Legal warning as trade watchdog ‘zeros in’ on anti-dumping duties

Date: 15/03/01

By Peter Chapman

FALLOUT from the EU's defeat in a World Trade Organisation anti-dumping dispute could lead to fewer new dumping cases and a spate of legal challenges to past European decisions to impose duties, trade lawyers predicted this week.

The Geneva-based watchdog's appellate body decided on Monday to outlaw 'zeroing', one of the key methods used by the European Commission when it considers proposing duties against firms flooding markets with below-cost goods.

Ruling on a case involving Indian bed-linen, the WTO said the Commission was wrong to ignore individual transactions where no dumping has been found when they calculated market-wide dumping margins. It is widely accepted that the technique artificially bumps up duties.

Senior Commission trade officials this week promised to change the way they conduct future investigations, but they claimed it was "too early to say" what the impact of the WTO ruling will be. But legal experts are already predicting huge ramifications for the use of anti-dumping measures in the EU and abroad.

"The impact is likely to mean the number of new cases will reduce substantially, "said James Searles, a partner with US firm Oppenheimer, Wolff and Donnelly. He added that other trade blocs, such as the US and India, which use the same technique will also have to re-think their policy or face defeat in the WTO.

"I think it is fairly certain that the next instance that the US did zeroing it would be challenged directly," he said. "It may decide for administrative purposes to change its procedures before that."

Dan Horovitz, senior partner in the Brussels office of law firm Theodore Goddard, says the ruling could open a Pandora's box of WTO challenges to current decisions by the EU to impose anti-dumping duties on foreign imports for which the zeroing technique has been allegedly abused.

His firm is currently representing the Brazilian makers of pipe fittings used in the building industry in a WTO case against the EU - in which zeroing was a factor.

Horovitz says the zeroing ruling shows the watchdog is starting to wield its power to stop nations abusing trade policy to protect domestic firms.

"Going beyond these rulings the significant impact coming from the Appellate Body is that we now have a 'guardian of the guardians'," he said. "There were on numerous occasions serious concerns about the objectivity of national authorities. The WTO's judiciary is much more objective and it eventually decides if the authorities were right or wrong."

Fallout from the EU's defeat in a World Trade Organisation anti-dumping dispute could lead to fewer new dumping cases and a spate of legal challenges to past European decisions to impose duties, trade lawyers have predicted.