WASHINGTON — A proposed rule change that would force U.S. companies to pay millions of dollars in additional duties on the products they make abroad and import back to the U.S. is aggravating lawmakers and the business community.
Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, said last week that he has problems with a proposed rule change by the U.S. Customs & Border Protection agency.
"Without consulting the committee, I have serious concerns about the proposed change to the First Sale Rule," Baucus said at a committee hearing as senators consider what to incorporate in legislation reauthorizing Customs' authority.
The First Sale Rule allows a company to determine the value of an imported finished product on the cost of the item at the point of the first sale in the supply chain, such as factory to wholesaler. The proposal would peg the final value to the point of importation, generally meaning the actual wholesale price.
Customs calculates duties based on the value of a product and companies using the existing rule essentially pay lower duties because the value of the product is lower in the beginning of the supply chain process.
Several apparel brands and retailers that shipped $96.1 billion worth of apparel and textiles to the U.S. for the year ended Jan. 31 wrote a letter to Homeland Security Secretary Michael Chertoff in February urging him to withdraw the proposal.
"At the end of the day, Finance and the [House] Ways & Means Committee creates the legislation authorizing Customs," said Stephen Lamar, executive vice president of the American Apparel & Footwear Association. "If they feel Customs overstepped its bounds, they could create a legislative mechanism that prevents that from happening in the future."
Customs has set a public comment period on the proposal that ends April 23, at which point it will decide whether to go forward with implementation.At the hearing, Charlene Stocker, chairwoman of the American Association of Exporters & Importers and senior international services manager at Procter & Gamble Distributing, said implementation of such a change would "cause us to redesign our models of international trade."
In arguing the case for making such a change to a rule that has been in place for more than 20 years, Customs said in a government filing that it needed to bring the rules into compliance with a recent decision made by the World Customs Organization.
Customs argued that most other World Trade Organization countries determine the value of imported products based on the final price before importation. (The WCO is the only intergovernmental organization focused exclusively on Customs matters. It is a separate entity from the WTO but administers certain technical aspects of the WTO agreements on customs valuation and rules of origin.)
"Many of the companies which are partnering in First Sale have been partners with [Customs] on important efforts like the [Customs Trade Partnership Against Terrorism project] security measures [a public-private supply chain partnership]," said Stocker in her testimony. "In return, [Customs] proposes to revoke one of the few practices that help these companies to maintain their profitability."
Apparel and textile importers actively participate in voluntary Customs security programs, such as the CTPAT. Under the program, if companies secure their supply chains from tampering, their goods are less likely to undergo inspection upon arrival in the U.S.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye