US dumping duty maths fails WTO test

NEW DELHI: India and 15 other nations have joined forces to defeat an attempt by World Trade Organization’s committee on rules to legitimise a process called zeroing that will allow the US to impose high anti-dumping duties. The countries have submitted a joint representation to WTO saying the move would lead to increased protectionism.

Dumping margin, which is the difference between the normal price of a product in the exporting country and the export price, gets inflated through the process of zeroing (used by the US department of commerce). In the process, the anti-dumping duties imposed on the exporter also end up being much higher. This happens because while calculating the average dumping margin by looking at a number of similar products, the negative dumping margins are ignored and designated as zero.

On several occasions, the WTO Appellate Body has struck down applications for such methodology by both the EU and US. However, a draft text circulated by Uruguayan ambassador Guillermo Valles Galmes, who chairs the WTO committee on rules, stating that the process of zeroing could be allowed under certain circumstances, could legitimise the process.

In its representation against the move, the 16-member group — which includes Brazil, China, Japan, New Zealand and Norway — pointed out that zeroing was a biased and partial method for calculating the margin of dumping and inflated anti-dumping duties. “If the use of such practice prevails in future, it could nullify the results of trade liberalisation efforts,” it said.

The group added that since in Marrakesh WTO members expressed their determination to resist protectionist pressures, all members should ensure the mutilateral trading system is not undermined through zeroing.