DESPITE DISPUTE RULINGS, 'ZEROING' STILL AT FOREFRONT OF ANTI-DUMPING TALKS

The US' attachment to a practice for calculating anti-dumping duties known as 'zeroing' remains controversial, as the chair of the Doha Round rules negotiations moves to prepare draft texts to serve as the basis for further discussion among WTO Members.

Several countries argue that anti-dumping duties are often inappropriately imposed for protectionist ends, and want the rules on their use tightened.

Chair Ambassador Guillermo Valles Galmés (Uruguay) told the negotiating committee on 28 September that he would only issue texts after the chairs of the agriculture and industrial goods committees revise the draft deals that they presented to Members in July. Nevertheless, many delegates want to see as much progress as possible on issues such as rules and trade facilitation, so that they are poised for agreement in the event of a breakthrough on agriculture or non-agricultural market access (NAMA).

Valles Galmés has been meeting informally with groups of Members to discuss anti-dumping. Like all negotiating committee chairs, he will have to tread carefully when deciding how his texts should address issues on which Members are far from consensus.

In the rules negotiations, 'zeroing' is one such issue. When using this methodology to calculate the extent to which imports are being 'dumped' - that is, sold in the US at below the price they command in their home market - US trade authorities simply ignore ('zero out') instances where prices are lower in the US than in the export market, and only consider comparisons where the 'dumping margins' are positive. This make it possible for US companies to secure higher duties against dumped competing imports than would otherwise have been possible.

WTO dispute panels and the Appellate Body have repeatedly ruled against the practice, in cases brought by Members including the EU, Japan, Canada, and Ecuador (see BRIDGES Weekly, 17 January 2007).

US negotiators, however, maintain that these rulings have been based on inappropriate interpretations of WTO rules. They point out that the Agreement on Anti-Dumping does not specify whether 'non-dumped comparisons' (those that are now zeroed out) must be 'offset' when calculating anti-dumping margins.

A US proposal in June (TN/RL/GEN/147) would have amended the AD Agreement to explicitly make offsetting unnecessary - in effect, formally legalising zeroing. However, it met with strong opposition from countries that have opposed the practice.

Trade remedies are a contentious issue in the US Congress as well, where many lawmakers are opposed to reforms that could be unpopular with local manufacturers. This was illustrated once again last week when House trade subcommittee chair Sander Levin (Democrat-Michigan) said that he "cannot imagine Congress approving a Doha Round trade agreement" that reverses "the common and longstanding practice of 'zeroing'." He added that protecting zeroing should be the foundation of an agreement in the Doha Round rules negotiations.

The loose alliance of countries seeking to tighten the rules on anti-dumping duties - dubbed the 'friends of anti-dumping'- includes Chile, Hong Kong, Taiwan, Norway, and Israel.

Valles Galmés told the rules committee last week that even though dispute rulings had addressed the issue of zeroing, it could not simply be excluded from a text.

One trade diplomat said that zeroing would be a tough issue for the chair to address, in light of the sharp divisions among Members. The official suggested that one potential approach might be to include a footnote describing "one Member's" views on zeroing, which could then be explored further.

Indeed, the rules chair himself has urged Members not to see his draft texts as "silver bullets that will serve as the basis for a dramatic and immediate breakthrough." Reporting on progress in the talks to the entire WTO Membership in late July, Valles Galmés said that his texts would be "technical papers that could serve as the basis for an intensive discussion." He expressed hope that the discussions would allow him to revise the texts multiple times in order to work towards an acceptable deal.

The next meeting of the negotiating group on rules is set to start on 15 October.

ICTSD reporting.