At a June 24 hearing before the Senate Finance Committee, U.S. Customs and Border Protection Commissioner Ralph Basham said that his agency is not going forward with any further action to implement its proposal to revoke the First Sale Rule (FSR) or otherwise change the interpretation of the rule before 2011. Basham’s remarks are consistent with a provision in the recently-passed Farm Bill that forestalled any immediate CBP action on the rule. The committee hearing also addressed a range of issues related to the oversight of trade functions at CBP and other agencies.
The FSR allows import duties to be assessed on the value of the first sale when an import transaction involves a series of sales (e.g., from the factory to the middleman and then to the buyer). In late January, however, CBP proposed to eliminate the FSR and trade groups actively fought this proposal, arguing that it would increase consumer costs and raise concerns on issues such as supply chain security, business predictability, agency authority and trade policy.
Ranking member Charles Grassley, R-Iowa, also expressed concern over CBP’s recent steps to change longstanding practices, such as the First Sale Rule, without first consulting the Finance Committee. Basham acknowledged that CBP did not conduct the proper consultation with the committee for its interpretation of the rule and stated that CBP could have done a much better job in consulting with stakeholders before it published the proposal.