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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Current status  back to top

 

Key facts  back to top

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 1 October 2008
Appellate Body Report circulated: 4 February 2009

  

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

Consultations

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.

 

Panel and Appellate Body proceedings

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 measuresinto 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.

On 4 February 2009, the Appellate Body report was circulated to Members.  Regarding the European Communities' claims concerning the continued application of the 18 anti-dumping duties at issue, the Appellate Body reversed the panel's finding that the European Communities failed to comply with Article 6.2 of the DSU, and found, instead, that the panel request identifies the specific measures at issue.  The Appellate Body declined to make additional findings concerning whether the panel acted inconsistently with Articles 7.1, 7.2, 11, and 12.7 of the DSU.  The Appellate Body concluded that the continued application of the anti-dumping duties in each of the 18 cases was identified in the request for consultations, and found that the continued use of the zeroing methodology in successive proceedings in which duties resulting from the 18 anti-dumping duty orders are maintained, constitute measures that can be challenged in WTO dispute settlement.

Regarding Ball Bearings and Parts Thereof from Italy (Case II), Ball Bearings and Parts Thereof from Germany (Case III), Ball Bearings and Parts Thereof from France (Case IV), and Stainless Steel Sheet and Strip in Coils from Germany (Case VI), the Appellate Body found that the panel's factual findings sufficiently establish the continued use of the zeroing methodology in successive proceedings whereby duties in these cases are maintained; and concluded that the application and continued application of anti-dumping duties is inconsistent with Articles 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 to the extent that the duties are maintained at a level calculated through the use of the zeroing methodology in periodic reviews and that it is inconsistent with Article 11.3 of the Anti-Dumping Agreement to the extent that reliance is placed upon a margin of dumping calculated through the use of the zeroing methodology in making sunset review determinations.  The Appellate Body declined to make additional findings under Articles 2.1, 2.4, 2.4.2, and 11.1 of the Anti-Dumping Agreement, Article VI:1 of the GATT 1994, and Article XVI:4 of the WTO Agreement for purposes of resolving this dispute and to complete the analysis in respect of the remaining 14 of the 18 anti-dumping cases at issue.

The Appellate Body reversed the panel's finding that the European Communities' claims concerning four preliminary determinations were outside the panel's terms of reference and declined the European Communities' request for a finding that these determinations are inconsistent with “the provisions of the GATT 1994 and the Anti-Dumping Agreement cited in the panel proceedings”.  The Appellate Body further upheld the panel's finding that the 14 periodic and sunset reviews were within the panel's terms of reference and the panel's finding that the United States acted inconsistently with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 by applying simple zeroing in the 29 periodic reviews, and accordingly declined to rule on the conditional appeals of the European Communities.

The Appellate Body found that the panel acted inconsistently with Article 11 of the DSU when it found that the European Communities had not shown that simple zeroing was used in the seven periodic reviews at issue and consequently reversed this finding of the panel. The Appellate Body completed the analysis and found that the European Communities has shown that simple zeroing was used, and that the United States acted inconsistently with Article VI:2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement by applying simple zeroing in the periodic reviews in Steel Concrete Reinforcing Bars from Latvia (Case I — No. 3);  Stainless Steel Bar from Germany (Case IX — No. 33);  Stainless Steel Bar from Germany (Case IX — No. 34);  Stainless Steel Bar from Italy (Case XI — No. 39);  and Certain Pasta from Italy (Case XIII — No. 43).

The Appellate Body declined to complete the analysis in respect of the periodic reviews in Stainless Steel Bar from France (Case V — No. 20) and Stainless Steel Bar from France (Case V — No. 21) and dismissed the United States' claim that the panel acted inconsistently with Article 11 of the DSU in finding that the United States acted inconsistently with Article 11.3 of the Anti-Dumping Agreement with regard to the eight sunset reviews and, consequently, upholds this finding of the panel.  Finally, the Appellate Body rejected the European Communities' request for a suggestion under Article 19.1 of the DSU.

The Appellate Body recommended that the DSB request the United States to bring its measures, found to be inconsistent with the GATT 1994 and the Anti-Dumping Agreement, into conformity with its obligations under those Agreements.

At its meeting on 19 February 2009, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.

 

Implementation of adopted reports

At the DSB meeting on 20 March 2009, the United States informed the DSB that it intended to bring its measures into conformity with its WTO obligations and would need a reasonable period of time to do so.  On 2 June 2009, the United States and the European Communities informed the DSB that they had agreed that the reasonable period of time for the United States to implement the DSB recommendations and rulings shall be ten months.  Accordingly, the reasonable period of time expired on 19 December 2009.

On 4 January 2010, the European Union and the United States notified the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.

On 6 February 2012, the European Union and the United States informed the DSB of a Memorandum between the United States and the European Commission which envisages a roadmap addressing this dispute.

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