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

April 5, 2005

• Expedited Textile Monitoring System: The U.S. Secretary of Commerce, Carlos Gutierrez, recently announced the initiation of a new textile and apparel monitoring system to give the domestic industry timely access to preliminary textile and apparel import data and allow for quicker analysis and decision making based on actual import statistics. The new data, to be released bi-weekly, can be accessed at http://www.otexa.ita.doc.gov/.
• New China Safeguard Measures Initiated: The U.S. Committee for the Implementation of Textile Agreements ("CITA") announced it is self-initiating investigations which may lead to the imposition of safeguard measures on certain Chinese cotton knit shirts and blouses (category 338/339), cotton trousers (category 347/348), and cotton and man-made fiber underwear (category 352/652). CITA will investigate whether the U.S. domestic market is being disrupted from a surge of Chinese imports. Unlike the "threat-based" safeguard measures filed in 2004, which are now being reviewed by the Court of International Trade, these investigations will be based on actual import statistics published under the new Expedited Textile Monitoring System. CITA's self-initiation of investigations for safeguard measures will allow for safeguard measures to be imposed quicker than if the domestic industry would have filed the same petitions.
• Pumpkin Carving Sets: A pumpkin carving set, consisting of a carving knife, plastic scraper, felt tipped pen, glitter glue pens, and paper stencils, were previously treated by CBP as a set with no particular item imparting the essential character and classified by the component occurring last in numerical order among those equally meriting consideration. However, CBP now states that the primary purpose of the pumpkin carving set is to carve designs, and as such, the carving knife imparts the essential character to the entire set; effective May 22, 2005, the proper classification is under the provision for "Knifes with cutting blades….Other: Other," HTSUS 8211.92.4060 (1¢ each+4.6% duty).
• Baseball Caps "In Part of Braid": Effective May 2, 2005, CBP is adapting a final rule with regard to ornamental braids attached to baseball-style caps; only braids with a thickness of 1/8" or greater will be considered as being "in part of braid."

• 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.

• Fair Trade Developments: The U.S. International Trade Commission ("ITC") recently: 1) instituted an antidumping ("AD") investigation on imports of superalloy degassed chromium from Japan; 2) instituted special Section 337 investigations with regard to patent infringement of certain network communication systems for optical networks and components thereof; 3) instituted a Section 337 investigation with regard to patent infringement of certain color television receivers and color display monitors and parts thereof; 4) instituted a Section 337 investigation regarding alleged patent infringement of certain rubber antidegradants, components thereof, and products containing same; 5) China vowed to aggressively oppose a preliminary AD finding by the EU against Chinese finished polyester filament with an AD margin of 20%-85.3%.
• President Seeks Extension of Fast Track Trade Authority: The U.S. administration recently asked Congress to extend Trade Promotion Authority ("TPA"), also known as "Fast Track" legislation, until July 1, 2007; TPA is currently set to expire on July 1, 2005. TPA gives the President greater authority to negotiate free trade agreements ("FTA") and was used in negotiating FTA's with Chile, Singapore, Australia, Morocco, and the proposed FA with Central America-Dominican Republic, and Bahrain.
• New North America Pact: President Bush, meeting with the Prime Minister of Canada and the President of Mexico launched the Security and Prosperity Partnership of North America, an initiative to compliment and expand existing treaties between the three countries. The initiative calls for closer integration of security measures as well as expanding economic cooperation. NAFTA itself won't be altered, however, the pact calls for increasing productivity, standardizing business regulations, and harmonizing export requirements and tariffs, to be more competitive with the EU and China.

• Countries Hit U.S. with Sanctions: The EC, along with Brazil, Canada, Chile, India, Japan, Korea, and Mexico, which comprise 71% of total U.S. exports, proposed retaliatory tariffs on a host of U.S. products in retaliation for the U.S. not repealing the Continued Dumping and Subsidy Offset Act of 2000 ("CDSOA"), also known as the "Byrd Amendment." Effective May 1, 2005, the EC will levy additional 15% tariffs on a variety of U.S. agricultural, machinery, paper and textile products, while Canada will impose tariffs on U.S. cigarettes, oysters, and live swine exports. Other countries are expected to announce similar tariffs shortly.
• Opposition to New EU Banana Regime: Colombia, Costa Rica, Ecuador, Guatemala, Honduras, and Panama are requesting WTO arbitration over the EU's proposed new banana tariffs of 230€ per ton. The current EU banana regime for imports from Central America, which is a quota-based regime, must be changed to a tariff-only regime by January 1, 2006.

