The European Commission and the US solved Monday one of their most longstanding WTO disputes concerning the US calculation practice of so-called “zeroing” in anti-dumping investigations. They signed a roadmap which sets out the steps the US will take to comply with WTO rulings in the future calculation of duties when the US authorities find that some imported products from a particular exporter enter the US market below the normal market price.
As a result, no EU exporter should be subject to an anti-dumping duty affected by zeroing in the future. The EU will closely monitor the US application of this new practice.
“This understanding solves this longstanding dispute”, said EU Trade Commissioner Karel De Gucht. “It will bring immediate relief to EU exporters who will no longer have to pay excessive anti-dumping duties; some of them will not pay any anti-dumping duties at all”. Referring to intensive negotiations over the past months, he welcomed that the EU and US were able to find a way forward. “We have now re-established a level playing field for our companies”, he added.
“Zeroing” is a calculation method the US authorities used when calculating duty rates for products that entered its market at dumped prices in review investigations (MEMO/12/73). Anti-dumping duties are additional duties which are imposed on top of the normal customs duty to offset dumping. Until now, the current US calculation practice led to higher duties for EU exporters, despite the fact that this methodology was found to be WTO-inconsistent in a series of dispute settlement cases.
With the roadmap signed today, the US committed itself to apply a new methodology to calculate anti-dumping duty rates in all new review anti-dumping investigations launched as of mid-February 2012. In addition, the anti-dumping duty rates on goods imported into the US after May 2010 will also be determined under the new methodology without zeroing. This will benefit about 30 EU exporters who are currently affected by ongoing US anti-dumping administrative reviews for 10 different products.
Furthermore, 35 EU exporters in anti-dumping cases for 8 different products, some of which are currently not taking part in US anti-dumping administrative reviews but are affected by zeroing, will have their anti-dumping duty rates determined without zeroing. Therefore, as of June 2012 no EU exporter should be subject to an anti-dumping duty affected by zeroing. At a very rough estimate, this could save EU exporters about USD 15 million a year.
The two WTO disputes on zeroing between the EU and the US (DS 294 and DS 350) date back to 2004.1 Two Appellate Body reports, adopted in 2006 and 2009 respectively, confirmed that the US must change its methodology for dumping calculation with zeroing (both in new cases and in review investigations).
The US only partially complied with these rulings in 2007, by changing its methodology in new investigations and in 2007 and 2009, by revoking 2 anti-dumping cases against EU Member States, lifting anti-dumping measures for 8 individual exporters and reducing the anti-dumping duties for 12 EU exporters.
The US did not, however, address zeroing in reviews of anti-dumping rates, so that EU exporters had to continue to paying increased anti-dumping duties in all ongoing cases.
In 2010, the EU requested the WTO for authorisation to impose sanctions in order to induce compliance. Immediately prior to the publication of the arbitration report at the end of 2010 the US offered to take the first step to compliance, and the sanction arbitration proceeding was suspended.
The sanction arbitration will remain suspended while the US takes the steps outlined in the roadmap. Thereafter, the EU would withdraw its retaliation request without taking any further steps in these disputes.