‘Zeroing’ Policy Defeated
The World Trade Organization (WTO) confirmed once again that anti-dumping duty levy on Korean washers by the US via the integration of the targeted dumping and zeroing methods is a violation of the WTO agreement. The WTO’s appellate body cited a panel judgment that 9% to 13% anti-dumping tariffs imposed on Korean washing machines made in 2013 by the US were in violation of the WTO agreement on September 7 (in the Korean Standard Time).
Zeroing refers to a controversial methodology used by the US for calculating antidumping duties against foreign products. The foreign domestic price (FDP) of the product is compared with its U.S. import price (USIP) adjusted for transportation and handling costs. Under zeroing, the United States sets at zero the negative differences (that is whenever FDP minus USIP is less than zero). The WTO's appellate body has continued to condemn this method frequently used by the US as unfair.
The appellate body also ruled in favor of Korea over controversy surrounding subsidies for washers. The WTO judged that the US Department of Commerce’s action to apply tax breaks for Samsung Electronics’ overall R&D expenses to the calculation of the subsidy ratio of washers went against the WTO’s subsidy rule.
They also ruled that it violated the WTO’s subsidy agreement for the US Department of Commerce not to consider Samsung Electronics’ overseas sales when calculating subsidies.
The US home washer market was estimated at nine million units a year as of 2015. Whirlpool accounted for 20.7% while Samsung and LG, 12.8% and 12.0%, respectively. Last year, Korea exported US$138 million worth of washing machines to the US, down 28.6% from the previous year.
“The US ought to entirely revise its anti-dumping calculation method to implement the rulings. Therefore, the rulings are expected to have a positive impact on Korea’s dealing with protectionism in its major industries such as steel in the future,” said an official at the Ministry of Commerce, Industry and Energy.