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United States – Continued Existence and Application of Zeroing Methodology: the end of Zeroing?

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

This is the eighth Appellate Body Report in which some aspect of zeroing was adjudicated. As in the prior cases, the AB again found the US practice inconsistent with several aspects of the Anti-Dumping Agreement. The novelty in this dispute was the EC attempt to broaden the concept of what constitutes an appealable measure. The EC challenged whether a WTO decision regarding zeroing could apply to subsequent proceedings that might modify duty levels and asked the AB to decide whether the United States' continued use of zeroing in the context of a given case was consistent with WTO obligations. The AB stated that in its attempt to bring an effective resolution to the zeroing issue, the EC is entitled to frame the subject of its challenge in such a way as to bring the ongoing use of the zeroing methodology in these cases, under the scrutiny of WTO dispute settlement. The AB then cautiously applied the new perspective to US zeroing practice.

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Copyright
Corresponding author
*Email: prusa@econ.rutgers.edu
**Email: edwin.vermulst@vvgb-law.com
References
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1 United States – Continued Existence and Application of Zeroing Methodology (WT/DS350/AB/R, 4 February 2009) [hereinafter: US–Continued Zeroing (EC)].

2 Previous cases in which the AB ruled concerning zeroing: (1) European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R of 1 March 2001 [EC–Bed Linen]; (2) United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R of 9 January 2004; (3) United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R of 11 August 2004 [US–Softwood Lumber V]; (4) United States – Laws, Regulations and Methodology for Calculating Dumping Margins (Zeroing), WT/DS294/AB/R of 18 April 2006 [US–Zeroing (EC)]; (5) United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/RW of 15 August 2006 [US–Softwood Lumber V (compliance)]; (6) United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/AB/R of 9 January 2007 [US–Zeroing (Japan)]; (7) United States – Final Anti-dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R of 30 April 2008 [US–Stainless Steel (Mexico)]. In addition to these AB reports, zeroing was discussed by Panels in: (1) EC – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R of 7 March 2003; (2) United States – Anti-Dumping Measure on Shrimp from Ecuador, WT/DS335/R of 30 January 2007; and (3) United States – Measures Relating to Shrimp from Thailand, WT/DS343/R of 29 February 2008.

3 In US–Stainless Steel (Mexico) and US–Zeroing (Japan), the Panels ruled that zeroing in original investigations was inconsistent, but zeroing in review proceedings was consistent. In both cases, the AB overturned the Panel with respect to zeroing in review proceedings.

4 US–Continued Zeroing (EC), Panel, para. 2.1.

5 See, e.g., Merit E. Janow and Robert W. Staiger (2003), ‘EC – Bed Linen European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India’, in Henrik Horn and Petros C. Mavroidis (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 Henrik Horn and Petros C. Mavroidis (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.

6 Prusa and Vermulst (2009), ‘A One–Two Punch on Zeroing: US–Zeroing (EC) and US–Zeroing (Japan)’.

7 US–Continued Zeroing (EC), AB, para. 1.

8 United States – Continued Existence and Application of Zeroing Methodology, request for the establishment of a Panel by the European Communities, WT/DS350/6 (11 May 2007).

9 Article 6.2 DSU provides, in relevant part, that the REP shall identify the specific measure at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. These two elements together constitute the ‘matter’ that forms the basis for the terms of reference of the Panel, see AB Report, para. 160.

10 US–Continued Zeroing (EC), AB, para. 16.

11 Ibid., para. 161.

12 Ibid., para. 169.

13 Ibid., para. 171.

14 Ibid., para. 176.

15 Ibid., paras. 178–180.

16 Ibid., para. 181.

17 Ibid., paras. 187–189.

18 Ibid., paras. 191–192.

19 Ibid., para. 193.

20 Ibid., para. 194.

21 US–Continued Zeroing (EC), Panel, para. 7.170.

22 US–Stainless Steel (Mexico), discussed in Crowley and Howse (2010), ‘US–Stainless Steel (Mexico)’.

23 US–Continued Zeroing (EC), Panel, para. 7.179.

24 Ibid.

25 Ibid.

26 Ibid.

27 Ibid., para. 7.180.

28 US–Stainless Steel (Mexico), discussed in Crowley and Howse (2010), ‘US–Stainless Steel (Mexico)’.

29 US–Continued Zeroing (EC), AB, para. 268.

30 Ibid., para. 317.

31 Ibid., para. 312.

32 Ibid., para. 358.

33 Ibid., para. 365.

34 Crowley and Howse (2010), ‘US–Stainless Steel (Mexico)’.

35 US–Continued Zeroing (EC), Panel, para. 7.158.

36 US–Continued Zeroing (EC), AB, paras. 209–211.

37 The revocation was the result of a negative ITC sunset injury determination.

38 US–Continued Zeroing (EC), AB, paras. 222 and 235.

39 Ibid., paras. 237–241.

40 US–Continued Zeroing (EC), Panel, para. 7.125.

41 Prusa and Vermulst (2009), ‘A One–Two Punch on Zeroing: US–Zeroing (EC) and US–Zeroing (Japan)’.

42 US–Continued Zeroing (EC), AB, para. 331.

43 Ibid., paras. 336–338.

44 Ibid., para. 344.

45 Ibid., paras. 345–347.

46 Ibid., paras. 349–357.

47 US–Zeroing (EC) (also WT/DS294/AB/Corr.1, 20 August 2007; WT/DS294/R, 31 October 2005).

48 US–Zeroing (Japan)] (also WT/DS322/R, 20 September 2006).

49 US–Continued Zeroing (EC), AB, para. 179.

50 Ibid.

51 Ibid., para. 181.

52 Ibid.

The views expressed in this paper are those of the authors and all omissions and errors are also of the authors.

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