U.S. reaches deal to avoid Japan, EU trade sanctions

(Reuters) - The United States said on Monday it has struck a deal sparing U.S. exporters from hundreds of millions of dollars in European and Japanese trade retaliation in a dispute over how Washington calculates anti-dumping duties on steel and other goods.

"I am proud to announce today that we have finally put these burdensome and potentially damaging trade disputes behind us," U.S. Trade Representative Ron Kirk said in a statement on the "zeroing" deal struck with the European Union and Japan.

"What this means for the American people and the country as a whole is that American farmers and businesses can invest in job-creating export markets without the uncertainty of possible trade retaliation," Kirk said.

The United States has lost numerous cases at the World Trade Organization in the past decade over a practice called "zeroing" used to calculate anti-dumping duties on products it says are being sold in the United States at less than fair value.

After Washington took only partial steps to comply with the rulings, Brussels and Tokyo asked the WTO for permission to impose sanctions in order to induce compliance.

"This understanding solves this longstanding dispute," said EU Trade Commissioner Karel De Gucht said in a statement that estimated the deal could collectively save dozens of European exporters about $15 million a year.

"It will bring immediate relief to EU exporters who will no longer have to pay excessive anti-dumping duties; some of them will not pay any anti-dumping duties at all," he said.

Countries typically calculate anti-dumping duties by comparing prices on different batches of goods.

But in zeroing, authorities ignore examples where the price of the imported good is actually higher than the domestic one, which critics says unfairly inflates the duties.

The United States has long defended the practice and still believes zeroing is consistent with global trade rules, despite its string of losses at the WTO.

Under the new deal, Washington will finally completely eliminate zeroing in duties against steel, bearings, chemicals and food products from the EU and Japan, in exchange for Brussels and Tokyo dropping their retaliation claims.

The United States dropped the use of zeroing in new anti-dumping investigations in 2007 but continued it administrative reviews of existing orders.

Starting next week, Washington will use a new methodology to calculate anti-dumping duty rates in all new administrative reviews of existing anti-dumping orders.

In addition, anti-dumping duty rates on goods imported into the United States after May 2010 also will be determined under the new methodology without zeroing, the EU said.

By June 2012, no EU exporter should be subject to an anti-dumping duty affected by zeroing, it said.

The trade representative's office said the change also would affect duties on imports from other countries, such as Brazil, Mexico and Vietnam, that have challenged zeroing at the WTO but have not yet been given permission to impose retaliation.

The United States intends to continue to push in negotiations at the WTO for the right to use zeroing.

But "in these circumstances and at this time, the compliance actions announced today are important in confirming U.S. support for the rules-based system that the WTO provides," it said.

Source: Reuters