This past Wednesday, the World Trade Organization (WTO) Appellate Body made its ruling in a challenge brought by Korea on the U.S. antidumping and countervailing duty case involving large residential washers from Korea. This ruling, which was largely unfavorable to the United States, is the result of appeals brought by both Korea and the United States concerning the Panel decision issued this March. The Appellate Body upheld the Panel’s finding that the WTO agreement does not permit the application of zeroing (i.e., the practice of setting ‘negative’ margins at zero when calculating overall dumping margins) even where it can be shown that dumping is targeted at specific customers, regions, or times. However, one Appellate Body member dissented from the majority opinion (a rare move in WTO precedent), and stated his view that zeroing is permissible when there is targeted dumping.

The Appellate Body did affirm that the WTO Agreements permit members to make some adjustments to their margin calculations in “targeted dumping” situations. However, the Appellate Body found that the methods resorted to by the United States were not in compliance with the Agreements, going so far as to expand upon the Panel decision and find additional bases of noncompliance. For example, the Appellate Body, unlike the Panel, found that the United States Department of Commerce (Commerce) did not do enough to explain why it resorted to its chosen comparison methodology. Separately, the Appellate Body also found, unlike the Panel, that  Commerce failed to adequately support its finding that the government subsidies granted to a Korean company were directly tied to the washers at issue in the dispute.

Commerce will now have a reasonable period of time to comply with the Appellate Body decision. Both Commerce and the U.S. Trade Representative’s Office (USTR) are studying the report to determine what measures they can take to bring the Washers determination into compliance with WTO obligations, but at the same time still maintain effective trade remedy tools to protect domestic industries from unfairly imported goods.

A summary of the Appellate Body’s findings and a copy of the full report can be found here: