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Article

Sang Man Kim and Jongho Kim

The purpose of this paper is to review the use of zeroing in the weighted average-to-transaction (W-T) comparison methodology and targeted dumping under the anti-dumping…

Abstract

Purpose

The purpose of this paper is to review the use of zeroing in the weighted average-to-transaction (W-T) comparison methodology and targeted dumping under the anti-dumping agreement by reviewing the WTO appellate body’s rulings on the use of zeroing in the W-T comparison methodology in the USA – anti-dumping measures on large residential washers from Korea (DS464). Although the appellate body has ruled that the use of zeroing would not be allowed in the weighted-average-to-weighted-average comparison methodology nor in the transaction-to-transaction comparison methodology, it has not ruled on whether the use of zeroing is allowed in the W-T comparison methodology prior to the instant case.

Design/methodology/approach

This paper mainly analyzes the WTO appellate body report on the USA – anti-dumping and countervailing measures on large residential washers from Korea’s rulings (DS464) and reviews other WTO appellate body reports on the use of zeroing in anti-dumping measures. This paper reviews the relevant provisions of the WTO anti-dumping agreement and the US Anti-Dumping Act, and also referred prior papers on the use of zeroing.

Findings

The appellate body upheld the panel’s finding that the USA’s use of zeroing in the W-T comparison methodology is inconsistent with Article 2.4.2 of the anti-dumping agreement. As zeroing inflates dumping margins, increases the amount of duty collected, and hinders the expansion of trade in goods. The use of zeroing should be prohibited or permitted only in very limited circumstances.

Social implications

Zeroing, which has been the subject of many WTO disputes between the USA and foreign governments, causes dumped sales to be masked by fair value. The WTO appellate body has consistently condemned the US practice of zeroing over the past decade as an unfair commerce practice. The instant case and this paper will help to stop the practice of zeroing in anti-dumping measures.

Originality/value

The text of Article 2.4.2 does not clearly prohibit the use of zeroing. The paper reviews the WTO appellate body’s rulings on the use of zeroing in the W-T comparison methodology in the USA – anti-dumping measures on large residential washers from Korea (DS464). The appellate body report was very recently circulated, on September 9, 2016. The appellate body has not ruled on whether the use of zeroing is allowed in the W-T comparison methodology prior to the instant case. This paper, first, concludes that the W-T comparison methodology is inconsistent with Article 2.4.2 of the anti-dumping agreement.

Details

Journal of Korea Trade, vol. 21 no. 2
Type: Research Article
ISSN: 1229-828X

Keywords

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Article

Jaemin Lee and Youngjeen Cho

The purpose of this paper is to examine zeroing jurisprudence under the WTO’s Anti-Dumping Agreement and to see if the jurisprudence can still be applied to situations of…

Abstract

Purpose

The purpose of this paper is to examine zeroing jurisprudence under the WTO’s Anti-Dumping Agreement and to see if the jurisprudence can still be applied to situations of targeted dumping where dumping takes place in a specific region, at specific timing, or for specific consumer groups.

Design/methodology/approach

This paper examines the prior decisions of the WTO panels and the Appellate Body relating to the zeroing practice. It categorizes the key elements of these prior decisions where the zeroing practice has been found WTO-inconsistent. While there has been no specific dispute addressing targeted dumping per se, this paper proves that core elements of the zeroing practice have been anatomized and dissected by the panels and the Appellate Body in prior proceedings. The paper then analyzes whether these key elements still exist in the specific context of targeted dumping and thus whether application of zeroing is still prohibited in targeted dumping situations.

Findings

The existing jurisprudence on zeroing from previous WTO disputes should apply to targeted dumping situations as well. Unbridled application of zeroing in the targeted dumping situations will effectively nullify the existing zeroing jurisprudence accumulated through a decade of WTO disputes. If unchecked, this calculation methodology in the context of targeted dumping may open the back door wide open for “zeroing” negative anti-dumping margins. The paper concludes that the existing jurisprudence on zeroing stands for the proposition that zeroing in targeted dumping should also be prohibited.

Originality/value

This paper examines the legality of the zeroing practice in targeted dumping situations, which has been one of the most controversial issues among WTO members for the past several years. The analyses and discussions contained in this paper will provide legal guideline to evaluate zeroing in targeted dumping within the WTO framework. The outcome of the research will provide a platform for continued research and discussion in this area.

Details

Journal of Korea Trade, vol. 20 no. 3
Type: Research Article
ISSN: 1229-828X

Keywords

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