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American Anti-Dumping Measures

 

            In 2012, Vietnam filed a trade dispute with the World Trade Organization (WTO) against the United States due to anti-dumping penalties being enacted against frozen shrimp being exported from Vietnam to the United States. From the perspective of the United States, it is purely an issue of dumping and protecting domestic industry from unfair trade practices. However, Vietnam takes issue with how the United States calculates their dumping ratios because of a practice known as zeroing. Zeroing, they claim, is injurious to free trade and non compliant with current WTO trade regulations.
             Dumping, the practice of selling abroad at a price lower than the domestic price or cost of production, is often considered an unfair trade practice that is harmful to importing industries. Under WTO agreements, a country may enact punitive trade measures against a foreign country if they are able to show that the foreign country is dumping goods and that it is causing harm to domestic industry. There are various methods of calculating dumping, but there is a specific process undertaken in the United States. First, a firm must make a complaint to the U.S. Department of Commerce (USDOC) that imported goods with which they are competing are being sold at a "less than fair value." The USDOC then investigates the complaint by checking to see what the "normal" price is from the foreign exporting country and compares it to domestic prices of the same product. If the domestic price is less than the normal foreign price, it is evidence that dumping is occurring and the difference is added to the dumping margin. However, when the normal foreign price is lower than the U.S. price the USDOC "zeroes" out the difference rather than subtracting it from the dumping margin. This is the practice of zeroing that Vietnam finds unfair.
             Zeroing creates an inflated sense of how much dumping is occurring and thus increases the chances that the WTO will agree that unfair trade practices have occurred.


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