This bulletin has been prepared especially for clients of A. N. Deringer, Inc. by:

• New C-TPAT Security Criteria: On March 25, 2005, U.S. Customs and Border Protection ("CBP") published its Implementation Plan of new minimum security requirements for participants of the Customs-Trade Partnership Against Terrorism ("C-TPAT") program. The new security criteria require all new C-TPAT members to meet the security requirements before being certified. Existing C-TPAT members will be able to meet the security requirements over a 180-day phase-in period as follows: 1) the physical supply environment, e.g., plant access, plant security, and container security, will have to be secured within 60 days; 2) procedures for internal security, e.g., personnel verification, computer and electronic security, and order, shipping, and receiving procedures, will need to be in place within 120 days; 3) written security procedures for selecting business partners and verification that those business partners comply with all C-TPAT security requirements, will be required within 180 days. CBP will not require existing members to confirm that they meet the security requirements by the proscribed dates, it will assume that they have. Should a CBP validation reveal that a member has not met the security requirements, that member may lose their C-TPAT benefits and may be suspended from the program entirely.
• Export Controls Tightened: In an effort to control chemical and biological proliferation, effective April 29, 2005, the U.S. is joining other members of the "Australia Group" in requiring export licenses for listed items being shipped to any country worldwide except to other Australia Group members. Prior to March 30, 2005, export licenses were only required if listed chemicals and biologics were shipped to certain "countries of concern." The AG Common Control List covers chemical weapons precursors, dual-use chemical manufacturing equipment and technology, biological agents, and animal and plant pathogens.
• Polyethylene/Polypropylene Plastic Mesh: Extruded polyethylene mesh or plastic to be used as gardening mesh, basket filler, and protection for trees and fruits, is being reclassified by CBP under 3926.90.9880, HTSUS (5.3%), the provision for "other articles of plastic…;" CBP notes that the previous classification under subheading 3920, HTSUS (4.2%), the provision for "other plates, sheets, film, foil and strip…" is not correct, as the open spaces between the plastic/mesh strips precludes them from being considered as having a broad surface and being capable of being turned into a sheeting.

• Yearly GSP Eligibility Review: The Office of the U.S. Trade Representative ("USTR") published a list of beneficiary developing countries ("BDC") and products which may lose preferential treatment under the Generalized System of Preferences ("GSP") unless a waiver is granted by the President. A BDC may lose its GSP eligibility if U.S. imports from that country exceed the Competitive Need Limits ("CNL"), currently either $115 million or more than 50% of all U.S. imports of a particular tariff number. The USTR listed a total of sixty- five (65) products which may lose GSP eligibility as of July 1, 2005, unless CNL waivers are granted. Importers should check whether their GSP imports require CNL waivers to continue receiving preferential benefits.

• Bulgaria and Romania to Lose GSP: The European Parliament approved the entry of Bulgaria and Romania into the EU in 2007. As soon as Bulgaria and Romania become EU-member countries, they will lose their GSP eligibility.
• Trade Restrictions on Ukraine May be Lifted: During Viktor Yushchenko's recent visit to Washington, President Bush called for the U.S. Congress to lift trade restrictions imposed on Ukraine. The President will also work toward Ukraine's membership to the World Trade Organization ("WTO").
• EU to Scrutinize Imports of U.S. GMO's: The EU introduced stricter rules governing the import of genetically modified ("GMO") foodstuff as a result of the inadvertent sale in the U.S. and export to the EU of the unauthorized "Bt10" genetically modified corn seed. The new rules require importers to provide proof from internationally accredited labs that their shipments do not contain the unauthorized corn seed.
• Combination Rates Assigned to NME AD Investigations: Effective April 5, 2005, the U.S. International Trade Administration ("ITA") will start assigning "combination rates" to new antidumping ("AD") investigations involving non-market economies ("NME"). While new AD rates will still be assigned to the qualifying exporter, the rate for the exporter will be specific and linked to the actual producer who supplied the exporter. If an exporter was supplied by more than one producer, then the AD rate will be tied to the group of producers supplying the exporter.

