The EU call for retaliation is the latest stage in a dispute over the controversial U.S. "zeroing" method of calculating duties on imports that are dumped -- sold for less than they cost at home.
The United States is now the only one of the World Trade Organization's 153 members to use zeroing, which has been repeatedly condemned by WTO courts.
But the European Union is now seeking trade sanctions because of failure of the United States to withdraw zeroing duties in cases that have been found to break trade rules.
"The European Union is not seeking compensation. We are seeking to induce compliance," an EU lawyer told a rare public session of a WTO arbitration panel.
Ultimate Step
The EU and the United States have sought to resolve some of their trade disputes amicably, for example last year's deal on EU beef imports, but recourse to retaliation is the ultimate step in WTO litigation.
The arbitration hearings are embarrassing for the United States, because it has to acknowledge that it is still using zeroing in cases where it has been found illegal, undermining the Obama administration's focus on enforcement in international trade.
And U.S. officials have had to accept repeatedly that zeroing is not a method consistent with WTO rules, which does not bode well for a series of outstanding challenges to the duties by Vietnam, South Korea and Japan.
As a result the U.S. government is looking at ways of reforming its anti-dumping armoury, possibly dropping dumping, without weakening its ability to tackle unfairly priced imports.
The EU has calculated its losses on annual trade resulting from the disputed duties on steel products from the Netherlands, Sweden, Britain, France, Germany and Italy and pasta from Italy in the case at hand at over $300 million.
It offered two alternatives to the arbitrator. One would be a prohibitive tariff, of 100 percent for example, on annual trade of $308.76 million.
The second proposes a tariff of 12.08 percent on annual trade calculated in a different way to be $475.02 million.
But the United States says the European Union vastly exaggerates the amount of trade that has been affected, and puts it at only $2.87 million.
"The United States has demonstrated that the EU's two proposals for the authorisation of suspension of concession or other obligations grossly exceed the level of nullification or impairment in this case," a U.S. lawyer told the arbitrator.
The difference reflects opposing views on what period to examine to look at the damage to trade, calculations of the impact of the duties on trade, and whether all the condemned cases should be included as the United States argues it has since withdrawn zeroing duties on some of them.
The EU also says the United States is withholding data that should be used in the assessment of retaliation.
Anti-dumping duties often involve comparisons of different batches of goods to work out the average price of the imports and how it compares with the price at home.
In zeroing, examples where the imports are actually sold for more than they cost at home are left out of the calculation, which critics say inflates the gap and resulting duties. (Reuters)
