Legislation was introduced in the Senate this week to eliminate the first sale rule, which would reverse nearly 40 years of judicial precedent and industry practice and increase costs at a time when affordability concerns are at an all-time high.
The first sale rule allows import duty to be paid on the price a middleman trading company pays the manufacturer instead of the higher price the importer pays the trading company. ST&R developed the theory of first sale and successfully litigated the seminal court case that established the first sale rule in 1988.
For nearly four decades first sale valuation has been used to help keep costs down for businesses, manufacturers, farmers, and consumers. Proper use of first sale in a manner consistent with U.S. Customs and Border Protection rules and regulations is also an effective mechanism for CBP to increase compliance and gain increased visibility into today’s complex supply chains. Importers benefit from better knowing their supply chains, which also aids in compliance with forced labor and other trade laws.
However, the new bill would amend the customs valuation statute to require imported goods to be valued based on the “price paid or payable by the buyer in the United States for the merchandise in the last sale that introduces the merchandise into the United States.” Such a change would further increase duties paid on imported goods.
In 2008, ST&R led a coalition of companies to successfully preserve first sale in response to CBP efforts to eliminate it administratively. ST&R is now once again forming a coalition of companies and stakeholders to educate Congress and the administration of the benefits of first sale valuation and its importance to supply chain security and transparency.
For more information on this coalition and how to participate, please contact Nicole Bivens Collinson at (202) 730-4956 or via email or David Cohen at (202) 730-4955 or via email.
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