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The US finds its controversial practice of ‘zeroing' in the line of fire again, as China on Monday initiated WTO dispute proceedings over Washington's anti-dumping duties on Chinese shrimp.

Despite having lost several WTO cases on the issue, most recently against Brazil for duties on orange juice, Washington responded coldly to China's challenge.

"The decision now by China to pursue new claims against the United States on zeroing only complicates resolution of this issue," said Nefeterius McPherson, a spokesperson for the US trade representative's office.

WTO rules authorise governments to levy ‘anti-dumping' duties on goods it determines to be ‘dumped', i.e., sold abroad for less than  the price they command in the exporter's home market, if they are injuring domestic competitors.  ‘Zeroing' refers to the practice by US commerce authorities of ignoring (or ‘zeroing out') instances where imported goods cost more in the US than in the exporter's market. Critics of zeroing argue that it artificially inflates anti-dumping margins, making them even more trade-restrictive.  Last December, the US Department of Commerce proposed to end the use of zeroing in annual reviews of existing anti-dumping measures, in an effort to stave off retaliation from major trading partners (for more information on that proposal see here).   The proposal is still open for public comment, but has drawn the ire of some lawmakers and industry representatives, according to Inside US Trade, a Washington-based trade publication.

China has decided to pursue what it sees as a legitimate claim. "Once the cancellation of zeroing was approved officially, it should have applied to all global trade cases," Zhang Aiqing, a former director of the department of treaty and law in the commerce ministry, told China Daily.

At issue in the complaint are US anti-dumping duties on Chinese shrimp that date back to 2005. Initially fixed in the realm of 27 to 82 percent, the duties were dropped to 5 to 8 percent after Beijing  successfully appealed to the US International Trade Commission (ITC), the quasi-judicial body that determines the rate of duties. Nevertheless, China's Ministry of Commerce complains that the levies remain in violation of WTO rules, and continue to impair the interests of its shrimp producers.

The US ITC will next month vote on whether to extend its duties on imported shrimp from China and other countries for an additional five years. US shrimpers in the Gulf of Mexico are still reeling from the effects of last year's massive BP oil spill, and have pushed for the extension of the duties.

China's request for consultations is the first step in the WTO dispute settlement process. If the two sides cannot reach a negotiated settlement within 60 days, Beijing will have the option of requesting a panel to hear the dispute.

ICTSD reporting: "USTR statement regarding China's decision to request WTO consultations on shrimp antidumping measures," OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, February 2011; "US irked by China's shrimp duty challenge at WTO," REUTERS, 28 February 2011; "China calls for proper settlement of disputes over US anti-dumping duties on Chinese shrimp," XINHUANET.COM, 28 February 2011; "China takes US to WTO," CHINA DAILY, 1 March 2011;  "Congress urges commerce to alter zeroing proposal, preserve flexibility," INSIDE US TRADE, 25 February 2011.