CBP May Require New First Sale Import "Declaration" as Soon as August 20, 2008
During the August 7, 2008 meeting of the Departmental Advisory Committee on Commercial Operations of U.S. Customs and Border Protection and Related Homeland Security Functions (COAC), CBP officials discussed issues related to the 2008 Farm Bill's "first sale"data collection provisions, which require:
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- for a one-year period, each importer of merchandise to provide a declaration to CBP, at the time of entry, as to whether the transaction value of imported merchandise has been determined on the basis of a first or earlier sale; and
- CBP to report to the International Trade Commission on the use of first sale and other transaction value-related issues so that the ITC can then report to Congress.
First Sale Declaration to be Provided at the Entry Line Level
According to CBP officials, the first sale declaration will be required at the entry line level.
CBP to Create a Field in ABI for First Sale Declaration
CBP officials state that after working with the trade community, it has found a way to allow the first sale declaration to be made via the Automated Broker Interface (ABI). CBP plans to create a field that will allow the filer to indicate whether first sale was used. (The filer would put an "F" in that field if first sale was used and would leave the field blank if a first sale was not used.)
First Sale Declaration Expected to be Required as of August 20, 2008
CBP officials state that they will have to publish an interim rule shortly, as the first sale information will be required as of August 20, 2008. CBP also plans to issue instructions to the trade regarding the new requirement and amend the Customs and Trade Automated Interface Requirements (CATAIR).
(The Farm Bill states that the requirement to provide first sale information (i.e., the first sale declaration) is effective for the one-year period beginning 90 days after the date of enactment (May 22, 2008) of the Farm Bill.)
ITC to Allow CBP to Use its CM Program Sample to Meet Transaction Value Reporting Requirements
CBP and the ITC have reached an agreement that will allow CBP to utilize its existing compliance measurement (CM) program sample to obtain the transaction value information it needs to report to the ITC (and which the ITC will subsequently report to Congress).
Each year CBP uses this CM program sample, which consists of 70,000 randomly selected entries, to gauge general trade compliance.
Since CBP does not currently collect data regarding transaction value, CBP will be revising its CM program sample process so that it can collect one additional piece of information - whether transaction value was the basis of appraisal.
CBP officials emphasize that it is important for the trade to provide CBP with the transaction value information it requests because the ITC has agreed that it will not require CBP to obtain transaction value information for 100 million entry lines annually if it can extrapolate from the statistically valid CM program sample to meet the Farm Bill's reporting requirements.
(In January 2008, CBP published a notice of proposed interpretation 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.
Congress included in the Farm Bill a provision which stated that it is the "sense of Congress" that the CBP Commissioner should not implement a change to CBP's interpretation of the term "sold for exportation to the U.S." for purposes of applying the transaction value of the imported merchandise in a series of sales, before January 1, 2011. The Farm Bill further stated that it is the "sense of Congress" that beginning on January 1, 2011, the CBP Commissioner may propose to change or change CBP's interpretation of the term ''sold for exportation to the United States'' only if CBP consults with and gives prior notice to the appropriate congressional committees and COAC and receives explicit approval of the Treasury Secretary prior to publishing a change.
CBP subsequently decided to withdraw its proposed interpretation.)
(See ITT's Online Archives or 06/26/08 news, 08062605, for BP summary on CBP testimony that it would shelve its proposal to eliminate the first sale rule.
See ITT's 05/19/08 news, 08051905, for BP summary of the Farm Bill, including its provisions related to first sale.
See ITT's Online Archives or 05/08/08 news, 08050805, for BP summary of Congressional letters sent to DHS opposing CBP's proposed elimination of first sale rule.
See ITT's Online Archives or 01/24/08 and 01/25/08 news, 08012405, and 08012505, for earlier BP summaries of CBP's proposal.)