The U.S. Trade Representative (“USTR”) announced last week that China, in a follow-up to its December 3, 2013 request for World Trade Organization (“WTO”) consultations, has asked for a dispute settlement panel concerning certain U.S antidumping methodologies. The USTR requests public comments on the issues identified by China in its panel request.

China challenges certain U.S. antidumping practices in the context of former proceedings on imported products such as coated paper, steel products, and shrimp. Certain of the allegations concern practices specific to antidumping cases involving “non-market economy” or “NME” countries, like China and Vietnam.The United States presumes that all companies in NME countries are subject to the central government’s control such that all of the companies should receive the same antidumping margin. Consequently, NME country companies must first demonstrate that they operate independently from the state before they may receive a separately calculated antidumping rate. The United States calculates these rates using a constructed home market NME price by valuing inputs, labor, and overhead items with prices from a market-economy country. In addition, companies not qualifying for a separate rate in an antidumping proceeding receive the NME country-wide rate.

As used in specific cases, China also alleges that the United States’ application of the “targeted dumping” methodology, and zeroing of dumping margins in “targeted dumping” cases, violates the WTO Agreement. Targeted dumping references the U.S. practice of employing a differential pricing analysis to determine if a pattern of export prices exists in which such prices differ significantly by purchasers, regions, or time periods. If such a pattern is determined to exist, the United States may calculate the antidumping margin by comparing an average of normal value prices to individual export prices. Zeroing in this context would reference the practice in which a Chinese respondent’s individual sales transaction negative margins are deemed zero for the overall antidumping margin calculation instead of including the calculated negative sales margin.

Although China’s WTO challenge is based on specific U.S. antidumping proceedings, it is significant.  A determination that the U.S. antidumping methodologies are inconsistent with U.S. WTO obligations could result in revisions to the U.S. antidumping regulations and the way in which they are administered – specifically with regard to NME proceedings.

U.S. manufacturers and importers involved in, impacted by, or considering future antidumping actions will want to consider submitting comments to USTR to address the issues raised by China. There is a May 2, 2014 deadline for that.