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US Proposes Action On Zeroing

by Glen Shapiro,, New York

07 June 2007

The United States on Monday submitted a proposal to the World Trade Organization (WTO) Negotiating Group on Rules to amend the Appellate Body’s rulings regarding offsets for non-dumped comparisons in antidumping proceedings, often referred to as “zeroing.”

Zeroing is a technique used in measuring alleged incidents of selling below fair value, or dumping.

When the US Department of Commerce calculates a weighted average dumping margin for a given company, it typically takes into account numerous comparisons between sales in the United States and sales in the home market or third country market (or costs in the home market).

It is not uncommon for the Department to find that some comparisons reveal dumping (e.g., the price in the United States is lower than the home market price), while others reveal no dumping (e.g., the price in the United States is higher than the home market price).

Where a comparison reveals no dumping, the Commerce Department assigns a zero to that comparison, rather than a negative number equal to the amount by which the US price exceeds the home market price.

The paper was submitted as part of the ongoing Rules negotiations in the Doha Development Agenda, as part of which the US Trade Representative also this week submitted proposed changes to subsidy rules.

The United States had previously expressed strong objections to recent dispute settlement rulings by the WTO Appellate Body regarding zeroing.

The WTO has issued a number of dispute settlement reports dealing with the issue of offsets for non-dumped comparisons in various contexts in antidumping proceedings, most recently in a January 2007 Appellate Body report concerning a dispute between Japan and the United States.

The United States strongly criticized the Appellate Body’s findings in that report, both in statements at meetings of the WTO Dispute Settlement Body (DSB), and in a detailed written submission to the DSB in February 2007.

Accordingly, the United States is now urging WTO Members to resolve this issue in the WTO negotiations by adopting "clear, precise rules permitting the use of zeroing in both investigations and administrative reviews".

“Where the WTO issues dispute settlement rulings contrary to the long-held understandings and practices of a wide variety of WTO Members, it is important that Members take up that issue in the WTO negotiations, so it is not simply left to the dispute settlement process, but rather is resolved by rules actually agreed upon by Members,” argued Warren Maruyama, General Counsel of the Office of the US Trade Representative.

David. M. Spooner, Assistant Secretary of Commerce for Import Administration, added:

"Because the practice of zeroing has resulted in extensive litigation and conflicting judgments, Members' obligations under the WTO remain unclear. The US firmly believes the members of the WTO need to engage in a frank and thorough discussion to resolve the issue of zeroing."

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