The Implications of ‘Zeroing' on Enforcement of U.S. Antidumping Law
AbstractThe United States and other countries enforce their antidumping regulations in roughly the same way. There is a difference, however. The United States–but not other countries--now uses ‘zeroing’ in its determination of whether imports are dumped. The use of ‘zeroing’ will almost always increase the level of any antidumping duty, and will sometimes create a duty where none would have been imposed, had the methodology not been used. All countries test for dumping by attempting to determine whether imports are being sold at less than ‘normal’ value. Other countries do this by simply comparing the average price at which the product is sold in the country of production with the average price at which the same product is sold in the importing market. If the average of the observed prices in the importing country is lower than the average price in the country of production (the ‘normal’ value), then the foreign firm is said to be dumping. Using zeroing, however, the U.S. treats import price observations above the ‘normal’ value as if they occurred at the ‘normal’ value (rather than at their observed level). Transactions at prices below the normal value are treated at their observed levels. The result of zeroing has been to make the U.S. antidumping laws more restrictive than they might appear, with a positive antidumping margin potentially being found if any single transaction occurs below ‘normal’ value, even if the average of the import prices in the U.S. is much higher than the ‘normal’ value. The U.S. practice of zeroing has recently been challenged at least six times before the World Trade Organization (WTO), and has generally been found to be inconsistent with the WTO obligations of the United States. The net impact of the zeroing methodology on the United States (compared to antidumping enforcement without zeroing) depends inter alia on the dispersion of the U.S. prices obtained by foreign exporters under dumping investigation. No real estimates of this dispersion exist, but the paper discusses some related evidence which may permit an inference. This evidence is itself quite dispersed, and, therefore, an estimate of the impact and cost of zeroing to the United States has a broad range of uncertainty. But it is plausible that zeroing could add perhaps 3-4 % to the typical U.S. antidumping duty with a cost to the U.S. of around $150 million per year when all existing U.S. antidumping orders were determined by zeroing.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Justice, Antitrust Division in its series EAG Discussions Papers with number 200810.
Length: 24 pages
Date of creation: Aug 2008
Date of revision:
Trade; Dumping; Import; Zeroing; United States; WTO;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruce A. Blonigen & Jee-Hyeong Park, 2001.
"Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence,"
NBER Working Papers
8477, National Bureau of Economic Research, Inc.
- Bruce A. Blonigen & Jee-Hyeong Park, 2004. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," American Economic Review, American Economic Association, vol. 94(1), pages 134-154, March.
- Bruce A. Blonigen & Jee-Hyeong Park, 2000. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," University of Oregon Economics Department Working Papers 2001-1, University of Oregon Economics Department, revised 01 Jul 2001.
- Bruce A. Blonigen & Jee-Hyeong Park, 2000. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," University of Oregon Economics Department Working Papers 2003-22, University of Oregon Economics Department, revised 01 Jun 2003.
- Joseph E. Gagnon & Michael M. Knetter, 1992.
"Markup Adjustment and Exchange Rate Fluctuations: Evidence From Panel Data on Automobile Exports,"
NBER Working Papers
4123, National Bureau of Economic Research, Inc.
- Gagnon, Joseph E. & Knetter, Michael M., 1995. "Markup adjustment and exchange rate fluctuations: evidence from panel data on automobile exports," Journal of International Money and Finance, Elsevier, vol. 14(2), pages 289-310, April.
- Knetter, Michael M, 1989. "Price Discrimination by U.S. and German Exporters," American Economic Review, American Economic Association, vol. 79(1), pages 198-210, March.
- Bruce A. Blonigen & Stephen E. Haynes, 2002. "Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates," American Economic Review, American Economic Association, vol. 92(4), pages 1044-1061, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tung Vu).
If references are entirely missing, you can add them using this form.