The US International Trade Commission recently concluded a review of the country’s ‘first-sale rule’.

This rule can be used to determine the transaction value of imported goods under certain circumstances. An item that is imported into the US may have been subject to several transactions, with each interim buyer adding to the ultimate price paid by the US importer. Current law allows US importers, under certain conditions, to base the valuation of a product entering the US on the first or earlier sale in a series of transactions, rather than the final one. For example, an item may be produced in China, sold to a middleman in Hong Kong, and in turn sold to a buyer/importer in Los Angeles; the first-sale rule would allow the US importer to declare the product's value, for import duty purposes, as the price of the original China-Hong Kong transaction.

From September 1, 2008, to August 31, 2009, a total of 23,520 unique importing entities used the first-sale rule, accounting for 8.5% of all US importing entities. For the textile, apparel and footwear sector the percentage of importers using the rule was 14%.

In terms of import value, of the $1.63 trillion in total US imports over the period, $38.5 billion, or around 2.4%, of total US imports were imported using the first-sale rule. For the textile, apparel and footwear sector the percentage was about 6%.