WTO to rule on US duty calculation

The World Trade Organization has agreed to probe claims that the US was breaking global rules by using a calculation that inflates import duties nine months after the Bush administration agreed to end the practice.

WTO judges granted a European Union request to determine whether the US is now complying with a ruling last year that the calculation, known as zeroing, violates international trade laws. Zeroing enables the US to maximise import duties by selectively excluding some market price data.

The US used the methodology to work out whether imports of chemicals, steel and pasta from the EU were sold below cost, or dumped, on the domestic market. The WTO ruled in favour of Japan in a similar complaint in February 2005.

The Commerce Department announced on December 22 that it would eliminate zeroing, which considers the difference between the price a company charges for its product at home and in the US. The US averages the differences in calculating duties, except when the product is sold at a higher price in the US.

Canada, Thailand and other countries have argued that the US use of zeroing violated global trade rules by unfairly inflating duties on imports.

In April, the Commerce Department agreed to scrap anti- dumping duties on eight European steel exporters including the UK's Corus Group and the French operations of ArcelorMittal, and to lower them for other steelmakers. The department computed new dumping duties without using zeroing "" the first evidence of the impact of the WTO rulings against the calculation on specific complaints. The EU lodged its WTO case against zeroing in 2003.