EGYPTIAN ANTI-DUMPING PROPOSAL UNDER FIRE BECAUSE OF 'ZEROING'

An Egyptian proposal to reform WTO rules for anti-dumping investigations has raised the ire of several countries, which argue that it would open the door to legalising a controversial duty calculation practice known as 'zeroing'.

The WTO allows Member goverments to place extra duties on goods exported at a price lower than what they command in their home market. However, before they can do so, government authorities in the importing country need to prove that the goods in question are indeed being 'dumped'. They also need to calculate the 'dumping margin' (the gap between home market and export prices), and show that the dumped goods are injuring the competing domestic industry.

Currently, the WTO anti-dumping agreement requires government authorities that suspect dumping to compare home market costs and export prices either in terms of weighted averages, or on a 'transaction-to-transaction' basis.

Egypt's proposal (TN/RL/GEN/152), dated 5 October, effectively called for modifying WTO rules to explicitly allow some export transactions to be ignored when carrying out these calculations, so that average home market costs can be compared to only a subset of export-import transactions. It said that this would be responsive to situations where only certain "product types" are dumped, or are dumped especially severely. It would also respond to "targeted dumping" limited to certain purchasers or geographical areas, Egypt claimed.

Referring to itself as "a relatively new user of the anti-dumping instrument," Egypt said that it would benefit from clarified rules.

During last week's session of the Negotiating Group on Rules, sources report that delegates from countries including Canada, Chile, China, Korea, Japan, India, Israel, Malaysia, Switzerland, Taiwan and Thailand expressed opposition to the Egyptian paper, arguing that it would legalise 'zeroing'. This refers to a controversial methodology used by the US to calculate dumping margins, in which government 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.

Critics say that 'zeroing' allows Washington to impose higher anti-dumping duties than might otherwise have been possible, and point to repeated WTO rulings against the practice (see BRIDGES Weekly, 3 October 2007). The US, on the other hand, wants zeroing to be effectively legalised (TN/RL/GEN/147). Australia said that zeroing could be permitted under certain circumstances.

Chair Ambassador Guillermo Valles Games (Uruguay) said he would likely present Members with a draft negotiating text by early December.

ICTSD reporting.