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

May 10, 2006

• Free Trade Developments:

• AD/CVD Developments: The U.S. Commerce Department recently:

1. Decided to keep in place its antidumping (AD) order on certain large diameter carbon and alloy seamless standard line and pressure pipes from Japan as well as keeping the AD order on the same product in small diameter from Japan and Romania.
2. Scheduled a Sunset review of its AD order on certain helical spring lock washers from China and Taiwan.
3. Scheduled a Sunset review of its AD order on silicon metal from Brazil and China.

• U.S. and Canada Settle Lumber Dispute: Capping the two-decade debate over softwood lumber, the U.S. and Canada agreed to the core terms of a lumber accord. Under the proposed settlement, all litigation will be withdrawn, the U.S. AD and CVD duty orders (27%) will be revoked, the U.S. will return roughly 78% of the $4.3 billion in AD and CVD subsidies collected, and Canada will impose an export tax on softwood lumber when prices dip below a certain point. Reports indicate that U.S. domestic producers have preliminary agreed to the outline of the agreement.
• EU Reimposes Sanctions on U.S. Over Byrd Amendment: Effective May 1, 2006, the EU intends to reimpose its trade retaliation of additional 15% duties on certain U.S. exports over the continued distribution of AD and CVD duties to affected domestic producers. Although the Continued Dumping and Subsidy Offset Act (CDSOA), also known as the Byrd Amendment, has been repealed, some distributions will continue until October, 2007.
• EU Reimposes Sanctions on U.S. Over Export Subsidies: Following the recent ruling by a WTO Dispute Settlement Body against the U.S., the EU will reimpose 14% retaliatory tariffs on certain U.S. products starting on May 16, 2006. The retaliatory tariff rates will increase 1% each month until it reaches 17%. Although the U.S. repealed the Foreign Sales Corporation (FSC) tax, it did allow for certain benefits into 2007 under certain "grandfather" clauses, which were found to be inconsistent with WTO rules.

• EU Bans Perfluorooctane Sulfanates: The EU recently banned the use and marketing of perfluorooctane sulfanates, mainly used to provide grease, oil, and water resistance in textiles, carpets, paper products, and also used in general coating, photography, fire fighting foams and hydraulic fluids.
• CPSC Actions: The U.S. Consumer Product Safety Commission (CPSC) recently announced the following recalls: 1) certain girl’s sweaters with drawstrings, as they pose a choking hazard; 2) certain men’s waterproof hiker boots, as they may not comply with safety standards regarding crush and impact resistance; 3) certain single and double strollers, as the handlebar can crack or break causing it to detach and pose a risk to children. This recall is an extension of a previous recall and repairs of the same strollers; 4) certain hair dryers, as the power cord lacks an immersion protection plug.

• Port Security Bills: On May 4, 2006, the U.S. House of Representatives passed the "SAFE Port Act" (H.R. 4954) to strengthen port security and enhance screening objectives. The bill calls for increased inspections, better tracking capabilities, improved high risk targeting, and the codifying of the Container Security Initiative (CSI) and C-TPAT programs. The bill did not contain a requirement to screen 100% of containers entering U.S. ports. A U.S. Senate Committee marked up for a full Senate vote the related "Green Lane Maritime Cargo Security Act" (S. 2459) which would set minimum standards for all containers entering the U.S., would establish an Office of Cargo Security Policy, require planning for resumption of trade in the event of an attack on a U.S. port, and would establish the "Green Lane" program granting special port treatment to companies who implement the highest supply chain security standards. The Senate bill includes an amendment to set up a pilot program at three foreign ports to screen all containers bound for the U.S. and implement that program for all U.S.-bound containers as soon as practicable and possible. The different versions of the bills will have to be reconciled before being sent to the President for his signature.

• Lead Paint Verdict: Rhode Island became the first state to successfully sue paint manufacturers over lead paint poisoning. A jury recently found several paint companies responsible for creating a "public nuisance" by selling lead paint decades ago. Banned across the U.S. in 1978, the jury found lead paint to be an "environmental hazard" requiring the companies to foot the bill for cleanup across the state. A judge ruled out punitive damages as the companies did not act in an illegal fashion. Similar litigation is pending in several other states.
• Byrd Amendment Doesn’t Apply to Canada and Mexico: The U.S. Court of International Trade (CIT) recently ruled that the Byrd Amendment, whereby AD and CVD duties collected by CBP are distributed to eligible affected domestic producers, can’t be applied to imports from Canada and Mexico. In Canadian Lumber Trade Alliance v. U.S., the CIT found that the NAFTA Implementation Act provides that any change to the U.S.’ AD or CVD laws apply to Canada and Mexico only if Congress specifically states that the change applies to the NAFTA participants and that the parties are notified in advance in writing so as to allow for consultations prior to the implementation of any changes. As the Byrd Amendment does not specifically state that it applies to Canada and Mexico and these countries were not notified prior to its implementation, it can’t apply to goods from Canada or Mexico. The CIT ordered the parties to reach an appropriate remedy for the AD and CVD duties already collected from Canadian softwood lumber exporters. However, a tentative agreement recently reached between the U.S. and Canada regarding the partial or full refunds of AD and CVD duties collected from Canadian softwood lumber exporters may moot this decision as far as it applies to softwood lumber, the product at the center of the biggest AD/CVD disagreement between the U.S. and Canada.