ITA Issues Final Rule and Modification to Eliminate Zeroing in AD Reviews

“Zeroing” refers to the practice of using only sales at less than fair value to determine the estimated AD duty rate, excluding all non-dumped sales from the calculation.

ITA Compares "Normal Price" to Export Price, to Determine if Dumping Occurs

In AD duty proceedings, the ITA determines the AD duty rates for cash deposit and assessment purposes (the dumping margins) by comparing a calculated “normal value” with the export price of comparable merchandise.

ITA Did Not Offset Dumping when Export Price Exceeded Normal Value

For AD reviews, the ITA has been comparing the average normal value with the transaction specific export prices. This approach is known as the “average-to-transaction method”. Furthermore, ITA does not offset the results of comparisons (i) for which export price is less than normal value by (ii) the results of comparisons for which export price exceeds normal value.

ITA to Calculate Offsets Pursuant to its Implementation Timetable

Under the ITA’s new approach for AD reviews, it will compare the monthly average normal values to the monthly average export prices. This approach is known as the “average-to-average method.” When applying this methodology, ITA will offset non-dumped comparisons, as it does in AD investigations (note that the ITA states it will use offsetting (and not "zeroing") as a matter of policy; it is not stated in the regulations).

Importer-specific assessment rates calculated in reviews will be determined in the same manner as the exporter’s dumping margin, on the basis of average-to-average comparisons using only the transactions associated with that importers with offsets being provided for non-dumped comparisons.

Transaction-to-transaction and average-to-transaction methodologies may still be applied when ITA determines that another method is appropriate in a particular case.

While ITA is modifying its practice to no longer rely on dumping margins that were calculated using WTO-inconsistent “zeroing” methodology in sunset (five-year) reviews, ITA does not anticipate that it will need to recalculate the dumping margins in the vast majority of future sunset determinations.

Implementation Timetable for New Approach

1. All reviews - prelim results after April 16, 2012. The new approach will be effective and applicable to all reviews pending before the ITA for which the preliminary results are issued after April 16, 2012.

2. Sunset reviews -- prelim or final results after April 16, 2012. The ITA will modify its practice such that it will not rely on dumping margins that were calculated using WTO-inconsistent “zeroing” methodology in all sunset reviews pending before the ITA for which either the preliminary results or expedited final results of the sunset review are issued after April 16, 2012.

3. WTO panels and Section 129 proceedings. In addition, this approach will be used in implementing the findings of WTO panels on zeroing involving the European Community (EC) (US-zeroing and continued zeroing), Japan (US-zeroing) and Mexico (US-Stainless Steel)¹, with respect to any AD duty proceedings conducted pursuant to Section 129 of the Uruguay Round Agreements Act.

4. Reviews continued after April 16, 2012 due to court decision. This approach will also be applicable to any reviews currently discontinued by the ITA if such reviews are continued after April 16, 2012 by reason of a final and conclusive judgment of a U.S. Court.

Final Rule Amends 19 CFR 351.414 to Implement New Approach

To implement its new approach, the ITA is making the following changes to 19 CFR 351.414 effective April 16, 2012 (added text italicized, deleted text crossed out):

(a) Introduction. The Secretary normally will average prices used as the basis for normal value and, in an investigation, prices used as the basis for export price or constructed export price as well. This section explains when and how the Secretary will average prices in making comparisons of export price or constructed export price with normal value.

(b) Description of methods of comparison —(1) Average-to-average method. The “average-to-average” method involves a comparison of the weighted average of the normal values with the weighted average of the export prices (and constructed export prices) for comparable merchandise.

(2) Transaction-to-transaction method. The “transaction-to-transaction” method involves a comparison of the normal values of individual transactions with the export prices (or constructed export prices) of individual transactions for comparable merchandise.

(3) Average-to-transaction method. The “average-to-transaction” method involves a comparison of the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise.

