‘It’s complete gibberish mathematics’ says expert
A new World Trade Organization ruling on softwood lumber has dragged Canada into the heart of a long-running dispute over a controversial American trade practice — a standoff experts say is unlikely to end soon.
But as the U.S. continues to block the appointment of new judges to the WTO’s appellate body or top court — an action that could leave it powerless by December — Canada’s challenge is almost certain to languish, said Tom Prusa, an economics professor and expert in trade policy at Rutger’s University.
Put simply, a zeroing calculation attempts to prove dumping has occurred by taking into consideration the average of all shipments from a foreign firm sold below the average U.S. price. To the frustration of U.S. trading partners, it then ignores all shipments sold above the U.S. price, effectively giving them a weight of zero. Countries targeted by the practice complain that it exaggerates the gap in prices, making a dumping finding more likely and penalties more severe.
“It matters because prices change over time,” said Prusa. “You might have high demand in the summer and low demand in the winter. When you do that average the way the U.S. has been doing, even normal variations look like dumping.”
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