• Fair Trade Developments: The International Trade Commission ("ITC") recently: 1) terminated the AD investigation of live swine from Canada, while the International Trade Administration ("ITA") terminated its countervailing ("CV") investigation on live swine from Canada; 2) decided to keep the AD and CV duties on certain hot-rolled flat-rolled carbon-quality steel products from Brazil, Japan, and Russia.

• WTO Appellate Body Rules on Internet Gambling: Reversing a WTO Dispute Settlement Body ruling against the U.S. and in favor of Antigua, a WTO Appellate Body ruled that the U.S. may ban certain interstate gambling because of "public order and public moral" reasons, so long as it does so in a uniform manner.
• USTR Seeks Public Comments in WTO Cases: The U.S. Trade Representative ("USTR") is seeking public comments involving two WTO Dispute Settlement Bodies ("DSB"). The first case involves a U.S. complaint against the EU for the non-uniform administration of classification, valuation, and customs matters and procedures among its different member countries. The U.S. administration asserts that the lack of uniform customs procedures makes it difficult to deal with different EU members and adds costs to U.S. exports to the EU. The second DSB involves a complaint by the EU against the American JOBS Creation Act of 2004, which replaced the Foreign Sales Corporation ("FSC") tax regime. The JOBS act replaced the FSC after the EU imposed escalating retaliatory tariffs over the FSC, which was ruled inconsistent with WTO rules. While the EU suspended its retaliatory tariffs upon the passage of the JOBS act, the EU claims that certain clauses of the act are inconsistent with WTO rules.

• Downwind States to Delay Air Cleanup: The energy bill passed this week in the U.S. Congress contains a miscellaneous provision that would allow "downwind" states to delay meeting the strict air quality standards under the Clean Air Act until the states from which the downwind smog originated meet their air quality standards. The downwind states argued that in order to reach the clean air standards they will have to impose additional air quality restriction on its own polluters to compensate for pollutants originating upwind. While the energy bill has been passed by Congress, it still needs to be voted on by the U.S. Senate.
• Ozone Friendly Chemicals Contribute to Global Warming: In a recently released report, the United Nations' Intergovernmental Panel on Global Change showed that chemicals used to replace ozone destroying chlorofluorocarbons ("CFC") are greenhouse gases contributing to global warming. The report suggests reducing the use of these chemicals through prevention of leaks, evaporation, and emissions; promoting recovery, recycling, and destruction of these substances; and increasing the use of ammonia and other alternative substances which have no affect on global warming.
• Cuba Revalues its Currency: Following the revaluation of the regular Cuban peso, Cuba revalued its convertible peso and un-pegged its peso from the U.S. dollar.
• BIS Announces Settlements and Penalties: The Bureau of Industry and Security ("BIS") announced the following penalties for companies violating the Export Administration Regulations ("EAR"): 1) a $49,500 civil penalty on a freight forwarder for shipping certain unlicensed articles to India; 2) a $46,750 civil penalty for unauthorized exports of balancing machines to Malaysia, Mexico, and Venezuela; 3) a $33,000 civil penalty to a company which shipped an unauthorized mobile cargo x-ray system to the Netherlands; 4) the president of an Illinois company was sentenced to probation and fined nearly $18,000, and his company was sentenced to corporate probation and fined $20,000 fine for knowingly and illegally shipping polygraph equipment to China.
• Recent CPSC Developments: The Consumer Product Safety Commission ("CPSC") recently: 1) accepted a civil penalty of $1.2 million from an importer of defective countertop toasters which failed to turn off properly; 2) announced a $950,000 settlement on a company which failed to report timely incidents of injuries and safety concerns of its fitness machines.
• Daylight Savings Time May be Extended: The U.S. House of Representative's House Energy and Commerce Committee approved an amendment to an energy bill being considered that calls for daylight savings time ("DST") to be extended by two months, beginning one month earlier, on the first Sunday on March, and ending one month later, the last Sunday in November. The extension of DST is expected to save the U.S. 10,000 barrels of oil a day due to longer daytime.
• Miscellaneous Business Developments: 1) Reversing its previous opposition, one of the world's largest sneaker manufacturers voluntarily disclosed the names and locations of over 700 of its factories which provide it with sneakers and apparel goods. The disclosure is an effort in better corporate governance as it relates to worker conditions; 2) New Jersey recently raised the statewide minimum hourly rate over two years to $7.15.
• Recent Innovations: 1) Scientists recently developed a polymer which looks like any other plastic, can be rigid or flexible in shape, yet is biodegradable and non-toxic. The scientists crafted the polymer into a cellphone cover and inserted a sunflower seed into the polymer, which will grow into a sunflower when the cover is disposed of and degrades; 2) researchers at the University of Toronto created a flexible plastic solar cell, said to be five times as efficient in converting solar energy into electrical energy, which can be formed into a flexible film and attached or woven into cloth, paper, or other materials; 3) using magnets, Texas scientists managed to levitate, move, and merge micron-sized fluids, promising new advances in chemistry, medicine, and related fields.

