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CITAC calls on Commerce Department to end zeroing practice

CITAC calls on Commerce Department to end zeroing practice

The Consuming Industries Trade Action Coalition on Wednesday renewed its call on the Bush administration to end the use of 'zeroing' in antidumping cases following the latest decision by the World Trade Organization's Appellate Body that the practice violates U.S. international trade obligations.

   The decision Wednesday was brought about by Mexico declaring the U.S. calculation of antidumping duties involving stainless steel sheet and strip from Mexico as unlawful. It’s the third time the Appellate Body has ruled against the practice in the last two years, CITAC said.

   CITAC Counsel Lewis E. Leibowitz, a partner in Hogan & Hartson, said this is a major decision on the importance of WTO panels respecting decisions of the Appellate Body.

   'There can be no doubt that the WTO rules preclude the use of mathematical devices that inflate margins of dumping beyond what the evidence shows,' CITAC Executive Director Steve Alexander said in a statement. “The U.S. administration has no choice now but to comply with the WTO ruling. U.S. compliance is important to the integrity of the WTO dispute settlement system if we expect other WTO members to abide by decisions with which they may disagree.

   “As important, the WTO decision is in the interest of the vast majority of U.S. manufacturers, who must ultimately pay the duties through higher prices and reduced availability of production inputs in the United States. The zeroing device is simply a tax on doing business in the United States that cannot be defended on any basis. The Bush Administration should end this unnecessary tax on American manufacturers.'

   Zeroing refers to the treatment of export sales to the United States when they are compared to 'normal value' — or the foreign 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 ('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, Commerce's practice of zeroing leads to artificially inflated dumping margins, CITAC said.

   'Japan and the EU have already initiated proceedings to authorize retaliation on U.S. exports because the U.S. has failed to implement prior decisions,” Leibowitz said. “With Mexico winning this latest case, more retaliation against U.S. exporters looms.'

   The U.S. argued in this case that the Appellate Body's two previous decisions specifically dealing with the legality of zeroing in assessment reviews, called 'administrative reviews' under U.S. law, were wrongly decided. However, the Appellate Body rejected this argument and reaffirmed its previous decisions as correct interpretations of the WTO Antidumping Agreement.

   The Commerce Department, which does antidumping calculations, is not required to zero under U.S. law. While the department has never studied the impact of zeroing on U.S. industry, it still has refused to end the practice.

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