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

• GSP Program Review: The U.S. Trade Representative’s (USTR) Trade Policy Staff Committee is seeking comments by November 14, 2005 on the general operation of the Generalized System of Preferences (GSP) trade program, which is set to expire on December 31, 2006. Particularly, it is seeking comments on: 1) the length of reauthorization for the program; 2) whether smaller beneficiary countries should be allowed to increase their use of the program; and 3) whether beneficiary countries who have become competitive should lose their eligibility. This review is separate from the yearly GSP country and product review. The top 10 GSP beneficiaries by trade volume (excluding petroleum) last year were: India, Brazil, Thailand, Indonesia, Turkey, Philippines, South Africa, Venezuela, Argentina, and Russia.
• Caribbean Basin Programs Review: The USTR is seeking comments by November 4, 2005 regarding its review of the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Partnership Act (CBTPA). Comments are sought on the performance of beneficiary countries under these programs. The USTR also notes that as soon as the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) comes into effect for one or more of the signatories (Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), that country will lose its beneficiary status under the CBERA and CBTPA programs.
• Textile Declaration Changes: In an interim rule, effective October 5, 2005, CBP eliminated the requirement of textile declarations to be accompanied with textile imports. However, under the interim rule, CBP is now requiring all entries of textile and apparel to identify the manufacturer identification code (MID). Reasonable care must be used by importers and brokers to construct the correct MID for each manufacturer which confers the country of origin designation for each product, using the methodology required by CBP; comments will be accepted until December 5, 2005.
• China Trade Developments: 1) Recent U.S.-Chinese trade talks, led by Treasury Secretary John Snow, failed to produce a promise by China with regard to the pace of its currency revaluation. Although restating its intent to allow greater flexibility for the Yuan, China reiterated its stance that a rapid revaluation may hurt its economic growth; 2) members of the U.S. Congress have stated that they may demand a vote in the Senate before the November recess on a bill requiring the levy of 27.5% on all Chinese goods in the absence of Chinese action to revalue the Yuan; 3) a fourth round of negotiations between the U.S. and China toward reaching a broad agreement governing textile and apparel imports failed to produce an agreement; 4) following the failure of those negotiations, the U.S. domestic industry filed a new safeguard measure on certain cotton terry and other cotton pile towels (cat. 363) from China; 5) sources indicate that barring an agreement with China governing its textile and apparel exports, the U.S. intends to renew safeguard measures yearly in a seamless fashion using "threat based" petitions which do not require the need to collect actual trade data.
• Remanufactured Auto Parts: Unserviceable auto starters and alternators are shipped from the U.S. to Canada for re-manufacturing, where the parts, from different countries of origin, are disassembled, cleaned, and salvaged for usable parts. The parts are commingled with others and rebuilt using salvaged or new parts as necessary. CBP ruled that the starters are classified under subheading 8511.40.00 (2.5% duty), HTSUS, the provision for "Electrical ignition or starting equipment…Starter motors…," while the alternators are classified under subheading 8511.50.00 (2.5% duty), HTSUS, the provision for "Other generators." CBP also noted that as the parts are completely disassembled, commingled with other like parts, and completely reassembled, the resulting articles is not considered as repaired or altered articles but a collection of new and re-manufactured articles sold in the automotive after-market, and thus, not eligible for partial duty exemption under heading 9802.00, as articles sent abroad for repair.

• Nicaragua Approves CAFTA: Nicaragua has now followed the U.S., the Dominican Republic, El Salvador, Guatemala, and Honduras in approving the DR-CAFTA, leaving Costa Rica as the only signatory which has not yet approved the agreement. A Presidential Proclamation amending the U.S. tariff codes is still required before the agreement comes into effect for the U.S. and sources indicate that the U.S. is working toward an implementation date of January 1, 2006.
• Oman FTA to be Signed: President Bush notified Congress that he intends to sign the recently concluded FTA with Oman. Congress has 90 days to review the FTA.
• Brazil GSP Review: With Brazil’s GSP beneficiary status still in review, the U.S. Deputy Secretary of State, Robert Zoellick, noted that Brazil’s request of the World Trade Organization (WTO) for authority to impose sanctions on U.S. exports in retaliation for U.S. cotton subsidies, may impact the results of the GSP review.
• Fair Trade Developments: The U.S. International Trade Commission (ITC) recently: 1) made an affirmative determination in its sunset review of the antidumping (AD) order on certain carbon steel butt-weld pipe fittings from Brazil, China, Japan, Taiwan, and Thailand; 2) determined to keep the AD order on certain porcelain-on-steel cooking ware from China and Taiwan; 3) determined to keep the AD and countervailing (CV) order on top-of-the-stove stainless steel cooking ware from Korea while dropping the AD and CV order for Taiwan; 4) determined to conduct full five-year sunset reviews on stainless steel wire rod (Brazil, France, India); magnesium (Canada); tin and chromium coated steel sheets (Japan); and certain pipe and tube (Argentina, Brazil, India, Korea, Mexico, Taiwan, Turkey).

