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

August 7, 2006

• CBP Textile Verification Visits: CBP recently released the results of its latest Textile Verification Team Visits in foreign factories located in Egypt, Macau, South Africa, Swaziland, and Vietnam. CBP notes that imports from factories considered to be "closed" will be seized immediately, while imports from factories deemed as "high risk" will be subject to intense investigation. Of a total 179 factories visited, 88 (49%) were deemed either high risk or closed.
• Export of Cathode Ray Tubes: In order to streamline management requirements and encourage the recycling of used cathode ray tubes (CRT), the U.S. Environmental Protection Agency (EPA) issued a final rule, effective January 29, 2007, whereby used CRT’s will not be considered solid waste under the Resource Conservation and Recovery Act, so long as: 1) they are not accumulated for speculation; 2) the exporter notifies the EPA of its intent to export; and 3) the exporter receives written consent from the receiving country. Broken CRT’s must also be marked according to regulations.

• AD/CVD Duty Developments: The U.S. Commerce Department recently made the following decisions:

• Section 337 Patent Investigations: The U.S. International Trade Commission (ITC) recently took the following action with regard to special Section 337 patent infringement investigations:

• HFCS Agreement Between U.S. and Mexico: Following the WTO’s ruling in favor of the U.S. and against Mexico’s 20% tax on beverages made with high fructose corn syrup and its associate services, Mexico agreed to comply with the WTO ruling by January 2007, and the U.S. withdrew its request to impose sanctions.

• FDA Safety Concern of Vinyl Lunchboxes: The U.S. Food and Drug Administration (FDA) recently advised manufacturers and suppliers of soft vinyl lunchboxes of its concern regarding the use of lead in the manufacture of the polyvinyl chloride (PVC) linings, however minimal the presence may be. The FDA is urging manufacturers and users to refrain from selling and marketing lead-containing lunchboxes, as they may be subject to enforcement under the food additive laws.
• China’s WTO Commitments: The USTR is seeking comments by September 18, 2006 for a report to Congress of China’s compliance with its WTO commitments.
• India Presents its Budget: In its recently presented budget for 2006-2007, India proposed to slash peak customs duties for non-agricultural products from 15% to 12.5% (originally 20%), further significantly reduce the duty rates for certain raw materials and intermediate products (e.g., minerals, refractories, inorganic chemicals, certain hydrocarbons and catalysts, certain bulk plastics, foodstuffs, packaged foods, and instant food mixes), and proposed no tax change for personal and corporate income taxes.

• Ruling May Lower Prices of Alcohol Beverages: A U.S. District Court ruling in Washington State may eventually help lower prices for beer, wine, and other alcohol beverages in that state and perhaps around the country. The case, stayed by the court pending an appeal by the state, challenged a bevy of Washington laws in place since the end of Prohibition (1933), which sought to discourage over-consumption of alcohol. Some of the laws banned volume discounts, central warehousing, and the purchase of alcohol on credit. Costco Wholesale Corp. challenged these laws as being anti-competitive, resulting in higher prices for consumers. A U.S. District Judge agreed that the rules violated federal antitrust laws and are not shielded by the 21^st Amendment, which repealed Prohibition. If this ruling stands on appeal, it may challenge the current three-tiered distribution system, from manufacturer to independent central wholesaler to retailer, along with the markups applied by each handler.
• "Reverse Payments" Challenged: While the U.S. Supreme Court recently declined to take a case involving the legality of payments by pharmaceutical companies to generic drug companies not to challenge their drug patents, both the U.S. Department of Justice and the U.S. Federal Trade Commission (FDC) are investigating these deals for their monopolistic characteristics. The U.S. Department of Justice recently launched a criminal antitrust probe of a large pharmaceutical company which agreed to pay around $40 million to a generic company to end its patent challenge of the pharmaceutical company’s best selling blood thinner drug. The FTC says that the growing number of similar deals, also known as "reverse payments", are anti-competitive, are keeping drug prices artificially high, and are denying consumers access to cheaper generic drugs.
• CIT Issues Injunction for NAFTA Byrd Amendment: Following its previous ruling in Canadian Lumber Trade Alliance et al. v. U.S. et al., that the application of the Continued Dumping and Subsidy Act, also known as the Byrd Amendment, to imports from Canada and Mexico is illegal under NAFTA (April 2006 Alert), the U.S. Court of International Trade (CIT) has now ordered relief after the parties failed to reach an agreement. Finding that the Byrd Amendment is contrary to NAFTA, the CIT granted plaintiffs declaratory relief and a permanent injunction barring any future distributions to affected domestic producers. However, in the interest of equity, the CIT refused plaintiff’s request to order CBP to disgorge monies already distributed under the Byrd Amendment. While this case was being decided by the CIT, the U.S. and Canada reached an agreement to resolve all issues resulting from the AD and CVD duties imposed by the U.S. on Canadian softwood lumber (see article above).