(c) Choice of method. (1) In an investigation or review, the Secretary will use the average-to-average method unless the Secretary determines another method is appropriate in a particular case.

(c) Preferences. (1) In an investigation, the Secretary normally will use the average-to-average method. The Secretary will use the transaction-to-transaction method only in unusual situations, such as when there are very few sales of subject merchandise and the merchandise sold in each market is identical or very similar or is custom-made.

(2) The Secretary will use the transaction-to-transaction method only in unusual situations, such as when there are very few sales of subject merchandise and the merchandise sold in each market is identical or very similar or is custom-made.

(2) In a review, the Secretary normally will use the average-to-transaction method.

(d) Application of the average-to-average method — (1) In general. In applying the average-to-average method, the Secretary will identify those sales of the subject merchandise to the United States that are comparable, and will include such sales in an “averaging group.” The Secretary will calculate a weighted average of the export prices and the constructed export prices of the sales included in the averaging group, and will compare this weighted average to the weighted average of the normal values of such sales.

(2) Identification of the averaging group. An averaging group will consist of subject merchandise that is identical or virtually identical in all physical characteristics and that is sold to the United States at the same level of trade. In identifying sales to be included in an averaging group, the Secretary also will take into account, where appropriate, the region of the United States in which the merchandise is sold, and such other factors as the Secretary considers relevant.

(3) Time period over which weighted average is calculated. When applying the average-to-average method in an investigation, the Secretary normally will calculate weighted averages for the entire period of investigation or review, as the case may be. However, when normal values, export prices, or constructed export prices differ significantly over the course of the period of investigation or review, the Secretary may calculate weighted averages for such shorter period as the Secretary deems appropriate. When applying the average to average method in a review, the Secretary normally will calculate weighted averages on a monthly basis and compare the weighted-average monthly export price or constructed export price to the weighted-average normal value for the contemporaneous month.

(e) Application of the average-to-transaction method — (1) In general. In applying the average-to-transaction method in a review, when normal value is based on the weighted average of sales of the foreign like product, the Secretary will limit the averaging of such prices to sales incurred during the contemporaneous month.

(2)(f) Contemporaneous month. Normally, the Secretary will select as the contemporaneous month the first of the following which applies:

(i)(1) The month during which the particular U.S. sale under consideration was made;

(ii)(2) If there are no sales of the foreign like product during this month, the most recent of the three months prior to the month of the U.S. sale in which there was a sale of the foreign like product.

(iii)(3) If there are no sales of the foreign like product during any of these months, the earlier of the two months following the month of the U.S. sale in which there was a sale of the foreign like product.

¹(1) United States-Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”) (US-Zeroing (EC)), WT/DS294/R, WT/DS294/AB/R, adopted May 9, 2006; (2) United States-Measures Related to Zeroing and Sunset Reviews (US-Zeroing (Japan)), WT/DS322/R, WT/DS322/AB/R, adopted Jan. 23, 2007; (3) United States-Final Anti-Dumping Measures on Stainless Steel from Mexico (US-Stainless Steel (Mexico)), WT/DS344/R, WT/DS344/AB/R, adopted May 20, 2008; (4) United States-Continued Existence and Application of Zeroing Methodology (US-Continued Zeroing (EC)), WT/DS350/R, WR/DS350/AB/R, adopted Feb. 19, 2009.

(See ITT's Online Archives 12020716 for summary of U.S. signing an agreement with the EU (European Union) and Japan to settle certain World Trade Organization (WTO) AD zeroing disputes.

See ITT's Online Archives 10122918 for summary of ITA proposed rule to normally use non-zeroing methodology in AD reviews, and 11012528 for the ITA extending comments on the proposed rule.

See ITT's Online Archives 07010825 and 07012930 for summary and delayed effective date of ITA ending "zeroing" in average-to-average method AD investigations.)

ITA contact: Rachel Nimmo (202) 482-0836

ITA D/N 101130598-2109-03 (FR Pub 02/14/2012)