Transcript Anti-Dumping Agreement - Global Trade Relations

United States — DS 422
Anti-Dumping Measures on Shrimp
and Diamond Sawblades from China
Rosemary Siqueira
Justin Van Buren
History
• The United States Department of Commerce
(USDOC) applied a “zeroing” methodology to
calculate dumping margins for individual
exporters. From January 2004 to February 2005,
USDOC investigated and calculated dumping
margins for the four shrimp exporters selected
for individual examination:
–
–
–
–
Allied: 80.19%
Yelin: 82.27%
Red Garden: 27.89%
Zhanjiang Guolian: 0.07%.
History
• The USDOC applied a “separate rate” of 53.68%,
calculated as the weighted average of the margins of
dumping calculated for Allied, Yelin, and Red Garden,
to 35 exporters/producers who were not selected for
individual examination but had established their
independence from the government.
• The USDOC applied a “PRC-wide rate” of 112.81% to
exporters/producers not selected for individual
examination who did not establish their independence
from the government.
• In August 2006, USDOC applied to separate rate to an
additional 11 Chinese exporters.
History
• In May 2006, USDOC calculated anti-dumping
margins on diamond sawblades:
– AT&M: 2.82%
– BOSUN: 35.51%
– Hebei Jikai: 48.5%
– a separate rate of 21.43%;
– a PRC-wide rate of 164.09%.
History
• China challenged the shrimp anti-dumping order
and the USDOC’s final determinations.
– Specifically, China challenged:
• the use of the zeroing methodology by USDOC in
determining dumping margins
• the calculation of the separate rate through use of the
contested zeroing-calculated margins
• China also challenged the final sawblade
determination and anti-dumping order.
– Specifically, China again challenges the zeroing
methodology used by USDOC in determining AT&M’s
dumping margin.
Dates
• On February 28, 2011, China requested consultations
• On March 11, 2011, Japan requested to join the
consultations.
• On July 22, 2011, China requested complementary
consultations with the United States with regard to the
zeroing practice by the USDOC in its anti-dumping
measures on diamond sawblades and parts thereof
from China.
• On October 13, 2011, China requested the
establishment of panel. On the same day, China and
the United States informed the DSB of an Agreement
on Procedures.
Prior Proceedings
Prior Proceedings
Prior Proceedings
• WT/DS404/R – United States – Anti-Dumping
Measures on Certain Shrimp from Vietnam
(Adopted September 2, 2011)
– Vietnam contested that USDOC zeroing
methodologies inconsistent with article 2.4.2
– Several anti-dumping measures on certain frozen
warm-water shrimp from Vietnam.
– zeroing practice to calculate anti-dumping
measures by the United States.
– upheld by the DSB.
Prior Proceedings
• WT/DS264/AB/R - US – Softwood Lumber V
dispute (Adopted August 31, 2004)
– Canada contested that the zeroing practice used in
the same manner by the USDOC
– Appellate Body found to be inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement
(WT/DS422/R Report of the panel -pg. 7).
Political Context
• The United States and China relied on DSB to
settle trade disputes
• Rule-oriented system operating as a
mechanism for enforcing previously agreed
upon rules between the various states
• Helps promote stability and consistency within
the international order especially within the
international economic system
Political Context
• Pre-established rules:
– Help mitigate political power struggles
– Settle disputes on a level playing field
• Complainant/respondent/third parties benefit
– From dispute settlement process
– From fair assessment of the particulars of the case
• Helps to strengthen international relations
between parties involved
Business Context
• Anti-dumping duties are important as a
deterrent to prevent foreign firms from selling
products at prices far lower than production
costs, and to protect domestic industry from
unfair foreign competition
• Does this result in higher prices to consumers?
What does it do to competitiveness?
Business Context
• The impact resulting from USDOC’s use of
zeroing is reflected on the Anti-dumping duty
order imposed on the Chinese shrimp and
sawblade companies
Contested issue
• Both of the most recent proceedings, DS404
and DS264, contested USDOC’s use of its
zeroing methodology to calculate antidumping measures. DS404 was upheld by the
DSB, and in DS264 the Appellate Body found
USDOC’s zeroing methodologies to be
inconsistent with article 2.4.2 of the AntiDumping Agreement.
So… What is zeroing?
• Remember when I mentioned taking an
average while excluding negative values?
That’s zeroing.
So… What is zeroing?
