China-U.S. Trade Law : International Trade Lawyer & Attorney : Baker Hostetler Law Firm : Trade Remedies, Customs & Export Controls

China requested a WTO panel on October 13, 2011 challenging the U.S. practice of zeroing in the 2004 antidumping investigation involving warm water shrimp and the 2006 antidumping investigation of diamond saw blades. This challenge to the U.S. Department of Commerce’s (“Commerce”) practice of zeroing to inflate dumping margins is the 10th such challenge since the WTO Appellate Body first condemned the practice in 2004.

The United States apparently recognizes that China likely will succeed in its challenge. The two countries agreed to procedures to accelerate the panel process in which the United States agreed not to contest China's claim that the measures identified in the Panel Request are inconsistent with Article 2.4.2 of the Anti-Dumping Agreement, on the grounds stated in United States - Final Dumping Determination on Softwood Lumber from Canada.

Commerce computes a company’s dumping margin in an original investigation by calculating a weighted average U.S. price and Normal Value for each model of the investigated product, then comparing the two to create model specific dumping margins. Commerce subsequently weight-averages all of those product-specific margins to calculate a single dumping margin for the company. However, before performing this last calculation, Commerce resets all “negative” margins (i.e., cases in which the U.S. Price was higher than the Normal Value) to zero. This practice of “zeroing” results in higher dumping margins than would occur had Commerce calculated a true weighted-average. In some cases, it results in a dumping order being imposed on a company when overall that company was not dumping and no dumping margin otherwise could have been found.

The WTO Appellate Body repeatedly and consistently has condemned the U.S. practice of zeroing beginning in 2004 with cases brought by the European Union involving 15 anti-dumping investigations and Canada involving softwood lumber. In those cases, the United States came into compliance for the specific investigation by making a new determination without the use of zeroing. However, until 2006 the United States refused to change its practices for subsequent and future investigations and systematically limited the application even in the immediate cases (limiting them to investigations instead of administrative reviews, for example). Thus, the United States continued to zero and the affected countries were required to bring a fresh WTO challenge in each case and even in each phase of each case. Worse, unless the amended final determination resulted in a finding of “no dumping” (as opposed to a lower dumping margin), Commerce would use zeroing to calculate the actual dumping duties to be imposed in subsequent administrative reviews. (Under the U.S. retrospective assessment system, the original investigation only sets a rate for cash deposits of estimated duties; the amount of actual duties collected is determined after importation in separate annual administrative reviews.)

In December 2006 Commerce changed its practice for new antidumping investigations initiated after that date and no longer zeros in original investigations. However, it did not go back to undo zeroing in investigations initiated prior to that date. Thus, China had to bring another WTO challenge for warm water shrimp and diamond saw blades notwithstanding nearly a decade of rulings. Moreover, Commerce continued to zero in subsequent administrative reviews, notwithstanding several WTO Appellate Body rulings that zeroing in administrative reviews is no more consistent with WTO obligations than zeroing in original investigations. Thus, even after China succeeds in its WTO challenge in these two cases, eliminating zeroing would help the companies involved only if the elimination of zeroing were to result in a finding of “no dumping” and a revocation of the antidumping order for that company. Were the new calculation to result only in a lower dumping margin, the order would be continued and the actual duty assessment would be determined in the administrative reviews in which Commerce could continue to zero. Surprisingly and without explanation, although China included subsequent administrative reviews and the recent sunset review in its request for WTO consultations with the United States earlier this year, it did not include those reviews in its request for a WTO dispute resolution panel.

China and the United States agreed to expedited procedures in which the panel would issue its decision within three months of its composition and the United States would bring itself into compliance within eight months of the Dispute Settlement Body adopting the panel’s report. As compliance in this case merely requires a recalculation, the eight months to comply is consistent with an American pattern to take as long as possible to comply with WTO decisions whose effects are strictly prospective.

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U.S. trading partners can learn a lot from the way the United States treats the countries it actively calls its friends in trade disputes and when interpreting trade agreements.  Canada is unmistakably the United States’ best friend.  Despite this close friendship, the United States has not treated Canada kindly in trade disputes.  The softwood lumber wars are illustrative.  Four times since 1982 the U.S. lumber industry has petitioned against Canada for trade relief.  Although U.S. agencies have found in favor of the U.S. industry repeatedly, U.S. courts, binational panels convened under the Canadian-U.S. Free Trade Agreement and the North American Free Trade Agreement, and panels convened at the World Trade Organization have all found, repeatedly, to the contrary.  Despite these legal outcomes, Canada capitulated in 2006 because of continuous U.S. pressure and apparently interminable litigation. The United States was withholding from Canadian industry $5.5 billion that the courts ultimately said should be returned to Canadians, but the withholding crippled Canadian operations.  In order to get the money back, Canada entered the Softwood Lumber Agreement of 2006 restricting trade. 

Canada made a minor, inadvertent, error in managing the agreement, which the United States challenged successfully in London Court of International Arbitration CASE NO. 7941.  It was not enough for the United States to see the error corrected and the violation of the agreement to end.  Nor was it enough to receive a significant cash award for the breach, even though the breach arose from excess shipments that promptly were followed by shipments well below allowances.  According to the United States, compensation for breach of the agreement, however inadvertent the breach, had to punish the sector of the Canadian industry that supposedly benefitted from the breach, even as the Government of Canada argued that punishment was inappropriate and that the U.S. action, with help from the tribunal, could devastate a portion of Canadian industry and create significant unemployment.  Canada, the United States said, should have understood what it was signing and must accept the consequences.

