Author: Chad P. Bown

Development Research Group,

Trade and Integration (DECTI);

The World Bank, 1818 H Street,

NW, MSN MC3-303, Washington, DC 20433 USA.

Tel: +1.202.473.9588.

Email: cbown@worldbank.org,

Web: http://econ.worldbank.org/staff/cbown

Thomas J. Prusa

Department of Economics,

New Jersey Hall, 75 Hamilton Street,

Rutgers University, New Brunswick, NJ 08901-1248,

Tel: +1.732.917.0484.

Email: prusa@econ.rutgers.edu,

Web: http://econweb.rutgers.edu/prusa/

Abstract

The United States use of “zeroing” in its antidumping procedures has become a political flash point threatening some legitimacy of the WTO’s dispute settlement system. This paper provides a positive analysis of the zeroing issue, explains how it has evolved and who is likely to be affected by it. The authors use economic theory to identify how export price volatility accentuates the impact of zeroing on the size of U.S. antidumping tariffs and review the WTO caseload over zeroing. They describe the impact that the U.S.’s retrospective system for assessing antidumping margins has on zeroing and the political economy implications as the U.S. struggles.

This paper—a product of the Trade and Integration Team, Development Research Group—is part of a larger effort in the department to evaluate the impact that international institutions have on the market access. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at cbown@worldbank.org. to generate policy reform.

The authors survey existing evidence of the impact of the zeroing on dumping margins and contribute their own evidence to suggest that zeroing is just as likely to impact the size of U.S. antidumping duties applied on developing country exports as developed economy exports. Thus while developed economies have filed the vast majority of WTO disputes against the U.S. over zeroing, the authors conclude that zeroing is also likely a relevant issue for developing country exporters as over 60 percent of the product lines currently subject to U.S. antidumping are exported by developing countries.