WORLD TRADE  
ORGANIZATION  WT/DS322/24 
11 January 2008 
 
 (08-0146) 
 Original:   English 
  
 
UNITED STATES – MEASURES RELATING TO ZEROING  
AND SUNSET REVIEWS 
 
Recourse to Article 22.2 of the DSU by Japan
 
 
 
 The following communication, dated 10 January  2008, from the delegation of Japan to the 
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 22.2 of the DSU.  
_______________ 
 
  Japan requests that an ordinary meeting of th e Dispute Settlement Body (DSB) to be held on 
21 January 2008 consider the following agenda item: 
 
United States – Measures Relating to Zeroing and Sunset Reviews (WT/DS322) – Recourse by Japan to Article 22.2 of th e Understanding on Rules and Procedures 
Governing the Settlement of Disputes 
Background to this request
 
 
 On 23 January 2007, the DSB adopted the Appe llate Body Report, and the Panel Report, as 
modified by the Appellate Body Report.  In these reports, it was found that the United States' zeroing 
procedures1, and the application of those procedures in a series of anti-dumping proceedings, are 
inconsistent with various provisions of the Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade 1994 ("Anti-Dumping Agreement ") and the General Agreement on 
Tariffs and Trade 1994  ("GATT 1994").  In particular: 
 
 (i) by maintaining zeroing procedures in original investigations when calculating 
margins of dumping on the basis of we ighted average-to-weighted average 
comparisons, the United States acts inconsistently with Article 2.4.2 of the Anti-Dumping Agreement ;
2 
  (ii) by maintaining zeroing procedures in original investigations when calculating 
margins of dumping on the basis of transaction-to-transaction comparisons, the 
United States acts inconsistently with Articles 2.4 and 2.4.2 of the Anti-Dumping 
Agreement ;
3 
 
                                                      
1 The term "zeroing procedures" refers to the methodology under which the United States Department 
of Commerce ("USDOC") disregards intermediate negative comparison results in the process of establishing the 
overall dumping margin for the product as a whole for a foreign producer or exporter.  See Appellate Body 
Report, footnote 3. 
2 Panel Report, para. 7.258(a). 
3 Appellate Body Report, para. 190(b). WT/DS322/24 
Page 2  
 
   (iii) by applying zeroing procedures in the anti-dumping investigation regarding imports 
of cut-to-length carbon quality steel products from Japan, the United States acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement ;
4 
  (iv) by maintaining zeroing procedures in  periodic reviews, the United States acts 
inconsistently with Articles 2.4 and 9.3 of the Anti-Dumping Agreement  and 
Article VI:2 of the GATT 1994;
5 
  (v) by maintaining zeroing procedures in ne w shipper reviews, the United States acts 
inconsistently with Articles 2.4 and 9.5 of the Anti-Dumping Agreement ;
6 
 
 (vi) by applying zeroing procedures in the 11 periodic reviews identified in Japan's 
Request for the Establishment of a Panel,7 the United States acted inconsistently with 
Articles 2.4 and 9.3 of the Anti-Dumping Agreement  and Article VI:2 of the GATT 
1994;8 and 
 
 (vii) by relying on margins of dumping calculated in previous proceedings using the 
zeroing procedures in the two sunset review s identified in Japan 's Request for the 
Establishment of a Panel,9 the United States acted inconsis tently with Article 11.3 of 
the Anti-Dumping Agreement .10 
 
 On 27 December 2006, the United States Depa rtment of Commerce ("USDOC") published a 
notice stating that, with effect from 22 Febr uary 2007, it would abandon the use of zeroing in 
weighted average-to-weighted average comparisons in original anti-dumping investigations, pursuant 
to the recommendations and rulings of the DSB in dispute WT/DS294.  This action also addresses the 
DSB's recommendations and rulings under point (i) above.  
 
 On 20 February 2007, the United States informed  the DSB that it intended to comply with its 
WTO obligations in this dispute but that it woul d require a reasonable period of time to do so.  
Pursuant to Article 21.3(b) of the Understanding on Rules and Pro cedures Governing the Settlement 
of Disputes  ("DSU"), Japan and the United States agreed that this reasonable period would be 
11 months, expiring on 24 December 2007.  On 27 D ecember, the USDOC announced publicly that it 
had taken steps to implement the DSB's recomme ndations and rulings un der point (iii) above. 
 
Japan's request for authorization to suspend tariff concessions  
 
 By 24 December 2007, the United States had not complied with the DSB's recommendations 
and rulings because it failed to bring the measures found to be inconsistent with the Anti-Dumping 
Agreement  and the GATT 1994 into conformity with its  obligations under these agreements, except 
with respect to the zeroing procedures in weight ed average-to-weighted average comparisons in 
anti-dumping original investigations, as referred to  in point (i) above, which were abandoned with 
effect from 22 February 2007 pursuant to the US DOC's notice of 27 December 2006.  Additionally, 
on 27 December 2007, the USDOC announced publicly  that it had taken steps to implement the 
DSB's recommendations and rulings with respect to  the anti-dumping investigation regarding imports 
of cut-to-length carbon quality steel products , as referred to in point (iii) above.  
                                                      
4 Panel Report, para. 7.258(a). 
5 Appellate Body Report, para. 190(c). 
6 Appellate Body Report, para. 190(d). 
7 WT/DS322/8. 
8 Appellate Body Report, para. 190(e). 
9 WT/DS322/12. 
10 Appellate Body Report, para. 190(f).  WT/DS322/24 
 Page 3 
 
 
   Therefore, pursuant to Article 22.2 of the DS U, Japan requests authorization from the DSB to 
suspend the application to the United States of tariff concessions and other related obligations 
regarding goods, within the meaning of Article 22. 3(f)(i) of the DSU.  This request addresses the 
United States' failure to bring itself into conform ity with the recommendations and rulings of the DSB 
and the United States' obligations under the covere d agreements, with respect to the measures found 
to be inconsistent with the Anti-Dumping Agreement  and the  GATT 1994, as referred to in points (vi) 
and (vii) above . 
 
 In accordance with Article 22.4 of the DSU, the level of the suspension of concessions and 
other related obligations will be e quivalent to the level of the nullif ication or impairment.  In any 
given year, the level of the nullification or impair ment is (a) the total amount of the anti-dumping 
duties illegally determined, and interest thereon ("excess duties"),  plus (b) the annual value of Japan's 
lost exports to the United States ("trade effects").  In the first year, the amount of excess duties is 
US$121.8 million and the amount of trade effects is US$59.4 million.  
 
 Japan intends to implement the suspension of tariff concessions and other related obligations 
by imposing additional import duti es above bound custom duties ("additional duties") on a final list of 
products originating in the United States, which will be notified to the DSB together with the rate of 
the additional duties.  For the purpose of suspension w ith regard to item (a) in the previous paragraph, 
the additional duties will be set so as to collect an amount that does not exceed the total excess duties.  
In addition, for the purpose of suspension with rega rd to item (b) in the previous paragraph, the 
additional duties will be set so as to decrease the va lue of exports from the United States to Japan by 
the annual value of Japan's lost ex ports to the United States.  As necessary, for the purposes of both 
items (a) and (b), Japan will adjust the additional dut ies imposed from year to year in light of changes 
in the level of the nullification or impairment, as desc ribed in the previous paragraph.  In the event of 
such an adjustment, Japan will notif y to the DSB a list indicating the products subject to the additional 
duties, as well as the rate of the additional du ties, in the light of the adjusted level. 
 
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