• U.S. and EU Seek to Reduce Regulatory Barriers: Officials from the U.S. and EU recently met in an effort to diminish regulatory differences that hinder greater trade and investment between the world's two largest trading blocs. The EU is reportedly guided by the "precautionary principle," where companies need to prove the absence of a problem, while the U.S. is reportedly guided by a principal of minimal governmental regulation. Officials will also discuss how to keep minor trade disagreements from accelerating into major trade disputes.
• India Developments: 1) Responding to business requests and in an effort to increase its global competitiveness, India recently amended its Factories Act to give women the right to work the night shift, between 10 P.M. and 5 A.M.; 2) despite protests, India instituted its new Value Added Tax ("VAT") regime as of April 1, 2005. The new VAT tax system is an effort to widen the tax base, cut multiple layers of localized taxes, and reduce inter-state trade barriers.
• Recent CPSC Developments: 1) The Consumer Product Safety Commission ("CPSC") accepted a civil penalty of $1.2 million from a consumer electronic manufacturer for failing to report in a timely manner defects with three of its products which caused injuries to several consumers; 2) the CPSC also announced a provisional settlement in the amount of $4 million, the largest civil penalty ever levied by the CPSC, with a manufacturer of infant and toddler products for failing to inform the CPSC of defective products in a timely manner; 3) the CPSC also announced the voluntary recall of the following defective products: certain gel candles and rope candles, as they may pose a fire hazard; certain plastic flower candleholders, as the plastic holder may melt and pose a hazard; certain toasters which may self-start and catch on fire; certain blenders whose blades may break and pose a risk of injury; certain children's jacket and pant sets, as the zipper pull may detach and pose a choking hazard; certain portable DVD player batteries, as they may overheat and explode; certain rear-projection televisions, as an internal electrical connection may arc and pose a fire hazard to consumers.

• China Threat-Based Safeguard Measures to be Reviewed by the CIT: The Court of International Trade ("CIT") recently refused to dismiss a case filed by a coalition of importers against the Committee for the Implementation of Textile Agreements' ("CITA") consideration of "threat-based" safeguard measures on certain Chinese textile and apparel articles. In U.S. Assoc. of Importers of Textile & Apparel, v. U.S., the defendant asked the court to dismiss the case on the grounds that: 1) plaintiff's claims are not ripe for review, as no formal action has yet been taken; and 2) plaintiff has not exhausted its administrative remedies by not fully participating in the 30-day comment period for each safeguard measure considered. The CIT found that although in general a matter is not ripe for judicial review where administrative proceedings are still in process, the court here limits its review to CITA's authority to administer China's WTO Accession Agreement and its decision to accept threat-based requests for safeguard measures. These actions are independently reviewable by the court. The court also found that plaintiff's challenge to CITA's regulatory authority does not require the exhaustion of administrative remedies. In addition, the court found that the administrative remedy in this case, the 30-day comment period, would be manifestly inadequate, and any delay of judicial review would be a detriment to the plaintiff. Consequently, the court waived the requirement for administrative exhaustion. Sources note the court is expected to render its decision shortly.
• Reliance on Foreign Entry Documentation: In United States v. Jean Roberts Of California, Inc., the U.S. is asking the CIT to enter default judgment against an importer for its alleged negligence in importing comforters, bedspreads, and other textile items from Mexico. Jean Roberts allegedly imported "knit" blankets from Mexico, classified them as "woven" blankets, and claimed duty free treatment available to only woven blankets from Mexico. CBP alleges that Jean Roberts was negligent in describing the merchandise by "improperly relying on its foreign manufacturer to prepare the entry documents," and is asking the CIT to enter default judgment in the amount of $242,375, twice the amount of lost duties, as the defendant consistently failed to answer its Complaint. The CIT is giving the defendant a final chance to secure counsel to represent it before the court.

Serko & Simon LLP

1700 Broadway, 31^st Floor

New York, New York 10019

Phone (212) 775-0055 Fax (212) 839-9103

Outside of New York State: 1-800-46-TRADE

E-mail address: serko-simon@customs-law.com On the internet at: http://www.customs-law.com