| National
Retail Federation
February 7, 2007
The Honorable Charles Rangel
Chairman
Committee on Ways and Means
U.S.
House of Representatives
1102 Longworth HOB
Washington, DC 20515
Dear Chairman Rangel:
On behalf of the U.S. retail industry, the
National Retail Federation is pleased to provide the following views in
response the request by the Ways and Means Committee on what action, if any,
the Committee should take with respect to the modification the Department of Commerce (“Commerce”)
has proposed to its calculation of weighted average dumping margins in
investigations.
The National Retail
Federation is the world's largest retail trade association, with membership
that comprises all retail formats and channels of distribution including
department, specialty, discount, catalog, Internet, independent stores, chain
restaurants, drug stores and grocery stores as well as the industry's key
trading partners of retail goods and services. NRF represents an industry with
more than 1.6 million U.S. retail establishments, more than 24 million
employees - about one in five American workers - and 2006 sales of $4.7
trillion. As the industry umbrella group, NRF also represents more than 100
state, national and international retail associations.
1. Background
Under the methodology known as
“zeroing” in antidumping investigations, Commerce assigns a value of zero for
all sales above normal value in calculating weighted average dumping margins.
The result is to inflate antidumping margins essentially by using only dumped
sales in the calculation and ignoring fairly-priced sales. Although petitioner
groups have defended the practice as a core element of the antidumping law, it
should be emphasized that zeroing is entirely an administrative practice that
is no where mentioned in the antidumping statute.
Several U.S. trading partners have
successfully challenged the zeroing methodology for calculating weighted
average dumping margins in actions brought before the Dispute Settlement Body
(DSB) of the World Trade Organization (WTO). The only options for the United States are to change its methodology by the deadline established by the DSB, or accept
retaliation from affected trading partners.
NRF strongly believes that the
Committee should support, or, at a minimum, do nothing to impede actions by
Commerce to come into compliance with WTO rules by changing the zeroing
methodology according to the DSB’s rulings and recommendations by the April 9,
2007, deadline. The Committee should offer its support for two important
reasons: (1) as Members of Congress increasingly press USTR to ensure our
trading partners abide by international trade rules, the United States can show
that it will also adhere to those rules even when doing so is politically
challenging; and (2) it will make U.S. “unfair” trade laws “fairer” for
American companies and workers impacted by these laws.
2. Eliminating Zeroing Shows U.S. Commitment to Following International Trade Rules
American exporters and investors know how
difficult it is to do business with trading partners who are not bound by
international trading rules. Consequently, they support bringing those trading
partners into the WTO rules-based system. American exporters and investors
also know how frustrating it can be to do business with trading partners who
are subject to the rules, but who ignore them. Fortunately, the WTO’s dispute
settlement architecture provides a means for relief. The chief complaint is
not that this system fails to work, but rather that it sometimes takes so much
time for trading partners to comply with their obligations.
The United States is a leader in insisting that WTO Members must live up to their international trading obligations and comply
with adverse DSB panel findings in a timely manner. We also need to do as we
say and lead by example. A message that the rules apply to everyone but us will
seriously undermine our credibility. Therefore, when the United States has exhausted all of its opportunities for appeal and the DSB process
repeatedly finds against us, we must accept that fact, and change the offending
practice. If we do not, what right do we have to ask the same of others? If
we cannot change the offending practice, then we should be ready to accept the
consequences - retaliation against our exports by affected trading partners.
Railing against the unfairness of the dispute
settlement system and suggesting that it is fundamentally broken at the same
time that we are pressing USTR to use that system to ensure our trading
partners adhere to the international trading rules also smacks of hypocrisy.
If the WTO DSB process is broken or inadequate in any way, the Doha Round is
the opportunity to redress the problem. If Members of the Committee are
concerned about the manner in which panel decisions are rendered, then we
recommend you instruct USTR to address those concerns in the Doha Round. But
in the interim, compliance is necessary in order to protect our credibility and
the integrity of the rules-based trading system in our efforts to ensure that
our trading partners likewise adhere to their international trading
obligations.
3. Eliminating Zeroing Will Help Make
Trade Remedies Laws Fairer
Many Members of the Ways and Means
Committee have spoken forcefully of the need to “level the playing field” on
trade, to enforce our “fair trade laws,” and not to “weaken” those laws. At
the same time, Committee Members are also properly concerned about finding ways
to improve the global competitiveness of the American economy, and helping
families make ends meet. The fact is, however, that U.S. trade remedy laws
themselves are frequently “unfair,” and impose excessive costs on U.S. manufacturers
and farmers who depend on imports for the products they make, retailers who
depend solely on foreign suppliers for many of the goods they sell, and
American families who end up paying the tab for antidumping duties through
higher prices for the goods they buy.
Zeroing is an example of why we need
greater fairness in our antidumping regime. Any math teacher would give an “F”
to anyone who ignored parts of a set to calculate an average. And yet, that is
precisely what zeroing does. It is simply an outcome-oriented practice
designed to inflate dumping margins beyond the actual level of dumping – if any
– and unfairly tilts the playing field in calculating dumping margins against U.S. consumers of imported products subject to the resulting antidumping duties.
In addition, were U.S. trading
partners to adopt such a practice in antidumping investigations of U.S.
products, artificially inflating resulting margins, there would surely be a hue
and cry from U.S. exporters. Therefore, it would be inadvisable for the
Committee to recommend that USTR seek acceptance of the practice from U.S. trading partners in the Doha talks on “rules.” To do so would also come at a cost that the United States would have to pay on more vital trade issues, such as market access.
No legislation is required of
Congress to permit Commerce to do the right thing – end its practice of
zeroing immediately. Moreover, given the absurdity of the practice as well as
its basic unfairness, the Committee should recommend that Commerce cease using
the methodology not just for weighted average calculations, but for all
antidumping calculations.
Respectfully
submitted,
Erik
O. Autor
Vice
President, Int’l Trade Counsel
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