Rebar Trade Action Coalition
February 7, 2007

Committee on Ways and Means
The United States House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

Dear House Ways and Means Committee:

On behalf of the Rebar Trade Action Coalition (consisting of Nucor Corporation, Gerdau Ameristeel, Inc. and Commercial Metals Company), and in response to the Committee’s January 31, 2007 advisory, we hereby offer comments regarding modifications to the methodology currently used by the Department of Commerce (“the Department”) in calculating dumping margins in antidumping investigations. Specifically, the Department proposes to abandon its long-standing “zeroing” methodology. Congress and the Committee should oppose this change, for three simple reasons. First, the law itself, as written by Congress, does not permit the change. Second, the Department’s proposal would not act to protect vulnerable U.S. industries from the effects of dumping. Third, the change is neither a necessary nor an appropriate response to recent decisions of the Appellate Body of the World Trade Organization (“WTO”).

Since long before the existence of the WTO, the Department has calculated dumping margins using a methodology known as “zeroing” methodology. Using this methodology, the dumping margin on individual, non-dumped sales is set to zero. The WTO has recently concluded that this methodology is not compliant with the WTO Agreements. In response, the Department proposes to use the negative margins on non-dumped sales to offset the positive margins on those individual sales in which merchandise is dumped on the U.S. market. 

However, it is clear that the Department cannot legally abandon its zeroing methodology. Zeroing is inherent in the text of the Tariff Act of 1930. Without it, certain provisions of the law are rendered meaningless. Thus, if zeroing is to be abandoned, the only legal method of doing so is through amendment of the statute. The Department’s proposal to abandon zeroing without a concurrent change in the statutory language impinges on Congressional authority, and flies in the face of years of court cases acknowledging the appropriateness of zeroing under the statute.

Further, if zeroing is abandoned, the Department’s antidumping calculations will necessarily understate the effects and extent of dumping.  Every dumped sale is harmful to United States industry, regardless of whether foreign producers also sell merchandise at non-dumped prices.  As Nucor is well aware from its experience in numerous antidumping investigations, sunset reviews, and administrative reviews, antidumping relief is difficult to achieve in the first place, and should not be further diluted through inappropriate calculation changes.  Illegal dumping poses harm to U.S. industry whenever it occurs, placing domestic producers at a competitive disadvantage to those foreign competitors who would unfairly price their sales. By offsetting dumped sales with the negative dumping margins on nondumped sales, Congress and the Department of Commerce send the message that dumping is permitted, and that U.S. industry cannot expect reasonable protection against unfair competition.

Finally, there is simply no reason to change the Department’s longstanding practice to accommodate the views of the WTO Appellate Body. The Appellate Body’s decisions are not binding on the United States, and are not part of U.S. law. Further, the Appellate Body’s decisions on zeroing are a particularly egregious example of overreaching.  Zeroing existed before the WTO Agreements, and before the Uruguay Round Agreements Act (“URAA”) put those agreements into effect. Despite this, zeroing was not addressed by either the WTO Agreements or the URAA. In fact, as the Administration noted in comments filed at the WTO, the Appellate Body’s recent holdings in this regard improperly renders superfluous the negotiated language of the WTO Antidumping Agreement, as well as overturning almost 50 years of international jurisprudence on the calculation of dumping margins.

In conclusion, the Committee and Congress as a whole should oppose the changes proposed by the Department of Commerce. The proposal would violate the plain language of the Tariff Act, would fail to protect U.S. industry from dumping, and would unnecessarily impose the views of the WTO Appellate Body on operation of the United States’ antidumping duty laws.  Accordingly, Congress should reject this change, and indicate to the Department of Commerce that zeroing must be continued.

Sincerely,

John R. Shane