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The eBearing News
February 10, 2005
Japan Files WTO Complaint Over
U.S. Dumping Calculations
copyright © 2005 eBearing Inc.
Japan has joined the European Union in formally petitioning the World Trade Organization to
set up a Dispute Settlement panel addressing the method used by the United States to determine the
existence, severity, and duties applied in alleged instances of dumping.
The U.S. calculation, known as "zeroing," has repeatedly been ruled by the WTO as violating its
Anti-Dumping Agreement. The EU had once begun using zeroing, but stopped once the WTO ruled against it.
In May 2004, the European Union lodged a formal complaint with the WTO regarding U.S.
use of zeroing (WT/DS294).
• article: WTO Investigates U.S. Dumping Calculation
Calculating whether dumping may have occurred, U.S. Commerce essentially compares local market
prices to U.S. market prices. If products are sold in the U.S. below local market prices, Commerce
adds up all the differences in prices across all the products it is investigating. In those
instances when products are sold in the U.S. market above local market prices and no dumping
has occurred, Commerce does not use the actual value difference, but instead uses zero.
For example, investigating ball bearings, Commerce may look at a basket of
equal-quantity-selling 203, 204, 205, 206 and 207 bearings. If the 203 and 204 sell for $1.00 in the local
market and $0.75 in the U.S., it
finds dumping has occurred, for a weighted average margin of 25%. If the 205, 206 and 207 all
sell for $1.00 in the local market and $1.25 in the U.S., Commerce finds dumping has not occurred with
those three and calculates a "negative dumping" margin of -25% for each.
However, the U.S. does not include the -25% entries in the weighted average running total:
1x25% + 1x25% + 1x(-25%) + 1x(-25%) + 1x(-25%) = 1x(-25%)
as might be expected. Instead, in the final calculations, the U.S. "zeroes" all margins where it
did not find dumping. So the Commerce Department calculation becomes:
1x25% + 1x25% + 0 + 0 + 0 = 2x25%
The use of zeroing causes U.S. Commerce to find dumping has occurred far more often
than it would otherwise, and has been severely criticized by every trading partner and the WTO.
In addition, the U.S. has lost every WTO case where it used zeroing in calculations.
The U.S. recently lost a WTO appeal on softwood lumber dumping determination from Canada (WT/DS264).
The Appellate Body upheld the Panel’s findings that using zeroing to determine the
existence of dumping on Canadian softwood lumber violated the WTO Anti-Dumping Agreement.
In its 2004 complaint, the EU charged the U.S. knows full well that its use of zeroing is improper
and violates WTO rules, but that U.S. Commerce continues to use it, systematically and knowingly
miscalculating when dumping has occurred,
and also the level of any antidumping duties assessed, which are based on those same flawed calculations.
Japan's Ministry of Economy, Trade and Industry (METI) has now joined the EU at the WTO, complaining
the zeroing method particularly impacts its bearing industry.
In late 2004, METI requested formal consultations with the U.S. regarding zeroing, but no
progress was made.
At the time, METI said,
The United States, by using "zeroing" methodology in the course of calculating dumping margins, inflates
such margins. Such inflated dumping margins are used for assessing anti-dumping duties on exports of
certain products including, in particular, bearing products exported from Japan to the United States
and, as a result, such exports have been unreasonably impeded. The Government of Japan is concerned
that the "zeroing" methodology is inconsistent with the WTO Anti-dumping Agreement.
In the case of tapered roller bearings from Japan, U.S. Commerce "zeroing" wipes out
a heavily weighted total -231.23% negative dumping margin which should have applied to the calculation
for large tapered roller bearings. Similarly, Commerce zeroed a number of heavily weighted
average -177.47% negative dumping margins which should have
applied to small tapered roller bearings.
If Commerce had not zeroed those margin calculations on tapered roller bearings, METI argues,
both findings of dumping would be radically different, potentially eliminating duties
entirely on those bearings.
In its formal WTO complaint filed February 7, 2005, Japan uses a wide variety of examples from the bearing
industry where it argues U.S. Commerce use of zeroing caused Japanese companies to be found guilty
of dumping when none had occurred. Worse, METI argues, the antidumping duties then applied to those
bearings damaged the ability of those Japanese companies to compete in the U.S. market.
Specifically, METI recalculated hundreds of dumping cases, but without the use of zeroing. Some examples
Japan cites in its WTO complaint are:
Koyo Seiko bearings hit with 14.86%, 16.26%, 17.94%, and 10.10% dumping duty margins
on products which should all have been zero. NTN bearings hit with 17.58%, 9.34% 6.14%, 5.28%, 3.60%, 2.51%,
3.49% and 2.78% duty margins which should all have been zero. NSK bearings hit with 6.07% and 2.68% dumping duties
which should have been zero, and Asahi Seiko bearings hit with 2.51% which should have been zero.
Just in the cited examples, Japan complains its bearing industry has suffered a loss of
¥3.8 billion (USD $37 million) due to the U.S. misuse of zeroing.
A formal hearing is set for later in February. The U.S. is expected to use procedural maneuvers, as it
has with the EU complaint, to delay the WTO investigation.
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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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