UNITED STATES – CONTINUED EXISTENCE AND APPLICATION OF ZEROING METHODOLOGY
Document: Request for Consultations by the European Communities
Date: 3 October 2006
Document codes: WT/DS350/1; G/L/786; G/ADP/D70/1
Complainant: EU
Respondent: U.S.
Third parties: Brazil, China, Egypt, India, Japan, South Korea, Mexico, Norway, Taiwan, Thailand
Dispute stage: Appellate Body
Agreements cited: Art. 2.1, 2.4, 2.4.2, 5.8, 9.1, 9.3, 9.5, 11, 1, 11.1, 11.3, 11.2, 2  Anti-dumpingArt. VI:1, VI:2  GATT 1994Art. 18.4  Anti-dumpingArt. XVI:4  Agreement Establishing the World Trade Organization

UNITED STATES – CONTINUED EXISTENCE AND APPLICATION
OF ZEROING METHODOLOGY

Request for Consultations by the European Communities

 The following communication, dated 2 October 2006, from the delegation of the European
Communities to the delegation of the United States and to the Chairman of the Dispute Settlement
Body, is circulated in accordance with Article 4.4 of the DSU.

 The European Communities request consultati ons with the United States of America (the
"United States") under Article 4 of the Unders tanding on Rules and Procedures Governing the
Settlement of Disputes (the "DSU"); Article XXII:1 of the General Agreemen t on Tariffs and Trade
1994 (the "GATT 1994"); and Articles 17.2 and 17.3 of the Agreement on implementation of
Article VI of the General Agreem ent on Tariffs and Trade 1994 (the " AD Agreement") with regard to
the practice and methodologies for calculating dumping margins involving the use of zeroing, and the
application of zeroing in certain specified anti-dumping measures.

1. The facts

 (a) When carrying out reviews of anti-dumping measures, the United States
re-investigates and determines the margin of dumping on the basis of a comparison of
a weighted average normal value for each "averaging group" and individual export
prices. When adding up the results of these comparisons to determine the total
amount or margin of dumping of the product under investigation, the United States
puts at zero any negative amounts of "dum ping". As a result, the United States
calculates a margin of dumping and collects an amount of anti-dumping duty in
excess of the actual margin of dumping practised by the companies concerned. The
United States uses this methodology systemati cally in all its annual reviews of anti-
dumping orders, so-called administrative revi ews, and indeed in all types of review
(including new shipper and changed circumstan ces reviews) in which it is required to
calculate a dumping margin.

 The Appellate Body, in the case United States – Laws, Regulations and Methodology
for Calculating Dumping Margins ("Zeroing") (WT/DS294/AB/R), found that the
United States' use of zeroing in its "adminis trative reviews" was inconsistent with
Article 9.3 of the AD Agreement and Ar ticle VI:2 of GATT 1994. The Appellate
Body also confirmed that the United States Department of Commerce (the "DOC")
employed a "zeroing methodology" in calculating the margin of dumping in its
"administrative reviews" as described above.

 This zeroing methodology is applied pursuant, in particular, to:

– the implementing regulation
1 of the DOC, in particular section 351.414(c)(2);
and

– the Import Administration Antidumping Manual (1997 edition) (the "IA AD
Manual") including the computer program(s) to which it refers.

 The zeroing methodology described above was applied in the determinations of the
margin of dumping by the DOC in the final results of the anti-dumping administrative
reviews listed in Annex I, and any assessment instructions issued pursuant to those
final results.

