American Iron and Steel Institute
February 7, 2007
Hon. Charles B.
Rangel - Chairman
Committee on Ways
and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515
Dear Chairman
Rangel:
The
American Iron and Steel Institute (AISI) submits these comments in response to
the January 31, 2007 Advisory from the Ways and Means Committee soliciting
comments on the Department of Commerce’s (DOC’s) proposed modification to its
calculation of weighted-average dumping margins in antidumping (AD)
investigations. These comments are on behalf of AISI’s U.S. member companies, which together account for approximately three-fourths of the raw steel
produced annually in the United States.
AISI
urges Congress to oppose firmly the DOC’s proposed modification of its dumping
calculation. The DOC’s proposed modification -- which is in response to
incorrect and overreaching rulings by the World Trade Organization (WTO) –
would
- Weaken severely U.S. AD law;
- Be impermissible under
current law;
- Be inconsistent with key
Congressional negotiating objectives and concerns.
A Severe Weakening of Antidumping Law
On
December 27, 2006, Commerce notified Congress that it would implement the World
Trade Organization’s (WTO’s) Appellate Body ruling in United States – Laws,
Regulations and Methodology for Calculating Dumping Margins (“Zeroing”)
(WT/DS294) (“US – Zeroing (EC)”). To implement a WTO decision that
the Administration has called “deeply flawed,” the DOC has said that, effective
February 22, 2007, it would begin to offset “positive” dumping margins
(non-dumped sales) against sales with “negative” dumping margins (dumped
sales), when calculating the weighted-average dumping margin in AD
investigations.
The
calculation methodology that the DOC currently applies, which is consistent
with the WTO Antidumping Agreement, reflects the longstanding policy of U.S. AD law that 100 percent of injurious dumping be identified and remedied. The
illogical WTO ruling in “US – Zeroing (EC)” would result in capturing
less than 100 percent of the dumping causing harm to U.S. industry.
If
the DOC were to comply with this erroneous WTO ruling and end its longstanding
practice of setting positive dumping margins at “zero” when calculating overall
dumping margins, the effect would be to reduce or eliminate dumping margins and
to mask or eliminate dumped sales by foreign firms. It would weaken severely
our antidumping law, which is one of the most important tools available to
steel and other U.S. producers to fight foreign market-distorting practices.
Not Allowed Under Current Law
The
governing statute, 19 U.S.C. § 1677f-1(d), requires the current
“zeroing” practice, and the DOC may not change this practice without
Congressional action.
The
law requires the exclusion of offsets for non-dumped sales when calculating
margins based on average-to-average comparison. It does so because, if offsets
were to be used, a respondent’s dumping margin would always be the same
regardless of whether weighted average or individual U.S. transaction prices
are compared to a weighted average normal value. Because the purpose of 19
U.S.C. § 1677f-1(d) is to specify when weighted average or individual U.S.
transaction prices are to be used, this provision would have no meaning if the
result is always the same regardless of the method used.
Even
if the DOC had the discretion to change its practice without an amendment to
the statute, it should not be providing offsets for non-dumped sales. The
DOC’s longstanding practice of excluding offsets in the calculation of dumping
margins promotes the remedial purpose of the statute by fully capturing all
dumping within the dumping margin. To allow for offsetting in the calculation
of dumping margins would go against both the letter and the spirit of U.S. antidumping law.
Contrary to Congress’ Negotiating Objectives and Concerns
The
Congress, in the Trade Act of 2002, identified “overreaching” by WTO panels and
the WTO Appellate Body as a serious concern. The concern then, and even more
today, is the use of the WTO dispute settlement process to impose unwarranted
restrictions on the use of U.S. trade laws -- and obligations on the United States -- that our country never agreed to in trade negotiations.
Given
the critical importance of zeroing to the effective enforcement of U.S. antidumping law, we urge the Congress to draw the line with this ill-considered ruling
in “US – Zeroing (EC),” and oppose the DOC’s inappropriate concession to
the WTO on this issue. First, the Congress has stated that it is a
“principal” trade negotiating objective to preserve U.S. ability to “enforce
rigorously” our trade laws. Second, the Congress has explicitly instructed the
Administration, in the context of the ongoing WTO Doha Round negotiations, to
defend the practice of zeroing. Third, the Congress, not the DOC, remains the
proper body for making laws.
The
Congress should urge the Administration to seek a negotiated, satisfactory
solution in this matter in the Doha Round, and not allow the DOC to change
longstanding practice because of an adverse WTO ruling that: (1) fails to
address significant evidentiary findings by the lower panel’; (2) relies on
novel findings by reference to evidence not before the Appellate Body; and (2)
exceeds the Appellate Body’s authority.
In
May 9, 2006 comments filed at the WTO, the Administration recognized that,
among the “disturbing” aspects of the US – Zeroing (EC) decision: (1)
this ruling reverses 47 years of WTO jurisprudence, finding that dumping should
be measured “in respect of each single importation of the product”; and (2) the
banning of zeroing was never agreed to by Member States in the Uruguay Round or
any previous trade negotiations.
The
proper response to a “deeply flawed” WTO ruling is not to cave in to it. It
is to stand firm, negotiate a solution and insist that U.S. rights under the WTO be respected.
Conclusion
For
the reasons cited above, the Congress should require the DOC to continue its
longstanding practice of zeroing when calculating AD margins in
investigations. AISI urges that the Committee:
- Vote, pursuant to Section
123(g)(3), to express its disagreement with the proposed DOC modification
of current practice;
- Take whatever other
action may be necessary to ensure that U.S. AD law is not further weakened
through implementation of WTO dispute settlement decisions that are erroneous,
overreaching and contrary to U.S. law.
The
AISI and its U.S. member companies appreciate the opportunity to comment on
this issue, which is vital to effective trade law enforcement.
Sincerely,
Barry D. Solarz
Senior Vice President, Trade
and Economic Policy |