Consumer Group Condemns Excessive US Anti-Dumping Duties

by Mike Godfrey, Tax-News.com, Washington

05 May 2009

The Consuming Industries Trade Action Coalition (CITAC) has urged the Obama Administration to end the use of 'zeroing' in anti-dumping cases following a WTO panel report which found the US in violation of its international trade obligations. The April 24 ruling - the 20th such WTO ruling against the US - clears the way for Japan to act against US exports later this year if the US continues to defy the WTO rulings.

Japan challenged the USA's failure to implement an earlier WTO decision against the US use of zeroing that Japan had won in January 2007. Under the WTO decision, the US had until December 24, 2007 to comply with the ruling.

"In this latest case, the WTO panel ruled that the US failed to implement earlier decisions against the use of zeroing in assessing anti-dumping duties," said CITAC Counsel Lewis Leibowitz, a partner at the law firm of Hogan & Hartson, LLP. "The EU won a similar case in December 2008, but the Japan ruling is significantly broader, because it found that US assessment of duties through Customs liquidation after the implementation date is a failure to comply with the WTO ruling; by contrast, the EU ruling found that only Commerce determinations after the implementation date are violations. The Appellate Body in the WTO will make a decision on this issue next month."

"The bottom line is that the Japan Panel ruling has expanded the number of transactions that can form the basis for retaliation, and expanded the likely effect on US exports if the United States fails to abide by the WTO rules. Soon Mexico will have this authority as well, as the period for US compliance with the Mexico decision expires on April 30."

"When the US fails to comply with these rulings, US consuming industries (downstream manufacturers, distributors and retailers) and US exporters will bear the brunt of the consequences - from artificially inflated anti-dumping duties as well as retaliation against US exports," said Leibowitz. "Three of our largest export markets will be subject to retaliation within a few months, and others are likely to follow."

Zeroing artificially inflates dumping margins by disregarding "negative" dumping comparisons (where the US sales price exceeds the foreign "normal value") when calculating an aggregate margin of dumping for a product. In effect, the negative comparisons are treated as though export price and normal value were the same. The resulting anti-dumping duties tax American consumers excessively by inflating not only the duties but domestic market prices.

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