TWN Info Service
on WTO and Trade Issues (Jan10/06)
WTO again strikes
down US "zeroing" practice again
Geneva, 25 Jan (Kanaga Raja) -- The Dispute Settlement Body (DSB) of the World Trade Organization has handed down yet another ruling holding that the United States had acted inconsistently with its obligations under the Anti-Dumping (AD) Agreement in using the "zeroing" methodology to determine dumping margins - this time, in its anti-dumping investigations of polyethylene retail carrier bags from Thailand.
In a ruling handed
down on 22 January, the panel recommended that the DSB request the
In the dispute, the
It is not very clear why the two sides could not settle the dispute on this basis - excepting for the benefit it conferred to trade lawyers on both sides, and finding some work for the Secretariat and the three panelists.
This time, the case
was brought by
("Zeroing" is used when a Member, in an anti-dumping investigation or finding of "dumping" and "margin of dumping" that results in a levy of countervailing duties, for comparison values, uses the values of exports below the "normal" value, but ignores exports where prices are above the "normal" value.)
Explaining the factual
aspects of the dispute, the panel said that the measures at issue in
the dispute were the anti-dumping order imposed by the
(i) identified different "models," i. e., types, of products based on the most relevant product characteristics;
(ii) calculated weighted
average prices in the
(iii) compared the
weighted average normal value of each model to the weighted average
(iv) calculated the dumping margin for an exporter by summing up the amount of dumping for each model and then dividing it by the aggregated United States price for all models; and
(v) set to zero all negative margins on individual models before summing the total amount of dumping for all models.
In a written submission
to the panel, the
(In a posting on the
International Economic Law and Policy Blog - http://worldtradelaw.typepad.com/ielpblog/
- US trade lawyer Simon Lester said that it was hard to know what to
make of a WTO panel decision such as in this panel report. In a nutshell,
(In an agreement with Thailand on the procedures relating to the dispute, the US said that it will not contest Thailand's claim that the measures identified in the request for the establishment of a panel are inconsistent with the first sentence of Article 2.4.2 of the Anti-Dumping Agreement on the grounds stated in United States - Final Dumping Determination on Softwood Lumber from Canada.
(According to the agreement between the US and Thailand, provided that the panel's finding is limited to a finding that the measures identified in the attached request for the establishment of a panel are inconsistent with the first sentence of Article 2.4.2 of the Anti-Dumping Agreement, the parties agree that, pursuant to Article 21.3(b) of the DSU, the reasonable period of time for bringing each such measure into conformity with the Anti-Dumping Agreement will be six months, beginning on the date on which the DSB adopts the report of the panel.
(According to Lester
in the IELP blog post, the
In its ruling, the panel was of the view that the evidence is sufficient to establish that the USDOC: (I) identified different "models," i. e., types, of products based on the most relevant product characteristics, (ii) calculated weighted average prices in the United States and weighted average normal values in the comparison market on a model-specific basis, for the entire period of investigation, (iii) compared the weighted average normal value of each model to the weighted average United States price for that same model, and (iv) calculated the dumping margin for an exporter by summing up the amount of dumping for each model and then dividing it by the aggregated US price for all models.
The panel recalled
that it has already found that
In light of these considerations, and in the absence of any denial by the United States, the panel said that it was satisfied that Thailand has demonstrated that the methodology applied by the USDOC in calculating the margins of dumping that were not based on total facts available in the Order imposing anti-dumping duties on certain polyethylene retail carrier bags from Thailand, and the Final Determination (as amended) leading to that Order, was the same in all legally relevant respects as the methodology that was found by the Appellate Body in US - Softwood Lumber V to be inconsistent with Article 2.4.2 of the Anti-Dumping Agreement.
The panel said that it has carefully considered the Appellate Body's reasoning in US - Softwood Lumber V and taken into consideration the finding of the panel in US - Shrimp (Ecuador) that there is a consistent line of Appellate Body Reports finding that "zeroing" in the context of the weighted average-to-weighted average methodology in original investigations is inconsistent with Article 2.4.2, first sentence.
Given that the issues raised by Thailand's claim are identical in all material respects to those addressed by the Appellate Body in Softwood Lumber V, the panel said that it was satisfied that Thailand has established a prima facie case that the use of zeroing by the USDOC in the calculation of the margins of dumping in respect of the measures at issue is inconsistent with the United States' obligations under Article 2.4.2 of the Anti-Dumping Agreement because the USDOC did not calculate these dumping margins on the basis of the "product as a whole", taking into account all comparable export transactions in calculating the margins of dumping.
The panel noted also
In light of its finding
The panel therefore
concluded that the USDOC, by using "zeroing" in the manner
described above, has acted inconsistently with the
In its conclusions and recommendation, the panel said that the United States acted inconsistently with Article 2.4.2, first sentence, of the Anti-Dumping Agreement by using "zeroing" in the Final Determination, as amended, and the Order to determine the dumping margins for individually investigated Thai exporters whose margins of dumping were not based on total facts available.
Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement.
Accordingly, the panel
concluded that, to the extent the
The panel therefore
recommended that the Dispute Settlement Body request the