It was supposed to be a starting point. Now
it looks like a dead end.
The draft text of World Trade Organization
trading rules continues to face resistance, and a recent WTO
panel ruling on the use of zeroing has thrown the Doha Round
talks into further disarray.
In import duty decisions, zeroing does not
give importers credit for products that enter the United States
priced higher than their home market price. The practice
increases anti-dumping duties in most cases, and the domestic
steel industry has mounted a campaign to protect it.
At the end of November, Guillermo Valles
Galmes, chairman of the rules committee, presented the
much-anticipated document, which WTO director-general Pascal
Lamy called "ambitious." That might have been the nicest thing
anyone has said about it.
Doha skeptics, including U.S. steel
manufacturers and Congressional Democrats, were quick to point
out what they perceived as its flaws, saying it would weaken
U.S. trade laws and leave domestic industry vulnerable to
dumped and subsidized imports. Put another way, it would alter
how U.S. companies file trade cases against foreign companies-a
system that the steel industry has used frequently and
successfully for decades.
Now the influential Committee to Support U.S.
Trade Laws (CSUSTL) has issued a detailed indictment of the
draft text, saying in the plainest words possible that it is
the equivalent of a death sentence for the already troubled
Doha Round. "Given that the current draft would significantly
weaken U.S. fair trade disciplines in a number of critical
areas, we do not view this text as a basis for further
negotiations that could lead to an acceptable agreement," said
the committee, which represents a broad-based cross-section of
major domestic industries, including manufacturing, technology,
agriculture, mining and lumber.
The committee's list of complaints is
lengthy. It is as critical of what's in the text as what isn't,
and it was even opposed to the release of the 98-page document
at this time. In short, the committee laments that instead of
expanding protection against unfair trade, the draft rules
would contract it.
First and foremost, the committee is
concerned that the text would weaken U.S. trade laws by
mandating that investigators consider the health of domestic
industry when determining whether dumping has occurred or not.
By that measure, it would be difficult for the U.S.
International Trade Commission to renew duties on many steel
products, given the health of much of the industry's bottom
lines. Currently, the ITC takes a forward-looking approach,
examining whether injury is likely to occur in the future.
Meanwhile, the committee scratched its head
over why the WTO's leadership, which had to restart the trade
talks after some serious breakdowns, would start with such a
controversial subject. "CSUSTL is uncertain why this paper has
even been put forward now, given the continuing uncertainty
about meaningful progress in other areas of the Doha Round
negotiations," the committee said. "Surely the rules
negotiations, which were never intended to be the lead issue in
the (Doha) Round, should not be the lead issue now."
One of the few bright spots for the U.S.
domestic industry is that the text would permit zeroing in some
circumstances. Although the committee said it didn't go far
enough, the text says zeroing would be permitted in
administrative and sunset reviews. The domestic industry would
like zeroing also to be permitted in new trade cases.
That coincides with a WTO panel ruling in
December that zeroing could be used in administrative reviews.
That decision was not only a loss for the Mexican stainless
steel producers who had brought the case, but for the WTO's
appellate body, which has voted against the use of zeroing
But the panel decision and the draft text has
alienated those in favor of freer trade with fewer trade
barriers, who say they won't accept the use of zeroing when
calculating dumping duties. Indian officials reiterated their
strong opposition to zeroing to the Times of India on
New Year's Day. If the United States is permitted to continue
zeroing, "there will be no Doha Round agreement," top Indian
trade officials told the newspaper.