On September 7, 2011, the United States reached agreements with the European Union and Japan to extend the deadline for responding to their successful WTO challenges on zeroing in administrative reviews. Both the EU and Japan have pending retaliation rights stemming from a WTO Appellate Body decision that ruled that the U.S. zeroing policy in administrative reviews was inconsistent with the antidumping agreement. U.S. manufacturers that continue to be harmed by unfair trade remain hopeful that the Obama administration will not change the calculation methodology for determining dumping margins in administrative reviews, particularly when many believe that the WTO appellate body exceeded its authority when reaching its controversial zeroing finding. Moreover, given the Obama administration’s focus on job creation, any proposal to change the dumping calculation methodology to eliminate zeroing in administrative reviews would be counterproductive to that goal for industries being harmed by unfair trade.
Separately, the zeroing issue has recently found its way into a number of cases before Commerce and the CIT.
As reported in the May Trade & Manufacturing Alert, the U.S. Court of Appeals for the Federal Circuit in Dongbu Steel Co. v. United States ruled that the Department of Commerce (“Commerce”) failed to adequately explain its zeroing practice in administrative reviews when it no longer uses the practice in antidumping investigations. “Zeroing” means that Commerce “zeros out” non-dumped sales rather than offsetting them against dumped sales. Eliminating the zeroing practice will cause dumping margins to be understated. Since that ruling, a number of cases have been stayed at the Court of International Trade pending resolution of Dongbu Steel. During the same period, Commerce repeatedly rejected foreign producers’ requests to abandon zeroing in ongoing administrative reviews based on the Dongbu Steel decision. In those cases, Commerce provided some insight as to how it might respond to the Federal Circuit’s request for explanation in Dongbu Steel. In particular, Commerce noted that the Federal Circuit already considered that not zeroing in certain circumstances would render parts of the trade statute superfluous, and affirmed Commerce’s practice of zeroing in investigations involving targeted dumping.