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

• New Federal Soot, Smog, and Mercury Limits: The U.S. Environmental Protection Agency's ("EPA") new "Clean Air Interstate Rule" sets limits in order to roll-back emissions of pollution-causing nitrogen oxide and sulfur dioxide. The new limits, phased-in over ten years, aims to reduce 61% of nitrogen oxide and 73% of sulfur dioxide emissions by 2015. While it is up to each state to decide how to reach those reductions, the new rules set up a trading system, referred to as cap and trade, whereby pollution allowances can be traded between plants which have exceeded their required reductions and those that have not.

• EU's New Wood Packaging Material Requirements: With certain exemptions, effective March 1, 2005, the European Union ("EU") is requiring all imported raw wood packaging material ("WPM") to be heat treated or fumigated and marked, as required by international standard ISPM 15; the requirement for debarking was postponed until March 1, 2006.
• Treasury to Crack Down on Suspect Trade Activity: Expanding on its success against money laundering and financial crimes in its fight against terrorist financing, the U.S. Treasury is calling for application of the same analysis used to ferret out illegal textile and gold shipments and combat the ever increasing use of "commodity trading" used to finance terrorist activity. As an example, the Treasury claimed that although the introduction of the Kimberley Process, which regulates trade in precious metals, stones, and jewels, is a success in slowing the trade of "conflict diamonds" in Africa, loopholes exist that may be exploited for terrorist financing. To this end, the Treasury is calling for the implementation of effective ways to analyze and investigate suspect trade-based activity and monitor imports and exports to and from specific countries.
• Protamine Sulfate: Protamine Sulfate, a polypeptide extracted from the testes of salmon milt and used in insulin preparations and in treating blood clotting disorders, was previously classified under HTSUS 3504.00.5000 (4% duty), the provision for "peptones and their derivatives;……..not elsewhere specified….other." CBP notes that as the Protamine Sulfate is extracted from an animal gland and is used in "organotherapy," it is excluded from heading 3504 and properly described by the terms of heading 3001.20.0000 (duty free), the provision for "extracts of glands or other organs or of their secretion for organotherapeutic uses……..Extracts of glands."

• Extension of Steel Import Monitoring: In an interim final rule, the U.S. International Trade Administration ("ITA") is extending the Steel Import Monitoring and Analysis System ("SIMA"), set to expire on March 21, 2005, for an additional four years, through March 2009. In March 2002, President Bush introduced temporary tariffs on certain imports of steel and implemented SIMA to provide the industry with accurate and timely information of surging steel imports. The temporary tariffs were discontinued in December 2003, while the monitoring system was kept in place.
• Recent Trade Developments: 1) Guatemala joined El Salvador and Honduras in ratifying the U.S.-Central America-Dominican Republic Free Trade Agreement ("CAFTA-DR"). Costa Rica, Nicaragua, and the U.S. must still ratify the agreement before it goes into effect; 2) President Bush extended the national emergency with respect to Iran for an additional year; 3) in a desire to help European diplomatic efforts in getting Iran to renounce its nuclear ambitions, the U.S. is ready to lift objections to Iran joining the World Trade Organization ("WTO"); 4) in an effort to keep high steel prices from translating into consumer inflation, Brazil is suspending tariffs on fifteen (15) different steel products.
• Fair Trade Developments: The U.S. International Trade Commission ("ITC") will conduct a full "sunset" review of polytetrafluoroethylene resin from Italy and Japan.

