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Japan will urge the United States to abolish a dumping calculation method that artificially inflates dumping margins and which the World Trade Organization says is incompatible with global trade rules, according to a government report released Monday.

The 2007 Report on the WTO Inconsistency of Trade Policies by Major Trading Partners also urges China to end its practice of using subsidies to protect domestic companies from foreign competition and calls for a transparent, subsidy system that is compatible with the WTO.

“Our country plans to request that the United States fully implement the (WTO) recommendation soon, including the abolition of ‘zeroing,’ ” the report says, alluding to a WTO ruling in January that invalidated the U.S. use of zeroing for calculating dumping margins.

The WTO Appellate Body ruled that the U.S. practice of not taking into account — or zeroing — nondumped transactions when calculating aggregate dumping margins is contrary to the WTO’s antidumping rules. The rules require that the dumping margin calculation includes all comparable transactions.

The body said that by excluding nondumped transactions from the calculation, the U.S. method leads to the finding of dumping margins where none exist, or to the finding of higher dumping margins than actually occurred.

Japanese industry, led by the bearings industry, has long suffered from an excessive dumping tax accruing from the U.S. use of the zeroing calculation, according to the report, published by the Ministry of Economy, Trade and Industry.

The report says Japan should join hands with Mexico, Argentina and Thailand, which share similar concerns, in calling for abolition of the zeroing system.

Following the WTO ruling, the U.S. in February expressed an intention to address the use of zeroing.

The report also cites 112 cases of trade practices by Japan’s major trading partners that Japan sees as incompatible with international trade rules. Besides the United States and China, these involve South Korea, the European Union and the Association of Southeast Asian Nations.

It says China fails to ensure transparency in its subsidy system, and its export-boosting subsidies and domestic product-propping subsidies are against WTO rules.

“While tying up with other WTO member states, our country will request that China clearly explain its subsidy system, and will urge China not to maintain subsidies that are against the WTO subsidy agreement,” it says.

In February, the U.S. lodged a complaint against China with the WTO, alleging China unfairly subsidizes its steel, wood and other industries, resulting in discrimination against imports of U.S.-manufactured goods. Japan supported the United States in this case.

Japan has also asked China to improve its legal, administrative and law-enforcement systems to stem the flow of pirated and counterfeit goods, according to the report.

Japanese companies sustain “significant damage” from the flow of illegal products in the market, leading Japan to continue to ask China to strengthen crackdowns on infringement of intellectual property rights, it says.

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