UNITED STATES – MEASURES RELATING TO ZEROING AND SUNSET REVIEWS
Document: Recourse to Article 22.2 of the DSU by Japan
Date: 11 January 2008
Document codes: WT/DS322/23
Complainant: Japan
Respondent: U.S.
Third parties: Argentina, China, EU, Hong Kong, India, South Korea, Mexico, New Zealand, Norway, Taiwan, Thailand
Dispute stage: Implementation & Compliance
Agreements cited: Art. 2.1, 2.4, 2.4.2, 9.1, 9.2, 9.3, 5.8, 3, 9.5, 11.1, 11.2, 11.3, 1  Anti-dumpingArt. VI  GATT 1994Art. 18.4  Anti-dumpingArt. XVI:4  Agreement Establishing the World Trade Organization

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 considers the following agenda item:

 (WT/DS322)
– Recourse by Japan to Article 22.2 of the 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
procedures,1 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 orig inal investigations when calculating
margins of dumping on the basis of weighted average-to-weighted average
comparisons, the United States acts incons istently with Article 2.4.2 of the Anti-
Dumping Agreement;
2
(ii) by maintaining zeroing procedures in orig inal 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).

(iii) by applying zeroing procedures in the an ti-dumping investigation regarding imports
of cut-to-length carbon quality steel pr oducts from Japan, the United States acted
inconsistently with Article 2.4.2 of the Anti-Dumping Agreement;
4
(iv) by maintaining zeroing procedures in pe riodic 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 new 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 inconsistently 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 December 2007, the USDOC announced publicly
that it had taken steps to implement the DSB's recommendations and rulings under 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 weighted 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 USDOC'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 an ti-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).
7 WT/DS322/8.
9 WT/DS322/12.

 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 conformity 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 (ii),
(iv) and (v) above.

In accordance with Article 22.4 of the DSU, the level of the suspension of concessions and other
related obligations will be equivale nt to the level of the nullification or impairment. In any given
year, the level of the nullification or impairment is (a) the total amount of the anti-dumping duties
illegally determined , and interest thereon ("excess duti es"), 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$18.7 million and the amount of trade effects is USD $48.6 million.

 Japan intends to implement the suspension of tariff concessions and other related obligations
under by imposing additional import duties above bound custom duties ("additional duties") on a final
list of products originating in the United States, wh ich will be notified to the DSB together with the
rate of the additional duties. For the purpose of su spension with 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 th e purpose of suspension with rega rd to item (b) in the previous
paragraph, the additional duties will be set so as to decrease the value of exports from the United
States to Japan by the annual value of Japan's lost exports to the Un ited States. As necessary, for the
purposes of both items (a) and (b), Japan will adjust the additional duties imposed from year to year in
light of changes in the level of the nullification or im pairment, as described in the previous paragraph.
In the event of such an adjustment, Japan will no tify to the DSB a list indicating the products subject
to the additional duties, as well as the rate of the add itional duties, in the light of the adjusted level of
the nullification or impairment.