The World Trade Organization’s (WTO’s) highest appeals court, the Appellate Body, today severly rebuked the United States for failing to comply with its recommendations in an anti-dumping dispute concerning the Japanese ball-bearing cylindrical-bearing steel products.
It found fault with the manner in which Washington collected anti-dumping duties based on an illegal zeroing methodology from Japanese steel producers.
Japan complained to the highest body that the US failed to implement the dispute settlement body (DSB) recommendations within an agreed reasonable period of time that ended December 24, 2007.
At the core of the dispute is the complex collection of anti-dumping duties by US authorities. The US is the only country that uses the retrospective duty assessment system in which definitive anti-dumping duties are not assessed upon the entry of the goods.
While all WTO members use a prospective system of collecting anti-dumping duties, which implies duties are assessed at the time of entry of the goods, the US imposes a cash deposit as the definitive duties are determined during the annual administrative reviews.
“The US retrospective duty system gives rise to unique “temporal” issues when the US implements rulings of the DSB,” said Brenden McGivern of White & Case International Trade, a legal firm. “In the present case, certain imports entered the United States before the expiration of the compliance period, but liquidation (actual collection of the duties) occurred after the compliance period,” he said.
The US also said that given the complex delays in the collection of anti-dumping duties resulting from judicial domestic proceedings, it could not be held responsible for non-compliance.
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The Appellate Body, however, dismissed the US’ arguments on the ground that any WTO-inconsistent conduct must stop by the end of the deadline —December 24, 2007 — even if imports of Japanese ball bearings and cylindrical roller bearings entered before the period to comply with the recommendations.
It rejected the US argument, saying that the relevant date was the expiry of the compliance period. “If a measure found to be WTO-inconsistent is to be applied after the expiry of the reasonable period of time, that measure must have been brought ‘into conformity’, irrespective of the date of entry of the imports covered by that measure,” it said.
Until now, the US has lost almost all anti-dumping disputes at the WTO because of its extensive use of the controversial zeroing methodology. Under this methodology, the US authorities imposed anti-dumping duties that exceeded the foreign producers’ or exporters’ margin of dumping.