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

April 10, 2006

• CAFTA-DR for Honduras & Nicaragua: President Bush issued a Presidential Proclamation implementing the Central America-Dominican Republic (CAFTA-DR) Free Trade Agreement (FTA) with Honduras and Nicaragua effective April 1, 2006. Most bilateral trade will be duty free as of this date. Commensurate with the implementation of CAFTA, imports from Honduras and Nicaragua will no longer be eligible for entry under the Generalized System of Preferences (GSP), Caribbean Basin Trade Partnership Act (CBTPA), or the Caribbean Basin Economic Recovery Act (CBERA) programs. With El Salvador already eligible for CAFTA, Guatemala and the Dominican Republic will become eligible for CAFTA when they implement the required legislation. Costa Rica is the only eligible country which has not yet ratified CAFTA.
• Proposed Changes to NAFTA Rules of Origin: The U.S. Trade Representative (USTR) requested the U.S. International Trade Committee (ITC) to investigate the impact of proposed changes to certain NAFTA rules of origin. Among others, the changes will affect certain: fish and fish oils, herbs and spices, food preparations, oil and petroleum products, leather, aluminum, diesel engines, turbines, valves, electric motors, transformers and generators, batteries, radio telephony, turntables and cassette players, medical appliances and parts, and measuring and controlling devices. Written comments are being sought by the ITC until June 2, 2006.
• Ceramic Ware: The FDA announced the signing of a Memorandum of Understanding (MOU) with China covering exports of Chinese ceramic ware to the U.S. intended for use in the preparation, serving, or storage of food or drink. The MOU, an extension and update of a similar previous agreement, enables the FDA to reduce inspections of ceramic ware when they are accredited by China’s Certification Accreditation Administration.
• Stacked Integrated Circuits: CBP recently denied an importer’s claim that certain packaged and stacked integrated circuits (DRAMS) should be classified in heading 8473 as parts suitable for use solely or principally with ADP machines; as the importer failed to prove that the integrated circuits are solely or principally used with ADP machines, they are more specifically classified in subheading 8543.89.9695 (2.6% duty), HTSUS, the provision for "electrical machines and apparatus, … Other machines and apparatus: Other: Other: Other: Other: Other."

• Release of Annual Trade Reports:

• Elimination of Duties on Multi-Chip Packages: Following a Presidential Proclamation, effective April 1, 2006, the U.S., EU, Korea, and Taiwan have eliminated import duties on multi-chip integrated circuits of subheading 8543.89.96, HTSUS. It is expected that Japan will join the agreement at a later stage in 2006.
• AD/CVD Developments: The U.S. Commerce Department recently:

1. Made a final AD determination on certain artist canvas from China, with a rate between 77.90% and 264.09%.
2. Will keep in place the AD order on polyester staple fiber from Korea and Taiwan.
3. Decided to revoke the AD order on certain grain-oriented electric steel from Italy and Japan and the countervailing (CVD) order on the above from Italy.
4. Decided to revoke the AD order on certain structural steel beams from Japan and Korea and the CVD order on the above from Korea.
5. Decided to revoke the AD order on certain synthetic indigo from China.

• Section 337 Investigations: The ITC instituted the following Section 337 investigations into alleged patent infringement of: 1) certain voltage regulators, components thereof and products containing same; 2) certain portable power stations; and 3) certain ink cartridges and components thereof.
• ITA to Abandon Zeroing: Following a World Trade Organization (WTO) finding that the U.S. International Trade Administration’s (ITA) use of "zeroing" is inconsistent under its rules, the ITA announced that it will cease using the method when calculating AD duties. Zeroing occurs when the ITA calculates a dumping rate by using average-to-average comparisons, comparing the average export price against the average normal price, but fails to offset (zero) any above average export prices against the dumping margins. The ITA is seeking comments by April 6, 2006 on alternative methodologies.

