ANTI-DUMPING MEASURES
ON SHRIMP AND DIAMOND
SAWBLADES FROM CHINA
DISPUTE DS422
ITRN 603
26 Feb, 2014
Hivi Faraj
Paul Gianoli
HISTORY & CONTEXT
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TIMELINE OF US’ ACTIONS
 In 2004: shrimp
 the USDOC started an anti dumping investigation on frozen and
canned shrimp
 Publish shrimp final determination calculating dumping margins on
responsible parties
 In 2005:
 An anti Dumping measure went into effect An anti-dumping duty order on shrimp
 Begins an anti-dumping investigation on sawblades
 In 2006: sawblades
 Release a final determination of injury
 In 2009:
 Anti-dumping measure goes into effect for sawblades
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TIMELINE OF DSU CASE
 Februar y 2011: China f iles complaint requesting consultation with US
regarding anti -dumping measures on cer tain frozen warmwater shrimp
 China stated that the use of zeroing increased dumping margins for Chinese
companies exporting shrimp
 China alleged USDOC zeroing practice is inconsistent with 1994 GATT A rticle VI
 July 2011: C h i n a r e q u e s te d a d d i t i o n al c o n s ul t a t i o n s o n z e r o i n g p r a c t i c e r e l a te d to
a n t i - d um p in g m e a s u r e s o n d i a m o n d s aw b l a d e s a n d p a r t s .
 October 2011:
 China requested establishment of panel and DSB established a panel
 The EU, Japan, Honduras, Korea, Thailand and Vietnam reserved third party rights.
 December 2011: Panel established
 June 201 2: Panel repor t distributed
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REACTIONS
 US unhappy with China filing formal complaint:
 “The United States is deeply disappointed in China’s decision to
request consultations. Members have called for the United States to
come into compliance with the WTO rulings on zeroing. In December,
the Department of Commerce issued a proposal to end zeroing in
administrative reviews, the core issue on which the Government of
China has today requested consultations…” (USTR Feb 2011)
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MAIN WTO ISSUE
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CONTESTED ISSUE INVOLVED
The US anti-dumping measures on shrimp and sawblades from
China:
 Anti-Dumping measures:
 Government takes such measures to protect domestic producers
 Tariffs are imposed to make up for the price difference
 Tariffs can be more than 100 percent in the US
 Zeroing:
 Method used by the USDOC to calculate dumping margins on foreign
importers that engage in dumping
 If one foreign producer engages in the act then the USDOC
investigates the entire industry
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“ZEROING”
 Practice of USDOC
in developing anti dumping margins
 Eliminates negative
dumping margins
 Can “create
dumping margins
out of thin air”
PUDD: “Potentially Uncollected Dumping Duties”
Source: Cato Institute
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USDOC USE OF ZEROING
 “Original Investigation” vs “Administrative Review”
 WTO summary of DS422: “…the USDOC’s use of zeroing in the original
investigation and several administrative reviews to calculate dumping
margins…”
 USDOC ceased zeroing in original investigations in Dec. 2006
 Only prospectively—does not recalculate A/D margins already in place (Prusa)
 April 16, 2012 – USDOC discontinues “zeroing” in calculating
dumping margins in administrative reviews
 Results in recalculation of A/D margins during reviews of prior investigations
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SPECIFIC WTO AGREEMENT INVOLVED
 Article VI of the GATT 1947:
 “2. In order to offset or prevent dumping, a contracting party may levy on
any dumped product an anti-dumping duty not greater than the margin of
dumping in respect of such product.”
 Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade GATT 1994
 Article 2.4: “A fair comparison shall be made between the export price
and the normal value…”
 Article 2.4.2: “…the existence of margins of dumping during the
investigation phase shall normally be established on the basis of a
comparison of a weighted average normal value with a weighted average
of prices of all comparable export transactions or by a comparison of
normal value and export prices on a transaction-to-transaction basis…”
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CONSISTENT WITH WTO OBLIGATIONS?
 Consensus: the use of zeroing in the USDOC’s methodology for
developing anti-dumping margins is inconsistent with the
country’s W TO obligations.
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POSITION OF THE MAIN
PARTIES
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POSITION OF CHINA
 Accused the US of allegedly using zeroing to determine its anti dumping margin
 Used to determine A/D margin for shrimp
 Used to determine “Separate Rate”
 “Since the dumping margins for relevant mandatory respondents were calculated
with and impacted by the application of ‘zeroing’, the Separate Rate calculated on
that basis was also affected by the application of ‘zeroing’.” (DS 422 first written
submission from China)
 Used to determine A/D margin for sawblades
 Use of zeroing is in violation of 1994 GATT ar ticles on anti dumping
measures
 1,2.1, 2.4., 2.4.2, 5.8, 9.2, 9.3 and 9.4 of Anti dumping act
 China argued that the zeroing resulted in inflated anti -dumping
margins for Chinese products, and thus higher duties.
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POSITION OF USA
 No formal rebuttals
 Not happy with the complaint filed by China
 Already in the process of discontinuing the practice of zeroing in
administrative reviews
 W TO puts pressure on the US because of its use of zeroing
 The US did not contest the claims made by China on its use of
zeroing
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THE DECISION
(RECOMMENDATION)
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THE DECISION (RECOMMENDATION)
 Zeroing
 The Panel found that the “zeroing” methodology used by the USDOC
in calculating the margins of dumping in the three anti -dumping
investigations at issue was inconsistent with Article 2.4.2 of the Anti Dumping Agreement, and therefore concluded that the United States
had acted inconsistently with its obligations under this provision.
