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Despite vigorous US protestations about judicial overreach, rulings condemning zeroing continue to pile up. An Appellate Body judge has called for an end to the debate.
Zeroing refers to a method of calculating anti-dumping and countervailing duties that only takes into account those occasions where a given good is sold for less in an export market than in the country of origin. The method assigns a value of ‘zero’ to those instances where the opposite is true and thus increases both the likelihood of a positive dumping finding and the value of the punitive duty (Bridges Year 12 No.6 page 11).
On 4 February, the Appellate Body for the first time ruled against ‘ongoing conduct’ in the application of zeroing, rather than specific reviews where the method had been used. The US had forcefully contested the legality of this approach, but the AB found that “the continued use of the zeroing methodology in successive proceedings in which duties resulting from the [...] anti-dumping duty orders are maintained, constitute ‘measures’ that can be challenged in WTO dispute settlement.” The case was brought by the EU following a panel ruling that had found the use of zeroing permissible in anti-dumping order reviews. Two other panel decisions with similar conclusions have also been overturned on appeal.
Clearly exasperated by the endless litigation, an Appellate Body member drafted a Concurring Opinion, which stated in part:
“In matters of adjudication, there must be an end to every great debate. The Appellate Body exists to clarify the meaning of the covered agreements. On the question of zeroing it has spoken definitively. Its decisions have been adopted by the DSB. The membership of the WTO is entitled to rely upon these outcomes. [...] The range of meanings that may constitute a permissible interpretation does not encompass meanings of such wide variability, and even contradiction, so as to accommodate the two rival interpretations. One must prevail. The Appellate Body has decided the matter. At a point in every debate, there comes a time when it is more important for the system of dispute resolution to have a definitive outcome, than further to pick over the entrails of battles past. With respect to zeroing, that time has come.”
US Lawmakers Protests the Findings
The chairmen of the US House of Representatives Ways and Means Committee and the Trade Sub-committee , Charles Rangel and Sander Levin, said in a joint statement that the Appellate Body had “mistakenly asserted the authority to resolve disagreements that the WTO Members were unable to resolve through negotiation. [...] In fact, there are times when the text of an agreement simply does not address an issue. In those cases, the Appellate Body must recognise that sovereign nations simply have not bound themselves. [...] Ultimately, this will make it more difficult to reach new agreements to liberalise trade. As we strive to complete the Doha Round of WTO negotiations, this report should give all negotiators cause for concern.” Similar comments have been by scores of US politicians over the past few years. Joe Mayer, who chairs the Committee to Support US Trade Laws, said his group would work with the new Congress and administration “to see that the problem of WTO AB activism is addressed in the negotiations and not through any change to existing US law or practice.”
Still More to Come
In January, a compliance panel found that the US had not implemented WTO rulings on the use of zeroing in administrative reviews of anti-dumping orders dating back to 2006. At issue was whether the US could use the method when setting definitive anti-dumping duties even after the expiry of its ‘reasonable period’ for implementing the rulings if the goods in question had entered US territory before the end of the compliance period. Agreeing with complainant EU, the panel ruled that zeroing must end when the reasonable period does, irrespective of the goods’ date of entry (WT/DS294/RW). Both sides have since appealed the decision.
Another compliance report on zeroing, this time requested by Japan, is expected shortly.
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