• U.S. Files with WTO Against China’s Auto Parts Policy: The U.S. and the EU asked the WTO to establish a Dispute Settlement Body regarding China’s taxation of imported auto parts. In only the second WTO case against China, the U.S. claims that China is effectively favoring local manufacturers by illegally charging increased duties on imported auto parts. Under current Chinese laws, as soon as imported auto parts reach a set percentage of the total car components, China assesses tariffs on additional auto parts as if they were a finished automobile (typically 28%), rather than continuing to use the tariff rates for auto parts (typically 10%-14%). The USTR intimated that the U.S. is on the verge of filing additional WTO complaints against China, without elaborating on which issues they may file. However, China’s continued import ban on U.S. beef was noted to be a concern.
• U.S. Files with WTO Against Canadian Corn Tariffs: The U.S. filed a complaint with the WTO against Canada’s import tariffs on U.S. corn. Canada assesses $1.65 per bushel on U.S. corn, claiming that the U.S. subsidizes its exporters and the corn is dumped at below-market value; the U.S. claims that Canada has not proven its case.
• Appellate Body Sides with U.S. in Sweetener Case: A WTO Appellate Body found for the U.S. in a case it filed against Mexico over its 20% tax on soft drinks and other beverages made with sweeteners other than cane sugar, i.e., imported high-fructose corn syrup (HFCS). While Mexico’s lower house of Congress voted to scrap the tax, its Senate refused to go along.

• EU Geographical Indicators: Following a WTO ruling against its current regime covering geographical indicators (GI), the EU agreed to allow foreign companies to register their GI claims directly with the EU, regardless of whether the company’s country has their own registration process. This grants non-EU companies the same protection as EU companies.
• New Electronic Patent Filing: The U.S. Commerce Secretary recently launched the U.S. Patent and Trademark Office’s new electronic filing system, allowing applicants to file patent applications online. The system allows applicants to file by attaching PDF documents, allows for quick access to each applicant’s files, and starts the shift away from a paper-based system to an electronic-based system.
• Export Violations: 1) The U.S. Department of Justice recently sentenced an executive at a forklift manufacturer to 39 months in prison and fined him $6,000 for conspiring to violate the U.S. trade embargo against Iran; 2) the U.S. Bureau of Industry and Security (BIS) imposed export sanctions on 14 individuals because of their alleged financing and shipping an industrial hot press furnace to China without proper license.

• LA-Long Beach Pier Pass Raises Fees: Effective April 24, 2006, Pier Pass fees for truckers using the ports of Los Angeles-Long Beach during peak hours (3 AM-6 PM) will increase to $50 per TEU (20" container) and $100 per FEU (40" container).

• Federal Food Safety Oversight to Trump State Oversight: The "National Uniformity for Food Act of 2005" (H.R. 4167) recently passed in the U.S. House of Representatives will position the federal government, and not individual states, with oversight authority for food safety. The bill will require uniform food safety labeling and will void any state food safety law which does not conform to federal standards. The bill is aimed at the myriad state food safety laws, especially California’s Proposition 65, but will allow states with tougher laws to petition the FDA for exemption from the new federal labeling laws.
• Alternative Sanction Bill Aimed at China: In an alternative to the proposed bill that would levy an across the board 27.5% tariffs on Chinese goods, the "U.S. Trade Enhancement Act of 2006", was recently introduced in the U.S. Senate, seeking to prod the Chinese to change their alleged unfair trading practices. The bill would prohibit approval of loans to countries manipulating their currencies, would try to diminish that country’s voting rights at the International Monetary Fund (IMF), and would make currency policies an issue when considering the market economy status of those countries. The bill would also suspend the ability of new shippers to post bonds in lieu of cash when importing goods from these countries that are subject to AD or CVD duties.
• AGOA Extension: The "Miscellaneous Trade and Technical Corrections Act of 2006" recently passed by the U.S. House of Representatives, and contained a clause to extend to September 30, 2015 the textile and apparel benefits of the African Growth and Opportunity Act (AGOA), currently set to expire on September 30, 2008.