Ostensibly, the good news in making moves to end zeroing practices for good (as we outlined in Part One of this post) is that our trading partners won’t be docking US exports with retaliatory fees, which makes the likes of the United Steel Workers (not to mention domestic steel producers exporting their products) happy: “One count of our core objectives has been met with these announced agreements – a prospective application of any change – meaning no retroactivity – while avoiding retaliation is certainly a very positive outcome,” USW President Leo Gerard said in a press statement.
However, the union will still lobby for the importance of the practice. “Also positive [about the agreements] is Ambassador Kirk’s confirmation that the U.S. will continue to pursue clarification of our rights within the WTO to apply zeroing, which is important to all companies and their workers who rely on conditions of fair trade in the U.S.,” Gerard also said.
Gerard and others see the removal of the zeroing practice as harmful, potentially undermining the “historical ability” of the present US antidumping duty law to capture 100 percent of dumping found.
Consider it this way, as put by Petros C. Mavroidis in “The WTO Case Law of 2004-2005: Legal and Economic Analysis”:
“[US proponents of zeroing] analogize dumping to speeding in a motor vehicle. When a motorist is caught speeding by a police officer, what matters is that the motorist is exceeding the speed limit at the time. There is no inquiry into the question of whether the motorist obeyed the speed limit on average, and no offset for speeding if the motorist was going below the speed limit at an earlier time. Zeroing is analytically equivalent in the view of its proponents — firms that dump should not enjoy any offset for the occasions on which they price above normal value.”
Ultimately, in the long run, it’s likely good for trade competition for the US to show that it plays by the rules, too. Who knows, maybe this will prove to be even better leverage against cheaters in the future.