U.S. Farm Bill Addresses Transaction Value Interpretation

(Expeditors Newsflash)

On May 15, 2008, House Bill H.R. 2419, commonly known as the Food, Conservation, and Energy Act of 2008 or “Farm Bill”, passed the House and Senate and is now cleared for submission to the President. Language in the bill addresses U.S. Customs and Border Protection’s (CBP, Customs) January 24, 2008 proposal regarding transaction value of imported merchandise.

According to the bill, Customs will require importers to report, at the time of entry, “whether the transaction value of the imported merchandise is determined on the basis of the price paid by the buyer in the first or earlier sale occurring prior to introduction of the merchandise into the United States.”

This requirement would be effective for one year beginning 90 days after the date of the enactment of the Food, Conservation, and Energy Act. On a monthly basis during the one-year period, Customs would report the information provided by importers to the International Trade Commission (ITC). The report would include:

• the number of importers that declare the transaction value of the imported merchandise is determined on the basis of the price paid by the buyer in the first or earlier sale
• the tariff classification of imported merchandise
• the transaction value of the imported merchandise.

After the one-year reporting period, the ITC would report to Congress the following:

• the aggregate number of importers that declare the transaction value of the imported merchandise is determined on the basis of the price paid by the buyer in the first or earlier sale
• a description of the frequency of the use of the “first or earlier sale” determination method
• the tariff classification of imported merchandise, and an analysis on a sectoral basis
• the aggregate transaction value imported merchandise, and an analysis on a sectoral basis.

In a section of the bill titled “Sense of Congress Regarding Prohibition on Proposed Interpretation of the Term ‘Sold For Exportation to the United States’”, Congress noted that the Customs Commissioner should not implement a change to Customs’ interpretation of the term “sold for exportation to the United States,” as it relates to determining transaction value, before January 1, 2011, unless the Commissioner consults with, and provides notice to Congressional committees, the Commercial Operations Advisory Committee (COAC) and receives approval of the Secretary of the Treasury.

The full text of H.R. 2419, the Food, Conservation, and Energy Act of 2008 or “Farm Bill”, can be accessed online here (PDF format).