Ecuador is one of the South American countries

well-

known around the world for its principal produced products, like petroleum derivatives, cocoa beans, flowers an also shrimp which is the second major produced product in the country after the petroleum derivatives. The United States is one of Ecuadors principal foreign markets buying around 50% more or less of Ecuadors production, and being shrimp the second product to be exported to the United States1. The relationship between this two commercial parties have been very good through the years helping each other with the exchange of products and the sign of some agreements, multilateral and unilateral ones. Moreover the respect of both parties for the agreements has permitted the continuing relationship between the countries. But in 2004 that good relationship was blurred when the United States accused some Ecuadorian companies of introduce their shrimp in a lower price to the United States affecting their local economy. So this accusation generated a response from the Ecuadorian government and it turned into a dispute that was presented to the World Trade Organization (W.T.O.)*

Ecuador Central Bank Statistics Foreign Trade Period: January 1

September 1 - http://www.portal.bce.fin.ec/vto_bueno/ComercioExterior.jsp * Organization that deals with the global rules of trade between nations.

that established a panel to handle this situation seeking for a better solution. (Exhibit 1) In order to understand better the dispute I consider important to know a little of the background of the problem and how both parties and the panel of the W.T.O. worked to solve it. On 17 November 2005, the Government of Ecuador requested consultations pursuant to Article 4 of the Understanding on the Dispute Settlement Understanding (DSU)*, Article XXII of the General Agreement on Tariffs and Trade 1994 ("the GATT")**, and Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the Anti-Dumping Agreement) concerning certain antidumping measures on frozen warm water shrimp from Ecuador and, in particular, the United States Department of Commerce (USDOC)***'s practice of "zeroing"2 when calculating dumping margins, as applied in these measures.

Methodology used by the United States that consist in separate the time

when there is dumping from the time when such practice does not occur or occurs the opposite result.

* Understanding on Rules and Procedures Governing the Settlement of

Disputes. ** Nowadays the WTO, agreement ruling tariffs and trade of their contracting members with others.

At the parties meeting on 19 July 2006, the DSB established a Panel, restating that the issue in this dispute is the use by the USDOC of zeroing as applied in respect of three antidumping measures on certain frozen warm water shrimp from Ecuador. The USDOC, on 27 January 2004, initiated an anti-dumping investigation on Certain Frozen and Canned Warm water Shrimp from Ecuador. On 4 August 2004, the USDOC published a notice indicating that it had selected the two largest producers/exporters of the subject merchandise, Exporklore S.A. (Exporklore) and Promarisco S.A. ("Promarisco")* as mandatory respondents and had calculated margins of dumping for these three respondents rate. On 1 February 2005, the USDOC published an amended final margin determination and antidumping duty order as follows: Exporklore 2.48%, Promarisco, 4.42%. Therefore Ecuador contends that the USDOC engaged in "zeroing" in determining the respective margins of dumping for Exporklore, Promarisco in the final dumping determination, the amended final determination, and the anti-dumping order, and that as a consequence the measures at issue violate Article 2.4.2 of the Anti-Dumping Agreement.
*** Cabinet department of the United States government concerned with promoting economic growth. * Ecuadors largest producer/exporter companies, affected by the measure.

Now to conclude, after the panel analyzed Ecuadors argument that mentioned that the USDOC's final determination, its amended final margin determination and anti-dumping order, are inconsistent with the United States' obligations under the first sentence of Article 2.4.2 of the Anti-Dumping Agreement as that provision applies to the weighted averageto-weighted average methodology. Furthermore it describes the zeroing methodology at issue in this dispute as follows: (1) different models, (2) weighted average prices in the U.S. and weighted average normal values in the comparison market are calculated on a model-specific basis for the entire period of investigation; (3) the weighted average normal value of each model is compared to the weighted average U.S. price for that same model; (4) in order to calculate the dumping margin for an exporter, the amount of dumping for each model is summed and then divided by the aggregated U.S. price for all models; and (5) before summing the total amount of dumping for all models, all negative margins on individual models are set to zero. Given that the WTO panel concluded that Ecuador has made a prima facie case3** of violation in respect of the

WTO Disputes Panel US-Shrimp Ecuador DS335 Final Report - 2006 *Term used to describe the apparent nature of something upon initial observation.

final determination, the amended final determination and the anti-dumping order, as a matter of law, and in the absence of arguments from the responding party to the contrary, to rule in favor of Ecuador. The Panel therefore determined that the USDOC, by using zeroing as described above in calculating the margins of dumping in the three measures challenged by Ecuador, has acted inconsistently with the United States' obligations under Article 2.4.2 of the Anti-Dumping Agreement. One of the most important issues to consider in this case is that Ecuador was prepared to face the entire dispute presenting the right information at the right moment to defend the local companies that were affected by this inconsistent measure that also affected the country foreign trade, especially with one of our principal exporting destination. Finally the United States had to correct it wrong anti dumping measure and let Ecuadorians companies to enter into their market with the zero tax payment according to their trade agreement to support exchange of goods between them helping Ecuadors exports to improve the margin of the foreign trade balance with the United States, and demonstrating transparency in their businesses to no repeat the same situation that can affect both nations.
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