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

Customs & International Trade Law

• China Safeguards: 1) The Committee for the Implementation of Textile Agreements ("CITA") is requesting public comments by August 18, 2005 on a safeguard petition filed by the domestic industry against Chinese exports of cotton and man-made fiber curtains and draperies (category 369 Part/666 Part). CITA will have up to 60 days to make a decision on the merits of the petition. If CITA makes an affirmative decision, it will request consultations with China toward reaching a mutual agreement to reduce the import surge. As soon as CITA requests consultations with China, China must limit any export increase to 7.5% above the prior 12 month period; 2) CITA is extending to July 31, 2005 its decision on safeguard petitions against Chinese exports of certain synthetic filament yarn (category 620); 3) As a result of the recent Court of Appeals for the Federal Circuit ("CAFC") ruling allowing CITA to entertain safeguard petitions based on a perceived "threat" of domestic market disruption, the industry expects additional safeguard petitions to be filed and timed to take effect as close as possible to the expiration of the safeguard measures currently in place. These expected safeguard petitions will be based on the perceived threat of additional market disruption as soon as the current safeguard measures expire; 4) In response to a surge of Chinese exports, a Canadian textile union filed the first safeguard petitions against Chinese exports with the Canadian International Trade Tribunal ("CITT"). The petitions cover certain: men's and boy's suits, jackets and blazers, overcoats, pants, woven dress shirts, and women's and girl's brassieres, jackets and blazers, pants, and skirts. The petitioner claims that the general surge of Chinese exports and imports being diverted to Canada as a result of limits imposed by the U.S. and the EU are disrupting the domestic Canadian marketplace.
• Watch, Jewelry Program from Insular Possessions to be Expanded: The U.S. Departments of Commerce and Interior are seeking comments by August 5, 2005 on a proposed rule that would expand the duty free treatment for certain watches and jewelry produced in the U.S. insular possessions, i.e., American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands. The proposed rules would: 1) exponentially raise the amount of jewelry, jewelry components, and watch repairs which are eligible for duty free refunds; 2) extend duty free benefits to include health and life insurance as well as certain pension costs; and 3) encourage additional jewelry production by allowing an 18-month grace period in meeting the substantial transformation requirements for new manufacturers.
• Comments Sought on Guide for the Jewelry, Precious Metals Industries: The U.S. Federal Trade Commission ("FTC") is seeking comments by September 28, 2005 on possible modifications to the Guides for the Jewelry, Precious Metals, and Pewter Industries, which addresses claims made about precious metals, diamonds, gemstones and pearl products. Due to a request to market products containing platinum which differ from traditional platinum products, the FTC is requesting comments on a product containing 585 parts per thousand (ppt) pure platinum with no other PGM.
• Proposal to Amend Cut Flower Regulations: The U.S. Department of Agriculture's Animal and Plant Health Inspection Service ("APHIS") is seeking comments by September 6, 2005 on a proposal to amend the requirements for imports of cut flowers which may be infected by the chrysanthemum white rust ("CWR") blight. The proposed new rules would require all production sites in known CWR regions to register with the local authorities, be subject to inspection by APHIS, be accompanied with a special phytosanitary certificate declaring the shipment to have been inspected and found free of CWR, and have all box labels and documents identify the actual production site.

• Free Trade Developments: 1) The U.S. and Thailand recently concluded the fourth round of negotiations toward a free trade agreement ("FTA") with the hope of concluding negotiations in early 2006; 2) South Korea and the European Free Trade Association ("EFTA") countries of Iceland, Liechtenstein, Norway, and Switzerland recently signed a FTA to take effect in June of 2006; 3) Brunei, Chile, New Zealand, and Singapore signed the Trans-Pacific Strategic Economic Partnership to eliminate all tariffs between themselves; and 4) Switzerland announced that it is seeking a FTA with the U.S.
• U.N. Seeks Marshall Plan for World's Poorest Countries: In a recent report, the U.N. Conference on Trade and Development called for a new Trade Marshall Plan for the world's 50 poorest countries. The plan is based on three pillars: preferential trade treatment, liberalization in services, and the creation of an Aid for Trade facilitation fund. The first pillar seeks to guarantee duty free/quota free treatment for the 50 poorest countries by anchoring these benefits through the World Trade Organization ("WTO"). The second pillar seeks liberalization in services, while the third pillar of the new plan calls for the creation of an Aid for Trade Fund to finance adjustment costs from trade reform.
• Fair Trade Developments: The International Trade Administration ("ITA") recently: 1) voted to continue the antidumping ("AD") and countervailing ("CV") duties on certain stainless steel sheet and strip from France, Germany, Italy, Japan, Korea, Mexico, Taiwan, and the U.K.; 2) revoked the AD order on certain stainless steel plate in coils from Canada; 3) initiated five year sunset reviews on the following: alloy and pure magnesium (Canada), heavy forged hand tools (China), cased pencils (China), forged stainless steel flanges (India and Taiwan), welded carbon steel pipe (India, Thailand, Turkey), small diameter carbon steel pipe (Taiwan), light-walled rectangular pipe and tube (Argentina and Taiwan), certain stainless steel wire rod (Brazil, France, India), paper clips (China), tin mill products (Japan), brass sheet and strip (Brazil, Canada, France, Germany, Italy, Japan), polyester staple fiber (Korea, Taiwan), ammonium nitrate (Russia), and uranium (Russia).