 (b) In original investigations, the United States identifies sub-groups of products within
the product under investigation ("averaging groups") on a per model basis as well as
on the basis of other criteria such as the leve l of trade. Within each of the averaging
groups, a weighted average export price is established and compared to the
corresponding weighted average normal value. The results of these comparisons on
an "averaging group" basis are added up to establish the dumping margin of the
product under investigation as a whole; however, in this process, any negative
margins or amounts of "dumping" resulting from the comparison of weighted average
normal values with weighted average export prices on an "averaging group" basis are
put at zero. As a result, the United States calculates a margin and amount of dumping
in excess of the actual margin of dumping pr actised by the companies concerned. The
panel and the Appellate Body in United States–Laws, Regulations and Methodology
for Calculating Dumping Margins ("Zeroing") (WT/DS294/R and WT/DS294/AB/R)
have confirmed that such a methodology is inconsistent with Article 2.4.2 of the AD
Agreement. This methodology was used by the DOC for the determination of the
margins of dumping in the original inves tigations listed in Annex III, and in any
automatic assessment instructions issued pursuant to those measures.

 (c) In sunset reviews, the US makes dete rminations with refe rence to previously
established margins of dumping which we re usually calculated using a zeroing
methodology.
2 In the case listed in Annex II, DOC determined that dumping was
likely to continue or recur if the anti- dumping order were revoked, notably because
dumping had continued at levels above de minimis after the issuance of the order. To
find that dumping had continued after the issuance of the order, DOC relied on
dumping margins calculated in the original investigation and in administrative
reviews using zeroing.

2. Subject of consultations

 The matters, which the EC would like to raise in the course of the consultations include, but
are not limited to, the following:

1 19 CFR Section 351.
2 These dumping margins will normally have been established in original investigations, in which the
zeroing methodology condemned in DS 2 94 will usually have been used; Sec tion 752(c)(3) of the Tariff Act of
1930, Section 315.218(e)(2)(i) of the DOC implementing regulation and paragraphs II.B of the Sunset Policy
Bulletin.

 (a) The United States regulations, zeroing methodology, practice, administrative
procedures and measures for determining th e dumping margin in reviews mentioned
under point 1(a) above and which the EC c onsiders are inconsistent with several
provisions of the AD Agreement, GATT 1994 and the Marrakesh Agreement
establishing the World Trade Organization:

• Articles 2.1 of the AD Agreement and Articles VI:1 and VI:2 of the GATT
1994, because the US did not determine a dumping margin for the product as
a whole ;

• Articles 2.4 and 2.4.2 of the AD Agreement insofar as the comparison made
by the United States is inconsistent with those provisions;

• Articles 9.1 and 9.3 of the AD Agreement insofar as there is as a result the
imposition and collection of an anti-dumping duty in excess of the margin of
dumping determined pursuant to Article 2 of the AD Agreement;

• Articles 9.5 and 11 (including Articles 11.2 and 11.3) of the AD Agreement
insofar as the determinations of dumping in review investigations
contemplated by these provisions are not made in compliance with Article 2
of the AD Agreement;

• Articles 1 and 2.1 of the AD Agreement and Articles VI:1 and VI:2 of the
GATT 1994 insofar as there is as a result the imposition and collection of an
anti-dumping duty which is inconsistent with the AD Agreement; and
consequently of

• Article XVI:4 of the Marrakesh Agreement establishing the World Trade
Organization and Article 18.4 of the AD Agreement insofar as the United
States has not taken all necessary steps, of a general or particular character, to
ensure the conformity of its laws, re gulations and administrative procedures
with the provisions of GATT 1994 and the AD Agreement.

 (b) The specific anti-dumping administrative reviews listed in Annex I to the present
request, and any assessment instructions issu ed pursuant to them in which the United
States applied the regulations, zeroing methodology, practice, administrative
procedures and measures described under point 1(a) above. As a consequence, the
European Communities consider that the out come of the administrative reviews as
detailed in Annex I is inconsis tent with Articles 1, 2.1 2.4, 2.4.2, 9.1, 9.3, 11.2 and
18.4 of the AD Agreement, Articles VI:1 and VI:2 of the GATT 1994 and
Article XVI:4 of the Marrakesh Agreement establishing the World Trade
Organization for the reasons set out above under point (a).

