Food Conservation and Energy Act

Monday, May 19, 2008

Trade Alert!!!


On May 19, 2008, H.R. 2419, the Food, Conservation, and Energy Act of 2008 (known as the Farm Bill) was signed into law. In H.R. 2419 contains a proposal by Customs and Border Protection (CBP) to no longer use the “first sale” in a series of sales as the valuation “sold for exportation to the United States”. CBP believes that in a series of sales the proper value would be the “last sale” occuring prior to theintroduction into the U.S..

Example of “last sale” in a series of sales: A series of sales involves more than two entities contracting together for a product to be purchased and exported to the U.S.  With global trade’s increasing complex transactions, many times there are more than two or more transactions made between different companies. A manufacturer may sell to a trading or procurement company, who then sells the article to a U.S. buyer. However; the manufacturer ships the product directly to the buyer in the U.S.. The “first sale” of valuation would be the price paid between the manufacturer and the trading company. This is the current transaction Customs uses for entry purposes. The “last sale” proposal would be the pricing between the manufacturer and the U.S. buyer as the value for entry.

Additionally, Customs is mandating that with every import a declaration by the importer is to be provided notifying Customs if valuation of the imported goods reported for entry is the “first sale” pricing or the “final sale.” This is done electronically via ABI by the entry filer. At each line item representing each imported article, a special field has been created by Customs. By inserting the field with an “F” would indicate that the “first sale” pricing was used. Leaving the field blank would indicate that the “last sale” valuation for entry was made. This reporting is mandantory starting September 20, 2008.You must notify your broker to advise of any “last sale” transactions that you currently have.

Customs has withdrawn this proposal, however; on January 1, 2011, the CBP Commissioner may change the term from exportation tointroduction into the United States and apply the “last sale” valuation. The declaration remains mandantory.