McGregor Metalworking
Companies
February 7, 2007
The Honorable Charles B. Rangel
Chairman
Committee on Ways and Means
1102 Longworth House Office Building
Washington, D.C. 20515
Dear Mr. Chairman:
On behalf of
steel consuming industries, I am writing to encourage support for implementing
the Department of Commerce’s recent decision to abandon the WTO-illegal
practice of zeroing, in which negative price comparisons are inaccurately
treated as though they were zero. Abandoning zeroing will result in
significant benefits to U.S. manufacturers and the economy as a whole.
In antidumping
proceedings the Commerce Department compares all U.S. sales of an imported
product to a normal value (usually the home market selling price) to determine
whether, and the extent to which, dumping (sales at less than normal value of
the product as a whole) has taken place. Zeroing refers to the practice
employed by the Commerce Department of considering only those U.S. sales where
normal value is greater than the U.S. price, and ignoring transactions where
the reverse occurs, instead setting such negative comparison transactions equal
to zero.
Under this
practice, the weighted average margin of dumping is calculated without taking
into account negative comparison sales. Zeroing is currently used in investigations
and administrative reviews, as well as other proceedings under the antidumping
law. The Department’s current practice of zeroing has been ruled inconsistent
with U.S. WTO obligations several times.
The effect of
zeroing is not only contrary to WTO agreements that the United States has signed, but it also runs contrary to the best interest of the United States. The appropriate measure of the effect of dumping on the U.S. economy is to treat all sales equally. A sale in the United States of an imported
product at a price greater than its home market selling prices is not
accurately assessed by zeroing. Rather, the law must recognize that it
counterbalances sales at less than the normal value for that product.
U.S. manufacturers need and deserve an accurate calculation of dumping duties. Both
consumers and producers are entitled to it. Manufacturers rely on vigorous
competition in securing their supplies of raw materials and components, and
face tremendous competition from global suppliers of their products. Zeroing
inflates the duty (tax) paid by importers raising costs of U.S. manufacturers,
including industrial consumers of steel and other industrial products used in
the manufacture of component parts and end products making it that much harder
to compete in the United States. The unintended consequence of zeroing is that
it encourages manufacturers to look to other countries as a base for
manufacturing the entire product.
The WTO
decisions on zeroing are in keeping with the letter of the WTO Antidumping
Agreement, properly concluding that a product “as a whole” under investigation
or review is the subject of a dumping margin calculation, and not the
individual sales transactions. These decisions represent the law of the WTO,
and PMA urges the U.S. authorities not to defy the law established in these
cases, but rather seek changes—if indeed such changes are in the national
interest—through the established processes of the WTO.
The time has
come for zeroing to be abandoned. Zeroing imposes a tax higher than permitted
by international rules and harms U.S. manufacturers that rely on competitive
international markets for their raw materials and other production input.
Sincerely,
James B. McGregor, Sr.
President |