On May 24, 2011 (three months after China had requested consultations) the US
Court of International Trade issued a remand order to USDOC, and USDOC revised
production input and labor hours used in margin calculations.
WTO Agreement
Agreements cited in this case:
• Article 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes
(“DSU”)
• Article XXII:1 of the General Agreement on Tariffs
and Trade 1994 (GATT 1994)
• Article 17 of the Agreement on implementation
of Article VI of the General Agreement on Tariffs
and Trade 1994 (“Anti-Dumping Agreement”)
WTO Agreement
• China alleged that use of zeroing methodology
was inconsistent with agreement (under Article
VI: 1, VI: 2 of the GATT 1994 and Articles 1, 2.1,
2.4,2.4.2, 5.8, 9.2, 9.3, and 9.4 of the AntiDumping Agreement)
• China also asserted dumping margins calculated
in the original investigation and administrative
reviews were inconsistent (under United State’s
obligations under Article 11.3 of the AntiDumping Agreement)
WTO Agreement
Provision - Anti-Dumping Agreement (ADA) Art. 2.4.2 (Dumping
Determination – Zeroing)
• Margins of dumping established on
• Comparison of a weighted average normal value with a weighted average of
prices of all comparable export transactions or
• By comparison of normal value and export prices on a transaction-totransaction basis.
• Normal value established on weighted average basis may be compared
to prices of individual export transactions if…
1)
2)
authorities find pattern where export prices differed significantly among
different purchasers, regions or time periods and;
an explanation is provided on why such differences cannot be taken into
account by the use of a weighted average-to-weighted average or
transaction-to-transaction comparison
Panel Conclusions –
Consistency
• Inconsistent with first sentence of Article 2.4.2
of the Agreement on implementation of
Article VI of the GATT and Trade 1994 (“AntiDumping Agreement”)
– Using zeroing in calculation of certain margins of
dumping
– Three investigations involving PRC products
Panel Conclusions –
Consistency (cont.)
• “Zeroing” methodology constantly used by
USDOC
• By using this methodology, the USDOC:
– Identified different models (Types)
– Calculated weighted average prices
– Compared the weighted average normal value of each
model to the weighted average U.S. price
– Calculated the dumping margins for an exporter for
each merchandise model
– Set all negative margins on individual models to zero
Implementation and
Sanctions
• United States informed the DSB meeting on March 26, 2013 that it
had implemented the DSB recommendation and rulings within the
time frame agreed upon
• China disagreed with the United States’ statement that the
measures were brought into conformity with its obligations under
this Agreement
– Anti-dumping duty on sawblades not removed
– China advised that the United States fulfill its obligation
• Today:
– Lack of further proceedings suggests that U.S. has fulfilled this
obligation
– U.S. has complied with its obligations under this agreement
– We uncovered no further proceeding has been reported
– So, it would appear that there is no need for sanctions
Observations
• China provided evidence and support
documentation to show violation of the AntiDumping Agreement under the Article 2.4.2
• Third party written submissions
• Disagreement between parties on compliance
(Diamond Sawblades)
• Revisions of panel report by China and U.S.
Future Zeroing?
• On February 14, 2012 the USDOC declared that it
would no longer use zeroing methods in
calculating anti-dumping margins
• However, in USDOC’s Final Rule of April 22, 2014,
it codified the use of zeroing in targeted dumping.
• Yet on March 11, 2016, the panel in DS464 issued
a report stating that zeroing methodologies were
inconsistent with article 2.4.2 of the AD
agreement
Questions?
• No? Good. Thank You. Bye.
Bibliography
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“DS422 --Antidumping Measures on Certain Frozen and Canned Warmwater Shrimp from the PRC - Prc-Shrimp-AdWto-129-Final-Memo-20130304.pdf.” 2016. Accessed March 21.
http://enforcement.trade.gov/download/section129/prc-shrimp-ad-wto-129-final-memo-20130304.pdf.
Hartigan, James C. 2015. “It’s Baaaack — Zeroing, the US Department of Commerce, and US — Shrimp II (Viet
Nam).” SSRN Scholarly Paper ID 2669961. Rochester, NY: Social Science Research Network.
http://papers.ssrn.com/abstract=2669961.
“No More Zeroing?: The United States Changes Its Antidumping Policy to Comply with the WTO | ASIL.” 2016.
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“WTO | Dispute Settlement - the Disputes - DS422.” 2016. Accessed March 21.
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