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

March 22, 2005

• China Textile Update: In an effort to stem an import surge of certain Chinese textiles and apparel, a European textile and apparel association asked the EU to impose "safeguard measures" on twelve categories of Chinese textile and apparel exports. The request covers the following categories: pullovers (cat. 5); trousers and shorts (cat. 6); blouses (cat. 7); panty-hose, tights and socks (cat. 12); women's or girl's woven overcoats, raincoats, etc. (cat. 15); men's or boy's suits (cat. 16); men's or boy's jackets or blazers (cat. 17); women's or girl's dresses (cat. 26); brassieres (cat. 31); other garments (cat. 78); other overcoats, jackets, or blazers (cat. 83); and woven fabric of flax or ramie (cat. 117). The trade association claims that an increase of over 600% was registered for imports of the above goods this January versus imports of January 2004, with price reductions averaging over 30%. Before any safeguards can be imposed, a request must be made by at least one EU member state, which thus far has not happened. However, the EU Trade Commissioner stated that safeguard measures should not be imposed based on trade information covering only one month, and pointing out that quotas imposed on China until January 1, 2005 were unrealistically low and it is "only fair" that China should now enjoy the lifting of the quota regime. The Commissioner stated that an "acceptable equilibrium beyond the initial surge following liberalization" should be sought.

• Canada Updates its Exported Goods Regulations: Canada issued new regulations to update its Reporting of Exported Goods Regulations. The new regulations make clearer who is responsible for reporting goods that are exported, as well as the time, place, and manner of reporting those goods. The regulations specify exceptions to the reporting rules and spell out alternate reporting manners. An agreement between Canada and the U.S. exempts goods exported from Canada to the U.S. from the reporting requirements.
• 3-Ring Binder Carryall Case: A textile carryall case (pencil case) comprising a main compartment and a smaller PVC mesh compartment on top, with a zippered closure, is outfitted with three metal eyelets to enable its attachment to a 3-ring loose-leaf binder; while the storage compartment and the eyelets each perform an important function, the overall purpose of the article is its storage capabilities; the carryall case is properly classified under HTSUS 6307.90.9889 (7% duty), the subheading for "Other made up articles…: Other: Other: Other, Other: Other."
• Plastic Travel Water Bottle: A plastic water bottle, either accompanied with a carrying bag or snapped onto the frame of a bicycle, and used to carry water during travel, was originally classified under subheading 3923.30.0090 (3% duty), the provision for "Articles for the conveyance or packaging of goods, of plastics….Carboys, bottles…;" CBP now states that because the bottles will not be sold with water but will be filled later by the end user, they are to be classified under HTSUS 3926.90.9880 (5.3% duty), the subheading for "Other articles of plastics….: Other: Other: Other."

• 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 can go 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") recently: 1) voted to revoke the existing antidumping ("AD") duty order on frozen concentrated orange juice from Brazil. This action is irrespective of the recent AD initiation on certain orange juice from Brazil; 2) voted to conduct a "sunset" review on Polytetrafluoroethylene resin from Italy and Japan; 3) voted to conduct "sunset" reviews of AD duty orders on certain carbon steel butt-weld pipe fittings from Brazil, China, Japan, Thailand, and Taiwan; 4) instituted a Section 337 investigation with regard to patent infringement of certain automotive fuel caps and components thereof.

• New USTR Selected: President Bush chose Rob Portman (R.-Ohio) as the new U.S. Trade Representative. Portman has a long record of voting for more liberalized trade and is seen as the President's link to Congress on trade issues.

• Geographic Indicators Acceptable: The WTO recently ruled on a case brought by the U.S. and Australia regarding the refusal of the EU to grant protection to imported goods with "geographic indicators." The WTO ruled that the EU has a right to protect EU products with geographic indicators if it grants the same protection to imported goods which also carry geographic indicators.
• Other WTO Developments: 1) The WTO ruled in favor of the EU on its complaint against subsidies provided by Korea to its shipping industry. The WTO ordered Korea to withdraw those subsidies within 90 days; 2) talks between the U.S. and the EU over subsidies given to its respective aircraft makers recently broke down, and the U.S. is threatening to reinstate its formal complaint to the WTO over this issue.
• Specific Duty Rates: At its recent meeting in New Delhi, the Group of 20 ("G-20") industrialized and developing nations called for the U.S. and the EU to change their specific duty rates to ad valorem duty rates. Speaking for the G-20, the Indian Commerce and Industry Minister said that these changes are a pre-condition for progress in reducing tariffs for agricultural and industrial goods at the ongoing Doha Round of negotiations.

• 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 investors 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 for manufacturers and service companies, whether domestic or foreign, will be unified at 24%.
• Cartels Fined: 1) 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; 2) 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.
• New EU GSP Options: The EU proposes to revamp its various Generalized System of Preferences ("GSP") schemes and streamlining the current five GSP programs into just three: 1) The "General Scheme" will be increased by about 300 agricultural and fishery products; 2) the "GSP Plus" scheme, covering approximately 7,200 items, will be tailored for especially vulnerable countries with special needs. Preferential duty free treatment under the "GSP Plus" scheme will be dependent on the beneficiary country ratifying 27 key international human, labor, and environmental treaties, and; 3) "Everything but Arms" scheme, which will remain unchanged. The proposal calls for accelerating the new GSP programs to April 1, 2005 from July 1, 2005.
• Temporary Work by Aliens: The U.S. Department of Homeland Security's Citizenship and Immigration Service is extending the comment period until April 8, 2005 on its proposed uniform review process governing petitions for aliens to perform temporary non-agricultural services or labor.
• 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 broaden consumer awareness of dangerous products.
• Other CPSC Developments: CPSC announced the following voluntary recalls: 1) certain bathroom light fixtures, as the glass shades may detach and cause lacerations; 2) certain thermal switches, as they may fail to operate in an emergency; 3) certain "Fur Out" yarns, as the yarn is highly flammable when exposed to fire.

• 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") that notify authorities of any tampering. The bill also 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.
• Updated List of Vessels to be Denied Port Calls: The U.S. Coast Guard updated its list of countries which have not complied with the International Ship and Port Facility Security Code. A port call within the below listed countries within the vessel's last five port calls will subject the vessel to strict measures leading to boarding by the U.S. Coast Guard or denial of entry. The listed countries are: Albania, Democratic Republic of Congo, Guinea-Bissau, Liberia, Madagascar, Mauritania, and Nauru.

• 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. The committee has requested that bills should not create revenue losses, should not operate retroactively, nor have significant opposition or be subject to controversy.
• Recent Bills Introduced in Congress: 1) A bill, the "Trade Act of 2005" (H.R. 886) was introduced in the U.S. House of Representatives that may extend preferential duty free treatment for certain articles from the following countries: Afghanistan, Bangladesh, Bhutan, Cambodia, Kiribati, Laos, Maldives, Nepal, Samoa, Solomon Islands, Sri Lanka, East Timor, Tuvalu, Vanuatu, and Yemen. A similar bill (S. 191) was introduced in the Senate as well; 2) the Lebanon and Syria Liberation Act (H.R. 1141) calls for sanctions on Syria for its support of terrorism. Sanctions may include suspension of all U.S. assistance, export sanctions, and the ban of all imports from Syria; 3) a bill (H.R. 668) was introduced in the House that calls for the CPSC to ban as hazardous substances certain products containing lead intended for children under the age of six; 4) a bill (H.R. 445) calls for requiring country of origin hang tags or paper label to be affixed to all furniture, in addition to the required permanent marking, so a viewer of unpackaged furniture could readily identify the country of origin without rotating, tilting, or turning the furniture.

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