Elemental Mercury: The U.S. Environmental Protection Agency (EPA) is seeking comments by September 11, 2006 on its proposed significant new use rule for elemental mercury. Used in certain light switches, ride control, and anti-lock braking systems, the proposed rule would require EPA notification of up to 90 days prior to manufacture, further process, or importation, of elemental mercury and products containing same.

Drug Pedigree: After two decades of delay, on December 1, 2006, the U.S. Food and Drug Administration (FDA) will start enforcing the Prescription Drug Marketing Act (PDMA) of 1987. The PDMA requires secondary wholesale drug distributors to track every drug each time they change hands from the factory to the pharmacy (pedigree), in order to help keep counterfeit drugs out of the supply chain. Enforcement has repeatedly been delayed so as to allow tracking technology to become available. The FDA will use a "phased-in" approach whereby the first focus will be on high value drugs and those susceptible to counterfeiting.

Retroactive Guatemala CAFTA Benefits: The U.S. Trade Representative (USTR) announced that under the Dominican Republic-Central America Free Trade Agreement (DR-CAFA), qualifying goods from Guatemala will be eligible for retroactive duty refunds for imports back to January 1, 2004; written refund requests must be made by December 31, 2006.

Transshipment Investigation of Retail Plastic Bags: CBP, along with U.S. Immigration and Customs Enforcement (ICE), are investigating the possible transshipment of retail polyethylene bags, which are currently subject to antidumping duties (AD) from China, Malaysia, and Thailand. Importers of these bags from countries not subject to AD should make sure that manufacturing, production, and shipping documents are available upon request to satisfy CBP of the true country of origin of their imports. Failure to provide the required documents upon request by CBP, may result in the assessment of the highest AD rates, currently at 101%.

FDA Issues Guidance Documents: The FDA recently issued a guidance document entitled "Guidance for Industry: Using Electronic Means to Distribute Certain Product Information" which is available at: http://www.fda.gov/oc/guidance/electronic.html.

The FDA also issued guidance for quality risk management tools for pharmaceutical, biological, and biotechnological products. The guidance document can be accessed at: http://www.fda.gov/cber/gdlns/ichq9risk.pdf.

• AD/CVD Developments: The U.S. International Trade Commission (ITC) voted to revoke the countervailing duty (CVD) on pure and alloy magnesium from Canada.
• Patent Infringement Investigations: The ITC issued a limited exclusion order on two importers resulting from its Section 337 investigation of rubber antidegradants.

Failure of Doha Round May Herald Complaints: With informal talks between the U.S., EU, Australia, Brazil, India, and Japan on rescuing the Doha Round talks failing to lead to a consensus, it is expected that a wave of WTO complaints will now be filed by countries seeking to extract trade concessions through litigation. Indeed, while Brazil has until now held off from asking the WTO for permission to levy sanctions on U.S. goods for not reforming its cotton subsidy program following a previous WTO ruling, reports indicate that it might go ahead with that request after the failure of the Doha Round talks. In addition, Panama is said to want to challenge Colombia over its trade and tariff barriers.

U.S.-Canada Reach Agreement on Softwood Lumber: On July 1, 2006, the U.S. and Canada initialed the previously announced agreement to bring resolution over U.S. dumping duties imposed on Canadian softwood lumber. The agreement calls for an end to all legal proceedings, an end to U.S. dumping duties as they are currently imposed, and a return of most of the dumping duties collected to the Canadian exporters. While the agreement calls for unrestricted trade, it does provide for certain safeguards when prices fall below $355 per Thousand Board Feet (TBF). Canada will impose volume limits and charge an export tax in 5% increments, up to a maximum of 15%, to be charged when prices fall below $315 per TBF.

Complaint Against U.S. Internet Gambling Restrictions: Following a complaint by Antigua and Barbuda, the WTO set up an investigative panel on whether the U.S. is complying with a previous WTO Dispute Settlement Body (DSB) recommendation regarding its restrictions on internet gambling.

Container Security Standards: A new business-led organization, the International Container Standards Organization (ICSO), was recently established to develop industry standards and interoperability between containers, ports, and terminals, and to maximize the potential of new technologies in securing the supply chain.

CSI: The Dominican Republic agreed to join CBP’s Container Security Initiative (CSI) as well as the U.S. Department of Energy’s new Megaport Initiative.

International Standards: The U.S. and EU are uniting to fight China’s desire to set its own trade standards and regulations on a host of goods sold in China. Already requiring stricter sanitary guidelines for food imports, China is now demanding a Chinese mark be branded on tires, which is in addition to the required international standards. The U.S. and EU fear that a third set of regulations will unfairly favor domestic Chinese firms and only add to the cost of manufacturing, which can equal 20% in the case of automobiles.

• Miscellaneous FDA Developments:

Wal-Mart Efforts to Reduce Global Warming: In recent discussions regarding steps it has taken to reduce its share of global warming emissions, Wal-Mart discussed ways to encourage its supplier network to work with it in reducing their emissions as well. To that end, Wal-Mart stated that "all things being equal, we’ll give business to operators who show they’re fully engaged" in fuel efficiency efforts.

EAR: In an effort to make its anti-boycott administrative and enforcement process more efficient, the U.S. Bureau of Industry and Security (BIS) is seeking comments by August 29, 2006 on a proposal to publish guidelines and procedures regarding the voluntary self disclosures of requests to comply with the anti-boycott provisions of the Export Administration Regulations (EAR). The guidelines will spell out how the BIS responds to violations, how it makes penalty determinations, and what factors it considers when settling violations.

• China Developments:

• India Developments:

• Currency and Tax Developments:

Israel – Effective July 1, 2006, Israel reduced its Value Added Tax (VAT) by 1%,from 16.5% to 15.5%.

CPSC Penalty Factors: The U.S. Consumer Product Safety Commission (CPSC) is seeking comments by August 11, 2006 on a proposal to describe which factors it will consider when assessing penalties for defective merchandise. Some of the factors under consideration are the statutory factors of: failure to furnish information, nature of the defect, severity of risk to injury, number of defective products, actual occurrence of injury, and penalty appropriateness in relation to the company fined. In addition, other factors such as previous compliance, timeliness of response, monitoring, cooperation, economic gain, and failure rate, are also proposed to be weighed when considering penalties.

Export of Compulsory Licensing Drugs: The "Life-Saving Medicines Export Act of 2006" (S. 3175) was recently introduced in the U.S. Senate to allow for the export of life-saving pharmaceutical products manufactured under compulsory license to countries with insufficient manufacturing facilities who face a health crisis.

Miscellaneous Tariff Bills: The U.S. Senate Finance Committee is seeking comments by August 15, 2006, on the introduced miscellaneous tariff bills. Bills will be considered only if they are non-controversial and are revenue neutral.

"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).