Evolution of the Treaty Interpretation on the Issue of Targeted Dumping: Is it a Clarification of a Treaty or ‘Gap Filling’?

Author Name MIYAOKA Kunio (Mori Hamada & Matsumoto)
Creation Date/NO. July 2021 21-J-034
Research Project Comprehensive Research on the Current International Trade/Investment System (pt.V)
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The second sentence of Article 2.4.2 of the Anti-Dumping Agreement, recognized as a provision that addresses ‘targeted dumping’, is one of the most controversial provisions of the WTO Agreement. There are largely two approaches to interpreting the second sentence: (i) some Members, including the United States, consider that this provision permits ‘zeroing’ where certain prescribed conditions are met; whereas (ii) others posit that this provision instead offers investigating authorities a means to address low-priced exports targeted to a particular purchaser, region, or time period by focusing on that particular group. In US – Washing Machines (DS464, 2016), The Appellate Body took the latter view and held that the use of zeroing was inconsistent with the second sentence. Nevertheless, the United States has continued its practice of using zeroing despite the Appellate Body's ruling, and a recent panel endorsed such practice by saying that the Appellate Body was wrong. The past and ongoing controversy over the interpretation of the second sentence of Article 2.4.2 finds its roots in the constructive ambiguity resulting from the Uruguay Round negotiations and highlights the complex issue of how to draw a proper line between the interpretation of a written treaty and 'gap filling’ by adjudicators.