John Miller reports in Wednesday's Wall Street Journal that efforts to wake up the Doha Round are likely to be a non-starter: Doha Revival Talks Are Set, But Accord Is Unlikely (January 24):
Global trade negotiators hope to restart the Doha round of world trade talks at the World Economic Forum in Davos, Switzerland, this week, but a return to the bargaining table will likely be more symbol than substance.
The key players -- the U.S. and the European Union -- remain unwilling to cut farm subsidies enough to satisfy emerging economies like Brazil and India....
Mr. Mandelson proposes a 54% cut in agriculture import tariffs. France, Europe's largest agriculture producer, wants to cut tariffs by just 39% -- and isn't budging. Without France there is no deal: Mr. Mandelson needs support from all 27 EU members in order to reach a global trade deal.
Dan Ikenson of Cato's Center for Trade Policy Studies won't be too worried if the Doha princess sleeps for years to come. Trade is Much Bigger Than the Doha Round (CATO at Liberty, January 22)
What worries him, are tensions that may rise from WTO dispute resolution decisions that go against the U.S. If the U.S. doesn't comply with the rulings, other countries may stop complying, and that could destroy the dispute mechanism itself.
What really worries him is how Congress will react to recent WTO decisions that zeroing in anti-dumping actions is wrong. Dumping is the term used when a foreign firm sells goods in the U.S. at a lower price than it does in its home market. Anti-dumping actions can be used to impose tariff penalties on parties found to be dumping.
Zeroing refers to the way the dumping price margins are calculated. In an anti-dumping action, the U.S. Commerce Department may have to compare the prices of many models or versions of a product in the foreign and U.S. markets. Some prices may be lower in the U.S. market, but some may be higher. Commerce generates an average price to identify and measure dumping.
Under zeroing rules, the average difference between prices in the foreign home market and the U.S. market may be calculated by setting the price differences equal to zero when the foreign firm charges higher prices in the U.S. market than in its home market. Dumping will look more severe than it is, or appear to be where it isn't. When it "zeros" the Commerce Department acts like a credit card company which sends you a statement in which all your purchases are accurately recorded, but your payments all set equal to zero. You're not going to look good, but it's not going to be an accurate reflection of reality (Zeroing In: Antidumping’s Flawed Methodology under Fire, Dan Ikenson, Cato Free trade Bulletin #11, April 27, 2004).
There have been WTO zeroing decisions that have gone against the U.S. [ A blow to "unfair" "fair trade": the WTO Appellate Body ruling on "zeroing" Ben Muse (April 25, 2006); The WTO Appellate Body decision on Zeroing (Ben Muse, May 24, 2006)].
In September a WTO dispute resolution panel circulated a decision in a case brought by Japan. In this case, the panel found that one use of zeroing was wrong, but upheld other uses: WTO Panel Finds for United States in "Zeroing" Dispute with Japan (USTR press release, Sept 20, 2006).
In December, the Commerce Department agreed to stop using zeroing under certain circumstances. Good anti-dumping news (Ben Muse, Dec 28, 2006)].
This month, the WTO's Appellate body has overturned much of the September panel's decision - the effect is that zeroing should be ruled out in a much wider range of circumstances: Consuming Industries Trade Action Coalition (CITAC) Calls on U.S. to Eliminate 'Zeroing Tax' on Consuming Industries in Wake of WTO Decision Condemning the Practice of Zeroing in Antidumping Cases (CITAC press release, Jan 10)
Ikesnson points out that Congress is unusually sensitive about trade remedies, including zeroing, and asks, "Will it comply with these rulings?": Trade is Much Bigger Than the Doha Round. :
What concerns me more than the failure to reach a new accord is the potential for marginalization of the old agreements and institutions. The agreements that culminated in the creation of the World Trade Organization in 1995 and the quiet success of its dispute settlement system (which has “handled” 357 disputes) have a lot to do with trade’s contribution to world economic growth. Long-standing rules and familiar processes have helped reduce and eliminate some of the uncertainties (and therefore, risks and costs) traditionally associated with trading and investing with foreigners. If member countries were to begin questioning the efficacy of the system or the wisdom or propriety of its adjudication process when it becomes politically convenient to do so, calls to skirt the rules and ignore the verdicts might not be too far behind. And that behavior could prove contagious, leading to new uncertainties, greater risks and costs, and ultimately, degradation and a potential collapse of the rules-based trading system.
Based on a letter from Congressional trade leaders Baucus and Rangel, Ikenson sees problems brewing: Trade Showdown Looks Inevitable (CATO at LIBERTY, January 23) Baucus and Rangel request that Commerce postpone any action to implement the WTO decision until March 31, in order to give Congress time to review the issue. They state their belief that Appellate Body is imposing obligations on the U.S. that it did not agree to in negotiations.
For details on the details of the Appellate decision circulated in January, see the WTO web site on this case: United States — Measures Relating to Zeroing and Sunset Reviews.
Postscript (Jan 25): In a subsequent post, Ikenson describes new evidence of a looming confrontation between the U.S. and WTO over the Appellate Body decisions on zeroing: U.S. Posturing for a Fight at the WTO (Cato at Liberty, Jan 25)
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