• WTO Hands U.S. Loss Over FSC: The WTO recently sided with the EU over its claim that the changes made to the Foreign Sales Corporation ("FSC") tax scheme by the U.S. Congress are not adequate under WTO rules. Congress eliminated the FSC after the WTO ruled it illegal but approved a staged elimination allowing benefits to continue several years. The EU imposed retaliatory sanctions on certain U.S. exports reaching 14% until Congress eliminated the FSC. The EU waived those sanctions upon Congress' action but reserved the right to reinstate them if the WTO found the grandfathering provisions to be inconsistent with its rules. The U.S. has not yet decided whether to appeal the WTO finding and it is not yet known whether the EU will re-impose its retaliatory sanctions.
• U.S. Lumber Offer to Canada: Awaiting a NAFTA ruling regarding the U.S. imposition of AD and CV on Canadian softwood lumber, the U.S. proposed to resolve the dispute by offering the following: 1) impose a Canadian export tax, 2) impose a quota on British Colombia lumber exports, 3) refund partially the AD and CV already collected, and 4) require an increase in the lumber harvesting fee. Reports indicate that it is doubtful if Canada will agree to these conditions.
• U.S. Postpones Sanctions Over Japanese Apple Imports: The U.S. set August 31, 2005 as a deadline for talks with Japan to avoid retaliatory sanctions over Japan's restrictions on imports of U.S. apples which were found illegal under WTO rules.

• India Labor Laws: Industry sources indicate that India is considering amending its labor laws in an effort to better compete with China, especially in the textile industry. The sources note that India may increase the maximum weekly work hours to 60 from the current 48, allow contract employment, and give factory employers greater flexibility in managing their workforce.
• EAR Violations: The U.S. Bureau of Industry and Security announced that a California pharmaceutical company agreed to pay a $31,000 civil penalty to settle charges for illegally exporting a controlled biological toxin to Belgium in violation of the Export Administration Regulation ("EAR").
• Recent Innovations: A security solutions company recently filed patent claims for a "chipless" radio frequency tag and its associated reader. While radio frequency identification ("RFID") tags hold out the opportunity for revolutionizing supply chain management and brand protection, the cost of the chip has held up the mass embrace of RFID. Chipless tags, which bring down the cost of an RFID tag to less than one cent, promises to speed up mass use of RFID.

• PierPASS at L.A./L.B. Port: The ports of Los Angeles and Long Beach, California will begin collecting its new Traffic Mitigation Fee of $40 per TEU for peak hour use of the ports from July 27, 2005.
• Vancouver Port Strike: The truckers strike at the Port of Vancouver, in its fifth week now with no end in site, is affecting retailers just as the peak shipping season begins.

• CAFTA Vote This Week: Following the U.S. Senate vote approving the Dominican Republic-Central America-U.S (DR-CAFTA) FTA, the U.S. Congress is set to vote on the accord this week.
• Other Recently Introduced Legislation: The following legislation was recently introduced in the U.S. Congress: 1) HCR 217 calls for the President to seek to enter into a FTA with the United Kingdom; 2) a bill (HR 3362) would protect small businesses from increased tariffs in the event of a trade dispute with another country; 3) a bill (HR 303) to temporarily suspend AD and CV duties on certain Cold Heading Quality (CHQ) wire rod.

• Court Lifts Ban on Canadian Beef Imports: On July 14, 2005, the Ninth Circuit Court of Appeals lifted the temporary injunction imposed by the U.S. District Court for the District of Montana which prohibited imports of Canadian cattle. As a result, APHIS' final minimal risk rule is effective from July 15, 2005 and imports of Canadian beef and certain products thereof have resumed for cattle under the age of 30 months.

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