Decided on the appeal of the Court of International Trade's First Sale Rule ruling on March 1, 2021

Clarification on the role of the non-market economy in the importation process in the United States

In the lawsuit Meyer Corporation against the Government [pdf], the importer attempted to determine the dutiable value of his cookware to be imported into the United States using the "first sale" price from the Chinese manufacturer to the U.S. distributor. The Court of International Commerce ("CIT") required Meyer to prove not only that the sale price had been established in good faith but also that China's status had not influenced the price as a non-market economy. Finding that the importer had failed to prove the absence of "non-market influence," the CIT did not allow the importer to have the First Sale rules used to calculate the U.S. import duty.

The Court of Appeals for the Federal Circuit ("CAFC") then overruled the CIT decision and held that the U.S. customs regulations imposed no obligation to consider the effects of a non-market economy on the value of goods intended for import into the U.S. market. The Court noted that the law required only that the goods be designed for export to the United States and that "the relationship between [the] buyer and the seller did not affect the price paid."

The U.S. Court of Appeals decision is significant because it resolves an open issue regarding the valuation of goods imported from China (and other non-market economies) and the feasibility of applying the First Sales Rule to save on import duties in the U.S.