Issues on Particular Market Situation to Calculate Dumping Margin of Korean Steel Products by the USA

Purpose – The U.S. Trade Preference Expansion Act (TPEA) of 2015 enables the US Department of Commerce (DOC) to inflate dumping margin when the particular market situation (PMS) exists in the exporter’s home market. DOC applied PMS provisions to the steel products from Korea. This paper analyzes whether DOC s calculation by using the regression analysis is consistent with WTO rules. Design/methodology – This paper analyzes the PMS application in law and regression analysis that extends the data period from 10 years to 18 years using the same economic model with DOC, and changes the country group according to the quantities of steelmaking capacity. Findings – Results show that DOC s argument conflating the sales-based with cost-based PMS designed to inflate dumping margins might not be consistent with WTO Antidumping Agreement Article 2.2 and 2.2.1.1 in which costs shall normally be calculated on the basis of records kept by the exporter, providing generally accepted accounting principles and reasonably reflection of the costs and PMS that exists in the Korean steel product markets. Even if it will be consistent, DOC’s calculated margin by the regression analysis using a 10-year data is a big gap (5 times) compared with an 18-year data projection and different countries data through the same methodology, which is a huge gap of regression coefficient. It means that dumping margin would be very wide range from 7.8% to 38.54% and unstable to calculate. Inflating dumping margin by DOC using regression analysis would not only be inconsistent with WTO rules, but also projection result is unreliable. Originality/value – Literature papers have mainly analyzed WTO law itself. This paper however, would be the first attempt to analyze the DOC’s new way of dumping margin calculation in both manners of law and an empirical methodology perspective at the same time.