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

SERKO & SIMON LLP – Customs & International Trade Law

June 15, 2005

CUSTOMS and BORDER PROTECTION ("CBP")

Intellectual Property Rights Crackdown: At a recent U.S. Senate Homeland Security Committee hearing, CBP discussed some of the measures it is taking under the Strategy Targeting Organized Piracy ("STOP") program, implemented to fight the rise of counterfeit imports. CBP noted that it has broadened its fight against Intellectual Property Rights ("IPR") violations by moving beyond reacting to counterfeit goods already imported into the U.S., and implementing an audit program to identify companies at risk of importing counterfeit goods. CBP notes that it has instituted an audit- verification program based on identified risk by using new statistical models to pinpoint whether an importer has weak internal controls over its IPR procurements. CBP has already audited approximately two dozen companies uncovering various IPR violations. CBP is asking Congress to grant it more enforcement powers. One option being discussed is the denial of importing rights to companies found to have repeatedly violated IPR laws.

EU Reaches Agreement with China to Manage Textile Imports: EU officials announced an agreement with China to manage textile exports from China through 2007. The agreement comes as the EU was about to launch safeguard measures over the surge of Chinese textile exports after the abolishment of global textile quotas on January 1, 2005. The agreement limits growth to between 8% and 12.5% year-over-year of the following categories: cotton fabrics (cat. 2), t-shirts (cat. 4), pullovers (cat. 5), men's trousers (cat. 6), blouses (cat. 7), bed linen (cat. 20), dresses (cat. 26), brassieres (cat. 31), table and kitchen linen (cat. 39), and flax yarn (cat. 115). In addition, the EU and China agreed to work closely in managing textile exports during 2008. Unlike the agreement reached between the EU and China, the U.S. has already instituted safeguard measures on seven broad categories of Chinese textiles and is considering safeguards on three other categories. The safeguards instituted by the U.S. limit Chinese export growth to 7.5% year-over-year and must be renewed each year (safeguards are only allowed through 2007).

In a related matter, the EU domestic shoe industry is calling for safeguard measures to be instituted on Chinese shoe exports, as a surge of shoe imports from China is threatening to destroy the domestic EU shoe industry.

TRADE TALK

CBP Set to Distribute AD and CV Duties: CBP issued a Federal Register Notice announcing its intent to distribute to eligible participants the antidumping ("AD") and countervailing ("CV") duties for FY2005 under the Continued Dumping and Subsidy Offset Act ("CDSOA"), better known as the Byrd Amendment. Eligible recipients must file a written certification with CBP by August 1, 2005 in order to receive their allotted distribution.

Additional Countries Announce Retaliation Over Byrd Amendment: Following the imposition of 15% retaliatory duties on certain U.S. exports by the EU and Canada, Brazil, Chile, India, Japan, Korea, and Mexico announced that they, too, will implement their own retaliatory duties on certain U.S. exports starting in July, 2005. The additional tariffs are in retaliation for the lack of progress in scrapping the Byrd Amendment, ruled illegal under WTO rules in 2003. The above trading partners indicate that although the U.S. administration introduced legislation to repeal the Byrd Amendment, lack of substantive progress are forcing them to implement retaliatory tariffs at this time.

Free Trade Developments: 1) The U.S. House Ways & Means Committee as well as the Senate Finance Committee, recommended passage of the stalled Central America Free Trade Agreement ("CAFTA"). The recommendations came after the U.S. administration hinted it is open to discussion regarding the impact of sugar imports on the domestic industry; 2) Switzerland announced it will seek talks with the U.S. toward developing a bilateral free trade agreement.

Fair Trade Developments: The International Trade Administration ("ITA") recently: 1) revoked the AD order on certain electroluminescent flat panel displays from Japan; 3) announced an opportunity to request by June 30, 2005 administrative reviews of AD or CV orders on certain: polyethylene terephthalate ("PET") film (Korea), ammonium nitrate (Russia), helical spring lock washers (Taiwan), furfuryl alcohol (China), indigo (China), and silicon metal (China).