 Separate Rate
 The Panel rejected China's claim concerning the separate rate, but
noted that the calculation of the separate rate on the basis of
individual margins calculated with zeroing necessarily incorporated
the WTO-inconsistent zeroing methodology
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IMPLEMENTATION &
SANCTIONS
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IMPLEMENTATION & SANCTIONS
 23 July 201 2
 US informs the DSB of its intention to implement the DSB recommendations and
rulings
 Establishes 8-month reasonable period of time (expires 23 March 2013)
 5 September 201 2
 USTR requests USDOC to take action necessary to implement the DSB
recommendations and rulings
 7 December 201 2
 USDOC issues the memorandum in which the Department recalculated the
weighted-average dumping margins from the antidumping investigation of shrimp
from China (calculated without the use of zeroing)
 17 December 201 2
 USDOC issues the memorandum in which the Department recalculated one of the
weighted-average dumping margins from the antidumping investigation of
sawblades from China (calculated without the use of zeroing)
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IMPLEMENTATION & SANCTIONS
 USDOC invites comments from interested par ties for both shrimp and
sawblades
 4 March 2013
 USDOC issues its final section 129 determinations after receiving comments and
rebuttal comments from the interested parties in both cases
 No changes to recalculated rates
 22 March 2013
 USTR instructs USDOC to implement its determinations under section 129
 26 March 2013
 US informs the WTO DSB that it has implemented the DSB recommendations and
rulings within the reasonable period of time.
 China states that it does not share the US' view that it had fully implemented the
DSB recommendations because it had “failed to revoke the anti-dumping duty on
sawblades.”
 China urges the United States to honor its obligation.
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OBSERVATIONS
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OBSERVATIONS
 General Obser vations
 Lack of reaction from the US confirms illegal actions
 More reaction from China related to the case
 China’s success encourages other nations to take disputes to WTO
 Last word on USDOC’s legacy of zeroing?
 Prior cases involving zeroing




DS402
DS383
DS350
DS344
ruled in favor of Korea in 2010
ruled in favor of Thailand in 2010
ruled in favor of European Communities in 2009
required an over -ruling of Appellate Body in favor of Mexico in 2007
 Recently filed cases involving zeroing
 Warmwater Shrimp from Viet Nam – ongoing case involving question of zeroing
 Certain Steel Nails from China – filed new request for consultation Dec. 2013
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OBSERVATIONS
 National and International Interests
 Significant to other countries exporting/looking to export to the US
 Highlights consequence of lack of specificity in international agreements
 Doha Round Rules negotiations need to adopt clear, precise rules in the Antidumping Agreement on
the use of zeroing (USTR )
 Specific methodology under scrutiny of international community with use clearly defined in
agreements
 WTO Members need to agree on better implementation mechanisms (Ahn )
 WTO Members must individually resort to the dispute settlement system in order to rectify USDOC’s
zeroing practices
 Multiple successful cases — the international community successfully influenced US policy
change on specific trade issue
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THANK YOU
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SOURCES
Ahn, Dukgeun. Oct. 16, 2013. “US - Anti-Dumping Measures on Certain Shrimp and Diamond Sawblades from China: Never Ending
Zeroing in the WTO?” [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2396297 (accessed Feb. 23, 2014)]
Davis, Ryan. Jan 3, 2011. “Commerce Moves To End Zeroing On Most Exports.” Law360.
[http://www.law360.com/articles/217690/commerce -moves-to-end-zeroing-on-most-exports (accessed Feb. 23, 2014)]
“Certain Frozen Warmwater Shrimp From the People's Republic of China and Diamond Sawblades and Parts Thereof From the People's
Republic of China: Notice of Implementation of Determinations Under Section 129 of the Uruguay Round Agreements Act and Parti al
Revocation of the Antidumping Duty Orders .” Federal Register, Vol. 78, No. 60 (March 28, 2013), pp. Pages 18958-18960. Published by:
Government Printing Office. [http://www.gpo.gov/fdsys/pkg/FR-2013-03-28/html/2013-07251.htm (accessed Feb. 23, 2014)]
Ikenson, Daniel J. April 27, 2004. “Zeroing In: Antidumping’s Flawed Methodology under Fire.” CATO Institute.
[http://www.cato.org/publications/free -trade-bulletin/zeroing-antidumpings-flawed-methodology-under-fire (accessed Feb. 23, 2014)]
Prusa, Thomas J., and Luca Rubini. “United States –Use of Zeroing in Anti-Dumping Measures Involving Products from Korea: It’s deja vu
all over again.” World Trade Review, Vol. 12, No. 2 (2013), pp. 409 –425. Published by: Cambridge Journals
[http://econweb.rutgers.edu/prusa/cv/54%20 -%20Korea%20zeroing.pdf (accessed Feb. 23, 2014)]
Smith, Lee. March 2012. “New Methodology To End Zeroing Practice Announced.” Trade & Manufacturing Alert.
[http://www.kslaw.com/library/newsletters/TradeManufacturingAlert/2012/March/article4.html (accessed Feb. 23, 2014)]
United States - Anti-Dumping Measures on Certain Shrimp and Diamond Sawblades from China. Feb. 9, 2012. Office of the United
States Trade Representative. [http://www.ustr.gov/sites/default/files/Chn.Sub1_.ExecSum.%28for%20posting%29.pdf (accessed Feb .
22, 2014)]
United States - Anti-Dumping Measures on Shrimp and Diamond Sawblades from China. March 26, 2013. WTO Dispute Settlement.
[http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds422_e.htm (accessed Feb. 22, 2014)]
USTR Statement Regarding China's Decision to Request WTO Consultations on Shrimp Antidumping Measures. Feb 2011. Office of the
United States Trade Representative. [http://www.ustr.gov/about-us/press-office/press-releases/2011/february/ustr-statementregarding-chinas-decision-request (accessed Feb. 22, 2014)]
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