WTO Panel Issues Mixed Ruling in US-Korea Anti-Dumping Dispute (March 11, 2016) [1]
On March 11, 2016, a WTO panel issued a report [3] in a dispute concerning a complaint against anti-dumping and countervailing duties the U.S. had imposed on imported washing machines from Korea, ruling for the first time on the practice of zeroing in targeted dumping investigations. According to a news report [4], the controversy began in 2011 when a U.S. corporation complained to the U.S. Department of Commerce, arguing that imported Korean-made washing machines were sold below their fair value price, which constitutes dumping, and was made possible because the producers and exporters were benefitting from unfair state aid. By 2013, the Department of Commerce and the U.S. International Trade Commission had determined that the imports were in fact materially injuring a U.S. industry and thus called for the imposition of duties, a practice the General Agreement on Tariffs and Trade (GATT) [5] allows member states in those circumstances. Member states are further permitted to apply duties to another member’s subsidized imports, which hurt the domestic economy under the Agreement on Subsidies and Countervailing Measures (SCM) [6]. The panel ruled that the U.S practice of zeroing in investigations of targeted dumping was inconsistent with its obligations under the WTO regime. Zeroing refers to a practice by which dumping margins, the difference between the export price and normal value, is calculated ignoring certain data which indicates that in some circumstances the good is sold at a higher price in the U.S. than in the domestic market of the exporter. Targeted dumping refers to dumping that is targeted to specific purchasers, regions, or time periods. The panel stressed that investigations of alleged targeted dumping must take into account the entire pricing behavior, without ignoring instances of above average prices.