## Facts

- Japan challenged the U.S. Department of Commerce’s use of “zeroing” in anti-dumping proceedings, a methodology that sets negative dumping amounts to zero rather than allowing them to offset positive amounts.
- The challenged practice affected multiple stages of anti-dumping enforcement: original investigations (using different comparison methods), periodic (administrative) reviews, new shipper reviews, and sunset reviews.
- Japan also challenged the assessment of final duty liability derived from zeroed calculations, arguing the practice inflated or created dumping margins.
- The measures challenged included provisions of U.S. anti-dumping law, implementing regulations, agency manuals, computer programs used for margin calculations, and a policy bulletin governing sunset reviews.
- A WTO panel issued findings in 2006; both parties appealed, and the Appellate Body report was adopted in 2007.

## Issues

1. Whether recurring U.S. “zeroing procedures” constituted a challengeable “as such” measure (a rule or norm of general and prospective application) in original investigations and in periodic/new shipper reviews.
2. Whether zeroing in original investigations using transaction-to-transaction comparisons and other comparison methods was consistent with Anti-Dumping Agreement Article 2.4.2.
3. Whether zeroing in periodic and new shipper reviews violated the “fair comparison” requirement in Anti-Dumping Agreement Article 2.4.
4. Whether zeroing, when used in underlying reviews relied upon in sunset reviews, and related presumptions/waiver rules, were consistent with Anti-Dumping Agreement Article 11.3.
5. Whether duties assessed based on zeroed margins exceeded permissible limits under Anti-Dumping Agreement Article 9.3 and GATT 1994 Article VI:2.

## Decision

- The Appellate Body upheld findings that U.S. zeroing procedures “as such” in transaction-to-transaction comparisons in original investigations were inconsistent with Anti-Dumping Agreement Article 2.4.2.
- The Appellate Body concluded that U.S. zeroing procedures “as such” in periodic and new shipper reviews were inconsistent with Anti-Dumping Agreement Article 2.4, treating the procedures as a systematic rule or norm.
- As applied in specific periodic reviews involving Japanese products, the Appellate Body found violations of Anti-Dumping Agreement Articles 2.4 and 9.3 and GATT 1994 Article VI:2 because zeroing overstated dumping margins and led to excessive duties.
- The Appellate Body upheld findings that reliance on zeroed margins in sunset reviews, and the operation of certain presumption/waiver rules that compelled affirmative likelihood determinations without a substantive analysis, violated Anti-Dumping Agreement Article 11.3.
- The Appellate Body affirmed that consistent, recurring administrative conduct—shown through determinations and operational instruments such as manuals and calculation programs—can establish an “as such” measure even without a single formal text.

## Legal Principles

- Dumping margins in investigations must be determined by a comparison methodology that accounts for all comparable export transactions; excluding negative dumping amounts through zeroing is inconsistent with Anti-Dumping Agreement Article 2.4.2.
- In reviews, a “fair comparison” under Anti-Dumping Agreement Article 2.4 is violated where the methodology is designed to skew outcomes by disregarding transactions that would reduce the margin.
- Anti-dumping duties may not exceed the margin of dumping; if zeroing inflates margins, resulting duties breach Anti-Dumping Agreement Article 9.3 and GATT 1994 Article VI:2.
- Sunset reviews require a genuine, fact-based likelihood determination under Anti-Dumping Agreement Article 11.3; reliance on distorted margins or the use of mandatory presumptions that remove substantive analysis is inconsistent with that obligation.
- A practice may be challenged “as such” when evidence demonstrates a rule or norm of general and prospective application, including through recurring conduct and institutionalized calculation tools.

## Conclusion

The Appellate Body held that U.S. “zeroing” was incompatible with WTO anti-dumping rules across investigations, reviews, and sunset reviews, and clarified that entrenched administrative methodologies may be challenged “as such” when they function as generally applicable, forward-looking rules.


United States—Measures Relating to Zeroing and Sunset Reviews, WT/DS322/AB/R (WTO App. Body 2007)