"First Sale Rule" for Customs Valuation of US Imports - USITC

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FIGURE 2.4 First Sale use was sometimes associated with high tariff rates 2-10 Tariff rate (percent) 0 5 10 15 Average First Sale share (2.4%) Made-up textile articles Plastics Precision instruments Mineral fuels Tools & cutlery Prepared fruits & vegetables Prepared meats Rubber Electrical machinery Machinery Knitted fabrics Dairy Vegetables Knitted apparel Woven apparel Footwear Fish Leather Average tariff rate (1.4%) Beverages Trees and flowers Oil Seeds Fruit & nuts 0 2 4 6 8 10 Share of First Sale value in each sector's total import value (percent) Sources: CBP (September 2008–August 2009 First Sale data) and U.S. Department of Commerce. Note: Bubble sizes indicate the value of each chapter’s imports under the First Sale rule. For example, the First Sale value of imported leather goods is similar to the value of imported footwear, and both sectors have lower First Sale values than the knit or woven apparel sectors. The figure excludes information for products classified in 12 HTS chapters; this information is suppressed due to confidentiality rules.
The use of the First Sale rule for products with low or free duty rates occurs throughout the tariff schedule and is not restricted to food and agricultural goods. Appendix table D.2 shows that shippers in a number of U.S. territories and partners to U.S. free trade agreements are prominent users of the First Sale rule. Suppliers in Canada, Mexico, and the U.S. Virgin Islands accounted for 21 percent of reported First Sale use during the period, despite paying almost no duties in the period. The use of the First Sale rule for products that face very low U.S. duties, or for products from countries that face very low duties, suggests that First Sale use may be unrelated to duty reduction in these instances. In the absence of potential benefits from duty reduction, use of First Sale in these cases may simply reflect direct importation, the importer’s ready access to supply chain information, or other firm- or industry-specific attributes. The Transaction Value of Imports The 2008 Act requires that the Commission report the “aggregate transaction value of all merchandise imported into the United States during the one-year period.” 23 As noted in chapter 1, transaction value is one of a number of methods that can be used to measure imports. This value is based on the actual price paid by a buyer for a good, plus adjustments for certain fees such as commissions, packing, royalties, and licensing fees. All First Sale imports use transaction value, because the First Sale rule is not permitted under any other customs valuation method. Since the CBP has not previously collected data on the use of transaction value, the CBP added an additional question to its ESCM import compliance survey during the period October 2008–July 2009 to estimate the share of U.S. imports that use transaction value. 24 The CBP reported that 86.4 percent of the surveyed imports for consumption, by value, used the transaction value method of assigning value during that period. 25 Applying the CBP’s estimated share to the $1.633 trillion in total imports for consumption in the oneyear period from September 2008 to August 2009 implies that approximately $1.411 trillion of U.S. imports were valued using transaction value during that time. Thus, U.S. importers use the transaction value method for a high share and value of U.S. imports. 23 Section 15422(c)(2)(D). See app. A for legislation. 24 See chap. 1 for a detailed discussion of the ESCM survey and sampling methodology. 25 The CBP reported statistical confidence that the survey result is a representative sample of all U.S. imports, estimating that this share has a 1.5 percentage point margin of error in either direction, thus ranging between 84.9–87.9 percent, at a 95 percent confidence level. CBP official, e-mail message to Commission staff, July 17, 2009. 2-11
Page 1 and 2: United States International Trade C
Page 3 and 4: U.S. International Trade Commission
Page 5: PREFACE This report responds to the
Page 8 and 9: 12 10 8 Figure ES.1 Only the textil
Page 11: ABBREVIATIONS AND ACRONYMS 2008 Act
Page 15 and 16: CHAPTER 1 Introduction Every year,
Page 17 and 18: 2008-August 2009). 8 Section 15422(
Page 19 and 20: imports designating First Sale use
Page 21 and 22: CHAPTER 2 Analysis of First Sale an
Page 23 and 24: 2009, and then remained relatively
Page 25 and 26: FIGURE 2.1 The number of importers
Page 27 and 28: Value of Imports That Used the Firs
Page 29: Tariffs are only one of several pot
Page 34 and 35: U.S. International Trade Commission
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Page 43: APPENDIX B FEDERAL REGISTER NOTICES
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Page 49: APPENDIX C SUMMARY OF POSITIONS OF
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Page 55: APPENDIX D ADDITIONAL TABLES
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TABLE D.3 Detailed import data for
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"First Sale Rule" for Customs Valuation of US Imports - USITC

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