European Union Considering Changes to First Sale Rule

TRADE ALERT=

European Union Considering Changes to= First Sale Rule

(November 11, 2009)

European Union (EU) Customs is following in suit with the US= , by proposing revisions to valuation regulations. Similar to the US, currently European importers are allowed to use a sale earlier in the chain of transactions to establish Customs value for imported merchandise, otherwise know as the First Sale Rule. A new proposal has been submitted = that will eliminate this valuation option. The last sales transaction is usually the highest priced transaction= , so the proposal would most likely result in higher import values and thus high= er duties, when compared to the First Sale Rule. In 2011, the EU plans to adopt rev= ised regulations, which include this proposal.

Importers whose merchandise is subject to numerous sales contracts can use earlier transactions to determine value, which typically reduces the customs value and duties due.&= nbsp; European importers must meet certain conditions to be able to utilize the First Sale Rule. Article = 147 of the Commission Regulation (ECC) No.2454/92 states, “Where a price is declar= ed which relates to a sale taking place before the last sale on the basis of w= hich the goods were introduced into the customs territory of the Community, it m= ust be demonstrated to the satisfaction of the customs authorities that this sa= le of goods took place for export to the customs territory in question.”=

This proposed European change could have significant imp= act on the United States valuation criteria. In 2008, = US Customs and Border Protection (CBP) proposed a similar proposal to eliminate First Sale Rule valuation. Fo= r one year, CBP collected First Sale data and will report its findings to Congres= s by the end of this year. CBP can= not change the First Sale Rule until January 2011 and, if they decide to move forward with it, they must consult with the Commercial Operations Advisory Committee (COAC), the Hous= e Ways and Means Committee, Senate Finance Committee, and would have to get approv= al from the Secretary of Treasury. Obviously, if the EU is successful with eliminating First Sale, it w= ould pave the way for CBP to eliminate First Sale in the US as well.

Deringer recommends any company that is considering using the first sale rule to contact a Customs consulting group or Customs attorney to discuss the process of evaluation. &n= bsp;

About Deringer

A.N. Deringer, Inc. is a leading provider of logistics services including International Freight Forwarding, Warehousing & Distribution, Customs Brokerage, Logistics Consulting, Cargo Insurance, Duty Drawback, and Meat Inspection. Deringer combines over 30 US offices with a global agency network to facilitate the movement of cargo throughout the wo= rld.