Statistical Properties of the Department of Commerce’s Antidumping Duty Calculation Method with Implications for Current Trade Cases

The Department of Commerce (DOC) uses differential pricing analysis in order to detect whether a foreign exporter dumps goods in the U.S. market at prices lower than the exporter sells the goods for in its domestic market. A dumping duty is then levied on the exporter, the amount of which depends on the dumping margin. Several recent cases at the Federal Circuit Court of Appeals have challenged the DOC’s methodology on statistical grounds. In this article, the DOC’s procedure for calculating the dumping margin is described in detail, including the rules for the controversial zeroing policy. Several statistical issues with the DOC’s approach are identified and some potential improvements are proposed.