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

SERKO SIMON GLUCK & KANE LLP – Customs & International Trade Law

January 11, 2007

CUSTOMS and BORDER PROTECTION (CBP)

• WCO Tariff Changes Take Effect February 3, 2007: The U.S. International Trade Commission (ITC) posted to its website a draft of the new Harmonized Tariff Schedule of the U.S. (HTSUS) containing the classification changes as agreed upon by the World Customs Organization (WCO). The changes are scheduled to take effect on or about February 3, 2007, 30 days after the notice was published in the Federal Register. The draft HTSUS can be accessed at: http://www.usitc.gov/tata/hts/bychapter/index.htm .
• Early Use of WCO Tariff Changes: By using Immediate Delivery (I.D.) entry procedures, CBP will allow importers to take advantage of any WCO tariff changes 10 days prior to their actual implementation. Although in general the changes should be tariff neutral, there will be some rate changes, and certain tariff shift rules may also be impacted.
• C-TPAT Minimum Security Criteria for Brokers: Effective December 31, 2006, CBP posted new minimum security criteria for brokers who want to join the Customs-Trade Partnership Against Terrorism (C-TPAT) program. A 90-day implementation period will be allowed for brokers who are currently members of the program.
• Extension for Retroactive DR-CAFTA Duty Free Claims: CBP issued a notice announcing that the December 31, 2006 deadline for filing retroactive duty free claims for certain textile and apparel imports under the Dominican Republic – Central America Free Trade Agreement (DR-CAFTA) will be extended. Retroactive duty free claims can now be filed up to 90 days after the last of the DR-CAFTA members enters into the agreement. The Dominican Republic is expected to implement the agreement in the near future, while it is currently unknown when Costa Rica will join.

TRADE TALK

· Free Trade Developments:

Liberia – Effective January 1, 2007, Liberia has been designated as a lesser developed beneficiary country under the African Growth and Opportunity Act (AGOA).

East Timor – Effective January 18, 2007, East Timor has been designated as a beneficiary country under the Generalized System of Preferences (GSP) program. In addition, it will be designated as a least developed beneficiary country effective on or about March 4, 2007.

Central European FTA – Ten Southeastern European countries, Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Moldova, Montenegro, Serbia, and Romania, recently consolidated 32 different bilateral trade agreements into one regional FTA to foster closer economic relations and facilitate preparation for EU accession.

· Fair Trade Developments: The U.S. Commerce Department recently took the following action:

Foundry Coke – Revoked the antidumping (AD) order on foundry coke from China.

Oil Country Tubular Goods – Revoked the countervailing duties (CVD) on oil country tubular goods from Italy.

Silicon Metal – Decided to keep in place the existing AD order on silicon metal from China but revoke the AD order from Brazil.

· EU Trade Developments:

Belarus May Lose GSP Benefits – The EU adopted recommendations to withdraw GSP benefits it extends to products from Belarus unless that country addresses within 6 months its serious and systemic violations of core labor rights.

Increase in Quota Allocations to China – Due to the recent EU enlargement with the joining of Bulgaria and Romania, the EU increased its textile and apparel quota allocations available for exports from China.

WORLD TRADE ORGANIZATION (WTO)

· Continuous Entry Bond Requirement on Frozen Warm-water Shrimp: The USTR is seeking industry comments regarding a CBP directive requiring certain imports to be covered by a continuous entry bond, in a multiple of the value of affected imports during the previous year, in addition to the deposit of AD duties. India filed a WTO complaint against the U.S. claiming that the additional continuous bond requirement is inconsistent with WTO AD rules.

· Mexico Repeals HFCS Tax: Following its lower house of legislature and

Complying with a WTO ruling brought by the U.S., Mexico’s Senate repealed the 20% tax charged on soft drinks made with high fructose corn syrup (HFCS).

BUSINESS BRIEFS

· India Introduces Limited Liability Partnership Bill: With the increasing role of the service sector and the diversity of services being offered, India’s Minister of Company Affairs recently introduced legislation to allow for the creation of Limited Liability Partnerships (LLP) in India.

· CPSC Developments:

Japan Safety Agreement – The U.S. Consumer Product Safety Commission (CPSC) recently signed an agreement with Japan to jointly develop programs and exchange safety personnel and information aimed at enhancing the safety of consumer products.

Hooded Sweatshirt Agreement – The CPSC announced that it provisionally accepted a $50,000 settlement from a company which allegedly continued to sell hooded sweatshirts with drawstrings after the product has been recalled as a safety hazard.

Infant Seat Safety – Consumer Reports recently tested 12 rear-facing car infant seats which are snapped into a base and reported that most “failed disastrously.” While infant seats are required to perform well in a 30 mph frontal crash, and most did well at that speed, tests were also done at 35 and 38 mph, the thresholds for testing cars in frontal and side crashes respectively. It is at these speeds that most of infant seats tested failed, prompting Consumer Reports to urge federal authorities to recall the underperforming infant seats.

COURT CASES

· Are Tariff Rates Based on Gender and Age Discriminatory and Unconstitutional: An importer of men’s leather gloves filed a complaint at the U.S. Court of International Trade (CIT) seeking refunds of all duties it paid on these gloves alleging that they are discriminatory and unconstitutional. The imported leather gloves were classified under Subheading 4203.29.30, HTSUS, the provision for “Articles of apparel and clothing accessories, of leather…: Men’s,” subject to a 14% ad valorem duty rate. However, if similar gloves were imported for persons other than men, i.e., children or women, they were to be classified under Subheading 4203.29.50, HTSUS, and subject to a 12.6% ad valorem duty rate. The importer alleges that duty rates based on gender and age violates the Due Process Clause of the Fifth Amendment of the U.S. Constitution, which prohibits the assessment of taxes and duties on the basis of gender and age without an exceedingly persuasive justification. The importer asks the CIT to rule that the duty based on Subheading 4203.29.30 is null and void, and order the government to refund the entire duty amount paid, with interest.

· Backpacks Which Include Toys Are Not Toys: In Processed Plastic Company v. United States, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a CIT ruling that children’s backpacks and beach bags with mesh bottoms which are sold together with an assortment of plastic sand toys are not to be classified as “toys” of Chapter 95 (duty free), but rather, as “travel, sport, and similar bags” of Heading 4202.92, HTSUS (20% duty). The CAFC stated that any amusement qualities the bags may have are incidental to their function of “organizing, storing, and protecting”, regardless of the actual level of organization, storage, or protection it provides. In addition, the CAFC ruled that the bags are not “accessories” to the sand toys as they do not bear a “direct” relationship to the primary articles it is alleged to accessorize.

Serko Simon Gluck & Kane LLP
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E-mail address: serko-simon@customs-law.com On the internet at: www.customs-law.com

Note: This information is current as of the date of this document, and is not, nor is it intended to be, legal advice, which can only be provided by Serko Simon Gluck &Kane LLP on a case-by-case basis. ©2007