The World Trade Organization has made public a panel ruling that upholds Brazil's complaint against U.S. antidumping proceedings which led to the imposition of dumping duties on imports of Brazilian orange juice products.
The WTO panel found that the U.S. Commerce Department violated the trade body's Antidumping Agreement by relying on the controversial "zeroing" methodology in both its original investigation on the targeted importers as well as subsequent administrative reviews of the dumping order.
The ruling is the latest in a long string of WTO rulings condemning the zeroing methodology, with nearly all of the proceedings targeting Commerce's use of the methodology. The United States now has 60 days to decide whether the appeal the panel's findings.
The WTO clearly is becoming weary of adjudicating U.S. zeroing cases. In releasing the latest ruling, the panel said the zeroing issue had occupied panels and the WTO's Appellate Body for far too long, and that it was time to find a permanent solution to the problem.
The zeroing question "has tested the limits of the WTO dispute settlement system for almost 10 years now," the panel declared. "It has occupied the work of members, panels and the Appellate Body like no other controversy. We have no doubt that this experience has not served to advance the system's efficiency; and we note that members have not only sought to resolve the issue of zeroing through WTO dispute settlement, but they are also trying to address it through negotiations in the Negotiating Group on Rules in the context of the Doha Development Agenda."
"Given the objective lack of clarity in the current definition of 'dumping' that is set forth in the AD Agreement (a conclusion which we believe is inescapable after almost a decade of unprecedented, and often conflicting, panel and Appellate Body opinions on the matter), we firmly believe that all members have a strong systemic interest in seeing that a lasting resolution to the zeroing controversy is found sooner rather than later," the panel added.
The dispute centered on Commerce's use of a version of zeroing in its original investigation targeting imports of frozen concentrated orange juice and non-concentrated pasteurized orange juice from Brazil. The original investigation resulted in the imposition in March 2006 of antidumping duties on imports from two Brazilian producers.
In its reaction to the ruling, the Office of the U.S. Trade Representative noted that not only had Commerce proposed changing the calculation of weighted average dumping margins and assessment rates in administrative reviews, but it also had abandoned model zeroing in original investigations more than four years ago.
Zeroing refers to the practice in which an investigating authority makes multiple comparisons of the export price and normal value (i.e., home market) price of an allegedly dumped good, and then aggregates the results of those comparisons to calculate a dumping margin for the product as a whole. However, when aggregating the prices, the authority ignores results where "negative" dumping occurs, i.e., where the product is being sold for more abroad than on the home market.
Critics charge that the effect of zeroing is to illegally inflate the margin of dumping, resulting in higher antidumping duties or a finding of dumping where it would normally not be found.
