U.S. Government Expands the Use of Zeroing in Antidumping Investigations

Introduction

Foreign exporters and U.S. importers should take note of a recent antidumping decision that represents a significant change in the U.S. Government's antidumping duty calculations. The decision, which involved imports of certain retail carrier plastic bags from Taiwan, expands the use of a controversial practice known as "zeroing" through the use of a "targeted dumping" analysis. Polyethylene Retail Carrier Bags from Taiwan: Final Determination of Sales at Less than Fair Value, 75 Fed. Reg. 14569 (Mar. 26, 2010) ("Taiwan Bags"). We discuss this below.

Background

Antidumping laws were intended to address certain "unfair" trading practices between countries, thereby "leveling the playing field." Generally speaking, "dumping" is when a foreign company sells its goods in the United States for less than it sells the same products in its home country (or when it sells its products for less than it costs to produce them, plus a "reasonable" profit), causing injury to the U.S. industry. The U.S. Department of Commerce ("Commerce") is the agency primarily responsible for enforcing U.S. antidumping laws. If Commerce determines that a foreign company is dumping its products in the United States (and the U.S. International Trade Commission finds injury), it imposes an antidumping duty to offset the amount of dumping. Commerce uses very complicated computer calculations to determine whether and by how much a foreign company is dumping its goods in the United States.

Under U.S. law, Commerce has discretion in how it chooses to calculate the amount of dumping (known as the "margin" of dumping). At times, Commerce has used its discretion to calculate dumping margins as high as possible. A practice known as "zeroing" is one method Commerce has used regularly to increase dumping margins. Zeroing is when Commerce does not give a foreign company any credit for non-dumped sales in the dumping calculations. Instead, Commerce "zeros" out non-dumped sales and calculates the margin based only on dumped sales. This approach tends to increase the overall average amount of dumping. Commerce's zeroing practice has been repeatedly declared unlawful by the World Trade Organization ("WTO"), the international organization responsible for overseeing international trade disputes.

Commerce has refused on numerous occasions and under different scenarios to fully abide by the WTO's decisions declaring zeroing unlawful. In fact, Commerce has used several legal...