US wins anti-dumping row with Mexico, setback to India

by Pat Garcia | December 31, 2007 at 04:03 pm

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31 Dec 2007, 2036 hrs IST,PTINEW DELHI: The US has won the WTO zeroing dispute against Mexico, which is a setback to India's sustained campaign against the American method of calculating the anti-dumping duties on imports.

The WTO panel ruling in favour of the Americans has emboldened USTR Susan Schwab to say that the zeroing method of calculating anti-dumping duties should form the basis for the Doha Round Rules negotiations.

"This underscores the US view that WTO members need to address this issue in the Doha Round Rules negotiations and adopt clear, precise rules in the Anti-dumping Agreement expressly permitting the use of zeroing," she said in a statement.

India, which is backed by at least 15 other countries, has gone to the extent of saying that "with 'zeroing' there will be no Doha Round agreement".

Both Commerce and Industry Minister Kamal Nath and Secretary in his Ministry G K Pillai have put out India's strong resentment over the WTO panel on Rules succumbing to the US pressure.

"We are opposed to the process of zeroing and will always oppose it," Nath had recently said.

[q
url="http://www.ustr.gov/Document_Library/Press_Releases/2007/December/United_States_Wins_WTO_Zeroing_Dispute_with_Mexico.html"]United
States Wins WTO “Zeroing” Dispute with Mexico
12/20/2007

Washington,
D.C. - U.S. Trade Representative Susan C. Schwab announced today that a
World Trade Organization (WTO) panel has once again found in favor of
the United States in a case involving the "zeroing" method for
calculating ani-dumping duties. This case concerned a challenge by
Mexico on the use of zeroing by the U.S. Department of Commerce.

“This
is further proof of what the United States has been saying all along –
that WTO rules do not prohibit ‘zeroing’ and that WTO Appellate Body
reports to the contrary have overreached,” said Ambassador Schwab. “We
commend the WTO panel for conducting a very thorough analysis and
applying the WTO agreements as written.”

This marks the third
time a WTO panel has found that “zeroing” in assessment proceedings is
not prohibited by the WTO Antidumping Agreement. It is the second time
a WTO panel has considered and rejected Appellate Body findings to the
contrary. This unprecedented situation reflects that those Appellate
Body findings are not settled law.

In its report, the panel
stated that it was “troubled by the fact that the principal basis of
the Appellate Body’s reasoning in the zeroing cases seems to be
premised on an interpretation that does not have a solid textual basis
in the relevant treaty provisions.”

This underscores the U.S.
view that WTO Members need to address this issue in the Doha Round
Rules negotiations and adopt clear, precise rules in the Antidumping
Agreement expressly permitting the use of zeroing.[/q]

Dumping,' in trade parlance, refers to the practice of exporting goods at below the price that they command in their home market. WTO rules allow Member governments to place extra duties on dumped goods, so long as they can prove that dumping is indeed taking place and that it is injuring the competing domestic industry. Governments also have to be able to calculate the 'dumping margin' - the gap between the home market price and the export one.

It is the US government's method for making this calculation that Japan had challenged -- specifically, its practice of ignoring ('zeroing out') instances where prices are lower at home than in the export market, and only taking into account cases where the 'dumping margins' are positive. The US had in this case imposed anti-dumping measures against some steel products and ball bearings.

Countries including Canada, the EU, and Korea have brought WTO cases against the US' zeroing methodology, most of which finished with a rap on the knuckles for Washington. In the current dispute, however, a September 2006 panel ruling had rejected some of Japan's arguments.

The US argued to the adjudicative bodies a general prohibition on 'zeroing' had not been established in WTO law. However, both the earlier panel and the Appellate Body rejected its argument that 'zeroing' is not a measure that can be challenged 'as such' in WTO dispute settlement.

[q
url="http://ca.news.yahoo.com/s/reuters/071220/us/politics_trade_wto_steel_dc_2"]Several
previous WTO cases have struck down zeroing, which is now a major issue
in the Doha round of talks to open up world trade, pitting the United
States against the European Union, Japan, China, India, Brazil and many
other countries.

Proposals in the Doha negotiations from a
mediator on anti-dumping and subsidies three weeks ago would allow
zeroing in certain circumstances.

That has prompted protests
from a wide range of countries which say that WTO jurisprudence has
ruled against the method, which they say undermines trade
liberalization.

But Washington says the findings of WTO
dispute panels and appellate bodies are faulty and that zeroing is
allowed under previously negotiated WTO rules. It says a new agreement
must make it clear that zeroing is permitted on a wider basis than the
mediator has proposed.

WTO rules allow a country to impose
duties on imports that are sold at less than their price in the home
market. To calculate this "anti-dumping margin," the importing country
looks at the difference in prices between the two markets.

Under
zeroing, the United States ignores those goods that actually cost less
in the home market when it is making this calculation for a range of
similar products.

(Reporting by Jonathan Lynn; editing by Tim Pearce)[/q]