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Wednesday, December 17, 2008

Zero's not welcomed!

The WTO just ruled in favour of the EU and their zeroing complaint against the USofA.

The US loses another dispute settlement case. Against the EU at that.
http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds294_e.htm

Zeroing is an anti-dumping trade policy, which, in simple terms, sets the dumping price average of a good which is reportedly at a "dumped" price category, back to zero after it is evaluated rather than take into effect and account the true nominal value of the good, if below the price of the good in the domestic jurisdiction.

This takes out of the question the price variation of the price is lower naturally and assumes that it is being dumped, and carries higher price value, when it is not. This is a makeup trade protection barrier for the big boy's and not really a mechanism for the smaller, non mass producing countries.

For a better explanation, see the WTO website on the recent ruling---
http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds294_e.htm

The anti-dumping and umping policies can be hazy, so don't feel bad if you don't get it at first glance.

Dumping, in trade, is when a country, produces a good well below market value and sells that good to another country, in an attempt to gain market share in a jurisdiction where they may have domestic competition.

Anti-dumping, has many different forms and basically counter acts dumping practices---countervailing duties and safeguards.
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