In a setback to India's sustained campaign against the "zeroing" calculation employed by the US to compute anti-dumping duties on imports, the WTO has ruled in favour of the US against Mexico.
Significantly, the ruling by the WTO has led to the US trade representative Susan Schwab's demand for such zeroing method of calculating anti-dumping duties to form the basis for the Doha Round negotiations.
Schwab said in a statement, "This is further proof of what the United States has been saying all along - that WTO rules do not prohibit 'zeroing' and that WTO appellate body reports to the contrary have overreached. "We commend the WTO panel for conducting a very thorough analysis and applying the WTO agreements as written."
India, backed by 15 other countries, has said that "with 'zeroing' there will be no Doha Round agreement". Commerce and industry minister Kamal Nath and secretary G K Pillai have conveyed India's strong resentment over the WTO panel on Rules succumbing to the US pressure.
The US trade representative's statement says, "This marks the third time a WTO panel has found that "zeroing" in assessment proceedings is not prohibited by the WTO antidumping agreement. It is the second time a WTO panel has considered and rejected appellate body findings to the contrary. This unprecedented situation reflects that those appellate body findings are not settled law.
When the US Department of Commerce calculates a weighted average dumping margin for a given company, it typically takes into account numerous comparisons between sales in the United States and sales in the home market or third-country market (or costs in the home market).
It is not uncommon for the commerce department to find that some comparisons reveal dumping (eg., the price in the United States is lower than the home market price), while others reveal no dumping (eg., the price in the United States is higher than the home market price). Where a comparison reveals no dumping, the commerce department assigns a zero to that comparison, rather than a negative number equal to the amount by which the US price exceeds the home market price. This practice is commonly referred to as "zeroing."
In this dispute, Mexico challenged the use of "zeroing" in both the investigation phase and in assessment proceedings (the proceedings in which authorities determine the actual amount of antidumping duties owed).