U.S. trade court: Test case concerning “first sale” valuation and non-market economies

U.S. trade court

The U.S. Court of International Trade today issued its opinion in a case described as a “test case” with regard to valuation under 19 U.S.C. §1401a of 125 different sets of cookware (pots and pans) imported from China (a non-market economy) and Thailand (a beneficiary developing country).

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The trade court in entering judgment for the government concluded that it doubted that accurate ascertainment of the “true” value of the “price paid or payable” at the “first sale” level was demonstrated (specifically, that the importer was unable to demonstrate that the inputs from China were procured at an undistorted price, thereby satisfying one of the first sale requirements). 

The trade court also expressed hesitation about whether the first sale for export could be applied to transactions involving non-market economies.

The case is: Meyer Corp. v. United States, Slip Op. 21-26 (CIT March 1, 2021). Read the trade court’s opinion [PDF 601 KB] (120 pages)

The focus of the case was:

  • The “first sale” rule as articulated by the Federal Circuit in Nissho Iwai America Corp. v. United States, 982 F.2d 505 (Fed. Cir. 1992)
  • Preferential treatment of entries from Thailand under the Generalized System of Preferences (GSP)
  • Whether circular metal “blanks” imported into Thailand from China underwent a “double substantial transformation” as required by Customs and Border Protection (CBP) interpretation of the GSP for purposes of both of those valuation issues

The trade court adopted the government’s facts as the findings of the court in this case (it noted the importer’s proposed findings of fact were “not inaccurate” but did not provide a complete picture of what is necessary to its case for establishing entitlement to first sale valuation). Furthermore, based on the applicable law and the evidence, the importer had  failed to meet its burden of establishing its entitlement to GSP dispensation of duty-free treatment for cookware manufactured by the Thai producer from steel discs obtained from China because the manufacturing process did not result in a double substantial transformation of them.

Moreover, the trade court further found the importer had failed to establish that it was entitled to use the transaction value between the China producer and its Hong Kong affiliate or the Thai producer and its Macau affiliate (“first sale”) for the appraisement of the imported cookware.

In concluding, the trade court expressed its doubt that an accurate ascertainment of the “true” value of the “price paid or payable” at the first sale level had been demonstrated in this case and that it needed not to opine as to whether the same could be said with respect to the second-level “price paid or payable” by the importer itself because no party had proposed an alternative method of appraisement in any event. 


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