 (c) The specific dumping determination in the original investigations listed in Annex III
to the present request, and any automatic as sessment instructions issued pursuant to
them, in which the United States applie d the zeroing methodology described under
point 1(b) above. As a consequence, the European Communities consider that the
imposition of definitive duties in the original investigations detailed in Annex III is
inconsistent with:

• Articles 2.1 of the AD Agreement and Articles VI:1 and VI:2 of the GATT
1994, because the US did not determine a dumping margin for the product as
a whole ;

• Articles 2.4 and 2.4.2 of the AD Agreement insofar as the comparison made
by the United States is inconsistent with those provisions;

• Article 5.8 of the AD Agreement insofar as a de minimis dumping margin is
erroneously determined to be not de minimis;

• Articles 9.1 and 9.3 of the AD Agreement insofar as there is as a result the
imposition and collection of an anti-dumping duty in excess of the margin or
amount of dumping as determined pursuant to Article 2 of the AD
Agreement;

• Articles 1 and 2.1 of the AD Agreement and Articles VI:1 and VI:2 of the
GATT 1994 insofar as there is as a result the imposition and collection of an
anti-dumping duty which is inconsistent with the AD Agreement; and
consequently of

• Article XVI:4 of the Marrakesh Agreement establishing the World Trade
Organization and Article 18.4 of the AD Agreement insofar as the United
States has not taken all necessary steps, of a general or particular character, to
ensure the conformity of its laws, re gulations and administrative procedures
with the provisions of GATT 1994 and the AD Agreement.

 (d) The specific Sunset review determinati on in the case listed in Annex II to the present
request. The United States relied in its de termination on dumping margins that were
calculated in the original investigation and in administrative reviews using the
methodology described under point 1(a) above. As a consequence, the European
Communities consider that the continua tion of the anti-dumping in this case is
inconsistent with:

• Articles 11.1 and 11.3 of the AD Agreement insofar as the United States
relied on a dumping margin which was not established for the product as a
whole and not conform to Articles 2.4 and 2.4.2 of the AD Agreement;

• Articles 2.4 and 2.4.2 of the AD Agreement insofar as the comparison made
by the United States is inconsistent with those provisions;

• Articles 2.1 of the AD Agreement and Articles VI:1 and VI:2 of the GATT
1994, because the US did not determine a dumping margin for the product as
a whole ;

• Articles 9.1 and 9.3 of the AD Agreement insofar as there is as a result the
imposition and collection of an anti-dumping duty in excess of the margin or
amount of dumping as determined pursuant to Article 2 of the AD
Agreement;

• Articles 1 and 2.1 of the AD Agreement and Articles VI:1 and VI:2 of the
GATT 1994 insofar as there is as a result the imposition and collection of an
anti-dumping duty which is inconsistent with the AD Agreement; and
consequently of

• Article 18.3 of the AD Agreement insofar the United States has not applied
the provision of this Agreement to a review of existing measures initiated
after the entry into force for the United States of the WTO Agreement

• and Article XVI:4 of the Marrakesh Agreement establishing the World Trade
Organization and Article 18.4 of the AD Agreement insofar as the United
States has not taken all necessary steps, of a general or particular character, to
ensure the conformity of its laws, re gulations and administrative procedures
with the provisions of GATT 1994 and the AD Agreement.

 The European Communities reserve the right to raise additional claims and legal matters
during the course of the consultations.

 The European Communities look forward to receivi ng the United States' reply to this request
and to setting a mutually convenient date for these consultations.

