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

• Wood Packaging Material: The new wood packing material (WPM) requirements are effective as of September 16, 2005, albeit allowing for a three-step phase in period. The new governing standards, ISPM 15, require affected WPM to be either heat treated or fumigated with methyl bromide, and requires a certified mark. Wine crates with a vintage prior to 2006 and WPM which is part of a bundle of lumber are exempt from the new rules. In addition, WPM made entirely of U.S. or Canadian wood are exempt so long as the shipment is accompanied with a document attesting that the wood came from U.S. or Canadian trees. From September 15, 2005- January 31, 2006, CBP will use informed compliance on non-compliant shipments by attaching a Notice of Violation without taking further action; from February 1, 2006- July 4, 2006, CBP will reject those WPM materials which are not compliant and allow the remainder of the shipment to enter the U.S.; full enforcement, with the possible rejection of entire shipments, commences on July 5, 2006.
• GSP Country Eligibility Reviews: The office of the U.S. Trade Representative (USTR) accepted several petitions seeking to review the eligibility of certain beneficiary countries under the Generalized System of Preferences (GSP) program. Petitions for review have been accepted for the following countries: Bulgaria, Kazakhstan, Lebanon, Pakistan, Romania, Russia, Uganda, Uzbekistan, and Swaziland.
• AGOA Country Eligibility Review: The USTR is seeking comments by October 14, 2005 for its annual review of country eligibility under the African Growth and Opportunity Act (AGOA). Currently, there are 37 sub-Saharan countries eligible for special AGOA duty free treatment.

• China Trade Developments: 1) The failure of the second round of negotiations with China over its textile and apparel exports to the U.S. prompted the domestic industry to file additional "threat based" safeguard petitions with the U.S. Committee for the Implementation of Textile Agreements (CITA) in order to continue those safeguard quotas which are set to expire at the end of 2005. These new petitions cover: cotton knit shirts and blouses (cat. 338/339), cotton/MMF men’s and boy’s woven shirts (cat. 340/640), cotton trousers (cat. 347/348), cotton/MMF brassieres and other body supporting garments (cat.349/649), cotton/MMF underwear (cat.352/652), MMF knit shirts and blouses (cat. 638/639), MMF trousers (cat. 647/648), combed cotton yarn (cat. 301), and other synthetic filament fabric (cat. 620); 2) the domestic industry has indicated that they intend to file additional safeguard petitions for apparel, fabrics, and home furnishing products from China; 3) a third round of negotiations between the U.S. and China over China’s textile and apparel exports are set to be held in Washington on September 26-27, 2005; 4) CITA announced that should an importer give consent, CBP will release any embargoed shipment shipped in excess of safeguard limits directly to victims of the Katrina disaster.

• Dominican Republic Approves CAFTA: The Dominican Republic approved the Dominican Republic-Central America-U.S. Free Trade Agreement (DR-CAFTA). Costa Rica and Nicaragua have not yet approved the agreement.
• Possible Future FTA’s: The USTR, Rob Portman, recently stated that it is the U.S. administration’s desire to conclude free trade agreements (FTA) with Oman and Panama in 2005, and with Thailand, the United Arab Emirates (UAE), the Andean countries of Colombia, Ecuador and Peru, and the five-member Southern African Customs Union (SACU)-(Botswana, Lesotho, Namibia, Swaziland, and South Africa)-in 2006. The U.S. may also seek FTA’s with Egypt, Malaysia, South Korea and Switzerland in the future.
• Fair Trade Developments: The U.S. International Trade Commission (ITC) recently: 1) announced the filing of an antidumping (AD) and countervailing (CV) petition on lined paper school supplies from China, India, and Indonesia; 2) voted to expedite its five-year sunset review of glycine from China; 3) initiated a sunset review of sulfanilic acid from China and India; 4) initiated a sunset review on pure magnesium (ingots) from China; 5) voted to conduct a full sunset review of certain bearings from China, France, Germany, Italy, Japan, Singapore, and the U.K.; 6) scheduled a sunset review of the AD order on certain structural steel beams from Japan, and the AD and CV order from Korea.