There are several lessons to be learned here about the United States:

• The United States will use legal proceedings for trade advantages.
• The United States does not accept losing legal proceedings.
• The United States will use correlative means – legislation, publicity, illegal withholding of funds – when it is unable to prevail in the legal process.
• The United States will prolong legal proceedings as long as necessary to make foreign competitors feel the pain of a protracted legal contest.
• The United States will give no quarter when negotiating a trade agreement.
• The United States will always interpret the law to the advantage of its industry.
• The United States is not interested in equitable arguments.
• The United States will interpret the law or an agreement in the harshest possible light with respect to its trade partner.
• The United States demands strict compliance with trade laws, particularly to the detriment of trade partners.
• The United States takes into account in trade disputes only the substance of the dispute itself, unaffected by other aspects of the bilateral relationship.

China will never be able to claim a level of friendship with the United States comparable to Canada’s.   The way the United States treats Canada in trade should teach Chinese that in trade even the best friends of the United States can expect no favors, must endlessly fight for their rights, and must contest every word and action, just as the United States will do with them.  The United States does not like linking trade disputes to any other considerations.  It may be that eventually the United States cannot always have its way with respect to trade, and that partners will link trade disputes to other foreign policy questions successfully. But for now, and for the foreseeable future, partners must understand that friendship does not translate into friendly treatment and that, in trade disputes, the United States does not treat its partners as friends.

We discuss this issue in greater detail in the following article: How The United States Treats Its Friends In Trade Disputes: A Recent Revealing Example.

            在贸易纠纷中美国如何对待她的“朋友”，如何诠释贸易协定，这可给美国的贸易伙伴许多启示。毋庸置疑，加拿大是美国最好的朋友。尽管如此，在贸易纠纷中美国对加拿大仍毫不手软。美加软木纠纷是最好的例证。自1982年以来，美国软木行业已经四次矛头直指加拿大，要求美国政府采取贸易救济行动。虽然美国政府部门不断做出有利于美国企业的裁决，美国法庭、根据《北美洲贸易贸易协定》成立的仲裁委员会以及世贸组织却做出截然不同的裁决。尽管加拿大赢得了法律胜利，但因为美国政府不断施压以及接连不断的调查带来的压力，她不得不在2006年让步美国。此前，虽然法庭裁决美国政府应当归还加拿大企业总额高达55亿美金暂扣的惩罚性关税，美国政府却继续扣留这笔巨款，严重阻碍了加拿大企业的运作。为了取回这笔资金，加拿大和美国于2006签订《软木协定》，同意限制本国企业出口。

      在履行协议过程中，加拿大不经意中翻了一个小错误，随即这一小错误就被美国搬上了伦敦国际仲裁院（London Court of International Arbitration），案件号7941。修正这一错误、防止违背协定的情况再次发生，这不能让美国得到满足。虽然超过出口限额的情况发生后，加拿大的出口量骤减至限额以下，但是一笔数目不小的补偿仍不能让美国满足。根据美国的说法，虽然加拿大不经意中违背了协定，但是必须通过赔偿惩罚那些美国声称受益的加拿大企业。加拿大政府也不得不承认这一惩罚不太合适；而且在仲裁院的帮助下，美国的行动将严重摧毁加拿大部分软木生产、加工企业，造成大量失业。但美国却说，加拿大在签订协议时应当理解协定内容，应此必须承担后果。

            这一事件中可帮助读者加深对美国的了解、学到许多有益的经验：

•  美国将充分利用法律途径获取贸易利益。
•  美国决不接受不利于自己的法律裁决。
•  当她无法在法律行动取得胜利时，美国将综合利用其他多种工具——立法、公关、非法暂扣资金。
•  美国将在法律行动中采取拖延战术，使国外竞争对手深受其扰、苦不堪言。
•  在贸易协定谈判过程中，美国一定会极其强硬，决不甘占下风。
•  在解释法律条款时，美国一定倾向本国企业。
•  公平的协定，美国对此根本不感兴趣。
•  当解释某一法律条款或协定时，美国一定会极其严厉地对待她的贸易伙伴。
•  美国总是要求“严格遵守贸易法”，尤其是为了让她的贸易伙伴受损。
•  当发生贸易纠纷时，美国仅仅着眼于贸易纠纷，而不受双边关系其他因素的影响。

            中国与美国的友谊永远不能达到美加两国之间友谊的程度。美国如此对待加拿大可以让中国总结出一条经验：既然美国最重要的盟友也不必期待任何优待，中国必须竭尽全力捍卫自己的权利、反复斟酌美国的言行，就像美国对待她的贸易伙伴那样。美国不喜欢把贸易纠纷与其他事件联系在一起。也许将来某一天美国的盟友会成功地把贸易纠纷和外交领域的其他问题联系起来，美国将无法在贸易领域任意行事。但是目前及在可预见的未来，伙伴们必须明白友谊并不意味着他们将受到友善对待，并不意味着美国在贸易纠纷中将他们视为朋友。

            如果您想全面了解美国在贸易纠纷中如何对待她的朋友，请阅读英文全文。  

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