September 07, 2008

WTO rules against US duties on Mexican steel imports

A World Trade Organization panel ruled on Thursday against some US Anti dumping measures to combat imports of Mexican stainless steel, in another rebuff for a controversial US trade remedy.

The WTO found in a 45 page report that the US Department of Commerce imposed excessive dumping fees on steel from Mexico. But it upheld a complicated US method for calculating the tax, provided it is done fairly, in contrast to previous WTO decisions. The three member WTO panel told the United States to bring the steel duties into conformity with its obligations under the WTO agreement.

It said that “Dumping occurs when foreign producers export products at prices below cost usually because the exports have been subsidized or in an attempt to corner the market. In certain circumstances, trade rules allow governments to impose additional duties on dumped goods to protect domestic producers.”

The decision Thursday on stainless steel sheet and strip in coils deviated from previous panel rulings in finding that a US method for is not as such inconsistent with WTO rules. It also upheld the US Department of Commerce's dumping calculations in five reviews of Mexican stainless steel products.

Mr Susan Schwab US Trade Representative in a statement said that "This is further proof of what the United States has been saying all along that WTO rules do not prohibit zeroing and that WTO appellate body reports to the contrary have overreached." He added that those findings, however, would likely be overturned by the WTO's appeal body.

Mr Carlos Vejar an official at Mexico's mission to the WTO said that "This is obviously food for an appeal, but we will have to make a complete analysis." He added that the decision was a victory for Mexico. "It confirms that zeroing is prohibited in antidumping investigations."

But the WTO has consistently ruled against the US in disputes with the 27 country European Union, Canada, Japan and others for how it determines what antidumping fees to apply, known in trade jargon as zeroing. Panels have consistently found that zeroing leads to artificial and inflated margins of dumping and thus higher duties.