• Saudi Arabia: The U.S. and Saudi Arabia concluded bilateral negotiations toward Saudi Arabia’s accession to the WTO. This is the last of Saudi Arabia’s required bilateral agreements, and the focus will now shift to consolidating all its agreements and taking the last steps toward its accession to the WTO.

• EU Issues Cartel Fines: The EU announced that it is imposing fines totaling €43 million on several companies for running a cartel of the industrial thread marketplace. These companies were fined for colluding on pricing, customer information, and allocation of customers in the industrial and automotive thread markets.
• Child Restraint Safety Systems: The U.S. National Highway Traffic Safety Administration (NHTSA) is seeking comments by October 31, 2005 on its proposed rules for child restraint safety systems. The new rules would extend the Federal Motor Vehicle Safety Standard No. 213, Child Restraint Systems, from children weighing 65 lbs. to children weighing 80 lbs., and enhance the safety requirements for booster seats and other restraints.
• BIS Fines: The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced the guilty pleas of four individuals who illegally shipped restricted goods to China by using false statements and documents to perpetuate their violations of various U.S. export control laws. The defendants also agreed to forfeit over $390,000, which represented the revenue of the illegal shipments.
• Recent CPSC Actions: The U.S. Consumer Products Safety Commission (CPSC) recently announced recalls of the following items: 1) certain children’s toy trucks (small parts); 2) children’s watches (petroleum distillates in band), 3) wood toy boxes (lid may collapse); 4) children’s sunglasses (paint contains lead, lenses may separate); 5) children’s plastic sandals (flower may snap off); 6) bicycles (front wheel fork may separate); 7) wooden pub stools (stool may collapse).

• Gulf Port Update: CBP notes that the ports of Pascagoula, MS, and Baton Rouge, Gramercy, and Morgan City, LA are currently operational, leaving the Port of New Orleans as the only non-operational port resulting from the Katrina hurricane.

• Agent Responsibility: The U.S. Court of International Trade (CIT) recently issued a ruling that for the first time held a principal liable for fraud of customs violations committed by the principal’s agent, regardless of whether the principal authorized the agent’s specific conduct. In U.S. v. Pan Pacific Textile Group, Inc., et al., the court ruled on the responsibility of an importer involving a situation whereby a freight forwarder offered to provide shipping and customs clearance services to an importer, then proceeded to misdescribe and undervalue imported tracksuits as "plastic bags" and "patio furniture" which carry lower duty rates and are not subject to quota restrictions. After a period of time, the forwarder offered the importer a "flat-fee" arrangement, and stated that by becoming the importer of record themselves and utilizing a personal contact, they could pay lower duty rates and not require the purchase of quota visas. The importer, while questioning how such an arrangement was possible, agreed to the forwarder’s proposal when presented with an attorney’s letter describing a similar arrangement, although that letter was not addressed to the principals of this transaction and was not an opinion letter. The court ruled that because the importer had some end benefit from the forwarder’s actions, "it is irrelevant whether or not defendants authorized the specific unlawful conduct which constituted the violation." This is the first time the court applied agency liability to customs violations in this manner where the principal responsible was not also the importer of record. The court further stated that extending liability to defendants for duties unpaid as a result of the forwarder’s fraud "serves an additional public policy interest by creating proper incentives for importers in the future."
• Calcu-Folios: In the latest development of the ongoing Avenues in Leather, Inc. v. U.S. case, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a CIT ruling that the importer’s Presentation Calcu-Folios, measuring 13.5" tall by 11.5" wide by 1.5" deep, zippered on three sides, with an interior sleeve and a number of smaller pockets, with an interior three-ring metal binder attached to its spine, is properly classified as "letter pads, memorandum pads…, binders (looseleaf or other)…and other articles of stationary", under subheading 4820.10.2020 (duty free), HTSUS. CBP argued that as the folio’s pockets allow it to store small personal objects, it is similar to other organizing and carrying cases of heading 4202, and properly classified under subheading 4202.12.20 (20% duty), HTSUS. CAFC disagreed with CBP, and stated that as the folio was designed for and its specific primary purpose is to facilitate the taking of notes, as well as to aid in organizing print and other flat materials, its essential character is that of a binder or memorandum pad of heading 4820. The mere fact that the folio can carry some personal objects and has certain 4202 features does not convey a 4202 essential character on the folio.

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