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Washington unclear on whether it will appeal the decision on ''illegal'' dumping practices

GENEVA, Switzerland – 10/07/08 – The World Trade Organization (WTO) has ruled against the US in a dispute over dumping charges on imports of most of 52 European products, from stainless steel and ball bearings to pasta.

For some imports, though, the three-member WTO panel found the US had not broken any agreements or declined to assess the EU's claims.

Washington, the WTO said, violated international trade rules ”in dozens of instances in determining what fees to apply on goods from the European Union” – a practice known as “zeroing.”

Zeroing occurs when the US Commerce Department (DOC) calculates a weighted average dumping margin for a given company by taking into account numerous comparisons between sales in the US and sales in the home market or third country market – or costs in the home market.

It is not uncommon for the DOC to find that some comparisons reveal dumping – for example, when the price in the US is lower than the home market price – while others reveal no dumping, or when the price in the US is higher than the home market price.

Where a comparison reveals no dumping, the agency assigns a “zero” to that comparison, rather than a negative number equal to the amount by which the US price exceeds the home market price.

Governments around the world investigate dumping when they suspect that producers are exporting products at below-market price in their own country – usually because exports have been subsidized, or if it is believed that there is an attempt to corner the market.

Some countries have claimed that “zeroing” leads to artificial and inflated margins of dumping, and thus unfairly high duties.

According to the Office of the US Trade Representative, of the “zeroing complaints filed with the against the US so far under current WTO rules, 70 have been concluded; 26 were merged with other complaints; six are in the litigation stage; and 20 are either in the pre-litigation consultation stage or currently inactive.

In addition, 19 complaints have been resolved without completing litigation on a variety of imports including autos from Japan; wool coats from India; tomatoes and cement from Mexico; poultry from the European Union; brooms from Colombia; orange juice from Brazil; and, perhaps, most famously, softwood lumber from Canada.

At the same time, the WTO decided in the US’ favor on the “core issues” of 15 complaints involving import shipments of products including steel plate and apparel products from India and semiconductors from Korea, as well as gambling and betting services based in Antigua & Barbuda and Sections 301-310 of The Trade Act of 1974.

The US also failed to win a favorable judgment on the “core issues” of 36 complaints including EU challenges on wheat gluten import safeguards, music licensing provisions, and taxes on Foreign Sales Corporations (FSCs); and the importation of underwear from Costa Rica, stainless steel from Korea, wool shirts and shrimp from India, cotton yarn from Pakistan, and hot-rolled steel from Japan.

The US Trade Representative declined to comment on whether Washington will appeal the most recent WTO ruling.

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