Many retailers have implemented supply chain programs to take advantage of a duty-savings opportunity commonly known as the first sale rule in the United States and the European Union. Under these programs, importers involved in multi-tiered transactions (i.e. transactions typically involving a manufacturer, middleman and importer) may value merchandise pursuant to the first sale price between the manufacturer and the middleman for customs purposes, as opposed to the higher sale price between the middleman and the importer. Given the generally high ad valorem duty rates applicable to apparel, footwear and certain other retail items, use of the first sale value for customs purposes can produce significant savings and have a meaningful impact on a company’s bottom line.

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