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.
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)