Thoughts on the ‘First Sale’ Rule

The ‘first sale’ rule is a method used to arrive at the transaction value of merchandise which is the subject of multi-tiered sales. Because the first sale price is always lower than any subsequent resale price, the use of the first sale appraisement method results in substantial savings in duty. The main commercial blocks of the world – the European Union (EU), United States (US) and Japan – accept the first sale appraisement and in the US, this process has been validated through a series of court decisions. Recently, however, a move to ‘last sale’ appraisement has been proposed. This has prompted many substantial importers, trade groups and industry organisations to file comments and legal briefs in strong opposition to the proposal. This article considers the position being taken by the EU Commission, the likely result in a change to the World Trade Organization (WTO) Agreement on Customs Valuation, and concludes with the hope that customs administrators in the US and EU will heed the comments of the international trade community and continue the ‘first sale’ rule.