Approximately 2.4 percent of total U.S. imports during a recent period were valued using the "first sale rule" in determining the transaction value of imported goods, reports the U.S. International Trade Commission (USITC) in its report Use of the "First Sale Rule" for Customs Valuation of U.S. Imports.
The USITC, 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.
As required by the legislation, the USITC provided data regarding the frequency and value of "first sale" using tariff and sector classifications, based on data provided by U.S. Customs and Border Protection. Highlights of the report follow.
Use of the "First Sale Rule" for Customs Valuation of U.S. Import (Investigation No. 332-505, USITC Publication 4121, December 2009) will be available on the ITC's Internet site at http://www.usitc.gov/publications/332/pub4121.pdf. A CD-ROM of the report may be requested by e-mailing firstname.lastname@example.org, calling 202-205-2000, or contacting the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.
USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public unless they are classified by the requester for national security reasons.