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CBP Shelves its Proposal to Eliminate First Sale Rule
June 27, 2008

In June 24, 2008 written testimony before the Senate Finance Committee, U.S. Customs and Border Protection Commissioner Basham announced that CBP has shelved its proposal to eliminate the use of its First Sale principal for valuing transactions.

(In January 2008, CBP published a Notice of Proposed Interpretation in the Federal Register to require that the price paid by the buyer in the U.S. to the foreign distributor form the basis for valuation in a series of sales importation scenario.

This interpretation would have been a departure from the current application of the valuation statute, which allows importers to use the price paid by an intermediary to a foreign manufacturer (the first or earlier sale) as the basis for determining the transaction value of merchandise involved in a series of sales.)

CBP Does Not Intend Any Action on Proposal Before 2011

Using language that mirrors a \\\"sense of Congress\\\" provision in the recently enacted Farm Bill, the Commissioner stated that CBP does not intend to proceed further on its proposal before January 1, 2011.

In addition, CBP will not change its current interpretation without consulting with Congress and the private sector, or without the explicit approval of the Secretary of Treasury.

(A “sense of Congress”, even if enacted, is not considered to be law. It is simply an expression of opinion.)

CBP Still Required to Implement New Importer Declaration

The Commissioner also stated that the Farm Bill instructs CBP to require for a one year period, that each importer of merchandise declare whether the transaction value of the imported merchandise has been determined on the basis of a first or earlier sale.

CBP has had preliminary discussions with the trade and is examining the most efficient means of collecting the required information while minimizing the impact on the trade.

CBP Commissioner's 06/24/08 statement, available at http://www.cbp.gov/xp/cgov/newsroom/congressional_test/enforce_efforts.xml