The World Trade Organization, following up on Japan's complaint about U.S. use of "zeroing" in antidumping duty calculations, has set a public hearing time and date.

The public hearing is set for November 4, 2008. You must be preregistered and have a ticket to attend the hearing.

When the U.S. receives a dumping complaint about a product, it calculates the weighted average sales of individual items within that product line in the U.S. and again in the home country. Items selling for less in the U.S. are added to the dumping margin, while items selling for more in the U.S. are subtracted from the dumping margin. If the grand total is negative, then dumping has not occurred. If the grand total is positive, then dumping has occurred and that total is averaged to give the antidumping duty for that product.

Zeroing is an alternative way of calculating that grand total. Zeroing keeps all the positive dumping numbers, but all the negative dumping numbers are changed to zero. Using zeroing, the only possibility is a positive dumping number, and then an antidumping tariff penalty is applied, based on that positive number.

Zeroing was used by a number of countries, but has been abandoned by all but the U.S. after numerous WTO complaints and successful challenges; WTO rules do not allow the use of zeroing. The U.S. remains the only country still using zeroing and still fighting complaints about it through the WTO. DS322 is the WTO's Dispute Settlement action on U.S. use of zeroing in violation of WTO and GATT rules.

At the request of the parties in the dispute "United States - Measures Relating to Zeroing and Sunset Reviews" - Recourse to Article 21.5 of the Dispute Settlement Understanding (DSU) by Japan (DS322), the Panel has agreed to start its meeting with the parties on November 4, 2008 with a session open to public viewing at the WTO Headquarters in Geneva.

WTO DSB announcement
The basics of DS322 are here: WTO DS322 main page
Or, more succinctly, the WTO's regularly-updated one-page summary of the dispute and activity to date: WTS DS322 one-page summary
[ PDF format; one page; opens in new window ]
So why is this so important to the bearing industry?

Japan claims that if the U.S. can be stopped from using zeroing in its antidumping calculations, and particularly in the periodic follow-up review calculations, then the U.S. will have to eliminate all of its antidumping tariffs on ball and roller bearings from Japan.

Use of zeroing has had an outsized impact on a number of products and industries, most notably the major Canadian softwood lumber dispute that the U.S. lost. But for the U.S., and particularly with Japan, the ball and roller bearing industry is the most impacted by U.S. zeroing. So Japan has led the way in fighting the U.S. use of zeroing through the tortuously drawn out WTO complaint resolution system.

Eliminating antidumping duties on ball and roller bearings from Japan has the potential to fundamentally change the dynamics of the top half of the U.S. bearing market. While Japanese bearing manufacturers don't generally try to compete for low-end and commoditized bearing sales in the U.S. market, they do compete aggressively across all of the higher end bearings.

Particularly important in this battle are high-precision bearings, specialty bearings, large precision industrial bearings now in short supply, and high value-added bearings. Some sales to Japanese domestic automakers operating in the U.S. are also part of the consideration.

According to Japan's allegations, virtually all U.S. antidumping duties applied to bearings would be eliminated if the U.S. was forced to stop using zeroing in its calculations.

In fact, after several years of fighting and losing all WTO appeals since 2004, the U.S. did agree to stop using zeroing -- back in February 2007. That it continues forms the basis of Japan's complaint, which was joined a number of years ago by the European Communities, China, Hong Kong, Norway, Chinese Taipei, Korea, Mexico, and Thailand.