• China Delays Merge of Tax Rates: China will delay unifying its differing corporate tax rates for domestic and foreign manufacturers as required under its WTO obligations. In order to lure foreign investment, China has offered foreign manufacturers a tax rate of 15% versus a 33% tax rate for domestic companies. With its economy booming, China is seeking to phase out incentives offered to foreign investors, e.g., special export zones and preferential tax rates. Sources indicate that all corporate tax rates will be unified at 24%.
• No Federal Minimum Wage Increase: On March 7, 2005, the Senate defeated two amendments to raise the federal hourly minimum wage, currently $5.15 an hour.
• Cartels Fined: 1) The U.S. Department of Commerce's Bureau of Industry and Security ("BIS") announced settlements with several companies accused of violating the Export Administration Regulations by exporting sensitive articles without the proper licenses. BIS announced civil penalties in the amount of $45,000 to a medical equipment company and $183,500 to a company selling optical sighting devices in settlement of alleged export violations; 2) a Texas company agreed to $60,000 civil penalty and the completion of an internal export compliance report over its exports of certain banned chemicals to Mexico; 3) an American company said it received a U.S. Department of Justice subpoena investigating antitrust activity over the sale of bathroom fittings at its European divisions ; 4) in an effort to increase fair competition, the EU announced it will create an anti-cartel agency to better coordinate its fight against price fixing. The new agency will continue to provide amnesty to informants as a way to detect and punish cartels.
• EU Developments: 1) The EU recently sent the European Parliament a bill aimed at promoting software innovations by allowing software which is part of a mechanical device to be patented. The bill, intended to harmonize all EU members' patent laws, tries to strike a compromise by awarding patent protection to "computer implemented inventions," while differentiating from U.S. patent laws which allow patents for business methods and computer programs; 2) the European Commission ("EC") recently adapted a proposal to expand the existing tax deferrals for mergers, acquisitions and restructuring across the EU's internal borders. The proposal will expand the tax-deferral benefits to new types of company structures, i.e., "European Company" (available from October 2004) and "European Co-operative Society" (available in 2006), as well as new types of operations, i.e., "partial division" or "split off."
• CPSC to Share Information with the EC: The Consumer Product Safety Commission ("CPSC") recently signed a cooperative safety agreement with the EC to share and exchange information on safety issues and expand consumer awareness of dangerous products.

• Smart Shipping Containers: A bill (S. 376) recently introduced in the U.S. Senate will require at least half the containers entering the U.S. by 2007 to be equipped with electronic monitoring devices ("smart boxes") to help notify authorities of any tampering. In addition, the bill asks the Secretary of the Department of Homeland Security to study whether requiring advance submission of purchase orders, shipper's letters of instruction, commercial invoices, letters of credit or certificates of origin will enhance CBP's container targeting capabilities.
• Port Security Fees: Sources indicate that as of April 1, 2005, most Gulf of Mexico ports will assess port security fees of between 2˘ and 10˘ per ton of cargo.

• Miscellaneous Tariff Bills: The U.S. Congress' House Ways and Means Committee, which has authority over tariff legislation and trade laws, is requesting its members who plan to introduce miscellaneous tariff bills to do so before April 28, 2005 in order to allow for review and public comment. Bills should not create revenue losses, should not operate retroactively, nor have significant opposition, or be subject to controversy.

• Global Warming Lawsuit Against U.S.: A lawsuit filed by environmental activists which claims that U.S. aid agencies are responsible for perpetuating global warming will be heard in the U.S. District Court in San Francisco next month. Plaintiffs claim that the U.S. Export-Import Bank and the U.S. Overseas Private Investment Corp. financed projects in the developing world which contribute 8% of the world's emissions of the greenhouse gas carbon dioxide. The plaintiffs, seeking to force the U.S. government to conduct environmental assessments even on projects outside the U.S., are not seeking any monetary damages, as it is reasoned this will make it easier to win the case.
• U.S. Seeks Lost Duties and Penalties: The U.S. recently filed several cases against importers and their sureties in order to recover lost duties and penalties resulting from misrepresentation of imported merchandise. In U.S. v. Bois JLY Joyal, the U.S. is seeking over $550,000 in penalties plus interest and other costs for allegedly misrepresenting softwood lumber from Canada as aspen wood. Although there was no effect on the assessment of duties, softwood lumber was nevertheless subject the Softwood Lumber Agreement ("SLA"), while aspen wood was not.

Serko & Simon LLP

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