The United States agreed Monday with Japan to discard a practice called “zeroing” and to pay back the excessive tariffs it has been collecting from the Japanese bearing industry since May 2010, the Japanese trade ministry said.
Japan and the United States signed a memorandum of understanding in which the latter said it would sign a draft amendment of U.S. Commerce Department rules within seven days to abolish its use of the zeroing method to settle trade rows.
Under zeroing, Washington calculates a punitive dumping margin by taking into account only cases in which prices of imported goods are lower in the U.S. market than in their home markets. It ignores, or “zeroes out,” cases where prices of those imports are higher in the U.S. market than in their home markets.
Tokyo has argued that the methodology has allowed Washington to impose inappropriately high antidumping duties on imports. The World Trade Organization supported the Japanese complaint and recommended in January 2007 that Washington correct the practice and confirmed in August 2009 Washington’s failure to follow the WTO’s advice.
Washington has imposed sizable tariffs on Japanese imports under the zeroing method, collecting an excess of about ¥1 billion in tariffs from the Japanese bearing industry each year over a 22-year period from 1989, the Ministry of Economy, Trade and Industry said.
Under the memorandum of understanding, Washington agreed to pay back a total of about ¥2 billion to the industry dating back to May 2010, regardless of the outcomes of related lawsuits. It is not clear why the refunds stop at 2010.
“We welcome that the United States has promised to revise its rules on antidumping procedures and taken an important step forward to comply with WTO advice,” Trade minister Yukio Edano said in a statement.
He added that Tokyo will keep a close eye on developments in the United States to ensure it abolishes the zeroing practice.