• China Currency Bills: Two bills (H.R. 1498; S. 295) recently introduced in the U.S. Congress would impose additional 27.5% duties on all Chinese originating merchandise absent a certification from the President that China is working towards allowing its exchange rates to be market driven. Sources note that the Senate leadership agreed to consider the bill in the near future. Another bill (H.R. 1575) would clarify that currency manipulation by China is actionable under the countervailing duty remedies.
• Duty Suspensions: Several bills were recently introduced in the U.S. Congress that would temporarily reduce import duties on the following merchandise: amyl-anthraquinone (H.R. 1274); allyl ureido monomer (H.R. 1391); methacrylamido etheleneurae monomer (H.R.1392); nitrocellulose (H.R. 1537); potassium sorbate (H.R. 1609); and sorbic acid (H.R. 1610).

• HMT Cases to be Dismissed: The U.S. Justice Department recently filed a request with the Court of International Trade ("CIT") seeking to dismiss all outstanding Harbor Maintenance Tax ("HMT") cases. The Justice Department noted that as the issue of interest refunds has been decided by the courts, and all administrative refunds have been paid, a mechanism should be established to dispose of all the outstanding HMT cases. Exporters who filed HMT claims with CBP should review the status of their claims with counsel.
• U.S. Sues Surety for Lost Duties: In United States v. Aegis Insurance Security Co., the U.S. government is seeking to recover over $100,000 from a surety for its portion of unpaid duties, taxes, and fees resulting from the alleged material and false entries of Chinese pencils. At the time of entry, the Chinese pencils were subject to a duty rate of $0.14 gross plus 4.3% ad valorem, in addition to being subject to antidumping duties. The government asserts that the goods were introduced by: a) means of false statements by claiming duty free status, and b) by not referencing the AD order or tendering AD duties.
• U.S. Seeks Penalties and Lost Duties from Importer: In United States v. Lee, the U.S. is asking the CIT to award it civil penalties in the amount of: a) the domestic value of the imported merchandise, and b) lost duties, for the alleged entry of food products which were under-valued by $16,150.
• Patent Infringement: A case involving patent infringement claims argued at the U.S. Supreme Court this week promises to have major implications for the development of new drugs in the future. The case pits a medical device company, which owns the patent on certain peptides, against a drug manufacturer that used those peptides to develop an anti-cancer drug. The case turns on a clause of the Hatch-Waxman Act of 1984, which transformed the generic drug industry. Under Hatch-Waxman, a company may manufacture and test a drug while the patent on the original is still in place. The Act shielded research from patent infringement if it was "solely for uses reasonably related to the development and submission of information" to the U.S. Food and Drug Administration. The exemption does not specify that it is only for research into generic drugs. While the plaintiff claims that the peptides are patent protected, the defendant claims its research is protected under the Hatch-Waxman exemption. A California court upheld the plaintiffs patent infringement claims and ordered the defendant to pay the plaintiff for injury. The Court of Appeals for the Federal Circuit upheld the lower court's decision.

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