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DISPUTE SETTLEMENT: DISPUTE DS294

United States — Laws, Regulations and Methodology for Calculating Dumping Margins (Zeroing)

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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Summary of the dispute to date  back to top

The summary below was up-to-date at
See also: One-page summary of key findings of this dispute

Compliance Panels established by DSB/reports not yet circulated

Complaint by the European Communities.

The European Communities considered that there was a disagreement as to the existence or consistency with a covered agreement of the measures taken to comply with the rulings and recommendations of the DSB. Therefore, on 9 July 2007, the European Communities requested consultations under Article 21.5. Brazil and Korea requested to join the consultation. On 13 September 2007, the European Communities requested the establishment of an Article 21.5 panel. At its meeting on 25 September 2007, the DSB agreed to refer, if possible, the matter raised by the European Communities to the original panel. India, Japan and Mexico reserved their third-party rights. Subsequently, Korea, Norway, Chinese Taipei and Thailand reserved their third-party rights. On 28 November 2007, the European Communities requested the Director-General to compose the Panel. On 30 November 2007, the Director-General composed the Panel.

Appellate Body and Panel Reports Adopted

On 12 June 2003, the European Communities requested consultations with the United States concerning a methodology used by the US, among others, in the calculation of dumping margins, known as “zeroing”. The “zeroing” methodology, generally speaking, involves treating specific price comparisons which do not show dumping as zero values in the calculation of a weighted average dumping margin.

The request concerns specific provisions of the US Tariff Act of 1930 and the Department of Commerce implementing regulation as well as US Department of Commerce methodology and its determinations in specific cases involving products imported from the EC.

The EC has indicated specific aspects of the zeroing methodology that it will raise in the consultations, including the way in which it is applied in calculating dumping margins, its impact on determinations of injury, its impact in cases which would otherwise be de minimis, and the level of the dumping margins in 21 specific US anti-dumping cases.

The EC has attached to its request details of those specific cases, alleging that in each of them the US used zeroing methodology. Most of the products in these cases were steel. The EC asserts that in each case the dumping margin without zeroing would have been lower, de minimis or negative. In the EC’s view, the Act, regulation, methodology and these specific determinations appear to be inconsistent with the United States’ obligations under the following WTO provisions:

• Articles 1, 2.4, 3, 5.8, 9.3, 9.5, 11, 18.3 and 18.4 of the Anti-Dumping Agreement;
   
• Articles VI:1 and VI:2 of the GATT 1994;
   
• Article XVI:4 of the WTO Agreement.

On 27 June 2003, India and Korea requested to join the consultations. On 30 June 2003, Japan and Mexico requested to join the consultations.

On 8 September 2003, the European Communities requested further consultations with the United States. The EC wished to add ten more cases to the list of specific cases.

The EC indicated specific aspects of the zeroing methodology that it will raise in the additional consultations, including the way in which it is applied in calculating dumping margins, its impact on determinations of injury, its impact in cases which would otherwise be de minimis, and the level of the dumping margins in specific US anti-dumping cases.

In the EC’s view, these additional specific determinations appear to be inconsistent with the US obligations under the same WTO provisions mentioned above.

On 25 September 2003, Mexico requested to join the consultations.

On 5 February 2004, the EC requested the establishment of a panel. On 16 February 2004, the EC submitted a revised request for the establishment of a panel. At its meeting on 17 February 2004, the DSB deferred the establishment of a panel. At its meeting on 19 March 2004, the DSB established a panel. Argentina, Brazil, China, India, Japan, Korea, Mexico, Norway and Chinese Taipei reserved their third-party rights. On 23 March 2004, Hong Kong, China reserved its third-party right. On 30 March 2004, Turkey reserved its third-party right. On 27 October 2004, the Panel was composed.

On 22 March 2005, the Chairman of the Panel informed the DSB that it would not be possible for the Panel to complete its work in six months in light of the schedule which had been agreed after consultations with the parties, and that the Panel expected to complete its work in July 2005. On 1 July 2005, the Panel informed the DSB that due to its continued consideration of the issues in this dispute, it would not be possible for the Panel to complete its work by the end of July, and that the Panel expected to complete its work in September 2005.

On 31 October 2005, the Panel Report was circulated to Members. In its Report:

• The Panel unanimously upheld the claims of the European Communities as they relate to the specific determinations of dumping made by the United States Department of Commerce in the 15 original investigations at issue. The Panel also unanimously upheld the claims of the European Communities in respect of what was described by the Panel as the United States “methodology” of zeroing in original investigations. In doing so, the Panel found that the United States “methodology” of zeroing was a “norm” capable of being challenged in WTO dispute settlement proceedings.
    
• The Panel unanimously rejected the claims of the European Communities with respect to United States law, finding that the provisions in question did not speak to the issue of zeroing.
    
• The Panel rejected all of the claims of the European Communities in the context of reviews of existing measures. However, one member of the Panel dissented from this aspect of the Panel’s findings. The dissenting member of the Panel would have upheld the claims of the European Communities as they relate to the 16 specific determinations of dumping in reviews as well as the United States “methodology” of zeroing in the context of reviews. The dissenting member of the Panel would also have found one provision of a United States regulation to be WTO-inconsistent in respect of reviews.
    
• The Panel recommended that the DSB request the United States to bring its measures into conformity with its obligations under the AD Agreement.

At its meeting of 6 December 2005, following a joint request by the parties, the DSB agreed to extend the time period for the adoption of the panel report until 31 January 2006.  On 17 January 2006, the European Communities notified its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the Panel.  On 30 January 2006, the United States notified its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the Panel. On 15 March 2006, the Chairman of the Appellate Body informed the DSB that it would not be able to circulate its report within the 60-day period due to the time required for completion and translation of the report, and that it estimated it would be circulated to WTO Members no later than 18 April 2006.

On 18 April 2006, the Appellate Body report was circulated to Members. The Appellate Body reversed the Panel's finding that zeroing, as applied by the USDOC when assessing final anti-dumping duty liability for particular importers in the administrative reviews at issue, is not inconsistent with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.

The Appellate Body upheld the Panel's finding that the zeroing methodology, as it relates to original investigations, is inconsistent, as such, with Article 2.4.2 of the Anti-Dumping Agreement.

On 9 May 2006, the DSB adopted the Appellate Body report and the Panel report, as modified by the Appellate Body report.

Implementation Status of Adopted Reports

At the DSB meeting on 30 May 2006, the United States announced that it intended to implement the DSB recommendations and rulings but that they would need a reasonable period of time to do so. On 28 July 2006, the United States and the European Communities informed the DSB, pursuant to Article 21.3(b) of the DSU, that they had agreed that the reasonable period of time for the United States to implement the DSB recommendations and rulings shall be 11 months, expiring on 9 April 2007.

At the DSB meeting on 24 April 2007, the United States said that after the correction of a clerical error in the determination of one investigation, they would have fully implemented the DSB recommendations and rulings. The European Communities commended the United States for the steps it had taken to secure compliance, but said it was questionable if it had fully implemented the DSB recommendations and rulings.

On 4 May 2007, the United States and the European Communities notified the DSB of an Understanding regarding procedures under Article 21 and 22 of the DSU. On 9 July 2007, the European Communities requested consultations under Article 21.5 of the DSU. On 20 July 2007, Brazil and Korea requested to join the consultations. On 13 September 2007, the European Communities requested the establishment of an Article 21.5 panel. At its meeting on 25 September 2007, the DSB agreed, if possible, to refer the matter raised by the European Communities to the original panel.

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