ANNEX: LIST OF CASES

I. ADMINISTRATIVE REVIEWS
Product MS USDOC
No Final Results Amended Final
Results Company Dumping
margin Period covered by the review
1. Ball Bearings F A-427-801 68 FR 35623, June 16,
2003
68 FR 43712,
July 24, 2003
France SNR Roulements
SKF
3,52%
6,70%
1 May 2001–30 April 2002
2. Ball Bearings G A-428-801 68 FR 35623, June
16,2003
 FAG
Torrington
Paul Mueller
SKF
1,45%
70,41%
0,19%
3,38%
1 May 2001–30 April 2002
3. Ball Bearings I A-475-801 68 FR 35623, June 16,
2003
 FAG
SKF
2,87%
5,08%
1 May 2001–30 April 2002
4. Stainless Steel
Sheet & Strip Coils
I A-475-824 68 FR 69382
December 12, 2003
 Thyssenkrupp Acciai
Terni SpA
1,62% 1 July 2001–30 June 2002
5. Certain Pasta I A-475-818 69 FR 6255,
February 10, 2004
69 FR 81, April 27,
2004
Garofalo
Indalco
PAM
Tomasello
Zaffiri
2,57%
2,85%
45,49%
4,59%
7,23%
1 July 2001–30 June 2002
6. Stainless Steel
Sheet & Strip coils
G A-428-825 69 FR 6262,
February 10, 2004
 TKN 3,72% 1 July 2001–30 June 2002
7. Certain Hot-
rolled Carbon Steel
Flat
Nl A-421-807 69 FR 115, June 16,
2004
69 FR 43801,
July 22, 2004
Corus 4,80% 3 May 2001–31 October 2002
8. Stainless Steel
Bar
G A-428-830 69 FR 113, June 14,
2004
 BGH 0,52% 2 August 2001–28 February 2003
9. Stainless Steel
Bar
I A-475-829 69 FR 113, June 14,
2004
 Foroni
Ugine-Savoi-Imphy SA
4,03%
33,00%
2 August 2001–28 February 2003
10. Antifriction
Bearings and Parts
thereof
F A-427-801 69 FR 55574,
September 15, 2004
69 FR 62023,
October 22, 2004
Numerous 66,42% (43)
to less than
7% (3)
1 May 2002–30 April 2003
11. Antifriction
Bearings and Parts
thereof
G A-428-801 69 FR 55574,
September 15, 2004
69 FR 63507,
November 2, 2004
Numerous 70, 41% (43)
to less than
7% (4)
1 May 2002–30 April 2003
12. Antifriction
Bearings and Parts
thereof
I A-475-801 69 FR 55574,
September 15, 2004
69 FR 62023,
October 22, 2004
Numerous 68, 29% (43)
to less than
5% (3)
1 May 2002–30 April 2003

I. ADMINISTRATIVE REVIEWS
Product MS USDOC
No Final Results Amended Final
Results Company Dumping
margin Period covered by the review
13. Antifriction
Bearings and Parts
thereof
UK A 412-801 69 FR 55574,
September 15, 2004
69 FR 62023,
October 22, 2004
Aeroengine Bearings
Barden/FAG
61,14%
4,10%
1 May 2002–30 April 2003
14. Stainless Steel
Plate in Coils
B A-423-808 69 FR 74495,
December 14, 2004
70 FR 2999,
January 19, 2005
U&A Belgium 2,71% 1 May 2002–30 April 2003
15. Stainless Steel
Sheet and Strip in
Coils
G A-428-825 69 FR 75930,
December 20, 2004
 Thyssen Krupp Nirosta 7,03% 1 July 2002–30 June 2003
16. Steel Concrete
Reinforcing Bars
LV A-449-804 69 FR 74498,
December 14, 2004
 LM 3, 01% 1 September 2002–31 August 2003
17. Certain Pasta I A-475-818 70 FR 6832,
February 9, 2005
 Barilla
Corticella/Combattenti
Indalco
PAM
Riscossa
Russo
7,25%
4%
6,03%
4,78%
1,05%
7,36%
1 July 2002–30 June 2003
18. Certain hot-
rolled carbon steel
flat products
NL A-421-807 70 FR 18366, April 11,
2005
 Corus 4,42% 1 November 2002–31 October 2003
19. Stainless steel
bar
G A-428-830 71 FR 42802, July 28,
2006
71 FR 52063,
September 1, 2006
BGH Group 0,73% 1 March 2004–28 February 2005
20. Stainless steel
bar
F A-427-820 70 FR 46482,
August 10, 2005
 Ugitech S.A. 14,98% 1 March 2003–29 February 2004
21. Ball Bearings
and parts thereof
F A-427-801 70 FR 54711,
September 16, 2005
 SKF
SNR
8,41%
11,93%
1 May 2003–30 April 2004
22. Ball Bearings
and parts thereof
G A-428-801 70 FR 54711,
September 16, 2005
 FAG/INA
GRW
SKF Germany
5,65%
4,58%
16,06%
1 May 2003–30 April 2004
23. Ball Bearings
and parts thereof
I A-475-801 70 FR 54711,
September 16, 2005
 FAG Italy
SKF Italy
5,88%
2,59%
1 May 2003–30 April 2004
24. Ball Bearings
and parts thereof
UK A-412-801 70 FR 54711,
September 16, 2005
 Barden/FAG
SKF IK
2,78%
61,14%
1 May 2003–30 April 2004

