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United States – Anti-Dumping Measures on Polyethylene Retail Carrier Bags from Thailand: a cat in the bag

  • THOMAS J. PRUSA (a1) and EDWIN VERMULST (a2)
Abstract
Abstract

This paper analyzes the dispute between Thailand and the United States regarding the method of calculating the anti-dumping duty on polyethylene retail carrier bags from Thailand. In December 2006, after a series of WTO Appellate Body reports, the United States ceased zeroing in original investigations. The United States implemented the policy change prospectively, that is only for future cases. Consequently, the margins in this case remained unchanged because they had been calculated in 2004. Thailand challenged the United States' use of zeroing in the final determination. The US did not contest the claim. The Panel confirmed that zeroing was used and, following the long line of Appellate Body rulings, found the United States' practice inconsistent with Article 2.4.2 of the Anti-Dumping Agreement. After the Panel Report was adopted, the United States retroactively applied the policy change to the facts of this case and recalculated the margins without zeroing. The relative simplicity of the panel proceeding and the United States' willingness to amend the calculations following the adoption of the Panel Report may invite other WTO members to pursue a similar course of action in instances where their exporters have been subjected to US zeroing.

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Corresponding author
*Email: prusa@econ.rutgers.edu.
**Email: edwin.vermulst@vvgb-law.com.
References
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1 Panel Report, United States – Anti-Dumping Measures on Polyethylene Retail Carrier Bags from Thailand, WT/DS383/R, 22 January 2010 (hereinafter: US–PET Bags (Thailand)).

2 Over the past decade, the WTO Appellate Body has heard at least 18 disputes involving various types of zeroing and each time has found that the practice violates the WTO Anti-Dumping Agreement. All but two of the cases have involved the US as respondent. For a review of WTO cases involving zeroing, see Chad P. Bown and Thomas J. Prusa (2010), ‘US Antidumping: Much Ado about Zeroing’, World Bank Policy Research Working Paper 5352 (June 2010), forthcoming in Aaditya Mattoo and William J. Martin (eds.), Waiting on Doha, Washington, DC: The World Bank.

4 Panel Report, US–PET Bags (Thailand), footnote 4.

5 European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India (EU–Bed Linen), WT/DS141/AB/R.

6 See, e.g., ‘Urea and ammonium nitrate solutions from Poland’ (2002), Official Journal of the European Communities (OJ) L279/3 (review); ‘Polyethylene terephthalate originating in India, Indonesia, Malaysia, the Republic of Korea, Thailand and Taiwan’ (2007), OJ L59/1 (definitive), where the use of zeroing led to imposition of a 3.5% dumping margin with regard to the Taiwanese producer Far Eastern New Century Corp., whereas use of the average to average method would have led to a finding of de minimis dumping.

7 ‘Antidumping Proceedings: Calculation of the Weighted–Average Dumping Margin During an Antidumping Investigation; Final Modification’, Federal Register, 71: 248 (27 December 2006), pp. 77722–5.

8 Legal and economic summaries of previous zeroing disputes include Merit E. Janow and Robert W. Staiger (2003), ‘European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India’, in Petros Mavroidis and Henrik Horn (eds.), The WTO Case Law of 2001, Cambridge: Cambridge University Press; Gene M. Grossman, and Alan O. Sykes (2006), ‘European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India: Recourse to Article 21.5 of the DSU by India’, in Petros Mavroidis and Henrik Horn (eds.), The WTO Case Law of 2003, Cambridge: Cambridge University Press; Bown Chad P. and Sykes Alan O. (2008), ‘The Zeroing Issue: A Critical Analysis of Softwood V’, World Trade Review, 7(1): 121142; Prusa Thomas J. and Vermulst Edwin (2009), ‘A One-Two Punch on Zeroing: US – Zeroing (EC) and US – Zeroing (Japan)’, World Trade Review, 8(1): 187241; Crowley Meredith and Howse Robert (2010), ‘US – Stainless Steel (Mexico)’, World Trade Review, 9(1): 117150; Hoekman Bernard and Wauters Jasper (2011), ‘US Compliance with WTO Rulings on Zeroing in Anti-Dumping’, World Trade Review, 10(1): 543; Prusa Thomas J. and Vermulst Edwin (2011), ‘United States – Continued Existence and Application of Zeroing Methodology: The End of Zeroing?’, World Trade Review, 10(1): 4561.

9 Prusa and Vermulst, ‘A One-Two Punch on Zeroing’; Prusa and Vermulst, ‘United States – Continued Existence and Application of Zeroing Methodology’.

10 Prusa and Vermulst, ‘A One-Two Punch on Zeroing’, provide an extended discussion of how zeroing affects the calculated margin.

11 See, e.g., Prusa and Vermulst, ‘A One-Two Punch on Zeroing’; Vermulst Edwin and Ikenson Daniel (2007) ‘Zeroing under the WTO Anti-Dumping Agreement: Where Do We Stand?’, Global Trade and Customs Journal, 2(6): 231242.

12 Panel Report, US–PET Bags (Thailand), para 3.1.

13 Ibid.

14 United States – Final Dumping Determination on Softwood Lumber from Canada (US–Softwood Lumber V), WT/DS/264/AB/R.

15 Panel Report US–PET Bags (Thailand), para. 3.3.

16 This dispute involved multiple claims, not just zeroing. For an analysis of these disputes see Prusa Thomas J. and Vermulst Edwin (2010), ‘Guilt by Association: US–Measures Relating to Shrimp from Thailand and US–Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties’, World Trade Review, January, 9(1): 5984.

