Susan Schwab, United States trade representative, claimed the ruling as a victory. - Reuters

A World Trade Organisation (WTO) panel ruled last Thursday against some United States (US) anti-dumping measures to combat imports of Mexican stainless steel, in another rebuff for a controversial U.S. trade remedy.

But the panel said the controversial method of calculating penalty duties on imports sold at unfairly low prices - known as 'zeroing' - was permissible in some circumstances.

The ruling will give comfort to both the U.S. and a host of rich and poor countries which are challenging the way Washington sets anti-dumping margins in a series of trade disputes and in the long-running Doha round trade talks.

"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," U.S. Trade Representative Susan Schwab said.

She said in a statement that the panel had found in favour of the United States.

Victory

But a senior diplomat in Mexico's WTO mission said the panel's report was a victory for Mexico, even though the panel did not agree with all his country's claims.

"We see it as a victory for the Mexican claim, as they find that zeroing is prohibited in original investigations," Carlos Vejar Borrego, an expert on trade disputes, told Reuters.

Mexico was considering whether to appeal against the panel's ruling to try to clarify the rules on anti-dumping, as the panel had backed some of the U.S. measures, he said.

Both Mexico and the United States have 60 days to decide whether to appeal.

The panel took a nuanced position, ruling against the U.S. practice in investigations of new dumping complaints, but saying it was not inconsistent with WTO rules in reviews of existing dumping cases.

It recommended that the WTO ask the U.S. to bring the inconsistent measures into line with WTO rules.

But it said a country should not be forced to take into account the prices of imports that had not been dumped when it was reviewing an existing set of anti-dumping measures designed to protect domestic industry from injury through dumping.

Not changing the fact

"The fact that some imports are made at non-dumped prices would not, in our view, change the fact that the domestic industry in the importing country is injured by dumped imports," the panel report said.

Several previous WTO cases have struck down zeroing, which is now a major issue in the Doha round of talks to open up world trade, pitting the United States against the European Union, Japan, China, India, Brazil and many other countries.

Proposals in the Doha negotiations from a mediator on anti-dumping and subsidies three weeks ago would allow zeroing in certain circumstances.

That has prompted protests from a wide range of countries which say that WTO jurisprudence has ruled against the method, which they say undermines trade liberalisation.

But Washington says the findings of WTO dispute panels and appellate bodies are faulty and that zeroing is allowed under previously negotiated WTO rules. It says a new agreement must make it clear that zeroing is permitted on a wider basis than the mediator has proposed.

WTO rules allow a country to impose duties on imports that are sold at less than their price in the home market. To calculate this 'anti-dumping margin', the importing country looks at the difference in prices between the two markets.

Under zeroing, the United States ignores those goods that actually cost less in the home market when it is making this calculation for a range of similar products.

- Reuters