Statement of Retail Industry Leaders Association

The Retail Industry Leaders Association (RILA) welcomes the opportunity to submit comments on what action, if any, the Ways and Means Committee should take with respect to the modification the Department of Commerce has proposed to its calculation of weighted average dumping margins in investigations.  RILA is the trade association of the largest and fastest growing companies in the retail industry.  Its members include retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales.  RILA members operate more than 100,000 stores, manufacturing facilities and distribution centers, have facilities in all 50 states, and provide millions of jobs domestically and worldwide.  Our members pay billions of dollars in federal, state and local taxes and collect and remit billions more in sales taxes.  Our members are also leading corporate citizens with some of the nation’s most far-reaching community outreach and corporate social responsibility initiatives.

The retail sector, along with the suppliers and customers that it serves, is an essential part of the U.S. economy.  Retailers meet the needs of U.S. consumers, and in doing so are essential drivers of the U.S. economy.  We also serve the global market for consumer goods and bring U.S. products to the foreign markets where they operate.  Retailers provide quality jobs at all employment levels with good benefits. The industry also creates opportunities for entry-level employment, part-time work, jobs for non-skilled workers, and management training for front-line workers. 

RILA believes that “zeroing” is a harmful and unfair practice that should be ended in all antidumping proceedings.  Zeroing refers to the practice of considering only those U.S. sales where normal value (usually the home market sales price) is greater than the U.S. price and ignoring transactions where the reverse occurs.  Zeroing artificially inflates antidumping margins by adjusting negative dumping comparisons to zero.  As a result, zeroing produces higher dumping duties than the data support.  These artificially increased duties make goods more expensive than they should be.  

RILA urges the Ways and Means Committee to support the U.S. Commerce Department’s efforts to end zeroing because it is an unjust policy and would allow the United States to comply with its obligations to the World Trade Organization (WTO).  RILA believes zeroing should be eliminated in all antidumping proceedings, not just in investigations.

“Zeroing” Distorts Markets for Imported and Domestic Goods

Because zeroing can artificially inflate the amount of dumping duties assessed on a product, it causes the price of imports to increase and reduces the availability of imported goods in the U.S. market. As a result, prices for all products are higher, whether imported or domestic, and whether or not subject to antidumping duties.  U.S. consumers and consuming industries pay more for products than they would without zeroing, whether they purchase imported or domestically produced products.  

If U.S. manufacturers are forced to pay more for production inputs, they are less competitive in the global market.  Many U.S. manufacturers face global competition and the key to their survival is access to adequate supplies of globally priced raw materials. Zeroing creates unfair distortion in the market for raw materials in question, and hurts more U.S. manufacturers than it helps.

The Retail Industry Needs and Deserves an Accurate Calculation of Dumping Duties

Both producers and consumers are entitled to an accurate calculation of antidumping

duties.  An accurate dumping calculation requires that all data be analyzed and considered when calculating whether dumping is occurring.  Negative price comparisons should be counted to arrive at a margin of dumping for all the sales of the subject product. 

RILA recognizes that U.S. trade remedy laws can play an appropriate role in U.S. trade policy.  Nevertheless, it is critical that those laws be administered fairly and objectively to prevent abuse to eliminate competition for solely protectionist purposes.  The Ways and Means Committee should insist that the calculation of antidumping duties be based on the entire facts of the case, not only those facts which support the notion that dumping has occurred.  Zeroing is unfair by definition because it excludes any fairly traded sales.  The abolition of zeroing would improve accuracy and fairness in the administration of the dumping law.

Zeroing Should Be Eliminated In All Antidumping Proceedings

The Department of Commerce has proposed abolishing zeroing in relatively narrow circumstances where “average to average” comparisons are used in initial investigations. The Department’s plan does not address zeroing in administrative reviews, or where the Department uses average-to-transaction or transaction-to-transaction comparisons.  RILA believes the Ways and Means Committee should encourage the Commerce Department to abolish zeroing in all antidumping calculations − including administrative reviews and sunset reviews – not simply for initial investigations. 

Zeroing Is Inconsistent With U.S. WTO Obligations

Zeroing has several times been ruled inconsistent with U.S. obligations to the WTO.  In October 2005, a WTO Panel ruled that zeroing in investigations is WTO-inconsistent when average-to-average comparisons are used (as is normally done).  In April 2006, the WTO Appellate Body ruled that zeroing in investigations and reviews violates WTO rules. On August 15, 2006, the WTO Appellate Body ruled that zeroing in another form

(“transaction-to-transaction” comparisons) violates the WTO Antidumping Agreement.

On January 9, 2007, the Appellate Body determined that zeroing is an “as such”

violation of the WTO Antidumping Agreement in investigations, administrative reviews and most other antidumping proceedings, because it violates the text of the Antidumping Agreement.

Conclusion

RILA believes that “zeroing” is a harmful and unfair practice that should be eliminated.  Certain Members of the Ways and Means Committee have indicated their support for a resolution to disapprove of the Commerce Department’s plan to eliminate zeroing and comply with several WTO rulings.  It would be a great disappointment if the first trade action taken by the 110^th Congress were to condemn an effort to incorporate fairness in the administration of U.S. trade remedy laws, and to comply with U.S. obligations to the WTO.  RILA encourages the Ways and Means Committee to actively support the abolishment of zeroing in all antidumping proceedings.  If you have any questions on this statement or require any assistance, please contact Lori Denham, Executive Vice President, Public Affairs, or Andrew Szente, Director, Government Affairs.