In most matters of international trade, the United States is like a popular seventh-grade girl, surrounded by throngs of admirers and wannabes.
But when it comes to math — specifically a method of calculating duties on certain imports — the United States is eating its lunch alone.
Millions of dollars each year ride on this calculation, known as “zeroing,” which is used by the Commerce Department to determine whether a foreign company is selling goods here at less than fair value. If a company is dumping its products, the U.S. government adds a duty to even out the playing field.
But virtually every one of the World Trade Organization’s 153 member countries objects to how Washington juggles the numbers. The United States has been hit with more than a dozen suits at the WTO challenging zeroing — and lost them all before the trade body’s highest court.
Now, the United States faces the prospect of retaliatory sanctions from the European Union, Japan and Mexico. A WTO arbitrator is currently weighing the first request from Europe to impose $311 million in tariffs, with a decision due as early as next week.
The Obama administration is in an awkward position. If it quits using zeroing, it will trigger the wrath of the domestic industries it benefits — primarily steel makers, but also producers of products ranging from shrimp to ball bearings to plastic bags. If it clings to zeroing in the face of WTO condemnation, American exporters will be punished by sanctions.
The official position from the Office of the U.S. Trade Representative is that Washington “has indicated that it intends to work to bring itself into compliance,” according to a spokeswoman.
