TWN Info Service on WTO and Trade Issues (Mar10/07)
12 March 2010
Third World Network

US stands firm on “zeroing”
Published in SUNS #6878 dated 8 March 2010

Geneva, 5 Mar (Kanaga Raja) -- The United States made clear this week that any Rules Agreement in the Doha Round must address in a "balanced and fair" manner the issue of "zeroing" where, according to the US, the Appellate Body's rulings against zeroing did not "accurately reflect" the results of the Uruguay Round, but created obligations that the US and other countries disagreed with.

The US did not identify the "other countries" that had the same view as the US.

Trade observers said that whether at the Dispute Settlement Body, or in the Rules negotiating group, the US in fact, appeared to be isolated on this issue.

Earlier, at the informal meeting of the Negotiating Group on Rules (2-3 March), a number of Members of the World Trade Organization (WTO) once again called for a total ban on the use of the "zeroing" methodology in the calculation of dumping margins in anti-dumping investigations.

The "zeroing" methodology, employed by the United States in its determination of dumping margins, has come up for challenge at the Dispute Settlement Body on numerous occasions and had been repeatedly struck down as being WTO-incompatible.

("Zeroing" is the term 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.)

According to trade officials, the Group discussed the bracketed texts in the Chair's current text covering four of the most contentious issues in the anti-dumping negotiations, namely, "zeroing", public interest, lesser-duty rule and sunset review.

The Chair, Ambassador Guillermo Valles Galmes of Uruguay, said that he did not see any change in the positions of Members. He however commended them on their "positive and constructive approach" during the meeting.

On the issue of "zeroing", Japan, on behalf of the Friends of Anti-Dumping Negotiations group (comprising Brazil, Chile, Colombia, Costa Rica, Hong Kong-China, Israel, Japan, Korea, Mexico, Norway, Singapore, Switzerland, Chinese Taipei, Thailand and Turkey), reiterated its call for a total ban on the use of the "zeroing" methodology.

According to trade officials, Japan said that "zeroing" is opposed by an overwhelming majority of Members, including both developed and developing countries.

China said that allowing the practice of zeroing would increase the level of protectionism, while Brazil said that zeroing goes against the Doha Round objective of enhancing trade flows, and should therefore be prohibited.

Switzerland said that zeroing affects the global supply chain. It noted that as a Member that has never used anti-dumping, its economy has done better in terms of jobs as compared to other industrialized countries.

India said that zeroing influences the dumping margins, and should not be allowed under any phase of the anti-dumping investigation.

According to trade officials, Singapore, on behalf of ASEAN, said that zeroing is not in line with the goals of the Doha Round.

The European Union said that zeroing inflates dumping margins, and affects more cases involving smaller margins. It added that there is now almost a prohibition on this practice due to Appellate Body rulings against it, but that it was preferable that the issue be clarified in the negotiations.

The United States said that the Appellate Body decisions against zeroing do not accurately reflect the results of the Uruguay Round, and have created obligations that the US and other countries disagree with.

According to trade officials, the US stressed that any final Rules agreement must address this issue, and be balanced and fair, and not simply be against one anti-dumping system.

The US further said that it respects WTO dispute settlement decisions, and that it is working on changes that would allow it to be in conformity with Appellate Body findings.

The Group also discussed the issues of "public interest" (taking account of other factors in anti-dumping actions, such as inputs from consumer groups) and the "lesser-duty rule".

Japan, speaking on behalf of the Friends of Anti-Dumping Negotiations members, said that consideration of public interest in anti-dumping actions should be made mandatory, as well as the lesser-duty rule, which would use the level of the anti-dumping duty adequate to remove injury to the domestic industry.

According to trade officials, India said that it had joined other Members in favour of making the lesser-duty rule mandatory.

Trade officials said that on the issue of "sunset review", many delegations noted a "philosophical divide" in the Group regarding automatic termination of anti-dumping measures after a certain period of time.

Under the Anti-Dumping Agreement, the duration of anti-dumping measures is set at five years, but can be extended after a so-called "sunset" review.

According to trade officials, Japan urged automatic sunset, noting less-stringent disciplines on sunset reviews.

The US said that the Group needed to take another look at ideas in this area in order to move forward.

New Zealand and Egypt said that anti-dumping action should be available to Members if conditions require its extension.

India, Canada and some other Members urged greater transparency and fairness in sunset investigations, said trade officials.

A number of Members, including India, Pakistan, Thailand, Peru, Korea, Indonesia and Morocco, supported in general an automatic termination of anti-dumping action after 10 years.

The Chair said that while he had not seen flexibility or change in positions during the meeting, he commended the positive and constructive approach of delegations. He further said that delegations have stretched the exploration of issues, and looked at them from different angles, adding that the fact that delegations are taking ownership of the process is very important.

According to trade officials, the Chair said that there are no signs of disengagement, nor of rigid positions in accepting the present status quo.

He expressed optimism that the Group would be prepared to deliver, should the overall situation in the Doha negotiations call for it. He said that he would provide more reflections and bid farewell at the next meeting.

The next meeting of the Group is scheduled for 29-30 April. +