China Takes U.S. to WTO Court Over Shrimp, Saw Blades

China triggered a court case against the United States at the World Trade Organization on Oct. 25, 2011, arguing that U.S. anti-dumping measures on imports of diamond saw blades and frozen warm-water shrimp were invalid.

The case was detailed in court papers obtained by Reuters.

The United States has previously placed anti-dumping duties on imports of the products from China, claiming that they are deliberately priced below the market and killing off U.S. competition.

China raised the complaint in February but has failed to reach agreement with the United States, prompting it to go to the WTO court, the Dispute Settlement Body.

The Chinese case is based attacking on the U.S. use of "zeroing", a way of estimating the damage done by dumping -- selling goods abroad at a price below their cost at home -- that has repeatedly been ruled illegal under WTO rules.

The undermining of the U.S. calculation method could lead to further WTO cases to overturn U.S. anti-dumping duties. The United States has slapped anti-dumping duties on shrimp from Brazil, India, Thailand and Vietnam as well as China.

Vietnam used the zeroing defence to force a U.S. climbdown on shrimp earlier this year. Argentina, Brazil, Canada, Ecuador, the EU, Japan, Mexico, South Korea and Thailand have also all won zeroing cases at the WTO, and in January the United States promised its trading partners that it would change the method.

In the latest case, Japan, the EU, South Korea, Thailand, Vietnam and Honduras have all asked to be third parties, effectively giving them observer status in case the legal points of the dispute concern them in other cases.

A country is usually considered to be dumping a certain product if the average price on the foreign market is unfairly low. The zeroing method does not use an average price for exports of the product, but considers only those that are cheap, disregarding (or "zeroing") all prices that are above the home market.

That means it only takes into account the low-priced goods and effectively can inflate the apparent amount of dumping.