WTO finds against U.S. in “zeroing” case

WTO finds against U.S. in “zeroing” case

WTO finds against U.S. in “zeroing” case

   The World Trade Organization has ruled that the U.S. Commerce Department's use of 'zeroing' in antidumping proceedings violates the country's international trade obligations.
   Zeroing refers to the treatment of export sales to the United States when they are compared to “normal value” of similar goods in antidumping proceedings. Goods that are sold for less than their normal value have “positive” comparisons. However, when the Commerce Department finds transactions in the United States that occur at prices higher than normal value, it chooses to ignore those sales, or “zeroing” them, rather than averaging them into the final calculations as the WTO requires.
   By reducing the impact of those transactions on the final calculations, the Commerce Department's zeroing practice leads to artificially inflated dumping margins, argue trade advocates.
   On Tuesday, the Consuming Industries Trade Action Coalition (CITAC) lauded the WTO decision, made by the organization's appellate body, and called on the Obama administration and Congress to comply immediately. CITAC said failure to comply with the WTO ruling would leave U.S. exports subject to millions of dollars of retaliatory tariffs.
   “If the U.S. fails to uphold its WTO obligations and eliminate zeroing from antidumping calculations, U.S. exports stand to be hit,” said CITAC Counsel Lewis Leibowitz, a partner at the Washington-based law firm of Hogan & Hartson. “There is simply no justification for the U.S. to invite retaliatory tariffs by continuing the practice of zeroing, which in many cases only inflates the amount of duties collected and distorts markets in the United States.
   “Downstream U.S. industries are particularly hard hit by the loss of competitiveness that accompanies excessive duties on key inputs,” Leibowitz added. “This decision is actually in the interest of the vast majority of U.S. manufacturers, who ultimately pay for these duties through higher prices and reduced availability of production inputs in the United States. It is high time for the U.S. administration to comply with the clear rulings of the WTO and heed the interests of U.S. industries. Failure to act now will undermine our ability to persuade our trading partners to comply with their own trade obligations.”
   The WTO case was initiated by Japan, which successfully argued that the United States has failed to comply with past WTO rulings against zeroing. The violation applies to all actions to assess or collect antidumping duties after the original deadline for compliance, which was Dec. 24, 2007 for Japan, April 9, 2007 for Europe, and April 30, 2009 for Mexico. The decision sets the stage for punitive tariffs to be applied against U.S. exports later this year, CITAC said.