US faces battle over metal duties

The EU is preparing for further confrontation with the US government over anti-dumping duties imposed on sensitive industrial imports including steel and aluminium.

European Commission moves this week to launch World Trade Organization (WTO) dispute procedures are likely to lead to legal action after the summer.

US methods of calculating anti-dumping tariffs on imports, a complex process known as ‘zeroing’, were deemed illegal by the WTO in May 2006 following a challenge brought by the Commission. The EU, along with other WTO members including Canada, Japan and Mexico, claim that ‘zeroing’ allows the US to inflate anti-dumping duties artificially by ignoring sales of non-dumped goods in its retrospective calculations.

The US is notoriously protective of its metals industry. Despite the Bush administration’s pledge two months ago that last year’s ruling would be observed, the Commission is still not satisfied that concrete results, in the form of reduced duties, will be forthcoming. "The US is not applying the ruling to measures currently in force. Although some changes were made, rules were not changed in such a way that ensured distorted anti-dumping duties will no longer be applied to EU imports," said a Commission official.

This week the Commission launched a ‘request for consultations’, the first step in a renewed challenge to US anti-dumping tactics. The next step, which would follow two months later, is a full dispute resolution panel. "Our preference is always to find a solution through consultation. If it fails, then the option of using the panel process is still there," said the official.

But one US-based lawyer specialising in WTO anti-dumping disputes said that the US was unlikely to bow to EU pressure. Craig Lewis, a partner at the Washington DC office of law firm Hogan & Hartson, said that US lawmakers were "sincere in their belief" that the WTO ruling undermined the rule of law by creating arguments that are not contained in multilateral anti-dumping rules. Provisions under the General Agreement on Tariffs and Trade (GATT) do not address the issue of zeroing.

In addition, he said, the powerful US steel lobby is currently exerting substantial pressure on US legislators to introduce laws making zeroing mandatory. "The users of the anti-dumping measures in the US - the steel industry is the primary example - have very strong influence in the Democrat-controlled US Congress and an even stronger influence in the Commerce Department," he said.

The current consultation, which aims to ensure that last year’s ruling is applied to future calculations of anti-dumping duties, will be running in parallel with a separate legal challenge on zeroing launched by the Commission last month. In the latter case, the Commission is trying to ensure that the ruling applies to the period of legal limbo that preceded last year’s ruling. Steel exporters such as Latvia had not yet joined the EU when the original complaint was submitted to the WTO.

The EU is preparing for further confrontation with the US government over anti-dumping duties imposed on sensitive industrial imports including steel and aluminium.