• Saudi Arabia: The WTO Director General, Pascal Lamy, stated that it is now possible that Saudi Arabia’s bid for WTO ascension may be approved at the next ministerial meeting in Hong Kong on December 13-18, 2005.

• Japan Accused of Currency Manipulation: In recent testimony before the U.S. House of Representative’s House Ways & Means Committee, the chief economist for one of the largest U.S. automobile manufacturers accused Japan of currency manipulation, by maintaining a weak yen policy, in order to give Japanese automakers an unfair price advantage. The result of this unfair manipulation is directly hurting U.S. automobile manufacturers.
• Russia VAT Tax Proposal: Russian Prime Minister, Mikhail Fradkov, recently proposed the lowering of the Value Added Tax in 2007 from 18% to 13%.
• Recent Patent Developments: 1) The EC recently announced it will lower the cost of trademark protection. Lower costs for filing trademark applications (from €975 to €900), registration fees (from €1,100 to €850), and renewal fees (€2,500 to €1,500) will now apply. Even greater savings may be realized by filing requests via the internet; 2) the World Intellectual Property Organization (WIPO) recently announced that it will resume deliberations toward a draft Substantive Patent Law Treaty which aims to simplify and harmonize national and regional patent laws. WIPO seeks to consider the new treaty toward the end of 2006; 3) Australia’s High Court recently ruled that the addition of "modification chips" into Sony’s PlayStation, which modifies the game console’s installed regional coding system, allowing it to play games sold in other regions more cheaply than in Australia, does not violate Australian copyright law.
• Price Fixing Fine: One of the world’s leading computer memory chip manufacturers recently pled guilty to a felony charge of price fixing and agreed to pay a $300 million fine, the second largest price fixing fine ever, to settle accusations of conspiring with competitors to fix prices, which ultimately hurt consumers.

• Senate Committee Votes to Scrap Cotton Subsidies: The U.S. Senate Committee on Agriculture, Nutrition, and Forestry recently voted to comply with a recent WTO ruling by eliminating U.S. subsidies for cotton from August 1, 2006.
• No Raise of the Federal Minimum Wage: The U.S. Senate recently failed to approve an increase of the federal minimum wage, set at $5.15 an hour since 1997.
• Miscellaneous Developments: 1) A bill (H.R. 3676) recently introduced in the U.S. House of Representatives calls for the temporary suspension of duty for certain clock radio combinations; 2) the Short Sea Shipping Tax Exemption Act of 2005 (H.R. 3319) calls for an exemption of the harbor maintenance tax (HMT) for certain shipping between U.S. mainland ports.

• Gulf Ports Update: CBP issued a notice stating that the Port of New Orleans, along with all other Gulf ports, are now operational and accepting entries and entry summaries.
• Corporate Responsibility Sought for Greatest C-TPAT Benefits: Sources note that at a recent trade symposium discussing supply chain security, departing CBP Commissioner, Robert Bonner, indicated that Customs-Trade Partnership Against Terrorism (C-TPAT) approved companies seeking the greatest benefits from the program are expected to make supply chain security a part of their corporate governance structure, much akin to corporate responsibility for financial statements under the Sarbanes-Oxley law. The company’s supply chain procedures are expected to be reviewed periodically for continued adequacy.
• California Trucking Fairness Law: In an effort to eliminate arbitrary and excessive trucking fee assessments, the recently passed California Trucking Fairness Law prohibits ocean carriers, railroads, and marine terminal operators from imposing arbitrary per diem, demurrage, or detention charges for delays which are beyond a truckers control, i.e., port gate closures, labor disruptions, terminal congestion, or weekends and holidays.

• NAFTA Claim Must be Made Within Year: In Xerox Corporation v. U.S., the U.S. Court of Appeals for the Federal Circuit (CAFC) upheld a U.S. Court of International Trade (CIT) ruling denying Xerox’s protest and claim for NAFTA preferential treatment for its photocopiers and wire harnesses, as it failed to make that claim within one year from the date of import, as required under 19 U.S.C. §1520(d). The importer argued that by liquidating the entries "as entered," CBP made a finding that the entries are not eligible for NAFTA treatment, and it is that "finding" or decision that should be protestable under 19 U.S.C. §1514(a), the regular protest provision, which allows protests to be made up to 90 days (180 days for entries after December 17, 2004) after liquidation. The CIT found that as the issue of NAFTA eligibility was never before Customs, "it is too much of a reach to construe Customs’ decision to assess Column 1 duties as a negative decision regarding preferential NAFTA treatment." The CAFC concurred stating that Customs "did not make a protestable decision to deny Xerox NAFTA treatment," and that "Xerox relinquished its entitlement when it failed to make a claim within one year of entry."

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