Fashion Intel & Analysis

Homeland Security Secretary Janet Napolitano has named David Aguilar as Acting Commissioner for U.S. Customs and Border Protection (CBP). Aguilar, who was acting deputy commissioner, replaces Acting Commissioner Jay Ahern, who retired at the end of the 2009.


The Obama Administration last September nominated Alan Bersin as CBP Commissioner, but the Senate Finance Committee has not yet taken up this nomination, in part due to ongoing work on the healthcare bill.


Regarding other trade related nominations, the Senate late last month approved Miriam Sapiro as Deputy U.S. Trade Representative (with the portfolio for Europe and the Americas).  In addition, the Senate Finance Committee reported out the nominations of Michael Punke as U.S. Ambassador to the World Trade Organization (and third deputy USTR), Isi Siddiqui as Chief Agricultural Negotiator, and Lael Brainard as Undersecretary of Treasury for International Affairs.  These nominations are now ripe for confirmation by the full Senate.

Protection is seeking comments in response to a petition by U.S. candle makers to reclassify “wickless wax objects” as “unfinished candles.”  According to the notice, Currently, these objects are classified as “Molded or carved articles of wax” under Harmonized Tariff Schedule subheading 9602.00.40. The petitioner contends that the proper classification for these wic

            In a Federal Register notice to be published tomorrow, U.S. Customs and Border kless wax objects is in HTS subheading 3406.00.00, as candles. While the 2009 duty rates of both these subheadings is free, the National Candle Association claims that the importers of these products are using this classification as a means of circumventing a dumping order that has been placed on petroleum wax candles from China.

The Generalized System of Preferences and the Andean Trade Preferences Act programs will continue for another year, without a lapse.  Immediately following a decision last evening by Brazil’s Chief Justice in favor a New Jersey father in a custody battle, Sen. Frank Lautenberg (D-NJ) lifted his hold on H.R. 4284, the extension legislation.  The Senate quickly approved the bill by voice vote.  Now that the legislation has been passed by both houses of Congress, it goes to the President for signature.

The U.S. International Trade Commission today issued its long awaited report to Congress on the data it collected on import transactions in which value was based on the “First Sale Rule.” According to the USITC, “Over the 12-month period investigated, from September 1, 2008, to August 31, 2009, a total of 23,520 unique importing entities reported using the First Sale rule. These account for 8.5 percent of all importing entities.” The USITC also found, not surprisingly, given the higher tariff rates that apply to textiles, apparel and footwear, that those sectors had “an above average usage rate” for claiming First Sale as the basis for valuation.

Under the First Sale Rule, where there are a series of sales between manufacture and importation into the United States, importers buying goods from a middleman may elect to pay duty on the factory price, rather than a transaction between the middleman and the importer. The USITC report was requested by Congress following an attempt by U.S. Customs and Border Protection in 2008 to revoke the First Sale Rule. While Congress included language in the Food, Conservation and Energy Act of 2008, better known as the Farm Bill, barring CBP from moving forward before 2011 with any proposals to revoke the Rule, and establishing specific consultation procedures that would have to be followed by CBP, Congress also sought data on the practice so that the Congress could evaluate its position on the issue.

According to the USITC report, in terms of import value, of the $1.635 trillion in total U.S. imports over the 12 month period studied, $38.5 billion was imported using the First Sale rule, or only about 2.4 percent of total U.S. imports.

A table showing the value of First Sale Rule imports by individual Harmonized Tariff Schedule classifications is also included in the report.

Interestingly, the USITC also noted that “First Sale use is not always associated with high tariffs. For example, importers reported using First Sale when no duties would ordinarily be paid. These include approximately $8.1 billion of imports from Canada, Mexico, and the U.S. Virgin Islands, accounting for 21 percent of all First Sale imports. There are also numerous cases of First Sale use for products that are unconditionally free of duty from all countries with normal trade relations status. It is unclear how or why First Sale is being used in these instances.”

The USITC also estimated that $1.411 trillion of U.S. imports used the transaction value method during the period studied, with transaction value accounting for about 86.4 percent of total U.S. imports.

How Congress views the data provided by the USITC, and whether that data leads the Congress to form an opinion on whether the First Sale Rule should be maintained, remains to be seen.

The USITC report is posted on the USA-ITA website, as well as the USITC website.
Today President Obama signed the Proclamation announcing changes in the duty-free benefits for AGOA beneficiary countries in 2010. As expected, Madagascar (along with Guinea and Niger) will lose eligibility for AGOA in 2010. The decision is based on the fact that Madagascar has not scheduled democratic elections, even after pressure from the State Department to act by mid-December. The effective date for the change is January 1, 2010.