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

May 23, 2006

• New CBP Commissioner Favorably Reported: The U.S. Senate’s Finance Committee reported favorably W. Ralph Basham’s nomination as the new Commissioner of CBP.

• GSP Benefits May Lapse at End of 2006: Without action by the U.S. Congress to renew the program, preferential treatment under the general Generalized System of Preferences (GSP) will expire December 31, 2006. GSP benefits specific to the AGOA countries are in effect until September 30, 2015. Reports indicate that several influential U.S. Senators are intent to let the GSP program lapse at the end of the year.
• Bulgaria & Romania to Lose GSP Upon EU Membership: Bulgaria and Romania will automatically lose their GSP benefits upon joining the EU bloc of nations, currently expected to happen on January 1, 2007.
• National Emergency Against Syria to Continue: President Bush continued the national emergency with regard to Syria for another year.
• AD/CVD Developments: The U.S. Commerce Department recently:

1. Made a preliminary determination to revoke the AD order from China on certain jewelry armoires, which include a side door and are covered by the AD order on wooden bedroom furniture.
2. Initiated an anticircumvention inquiry on certain molded or carved articles of wax from China. The petitioner asserts that importers are circumventing the AD order on petroleum wax candles from China by importing essentially wickless candles for final processing in the U.S.
3. Made an affirmative determination in its AD investigation of certain artists’ canvas from China.

• Section 337 Patent Investigations:

1. The U.S. International Trade Committee (ITC) recently received special Section 337 petitions claiming patent infringements from imports of certain portable digital media players and certain equipment for telecommunications or data communication networks.
2. The ITC issued a limited exclusion order and a cease and desist order barring the importation of certain ink sticks used in solid ink printers.

• EU Cancels Reimposition of Tariffs over FSC: Following the repeal of the "grandfather clauses" in the now-suspended Foreign Sales Corporation (FSC) and Extraterritorial Income (ETI) tax schemes, the EU announced that it will not reimpose retaliatory tariffs on certain U.S. exports recently approved by the WTO. The "grandfather clauses," which allowed for the continuation of certain benefits, was a major sticking point between EU and U.S. trade negotiators.

• China Not Accused of Currency Manipulation: In its semi-annual report on the currency policies of the U.S.’ major trading partners, the U.S. Treasury Department did not designate China as a currency manipulator. Such a designation would have required bilateral talks on resolving the matter with the threat of a WTO complaint in the event that no progress can be achieved. It has been the U.S. administration’s stance that better results can be achieved through negotiations and that may have been backed up by the fact that the Chinese Yuan immediately rallied to below eight Yuan to the U.S. dollar upon the release of the Treasury’s decision. Treasury’s decision not to designate China as a currency manipulator was denounced by several members of Congress, who may now reintroduce legislation that calls for an across-the-board 27.5% tariff on all Chinese imports.
• India Developments:

• EC Proposes Standardized IPR Penalties: The EC recently proposed a bloc-wide standardization of penalties for intellectual property rights (IPR) offenses. The EC proposal calls for a minimum four year prison term and a fine starting at €100,000 if the IPR infringements are caused by a criminal organization or become a risk to the health and safety of individuals.
• Export Violations: 1) The U.S. Bureau of Industry and Security (BIS) announced that a Connecticut man was recently indicted for working as an agent for China to broker the sale of telecommunications equipment to Iraq at a time when it was prohibited to do so; 2) the BIS recently rescinded all export privileges until 2015 of a company and its owner for causing the export of electronic components and computer chips without a license.
• Recent CPSC Developments: The Consumer Product Safety Commission (CPSC) announced that it provisionally accepted a settlement requiring a consumer electronics manufacturer to pay a $100,000 civil penalty over its alleged faulty coffeemakers and other electronic devices.
• Price Fixing Agreement: Three dynamic random access memory (DRAM) chip manufacturers agreed to pay a total of $161 million to settle a class-action lawsuit accusing them of conspiring and fixing the price of DRAM’s.

• Reduction of Transportation Bottlenecks: The U.S. Secretary of Transportation recently initiated the "National Strategy to Reduce Congestion on America’s Transportation Network," in an effort to reduce transportation bottlenecks that threaten supply chain efficiencies. The U.S. Department of Transportation (DOT) will identify congestion reducing corridors, work for increased transportation funding, and encourage private sector investment in transportation infrastructure.
• Rail Fuel Surcharges Questioned: Some of the country’s major railroad customers recently asked federal regulators to review the way railroads calculate fuel surcharges. The rail customers argue that the current method of basing the surcharge as a percentage of the base freight rate often results in different commodities being charged vastly different surcharges even if they are shipped to the same destination. One alternative method being considered is to base the surcharge on a mileage based formula, which may result in certain customers paying even higher surcharges than they do now.

• Temporary Duty Reductions: Several bills were recently introduced in Congress calling for the temporary suspension of duties for the following imported articles: certain textured rolled glass sheets (S. 2685); microphones used in automotive interiors (S. 2692); plasma flat panel displays (H.R. 5258); radio broadcast receivers with or without clocks (S. 2775/2776); certain dog products (S. 2709-2712); and the repeal of the permanent and temporary duty on ethanol (H.R. 5261, S. 2763, S. 2778).

• Court Allows CBP Claim Against Importer to Proceed: In U.S. v. Optrex America, Inc., the U.S. Court of International Trade (CIT) recently denied the defendant/importer’s request to dismiss a civil complaint brought against it by CBP. CBP filed a civil complaint against the importer seeking to recover lost duties of over $1.5 million and a penalty of over $3 million (twice the amount of lost duties). The complaint alleged that the importer falsely declared that its imported liquid crystal display (LCD) products were properly classified using a lower duty rate by making use of material false statements. The importer classified the LCD products under Chapter 85 as "Electric sound or visual signaling apparatus," (1.4%-0.5% duty rate depending on the year of entry), while CBP contends that the importer knew that that the proper classification was in Chapter 90 as "Liquid crystal devices not constituting articles provided for more specifically in other headings" (6.3%-1.6% duty rate depending on the year of entry and heading used). The importer argued that it relied on expert advice from its broker and customs counsel, and cooperated with CBP while it was being investigated. However, CBP argued, and the CIT concurred that: the importer did not follow CBP guidance on the classification of its goods; did not heed advice repeatedly communicated by its customs counsel; it was possible that the documents submitted at the request of CBP were specifically created to mollify the agency; and that the importer maintained a parallel set of books reflecting the higher duty rates. The CIT found that as the preponderance of the evidence points to negligence on the part of the importer in exercising the "reasonable care" required by all importers, it will allow CBP’s civil complaint to go forward.