Once Again the WTO Reprimands the US From Employing Zeroing in Antidumping Administrative Reviews

The World Trade Organization (WTO) judges announced on July 11, 2011, that the United States is violating global trade rules in using its controversial "zeroing" method to continue impose anti-dumping tariffs on shrimp from Vietnam.

The decision by a three-member panel was the latest of a series in which zeroing — a framework for calculating duties on goods sold at less than their price on the exporter's home market — has been found illegal under WTO agreements.

The case which has been percolating since the beginning of 2010, finally confirmed what the trade community has known for a considerable length of time that the US’s continued use of zeroing is deliberately violating its obligations under the Antidumping Agreement.  Why the US continues to zero when it has been repeatedly told not to is a question not only for this trade practioner but to the rest of the trade community as well.

Vietnam's claims with respect to zeroing were upheld by the WTO Panel in that (1) The Panel upheld Viet Nam's claim that the USDOC's use of zeroing to calculate the dumping margins of respondents selected for individual examination in the second and third administrative reviews was inconsistent with Article 2.4 of the Anti-Dumping Agreement. And (2)    The Panel upheld Viet Nam's claims that the United States' “zeroing methodology”, as it relates to the use of simple zeroing in administrative reviews, is inconsistent with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994. The Panel first concluded that Vietnam had established the existence of the “zeroing methodology” as a rule or norm of general and prospective application. The Panel then relied on prior Appellate Body rulings to conclude that simple zeroing in administrative reviews is, “as such”, inconsistent with these two provisions.

Thus the Panel recommended that the United States brings its measures into conformity with its obligations under both the Antidumping Agreement as well as the Dispute Settlement Understanding.  The problem is that this is not the first nor will it  be the last of the cases before the WTO where it has found the U.S. to be in violation of its international obligations when it comes to zeroing.  When will the U.S. learn from its repeated reprimands, the readers’ guess is as good as this practioners.  However, one thing is certain the U.S. will not stop its use of zeroing unless and until it harms their overall trade strategy.

The U.S. continues to zero in reviews because it hides behind the U.S. statute governing trade remedies and specifically antidumping remedies which permits it to ignore WTO obligations unless and until there is a change in the actual language of the statute.  Here, the U.S. keeps finding the existence of dumping in a multitude of cases because it is able to under its own statute.  Thus, the question becomes, why change a statute when it helps the sovereign nation to apply it in the manner that helps it?  The answer is that the statute will change when the U.S. no longer sees a benefit to zeroing in reviews and it no longer benefits it.