US Lawmakers Attack WTO's 'Zeroing' Decision

by Glen Shapiro, LawAndTax-News.com, New York

27 February 2009

Two influential US lawmakers have attacked a recent decision by the World Trade Organization's Appellate Body for undermining the negotiation process that allows nations to settle trade disputes amicably.

House Ways and Means Committee Chairman Charles B. Rangel (D-NY) and Ways and Means Trade Subcommittee Chairman Sander M. Levin (D-MI) argue that the Appellate Body's recent decision in the 'zeroing' dispute between the European Union and the US: "mistakenly asserts the authority to resolve disagreements that the WTO Members were unable to resolve through negotiation."

"It has rejected the notion that the WTO Members could agree to disagree and move forward on areas of agreement and leave areas of disagreement for future negotiations," the lawmakers commented in their joint statement, released on February 23.

“In fact, there are times when the text of an agreement simply does not address an issue. In those cases, the Appellate Body must recognize that sovereign nations simply have not bound themselves. Indeed, they expressly agreed that the recommendations and rulings of the WTO’s Dispute Settlement Body cannot add to, or diminish, the rights and obligations provided in the WTO agreements," they added.

The lawmakers warned that the reading of new obligations into the text of existing agreements will "only undermine confidence in the Appellate Body and the WTO."

"Ultimately, this will make it more difficult to reach new agreements to liberalize trade," they cautioned, adding: "As we strive to complete the Doha Round of WTO negotiations, this report should give all negotiators cause for concern.”

The Appellate Body's report, issued earlier in February, modified last year's decision by a WTO panel in favor of the EU concerning the US government's continued use of 'zeroing,' an anti-dumping calculation that the EU argues inflates anti-dumping duties on European products.

Following the ruling, EU Trade Spokesperson Peter Power said: "This is an important decision and will lend continued credibility to the WTO dispute settlement system, and to the legitimate use of Trade Defence instruments to fight unfair trade."

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