The United States International Trade Commission (“USITC”) has finalized recommended modifications to the Harmonized Tariff Schedule of the United States (“HTSUS”). The revisions, which are set to go into effect on January 1, 2022, conform the HTSUS with World Customs Organization (“WCO”) amendments to the Harmonized System commodity codes.  A detailed report of all changes

The United States Department of Agriculture (“USDA”) is now seeking comments from the public in connection with the Biden administration’s wide-ranging review of America’s supply chains.  USDA’s request is the first to address the administration’s year-long sectoral supply chain evaluations –  in this case agricultural commodities and food products.

Several agencies have already requested comments

On April 8, Senate Foreign Relations Committee Chairman Bob Menendez (D-NJ) and Ranking Member Jim Risch (R-ID) announced a bipartisan agreement on a wide-ranging strategic approach towards China.  The Strategic Competition Act of 2021 addresses economic competition with China, as well as humanitarian, national security, and democracy-related issues.  Most significantly, the bill, if enacted, stands

Today, the Department of Defense (“DoD”) published in the Federal Register a request for comments on risks in the supply chain for strategic and critical materials. DoD’s request stems from an Executive Order signed in February by President Biden, which directed the DoD and three other federal agencies to closely examine America’s supply chains in

Last Friday, the Office of the United States Trade Representative (“USTR”) issued lists of products from six countries that may be subject to additional 25 percent tariffs.  The proposed product lists identified by USTR are designed to offset digital services taxes (“DST”)[1] imposed by Austria, India, Italy, Spain, Turkey and the United Kingdom, and

As discussed earlier this month here, President Biden issued Executive Order 14017 (“EO 14017”) establishing a wide-ranging evaluation of America’s supply chains that will take place over the next twelve months. This post provides updates with respect to two of the 100-day supply-chain specific reviews.

As previously reported, the Commerce Department’s Bureau of Industry

Today, the U.S. Department of the Treasury’s Office of Foreign Asset Control (“OFAC”) further escalated sanctions on Burma by adding two large Burmese military holding companies to its List of Specially Designated Nationals (“SDNs”).  Myanmar Economic Holdings Public Company Limited (“MEHL”) and Myanmar Economic Corporation Limited (“MEC”) both dominate large sectors of the Burmese economy,

On February 24, 2021, President Biden issued Executive Order 14017 (“EO 14017”) establishing a wide-ranging evaluation of America’s supply chains that will take place over the next twelve months.  The assessment will follow two tracks.

The first is a 100-day review involving four specific supply chains:

  • semiconductors and advanced packaging;
  • high-capacity batteries;
  • critical minerals and

On March 10, 2021, the United States Trade Representative (USTR) published an extension of the COVID-19 related medical-care and response product exclusions from Section 301 duties covering imports from China. The agency determined it would be inappropriate to allow the exclusions to lapse in consideration of the ongoing efforts to combat the COVID-19 pandemic. The

On March 1, 2021, the U.S. Court of International Trade (CIT) issued a decision with important ramifications for any company that uses “first sale” to reduce customs duty liability for goods imported into the United States.  The CIT’s ruling in Meyer Corp., U.S. v. United States calls into question the continued viability of first sale for suppliers located in non-market economies. This development has meaningfully altered the risk profile associated with using first sale for transactions in China and Vietnam.  All companies relying on first sale should review their first sale programs to evaluate the impact of this ruling and take adequate precautions.

The First Sale Rule

The first sale rule permits importers to declare a lower customs value—and by extension, to lower the customs duty liability—for certain types of qualifying importations. To be eligible, an importation must involve a multi-tiered transaction (i.e., there must be three or more parties involved in the sequence of sales leading to the importer). Under U.S. law, the earliest sale in such a sequence of transactions may be declared as the customs value provided that the goods are clearly destined for the United States at the time of such sale and the first sale value otherwise satisfies the requirements applicable to any transaction value (i.e., it must be a bona fide sale that has been conducted at arm’s length).

First sale is thus commonly described as having “three elements”: the first sale in a multi-tiered transaction may be used as a customs value provided (1) it is a bona fide sale, (2) the goods are clearly destined for the United States at the time of the transaction, and (3) the value is an arm’s length price.

Meyer v. United States

The CIT’s decision in Meyer hinges on additional language from the seminal 30-year-old case that established first sale as a viable basis for customs valuation—language that has frequently been quoted, but seldom, if ever, scrutinized for meaning.  The CIT interpreted that language to impose an overlooked requirement, namely that any legitimate first sale must be (4) absent any distortive non-market influences. While the first three requirements for the use of first sale are frequently assessed and litigated, the fourth requirement, the CIT notes, “has generally been neglected.”
Continue Reading U.S. Importers Should Reevaluate “First Sale” Customs Programs