For Immediate Release: December 20, 2007
Contact: Brittany Eck or Matt Englehart (202) 482-3809
WTO Panel Finds for United States in "Zeroing" Dispute with Mexico
WASHINGTON – The Department of Commerce today welcomed a WTO panel finding that upholds the department’s use of “zeroing” in calculating anti-dumping duties.
“Panels have consistently rejected the Appellate Body’s flawed reasoning as inconsistent with the text of the Antidumping Agreement and the intent of the WTO members,” said David Spooner, Assistant Secretary for Import Administration at the U.S. Department of Commerce.
In a previous dispute, the Appellate Body found that the WTO Antidumping Agreement prohibits zeroing in administrative reviews. The Panel in this dispute disagreed, finding that the text of the Antidumping Agreement does not support a prohibition of zeroing that extends beyond the context of antidumping investigations in which the comparison of price and fair value is made on the basis of averages.
This panel report marks the third report in which a panel of antidumping experts has found that the Antidumping Agreement does not prohibit ‘zeroing’ in the context of administrative reviews, and the fourth report in which panels have found the textual basis for prohibiting ‘zeroing’ is limited to investigations in which the comparison is made on the basis of averages. In fact, panels have consistently rejected the Appellate Body’s flawed reasoning as inconsistent with the text of the Uruguay Round Antidumping Agreement and the intent of the WTO Members.
This report illustrates that with respect to the interpretation of the Uruguay Round Antidumping Agreement, the issue of ‘zeroing’ remains very fluid. Accordingly, the United States has firmly stated that the issue of zeroing is one that must be addressed through negotiation. T he recent draft text of the Chairman of the WTO Rules Negotiating Group would clarify that the Antidumping Agreement does not prohibit ‘zeroing’ in administrative reviews. The United States has put forward a proposal in the rules negotiations to make clear that ‘zeroing’ is permitted under the WTO Agreements in all contexts.
Background
When the U.S. Department of Commerce (Commerce) calculates a weighted average dumping margin for a given company, it typically takes into account numerous comparisons between salesin the United States and sales in the home market or third country market (or costs in the home market). It is not uncommon for Commerce to find that some comparisons reveal dumping (e.g., the price in the United States is lower than the home market price), while others reveal no dumping (e.g., the price in the United States is higher than the home market price). Where a comparison reveals no dumping, Commerce 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. In other words, Commerce does not reduce the amount of dumping found because some sales are made at above the home market price. Those who assert that high priced sales should offset dumping refer to this as “zeroing.”
The WTO Antidumping Agreement contemplates three methodologies for calculating a dumping margin in investigations: average-to-average, transaction-to-transaction, and average-to-transaction. The issue of ‘zeroing’ in WTO disputes has been raised in relation to whether the text of Antidumping Agreement precludes zeroing when applying the different comparison methodologies in investigations, as well as in other types of antidumping proceedings, including administrative reviews, and sunset reviews.
Prior panels and the Appellate Body, addressing earlier disputes, have found that zeroing is prohibited when using the average-to-average methodology in an investigation, and this panel agreed with that finding. Commerce abandoned the use of zeroing with this comparison methodology in investigations in February 2007.
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