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).


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. 

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal