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U.S. import penalties new problem for WTO pact

GENEVA (Reuters) - The United States squared off against other World Trade Organisation members on Wednesday over its use of import penalties, an issue diplomats see as the latest obstacle to a new global trade deal.

WTO judges have repeatedly struck down the U.S. method of calculating anti-dumping duties -- known as “zeroing” -- as contrary to international trade rules, because it results in higher-than-merited charges on goods entering the United States.

But Washington says the practice is allowable under current global trade rules, penned in the 1994 Uruguay Round accord, and has signalled that any agreement emerging from the six-year-old Doha Round of talks must recognise its validity.

“It is a very serious issue,” U.S. ambassador to the WTO Peter Allegeier said after a heated negotiating session at the trade body’s Geneva headquarters. He has previously said the United States “cannot envisage an outcome to the negotiations without addressing zeroing.”

A draft text circulated last month by Uruguayan ambassador Guillermo Valles Galmes, who chairs the WTO’s “rules” talks, made room for the use of zeroing in some circumstances, in what was widely regarded as a concession to Washington.

Diplomats from major economies including the European Union, China, Brazil and India denounced that text at Wednesday’s meeting, saying the “biased and partial” U.S. method had no place in a WTO accord meant to remove global barriers to trade.

“If the use of such practice prevails in the future, it could nullify the results of trade liberalisation efforts,” said a joint statement from countries including Brazil, China, India and Japan and backed by the European Union and Canada.

Diplomats involved in Wednesday’s session said no country spoke in defence of zeroing other than the United States, but the WTO’s 151 member states need consensus on all aspects of a Doha deal for it to be achieved.

‘PERPLEXED AND DISAPPOINTED’

The friction added to deep divisions in separate WTO talks on agriculture, industry and services, where developing and developed countries have crossed swords over the size of the tariff and subsidy cuts that are needed.

WTO rules allow countries to slap duties on imported goods that are being sold for less than their production cost in the exporting market, a practice known as dumping.

Under zeroing, some prices are ignored for the calculation, making it easier to conclude that dumping has occurred.

The Japanese WTO ambassador, Ichiro Fujisaki, told diplomats that his country was “both perplexed and disappointed” with the rules text, stressing “the negative impact of zeroing on future world trade.”

And China’s ambassador Sun Zhenyu said that if all WTO members were to use zeroing, the level of protectionism worldwide would surely increase “which is clearly not the objective of this organisation.”

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