The World Trade Organisation halted arbitration between the United States and European Union after the two sides requested more time to resolve an import tariff dispute without sanctions.
The suspension gives the U.S. up to a year to fulfill its side of the bargain unless the EU asks for an extension. In the meantime, the EU may ask for retaliation moves to resume at any time before that.
“The suspension can be terminated at any time at the written request of either party,” the chairman of the arbitration panel, Felipe Jaramillo, said in a statement.
The panel had been expected to permit Brussels to impose retaliatory tariffs of up to $450 million on U.S. goods in the confrontation over the way Washington calculates anti-dumping duties, a method known as zeroing.
European Commission spokesman John Clancy told Reuters that the retaliatory sanctions Brussels had been seeking would not be required if Washington were to change the way it calculates anti-dumping duties in line with WTO rulings.
“We welcome U.S. reassurances that they are taking the necessary steps to bring themselves into compliance and that therefore the imposition of sanctions will not be necessary,” Clancy said.
The Office of the U.S. Trade Representative said the United States intended to comply with WTO rulings related to the anti-dumping measure but stopped short of saying Washington would stop using zeroing.
“The joint request to suspend the arbitration reflects a recognition that at this time, further steps toward retaliation would be counterproductive in reaching a resolution of the dispute,” a USTR spokeswoman said.
But she added: “The fact that we have submitted a joint request with the EU to suspend a WTO arbitration does not indicate what actions regarding zeroing that the United States will take.”
The WTO has repeatedly ruled that zeroing unfairly inflates anti-dumping duties, which governments are allowed to impose on imports that are “dumped” or sold for less abroad than in their origin country.
Calculations of anti-dumping penalties generally involve comparing different batches of goods to set an average price. In zeroing, examples where the imports are sold for more than they cost at home are left out of the calculation, leading to higher overall duties than if they had been averaged in.
In the case at hand, Brussels estimated the calculation method had caused losses worth more than $300 million to companies including steel product exporters in the Netherlands, Sweden, Britain, France, Germany and Italy.
The United States is the only one of the WTO’s 153 members to use zeroing. Beyond the Brussels case, it faces outstanding challenges to zeroing duties by Vietnam, South Korea and Japan. (Reuters)