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The eBearing News
March 25, 2004
WTO Investigating U.S. Dumping Calculations
copyright © 2004 eBearing Inc.
The World Trade Organization overcame a procedural block by the United States, establishing a panel to
investigate charges the U.S. Commerce Department uses an improper measure to systematically and
knowingly miscalculate when dumping has occurred and antidumping duties.
The result could be a decision against the U.S. with wide-ranging impacts -- one of which would be to
fundamentally change the U.S. marketplace for many EU bearing manufacturers.
Dumping is a term describing the sale of goods into another country at below cost or fair value,
below market prices, most often because the goods are government-subsidized or the manufacturer is
unfairly trying to wipe out competition.
The WTO investigation was initiated from a complaint filed by the European Commission, the executive
arm of the European Union, after two meetings in 2003 failed to convince the U.S. to change
its dumping calculations.
Specifically, the EC is challenging U.S. dumping findings and penalties in 31 cases -- including
ball and roller bearings.
Hundreds of millions of dollars in trade volume are at stake, along with the competitive positions of many
EU manufacturers facing what the EC termed, "severe adverse economic impact," from improperly calculated
dumping duties.
EU Trade Commissioner, Pascal Lamy, said, "Despite our efforts to solve this matter amicably, the U.S. failed
to solve this issue. In these circumstances, we have no choice but to request a panel."
In its complaint, the EC alleges U.S. Commerce uses an improper calculation method which leads to it finding
dumping has occurred when in fact it has not. In addition, the EC charges another effect is that duties based
on these calculations are unfairly inflated.
The calculation method at issue is called "zeroing."
When the U.S. Commerce Department investigates a dumping complaint, it determines whether dumping has
occurred by calculating a transaction-by-transaction value for all less-than-fair-value sales it finds.
But the U.S. method ignores (or "zeros") every transaction where the sale occurred at or above market value.
By ignoring all sales that occur at or above fair market prices (so-called "negative dumping"), the EC says
the U.S. violates WTO rules and "inevitably" leads to a dumping finding when none has actually occurred. In
addition, they charge, the duties calculated by this method are far above what would be levied if all
sales were considered on a weighted-average basis.
WTO rules specifically disallow zeroing. The EU recently lost a case involving zeroing and Indian
linen; "protectionist" duties of up to 24.7% on Indian linens were dropped in 2002. The EC says it
no longer uses zeroing. Recently, the U.S. lost a WTO case involving zeroing and Canadian lumber.
While the WTO considers zeroing as protectionism in disguise, past U.S. trade representatives have defended
the practice, claiming it covers situations when a company disguises an underlying dumping scheme by making a
few sales at dramatically inflated prices. The U.S. legal counsel in Geneva avoided answering the issue
directly, telling WTO ambassadors, "The U.S.
method, which takes into account non-dumped transactions, ensures that the amount of duties collected
equals the actual dumping practiced."
Mr. Lamy said, "The U.S. zeroing practice is negatively affecting our exporters to the U.S., and the
problem will only grow further if zeroing is allowed to continue."
Zeroing has always been disallowed by the WTO whenever it has come up, but so far that happens only
on a case-by-case basis. A group of WTO members -- including
Brazil, Hong Kong, South Korea, Mexico and Switzerland -- has now requested that the WTO formally disallow
the use of zeroing under any circumstances.
From a strictly historical perspective, it's interesting to note that the most difficult pre-WTO
international trade disagreements almost always involved ball and roller bearings.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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