First Sale Rule Survives in the United States


U.S. importers and their suppliers breathed a collective sigh of relief this month after U.S. Customs and Border Protection announced that it was not going forward with its planned rule change that would have essentially eliminated the "first sale" rule.

A great deal was at stake in this decision for companies exporting to and distributing in the United States. The rule has allowed companies sourcing goods from third countries for resale to U.S. purchasers to use their arms-length price paid to the third-country manufacturer as the basis for Customs valuation for import of the goods into the United States as long as the goods were purchased from that manufacturer for "exportation to the United States."

The rule allows Latin American distributors and traders who source products for export to the United States to benefit significantly when they arrange drop shipments from third countries such as China to their U.S. customers or distribution centers.

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