The World Trade Organization has called upon the United States to revise the calculating methodology used to set anti-dumping duties on certain frozen warmwater shrimp and diamond saw blades from China.

The case relates to the application by the United States of ‘zeroing’ calculating methodologies, a practice which has been criticized internationally as its allows nations to maximize the import duties placed on goods entering their nation's domestic market. Anti-dumping duties are imposed to ensure that goods are not sold abroad below the price that they would sell in the domestic market. Importing countries are allowed to impose duties to inflate the selling price.

Zeroing is a calculation method in anti-dumping investigations. Multiple comparisons of the export price and the home market price of an allegedly dumped good are made. However, when aggregating the results of such comparisons to calculate the level of dumping for the product as a whole, the investigating authority ignores results where "negative dumping" occurs (when the products is sold on the export market at above the home market price). The effect of this is that the margin of dumping is increased, often substantially, thus inflating the amount of anti-dumping duty paid.

In the latest case, China alleged that in applying zeroing methodologies on certain frozen warmwater shrimp, the United States had acted in a way not consistent with its obligations under Article 11.3 of the Anti-Dumping Agreement.

China initiated consultations with the United States regarding shrimp duties on February 28, 2011 and on July 22 that year, it followed this up by requesting complementary consultations with the United States with regard to zeroing methodologies used again by the US Department of Commerce (USDOC) to calculate anti-dumping measures on diamond sawblades and parts thereof from China.

In its recent ruling on the matter, published in a report on June 8, 2012, the Panel appointed by the World Trade Organization noted that the United States had not disputed China's argument. The Panel confirmed that the use of zeroing methodologies by the USDOC in calculating anti-dumping margins had infringed international trade rules in this area.

In its conclusions, the Panel said that, “Pursuant to Article 19.1 of the Dispute Settlement Understanding ... we recommend that the United States bring its measures into conformity with its obligations under this Agreement.”

June 14, 2012

Source: Reuters

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