17 Panel Report, US–PET Bags (Thailand), para. 7.2.

18 Ibid., para. 7.5.

19 Panel Report, United States – Anti-Dumping Measure on Shrimp from Ecuador, WT/DS335/R, paras. 7.7–7.11.

20 Panel Report, US–PET Bags (Thailand), para. 7.7.

21 Ibid., para. 7.10.

22 Ibid., paras. 7.13–7.17.

23 Ibid., para. 7.18.

24 Panel Report, US–Shrimp (Ecuador), paras. 7.38–7.39.

25 Panel Report, US–PET Bags (Thailand), para. 7.24.

26 Ibid., paras. 8.1–8.2.

27 Article 2.4.2, Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.

28 Prusa and Vermulst, ‘A One-Two Punch on Zeroing’, p. 188.

29 Prusa and Vermulst, ‘United States – Continued Existence and Application of Zeroing Methodology’, pp. 46–47.

30 Palmeter Compare David and Mavroidis Petros (2004), Dispute Settlement in the World Trade Organization, 2nd edn, Cambridge: Cambridge University Press, pp. 1920, 145, 155.

31 Mavroidis Petros (2008), ‘No Outsourcing of Law? WTO Law as Practiced by WTO Courts’, American Journal of International Law, 102: 14, points out that Article 12.1 DSU allows Panels to deviate from the working procedures (albeit after having consulted the parties to the dispute).

32 Annex B.1 of Panel Report, US–PET Bags (Thailand).

33 The EU noted in particular that the Parties agreed that any change in the cash deposit rate or revocation of the anti-dumping order as a result of the recalculation of dumping margins pursuant to a Section 129 determination would take effect with respect to entries made no sooner than the date of implementation of the new determination, even though the AB twice rejected the relevance of the ‘date of entry’ for the purpose of assessing compliance with adopted DSB reports (Appellate Body Report, US – Zeroing (EC) , Article 21.5, para. 309, and Appellate Body Report, US – Zeroing (Japan), Article 21.5, para. 169). Annex B.1 of Panel Report, US–PET Bags (Thailand), footnote 2.

34 See Section 3.2.

35 This US understanding is supposedly based on the rule that adopted WTO AB and Panel Reports work only prospectively and only after the expiry of the reasonable period of time (RPT) for implementation of an adopted report.

36 US–Shrimp (Ecuador); United States – Measures Relating to Shrimp from Thailand (DS343) and United States – Customs Bond Directive for Merchandise Subject to Anti-Dumping/Countervailing Duties (DS345) US–Shrimp (Thailand), WT/DS343/AB/R, WT/DS345/AB/R. Compare Palmeter and Mavroidis, Dispute Settlement in the World Trade Organization, 145.

37 Data through 21 March 2011 is from USDOC's web site, http://info.usitc.gov/oinv/sunset.nsf/.

38 Prusa and Vermulst, ‘A One-Two Punch on Zeroing’, discuss how the US's retrospective system and zeroing affect exporter incentives.

39 Using a small set of cases, Lindsey and Ikenson find the average impact of zeroing is at least 17.50 percentage points. See Brink Lindsey and Dan Ikenson (2002), ‘Antidumping 101: The Devilish Details of “Unfair Trade” Law’, Cato Trade Policy Analysis, No. 20, November 26. Using information from WTO disputes involving zeroing, Bown and Prusa, ‘US Antidumping’, calculate that the median (mean) change in the dumping margin due to zeroing is 4.8 (12.3) percentage points (Table 6). It is worth noting that Bown and Prusa find the change in the margin due to zeroing is greater than the reported margin for these cases, that is for cases brought to the WTO, eliminating zeroing would result in de minimis margins.

40 Chad P. Bown (2010) ‘Global Antidumping Database’, available at http://econ.worldbank.org/ttbd/gad/.

41 The difference in how different countries implemented the Uruguay Round's sunset review provision is a good example of this point. See Olivier Cadot, Jaime de Melo and Bolormaa Tumurchudur (2007), ‘Anti-Dumping Sunset Reviews: The Uneven Reach Of WTO Disciplines’, CEPR Working Paper No. 6502, at www.cepr.org/pubs/dps/DP6502.asp.

42 ‘Antidumping Proceedings: Calculation of the Weighted Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings’, Federal Register, 75: 248 (28 December 2010) pp. 81533–6.

43 A recent US CAFC decision found that the USDOC could not interpret the same statutory language to justify not applying zeroing in original investigations and also as the basis to justify application of zeroing in administrative reviews. See, United States Court of Appeals for the Federal Circuit, Dongbu Steel Co., Ltd. v. United States, No. 2010-1271, 31 March 2011.

44 Panel Report, US–PET Bags (Thailand), footnote 4.

45 Polyethylene Retail Carrier Bags from Thailand – Case Brief of the Petitioners, 17 May 2010, p. 2, available at United States International Trade Commission's Electronic Document Information System (EDIS) at https://edis.usitc.gov/.

46 Rebuttal Comments of the Royal Thai Government on the Preliminary Results Under Section 129 of the Uruguay Round Agreements Act: Antidumping Measures on Polyethylene Retail Carrier Bags from Thailand, 24 May 2010, p. 1.

47 Upheld by the European General Court as recently as 13 April 2011 in Case T-167/07, Far Eastern New Century Corp. v. Council, judgment of 13 April 2011.

WT/DS383/R, Report of the Panel, 22 January 2010. The views expressed in this paper are those of the authors and all omissions and errors are also of the authors. We would like to thank Jaime de Melo, Kenneth Pierce, Daniel Porter, Marguerite Trossevin, and Charlotte Van Haute for helpful discussions.

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