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DISPUTE SETTLEMENT: DISPUTE DS350

United States — Continued Existence and Application of Zeroing Methodology

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

Summary up-to-date at

Panel Reports currently under appeal

Complaint by the European Communities.

On 2 October 2006, the European Communities requested consultations with the United States concerning its continued application of the “zeroing” methodology. In particular, the request for consultations concerns (i) the implementing regulation (19 CFR Section 351) of the US Department of Commerce, especially section 351.414(c)(2);  and (ii) the Import Administration Antidumping Manual (1997 edition), including the computer program(s) to which it refers. The European Communities claims that, based on these regulations, the US Department of Commerce continued to apply the “zeroing” methodology in the determinations of the margin of dumping in the final results of the anti-dumping administrative reviews concerning various EC goods, and any assessment instructions issued pursuant to those final results. The European Communities considers that the relevant US regulations, zeroing methodology, practice, administrative procedures and measures for determining the dumping margin in reviews are inconsistent with:

• Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.3, 9.5, 11, including Articles 11.2 and 11.3, and 18.4 of the Anti-Dumping Agreement;
    
• Articles VI:1 and VI:2 of the GATT 1994;  and
    
• Article XVI:4 of the WTO Agreement.

On 9 October 2006, the European Communities, in a further request for consultations, identified additional administrative reviews in which the US Department of Commerce applied the “zeroing” methodology in calculating the margin of dumping, and requested that those cases be added to the list.

On 10 October 2006, Japan requested to join the consultations. On 12 October 2006, Thailand requested to join the consultations. On 13 October 2006, Brazil and India requested to join the consultations. On 10 May 2007, the European Communities requested the establishment of a panel. At its meeting on 22 May 2007, the DSB deferred the establishment of a panel. At its meeting on 4 June 2007, the DSB established a panel. Chinese Taipei, India, Japan and the United States reserved their third-party rights. Subsequently, Brazil, China, Egypt, Korea, Norway and Thailand reserved their third-party rights. On 29 June 2007, the European Communities requested the Director-General to compose the Panel. On 6 July 2007, the Director-General composed the Panel.

On 1 October 2007, 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 scheduling conflicts. The Panel expects to complete its work in June 2008.

Following the resignation on 8 November 2007 of one of the panelists, the parties agreed on the appointment of a new panelist on 27 November 2007. On 14 December 2007, the Chairman of the Panel informed the DSB that due to the resignation of one of the panelists, further delays were unavoidable and that the Panel expects to complete its work in September 2008.

On 1 October 2008, the Panel report was circulated to Members. The Panel found that certain proceedings that were identified in the EC's panel request but not in its consultations request were within its terms of reference, but that the EC's claims in connection with the continued application of the anti-dumping duties, as well as certain preliminary determinations identified in its panel request, were not within its terms of reference.

The Panel found that :

— the United States acted inconsistently with the obligation set out under Article 2.4.2 by using model zeroing in the four investigations at issue in this dispute;

— the United States acted inconsistently with its obligations under Article VI:2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement by applying simple zeroing in the 29 periodic reviews at issue in this dispute;

— The United States acted inconsistently with its obligations under Article 11.3 of the Agreement by using, in the eight sunset reviews at issue in this dispute, dumping margins obtained through model zeroing in prior investigations.

The Panel applied judicial economy with regard to certain claims regarding the use of model zeroing in the investigations at issue, the use of simple zeroing in the periodic reviews at issue, and the use of margins obtained in prior proceedings through the zeroing methodology in the sunset reviews at issue.

The Panel recommended that the DSB request the United States to bring its into conformity with its obligations under the WTO Agreement. The Panel declined to make a suggestion on how the DSB recommendations and rulings may be implemented by the United States.

One member of the Panel expressed a separate opinion with regard to the EC's claims regarding zeroing in investigations and zeroing in periodic reviews. That member of the Panel agreed with the conclusions reached by the majority of the Members of this Panel regarding all the claims raised by the European Communities in this dispute, but disagreed with the legal reasoning developed by the majority regarding the EC's claims on simple zeroing in periodic reviews, and, in part, model zeroing in investigations and provided his opinion on these matters.

On 6 November 2008, the European Communities notified the DSB 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 18 November 2008, the United States notified the DSB 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 22 December 2008, the Chairman of the Appellate Body informed the DSB that due to the time required for completion and translation of the report, the Appellate Body would not be able to circulate its report within 60 days.  It is estimated that the Appellate Body report would be circulated on 4 February 2009.

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