The SnowSports Industries Association (SIA) said a proposed change to federal regulations on how goods are valued when bought could double duties on many goods imported by its members.
Currently, the U.S. Customs and Border Protection agency values goods for purposes of calculating ad valorem (i.e., percentage rate) duties on the price paid by the “first buyer” of the goods from the manufacturer. This is known as the “first sale” rule. Customs is proposing changing the price on which it bases its ad valorem duty calculation to the price paid by the “last buyer” before the goods are physically introduced into the U.S., to be known as a “last sale” rule.
SIA believes the change could easily double duties because the goods valued at “last rule” acquired at the end of the wholesale supply chain will naturally be greater than at “first rule.” For example, a pair of ski pants made by a China factory could be sold to a Chinese distributor for $10. The Chinese distributor charges an importer $20 to send it to the U.S. Paying a 10% duty on the $20 “last sale” would be double the surcharge of a 10% duty on the $10 “first sale.”
SIA is responding to this threatened change in rules by participating in the American Association of Exporters and Importers' (AAEI) First Sale Working Group. AAEI is planning to submit comments in response to the Federal Register notice announcing Customs' proposed change. SIA is asking members to send comments ASAP on the proposals.
