U.S. to End Zeroing in AD/CVD Proceedings

February 7, 2012

On February 6, 2012, U.S. Trade Representative Ron Kirk announced that the United States signed an agreement with the European Union (EU) and Japan that will end a longstanding dispute at the World Trade Organization (WTO) over the United States’ use of “zeroing,” a methodology that generally increases antidumping and countervailing duties on imported goods. In 2006 and 2007, the WTO found the United States’ use of zeroing in certain antidumping proceedings inconsistent with the WTO’s rules. Following a subsequent WTO ruling which found that the United States had not brought its antidumping calculation methodology into compliance with WTO rules, the EU and Japan requested permission from the WTO to take retaliatory actions that would essentially block substantial volumes of U.S. exports from competing in the EU and Japanese markets. In exchange for the United States’ agreement to end the use of the zeroing found to be inconsistent with WTO rules, the EU and Japan have agreed to drop their claims for trade retaliation. 

Under the agreement, the United States has committed to completing the process of bringing its antidumping calculation methodology into compliance with the WTO rulings.  The U.S. Department of Commerce previously decided to limit the use of zeroing in original investigations and has been considering proposals for restricting the use of such methodologies in administrative reviews.  U.S. officials have yet to announce an effective date for bringing dumping calculations into compliance with the ruling, however, based on EU reports, it appears that the United States will begin applying a new methodology to calculate antidumping duty rates in antidumping reviews that are launched beginning in mid-February for all countries.  Using the previous “zeroing” methodology, the United States treated instances where the export price was higher than the home market price as zeros in its calculations in order to include only dumped prices in its dumping margin. Under the new methodology, the U.S. is expected to compare weighted-average normal values of goods subject to antidumping duty orders to weighted average export prices, which will allow sales above normal value to partially offset instances of sales below normal value, likely resulting in reduced dumping duty rates.  EU reports also indicate that new methodology is expected to be applied to goods imported into the U.S. from EU member countries after May 2010. It remains unclear whether the United States will apply such measures to goods imported from non-EU countries since May 2010. EU officials have noted, however, that in certain circumstances, the U.S. may use a different approach to the margin calculation.  

According to EU officials, the revised margin calculations will benefit companies impacted by ongoing administrative reviews as well as those that are not currently taking part in an administrative review, but that are subject to antidumping duty orders which used the zeroing methodology. This should result in dumping margins being recalculated so that, as early as June 2012, no EU exporter would be subject to antidumping duty margins affected by zeroing.

According to the Office of the U.S. Trade Representative (USTR), the U.S.’ agreement to comply with the WTO’s ruling on its calculation method for antidumping duties does not indicate that the United States agrees with the WTO finding.  The USTR maintains that the WTO Appellate Body did not apply the text of the Antidumping Agreement in reaching its findings on zeroing, and therefore exceeded its mandate. The USTR will continue to push for affirmation that zeroing is consistent with WTO rules during ongoing WTO negotiations, while simultaneously conforming its practices to comply with the WTO ruling.

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