Panel Backs Brazil in Zeroing Dispute with US

In a ruling released last Friday, a WTO dispute panel sided with Brazil in its dispute with the US concerning the method Washington used to calculate anti-dumping duties on Brazilian orange juice. Brazil first filed the complaint in 2008.

Following in the footsteps of several previous WTO rulings, the panel ruled that the US violated WTO rules when it used  ‘zeroing’, a controversial method of calculating the extent to which trading partners are ‘dumping’ (exporting at artificially low prices) their goods in the US market.  Under this methodology, US commerce authorities ignore, or ‘zero out’, instances in which goods command higher prices in the US market than in the country that made and exported the goods in question.

This is the second panel to condemn the US for the practice this year (the other being a panel that ruled against US levies on South Korean steel, WT/402/R). Three more disputes over zeroing are pending, one brought by China, one by Vietnam, and another by South Korea.  The trend may not dissipate either, considering Washington’s preference to defend anti-dumping measures involving zeroing on a case-by-case basis, repeatedly arguing that its domestic legal structures prevent it from amending the relevant orders absent a WTO ruling calling for changes to the particular anti-dumping order.

However, WTO panels have urged members involved in such disputes to find a lasting “systemic” solution to the controversial method “sooner rather than later,” instead of leaving it to repeated adjudication.

In response, the US has attempted to defuse some of the anger over zeroing by proposing to eliminate the practice in administrative reviews of anti-dumping duties already in place. It had previously banned the practice for some times of investigations.  The department of commerce issued the rule change late December of last year and is currently in the process of collecting and analyzing comments.

The US addressed implementation concerns at a latest Dispute Settlement Body meeting on 25 March, saying “at this time, the US Department of Commerce is continuing with its ongoing work on the December proposal.” Speaking about Japan’s case against zeroing, it said “because of our concerns about the findings regarding zeroing in this and other disputes, responding to those findings has presented substantial challenges for the United States and required significant resources.”

The Brazilian government said in a statement that it “hopes that the United States will bring its measure into conformity without delay, as a clear sign of respect for the multilateral trade disciplines.”