Use of the “First Sale Rule” for Customs Valuation of U.S. Imports

Use of the "First Sale Rule" for Customs Valuation of U.S. Imports

Investigation No. 332-505
USITC Publication 4121

Summary

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 Valuations of U.S. Imports.

The USITC an independent, nonpartisam, 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.

The USITC's report is now available at: http://www.usitc.gov/publications/332/pub4121.pdf.

Click here for Appendix Table D.3 (detailed import data for First Sale analysis, September 2008 to August 2009). (file is a 2.3 MB Microsoft Excel file)

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