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European Parliament Calls for Preservation of First Sale Rule

Monday, December 12, 2011
Sandler, Travis & Rosenberg Trade Report

[Editor’s note: This article originally appeared in the Dec. 8, 2011, issue of the Advisor, a weekly publication of our STR-TAP service, and is reprinted here with permission]

The European Parliament recently approved a non-binding resolution that provides its point of view on efforts to revise the European Union customs strategy and modernize customs procedures. Among other things, the EP called for the “First Sale Rule” to be retained and for the recording of costs in connection with risk analysis to be dropped. The EP expressed concern about proposals currently being discussed with regard to establishing a transaction value because they represent a shift toward “sale for import into the EU” instead of “sale for export to the EU.” The EP believes that such a shift would not be in accordance with the GATT Customs Valuation Code.

The EP also called on the European Commission to maintain the principle that the non-preferential origin of goods is determined according to the place where their last substantial economically justified processing occurred and expressed concern about efforts to establish non-preferential origin rules using different methods. The EP also expressed support for the implementation of product-specific origin rules only in special cases, as is currently the case, and called on the EC to retain the current product-specific rules and refrain from creating additional rules for other products. In the case of apparel, for example, non-preferential origin is currently conferred in most cases by the country where the apparel is completely made-up (where all the operations following cutting of the fabric or knitting or crocheting of the fabric directly to shape are performed).

The EP also encouraged the EC to take all necessary actions to ensure a seamless and harmonized application of the EU customs legislation throughout the EU and requested a report by 2012 on the current status of compliance. In addition, it advised the EC to consider postponing to 2016 the current June 2013 deadline for the entry into force of the Modernized Customs Code due to difficulties with the information technology systems needed to support it. The EP also highlighted the need to target high-risk consignments and allow low-risk consignments to be released for circulation as swiftly as possible, and it took the opportunity to once again voice its opposition to the U.S. legislative requirement that will eventually require scanning of all containers bound for the United States.

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