The International Trade Commission ("ITC"): 1) voted to retain the AD order on polychloroprene rubber from Japan, as a revocation will lead to renewed injury to the domestic market; 2) voted to revoke the AD order on certain stainless steel plates from Canada while retaining the AD and CV orders on Belgium, Italy, Korea, South Africa, and Taiwan; 3) voted to retain the AD order on certain iron construction castings from Canada and China and the AD and CV order on Brazil, as revocation of the orders will lead to renewed injury to the domestic industry; 4) instituted sunset reviews on its AD orders on glycine from China and certain bearings from China, France, Germany, Italy, Japan, Singapore, and the U.K.; 5) instituted a Section 337 investigation into alleged patent infringement of certain DVD/CD players and recorders, color television receivers, display monitors, and components thereof, and power supply controllers and products containing same.

WORLD TRADE ORGANIZATION ("WTO")

USTR Seeks Comments on "Zeroing" Dispute: The U.S. Trade Representative ("USTR") is seeking comments by June 27, 2005 regarding Japan's complaint to the WTO that ITA's and ITC's practice of "zeroing" in AD investigations are inconsistent with WTO rules. Zeroing is referred to as "offsets", where negative dumping margins are counted as zero margins.

BUSINESS BRIEFS

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 company which exported biological toxins to Canada without the required licenses received a suspended fine of $904,500 and loss of export privileges for a two year period; 2) a company was fined $700,000 for unauthorized exports of diaphragm pumps to the Middle East and China.

EU Cross Border Mergers Clarified: EU lawmakers recently passed new rules that should help increase EU-wide cross border mergers. The new rules clarify the role workers will have in the combined company's decision making process. Under the new rules, cross-border merging companies must adapt the stricter national labor code if one third or more of the combined work force comes from that country. The rules apply to companies with more than 500 workers.

Acetaminophen Recalled Over Labeling/Packaging Confusion: Certain children's acetaminophen was recently recalled by the manufacturer as a result of overdosing concerns resulting from confusing packaging. The medicines, packaged in double-pill blister cavities, led consumers to believe that two pills were necessary to satisfy the dosage requirements, when each pill contained the entire dosage.

TRANSPORTATION TIDBITS

L.A.-Long Beach Introduces Off-Peak Trucking Program: Effective July 23, 2005, in an effort to reduce port congestion, the ports of Los Angeles and Long Beach, in conjunction with PierPASS Inc., will implement an Off-Peak trucking program. Starting on that date, loaded containers entering or exiting the port's gates during peak hours (M-F 3:00 AM-6:00 PM) will be assessed a Traffic Mitigation Fee of $40 per TEU.

U.S.-Mexico Border Crossings: At a recent press conference with the Mexican Interior Minister, the Secretary of Homeland Security announced that over the next few months six new SENTRI lanes will be opened at the following U.S.-Mexico border crossings: Tijuana-San Ysidro, Juarez City-El Paso, Mexicali-Calexico, Nuevo Laredo-Laredo, Nogales-Nogales, and Matamoris-Brownsville. The SENTRI program, or Secure Electronic Network for Travelers Rapid Inspection, uses pre-approved automatic vehicle identification technology to reduce congestion and speed border crossings. A similar program called NEXUS is operational at 11 U.S.-Canada border crossings.

COURT CASES

Parallel Trading Case Not Heard by EU Court: In a widely anticipated case, the EU Court of Justice decided, on a technical basis, that it currently lacks jurisdiction and sent the case back to Greek regulators for their decision. The case involves "parallel trading", the practice of buying drugs in countries where they are cheaper and reselling them in countries where the drugs are more expensive. In the EU, each country sets the price manufacturers charge for drugs, depending on the wealth of each country. Drug companies have argued that the lost profits arising from parallel trading hurt drug research as well as the competitiveness of the industry.

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