EU Requests WTO Approval for 100% Duties, Etc. Against U.S. for AD Zeroing
On February 2, 2010, the European Union requested authorization from the World Trade Organization's Dispute Settlement Body to impose increased duty rates on certain U.S. products, as the U.S. has not brought its antidumping duty zeroing1 methodology into conformity with WTO rules and findings.
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EU Proposes 100% Duty on $311 Million or 13% Duty on $477 Million in Trade
The EU has proposed the increased duties take the form either of a prohibitive tariff (e.g., 100%) on a specified annual value of trade from the U.S. to the EU; or of an equivalent ad valorem tariff on an equivalent annual value of trade.
In the first case, the annual value of trade from the U.S. to the EU that would be subject to the prohibitive 100% duty rate would be US$ 311 million. In the second case, an ad valorem import tariff of 13.18 % would be applied to an annual trade value of US$ 477 million. (The EU notes that these figures are subject to change, as appropriate.)
If the U.S. objects to these proposed levels, the matter would be referred to the original Dispute Settlement Panel to determine the appropriate level of sanctions, and other issues.
Certain U.S. Steel Products to be Proposed for Increased Duties
The EU stated that it would propose a list of products to be subject to these additional duties in a subsequent filing, noting that the products would be from the same sectors as the EU products that were subject to AD zeroing in the dispute.
(The EU products that are the subject of the dispute include hot rolled steel, stainless steel wire rod, and ball bearings.)
Approval for Additional Actions Against U.S. Also Requested
According to the EU, it is also requesting authorization from the WTO to take additional actions if the U.S. does not withdraw, with respect to certain products, its statement that it will not bring the zeroing methodology used in review investigations into WTO conformity. The level of actions the EU would propose to take would be equivalent to, or less than, the level of harm.
(DS294. On May 9, 2006, in U.S. - Laws, Regulations and Methodology for Calculating Dumping Margin - (Zeroing), the DSB found that AD zeroing was inconsistent with the Antidumping Agreement and the GATT 1994. On June 11, 2009, the DSB determined that the U.S. had failed to bring its zeroing measures into compliance; failed to comply with the recommendations and rulings of the DSB within the reasonable period of time; and adopted or maintained its inconsistent zeroing measures. In addition, the following WTO members have invoked WTO dispute settlement procedures as third parties to date: Argentina; Brazil; China; Hong Kong, China; India; Japan; Korea; Mexico; Norway; Chinese Taipei; Thailand; and Turkey.
DS322. On January 23, 2007, in U.S. - Measures Relating to Zeroing and Sunset Reviews, the DSB found that certain zeroing measures were inconsistent with the Anti-Dumping Agreement and the GATT 1994. On August 31, 2009, in U.S. - Measures Relating to Zeroing and Sunset Reviews: Recourse by Japan, the DSB found that the U.S. had failed to bring certain zeroing measures found to be inconsistent with the Anti-Dumping Agreement and the GATT 1994 into compliance; failed to comply with the recommendations and rulings of the DSB within the reasonable period of time; and adopted or maintained certain zeroing measures inconsistent with the Anti-Dumping Agreement and the GATT 1994. In this respect, the European Union invoked the dispute settlement procedures as a third party.)
1The U.S. Trade Representative has previously stated that when the ITA calculates a weighted average dumping margin for a given company, it is not uncommon for it to find that some comparisons reveal dumping (e.g., the price in the U.S. is lower than the home market price), while others reveal no dumping. Where a comparison reveals no dumping, the ITA assigns a zero to that comparison, rather than a negative number equal to the amount by which the U.S. price exceeds the home market price. This practice is commonly referred to as "zeroing" or "denial of offsets."
(See ITT's Online Archives or 08/19/09 news, 09081925, for BP summary of WTO DS322 report that ruled against the U.S. and for Japan on AD zeroing, and that Japan had asked for approval to impose additional duties of $245.8 million on a list of U.S. products.
See ITT's Online Archives or 10/16/08 news, 08101630, for BP summary of WTO DS350 Panel report, the second ruling against the U.S. and for the EU on AD zeroing (the first WTO ruling against the U.S. and for the EU was for DS294).
WT/DS294/35 (dated February 2, 2010) (10-0523), available by searching WTO documents online for February 2, 2010, or by emailing documents@brokerpower.com
DS294, one page summary available at http://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds294sum_e.pdf
History of DS294 available at http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds294_e.htm
DS322, one page summary available at http://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds322sum_e.pdf
History of DS322 available at http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds322_e.htm