Brazil decided to file in Geneva, under the WTO Dispute Settlement Mechanism, a request for the establishment of a panel with respect to anti-dumping measures adopted by the United States on imports of Brazilian orange juice.

The request for the establishment of a panel challenges the practice known as “zeroing” in the anti-dumping investigation carried out by the United States Department of Commerce on Brazilian orange juice. The use of “zeroing” artificially inflates the dumping margins and is a practice that has already been condemned by the WTO Dispute Settlement Body on several occasions. The United States has not yet changed its internal procedures and continues to apply “zeroing” in the calculation of dumping margins in administrative reviews.

The Brazilian decision to request the establishment of a panel under the WTO Dispute Settlement Mechanism reflects the perception that the “zeroing” practice, in addition to being inconsistent with multilateral trade rules, causes great uncertainty and serious damage to the affected exporting companies. Before the filing of the request for the establishment of a panel, two rounds of consultations were held with the US Government, on January 16 and June 18, 2009, but failed to reach a satisfactory solution to the case.

The Brazilian request is expected to be examined by the WTO Dispute Settlement Body in its meeting scheduled for August 31, 2009. Should the United States object to the request at this meeting, the panel will be automatically established at the subsequent meeting, scheduled for next September.

Background Information:

“Zeroing” is the practice by which the US investigating authority excludes from the calculation of the margin of dumping for the investigated product transactions whose export prices are higher than the sales price of the same product in the exporter’s domestic market (the “normal value”). This practice artificially inflates the margin of dumping, leading to the imposition of antidumping duties that would not exist absent the use of “zeroing” or to increased antidumping duties for the exporter.

Different modalities of “zeroing” have been found to be inconsistent with the WTO Covered Agreements by the dispute settlement mechanism. To date, the most important disputes on the subject were: “EC-Bed Linen”; “US-Corrosion-Resistant Steel Sunset Review”; “US-Softwood Lumber V”; “US-Zeroing (EC)”; “US- Zeroing (Japan); “US-Stainless Steel (Mexico)”; and “US-Continued Zeroing (EC)”.