Sunday, January 24, 2010

Hide and Seek Protectionism, Ctd.

Last month, I explained how the United States' new legal strategy of "settling" WTO challenges to its "zeroing" methodology appeared to be a sneaky way to maintain a protectionist policy (zeroing has been repeatedly ruled inconsistent with WTO rules) while avoiding lengthy, costly WTO litigation:
[D]omestic manufacturers - particularly the powerful and well-connected US steel industry - believe that the US zeroing practice is still an effective tool to discourage imports, and thus they still intensely lobby their congressional allies to fight for zeroing, despite the long string of adverse WTO rulings. The Obama Administration, as it has with myriad other bouts of congressional protectionism (e.g., Mexican trucks or Buy American), has acquiesced on the issue and not pushed the Department of Commerce to stop zeroing, so the WTO cases keep coming (and coming and coming). And the protectionism continues.

Moreover, the administration might actually side with the congressmen and view the prior adverse WTO decisions as wrong (notice how the US submission doesn't say that the practice itself is WTO-illegal but merely cites the adverse Appellate Body decision - lawyer nuance!). But at this point, the only hope for reviving zeroing is through express validation in a revised WTO Antidumping Agreement. Thus, USTR views the endless WTO cases as perhaps the only way to keep the zeroing issue ripe for negotiation in the WTO's Doha Round negotiations on Rules (which would result in, among other things, a new AD Agreement). But because the Doha negotiations are stalled (at best), and because the outcome of any new WTO challenge to the US zeroing practice is pretty much a slam-dunk against the US, they simply accept their fault, and amend the isolated, challenged instance, rather than actually change the broader zeroing policy. Thus, they keep most of the protectionism in place, placate domestic industries and their political muscle, and live to fight another day at the WTO - all the while avoiding lengthy litigation and WTO-sanctioned retaliation (not to mention those brutal copying costs!).
A WTO decision issued Friday on US anti-dumping measures on Thai plastic bags, first pointed out by the International Economic Law and Policy Blog, makes this "hide and seek" strategy even clearer.  It turns out that the United States and Thailand worked out a settlement deal in advance of the panel decision, which inevitably sided with Thailand (the US admitted fault in its first submission):
3. The United States will not contest Thailand's claim that the measures identified in the attached request for the establishment of a panel are inconsistent with the first sentence of Article 2.4.2 of the Anti-Dumping Agreement on the grounds stated in United States - Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R (adopted 31 August 2004)....

5. Provided that the panel's finding is limited to a finding that the measures identified in the attached request for the establishment of a panel are inconsistent with the first sentence of Article 2.4.2 of the Anti-Dumping Agreement, the parties agree that, pursuant to Article 21.3(b) of the DSU, the reasonable period of time for bringing each such measure into conformity with the Anti-Dumping Agreement will be six months, beginning on the date on which the DSB adopts the report of the panel.
The IELP blog summarized these paragraphs well: "Thus, the U.S. would not contest the claim, the panel would find a violation, the U.S. would not appeal (presumably), and the implementation period would be six months."  The only thing left out was "...and the United States would continue screwing all other foreign respondents that haven't challenged the illegal US zeroing practice."  (Although they'd probably have been classier about it.)

Korea just recently filed a WTO case against US zeroing in anti-dumping investigations of stainless steel plate in coils, stainless steel sheet and strip in coils, and diamond sawblades.  And it's all but certain that the United States will continue its sneaky zeroing strategy in that case.

The only uncertain thing is what country will be the next to bring a challenge.


Anonymous said...

Korea's recent case is not about reviews but investigation. (It is following the track of Thailand case)

Scott Lincicome said...

Thanks. I've updated accordingly.