WASHINGTON — U.S. Customs & Border Protection officially withdrew a proposal today that would have raised duties on imported apparel, laying to rest an issue that stirred up a good amount of industry controversy when it was first raised.
The proposal would have changed how Customs calculated import duties by altering the “First Sale Rule.” Under the rule, Customs pegged the value of imported finished goods to their cost at the first point of sale in the supply chain, such as when a product was sold by the factory to a wholesaler. Customs had proposed to change that to calculate value based on the final cost at the point where a product entered the U.S., typically the wholesale price.
Opponents argued that changing the rule would increase duty rates because the value of products is higher further along the supply chain.
Customs had backed off its proposed rule change as early as August 2008, but did not officially withdraw the proposal until Wednesday.
Apparel importers opposed the rule when it was first introduced in early 2008. A coalition of groups formed to oppose the proposed switch, saying it could cost the industry hundreds of millions of dollars.