I. ADMINISTRATIVE REVIEWS
Product MS USDOC
No Final Results Amended Final
Results Company Dumping
margin Period covered by the review
25. Certain Pasta I A-475-818 70 FR 71464,
November 29, 2005
 Barilla
Corticella/Combattenti
Indalco
Pagani
Riscossa
20,68%
3,41%
2,59%
2,76%
2,03%
1 July 2003–30 June 2004
26. Stainless steel
plate in coils
B A-423-808 70 FR 72789,
December 7 2005
 Ugine & ALZ Belgium
NV
2,96% 1 May 2003–30 April 2004
27. Stainless steel
sheet and strip in
coils
G A-428-825 70 FR 73729 December
13, 2005
 TKN 9,5% 1 July 2003–30 June 2004
28. Steel concrete
reinforcing bars
LV A-449-804 71 FR 7016,
February 10, 2006
 Liepajas Metalurgs 5,24% 1 September 2003–31 August 2004
29. Stainless Steel
Bar
F A-427-820 71 FR 30873, May 31
2006
 Ugitech S.A. 9,68% 1 March 2004–28 February 2005
30. Ball Bearings
and parts thereof
F A-427-801 71 FR 40064, July 14,
2006
 SKF France
SNR
12,57%
11,75%
1 May 2004–30 April 2005
31. Ball Bearings
and parts thereof
G A-428-801 71 FR 40064, July 14,
2006
 FAG/INA
GRW
SKF Germany
4,04%
1,14%
7,35%
1 May 2004–30 April 2005
32. Ball Bearings
and parts thereof
I A-475-801 71 FR 40064, July 14,
2006
 FAG Italy
SKF Italy
2,52%
7,65%
1 May 2004–30 April 2005
33. Steel concrete
reinforcing bars
LV A-449-804 71 FR 45031, August 8,
2006 (preliminary
results, final results to
be issued by early
December 2006)
 Liepajas Metalurgs 6,03% 1 September 2004–31 August 2005

II. SUNSET REVIEW
Product MS USDOC Case No DOC Final Determination ITC Case
Number ITC Determination Continuation Order
34. Brass sheet & strip G A-428-602 71 FR 4348, January 26, 2006 731-TA-317 71 FR 14719,
March 23, 2006
71 FR 16552, April 3, 2006

III. IMPOSITION OF ANTI-DUMPING DUTY
Product MS USDOC Case No DOC Final Determination ITC Case
Number ITC Determination AD Order
35. Purified
carboxymethylcellulose
SW A-401-808 70 FR 28278, May 17, 2005 731-TA-1087 70 FR 39334, July 7,
2005
70 FR 39734, July 11, 2005
36. Purified
carboxymethylcellulose
NL A-421-811 70 FR 28275, May 17, 2005 731-TA-1086 70 FR 39334, July 7,
2005
70 FR 39734, July 11, 2005
37. Purified
carboxymethylcellulose
FIN A-405-803 70 FR 28279, May 17, 2005 731-TA-1084 70 FR 39334, July 7,
2005
70 FR 39734, July 11, 2005
38. Chlorinated
Isocyanurates
SP A-469-814 70 FR 24506, May 10, 2005 731-TA-1083 70 FR 36205, June 22,
2005
70 FR 36562, June 24, 2005