We’ve written extensively about why certain nations (ahem, China in particular) conveniently seem to keep “forgetting to follow WTO-mandated rules see here and here including the United States. The US is by no means an innocent when it comes to playing the trade game to their advantage, as is the case with the practice called “zeroing.
Zeroing has been used exclusively by the US (none of the other 152 WTO members do this) to bolster their anti-dumping claims and protect trade interests, notably in the steel sector. (See Lisa’s coffee cup-and-Japan example now, now, keep your minds out of the gutter.) Essentially, zeroing happens when, in calculating import prices, the US simply tosses out or “zeroes the instances in which the exporters’ domestic price is lower than the domestic US price, creating a much larger dumping margin, and giving them quite a skewed advantage, many say.
As we’ve previously reported, the WTO called the US out on this in May 2009, ruling against the practice and basically issuing a “cease and desist order. From then on, zeroing was disallowed on a new case basis, but any actions taken on already existent cases were much murkier. (US courts supported the practice.) So the US technically “stopped zeroing, while appealing the ruling. Later that year, they lost the appeal. So, case closed, right?
Apparently not. Other reports indicated the US had stopped zeroing back in December 2006, just before an initial WTO ruling on the issue in 2007. But Bloomberg recently reported that the US Commerce Department just now “proposed ending the way it calculates dumping duties after Japan, the European Union and Thailand said their exports were being penalized. (The steel case with Japan has been ongoing.)
“ËœWhile it has taken a very long time, the Commerce Department has finally acted to remove a serious distortion from antidumping calculations,’ Lewis Leibowitz, a lawyer at Hogan Lovells in Washington who represents U.S. companies that use imported products, said in a statement,’ according to the article.
So what’s the deal? Four years of ambiguity? When did the US actually stop zeroing? Or has it stopped at all? And how long does it really take to comply with WTO laws? Is the WTO effective, then? As the US flails to keep up in the globalized market, it clearly has a hard time letting go of some “tricks of trade that it would just as easily accuse others of employing.
Tell us what you think.
MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event: