency practice to implement a non-binding commentary by a World Customs Organization technical committee. The agency also made the decision to propose the reinterpretation without prior consultation when collaboration with the industry has become common. The letter warned that it “presents a disturbing message with regard to that essential partnership.”

On Jan. 24, Customs published the proposed rule reinterpretation for a public comment. Last week the agency extended the comment period until April 23.