a1 Vanderbilt University
a2 Harvard Law School
This paper analyzes Brazil's WTO challenge to the methods undertaken by the United States in calculating anti-dumping duties in administrative reviews and other investigations of Brazilian orange juice. The dispute resulted in a Panel ruling that conforms with earlier Appellate Body decisions outlawing the use of ‘weighted average to transaction’ zeroing in such reviews. However, we note that the Panel's stance was driven largely from a desire to preserve ‘stability and predictability’ within the system, suggesting a practical recognition of the shadow of past Appellate Body decisions on the same legal question. In addition, we argue that to understand fully the effects of zeroing, it is important to account for the underlying reasons behind observed price changes in the market. We show that zeroing is more likely to convert a negative dumping determination into a positive one when price changes are driven by variations in demand relative to when they are driven by variations in the cost of exporting. In the present case, Brazilian exporters of orange juice experienced an increase in (residual) demand for their product since, by reducing the local supply of round oranges, adverse weather conditions in the United States made it difficult for US orange-juice producers to meet local demand.
The authors are grateful for comments received from Mark Sanctuary, our discussant, Tom Prusa, and other participants at the 2012 American Law Institute conference on WTO Case Law.