DISPUTE SETTLEMENT

DS: European Union — Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Current status

 

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Key facts

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 16 December 2016
Appellate Body Report circulated: 5 September 2017

  

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Latest document

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Indonesia.

On 27 July 2012, Indonesia requested consultations with the European Union with respect to the imposition of definitive and provisional anti-dumping measures by the European Union on the importation of fatty alcohols and with respect to certain aspects of the investigation underlying these measures.

The definitive measure challenged by Indonesia was imposed pursuant to Council Implementing Regulation (EU) No 1138/2011 of 8 November 2011 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia, OJ L 293, 11.11.2011, p.1.  The provisional measure challenged by Indonesia was imposed pursuant to Commission Regulation (EU) No 446/2011 of 10 May 2011 imposing a provisional anti-dumping duty on imports of certain fatty alcohols and their blends originating in India, Indonesia, and Malaysia, OJ L 122, 11.5.2011, p. 47.  The investigation was initiated pursuant to the Notice of initiation of an anti-dumping proceeding concerning imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia, OJ C 219, 13.8.2010, p. 12.

Indonesia claims that the measures are inconsistent with:

  • Articles 1, 2.3, 2.4, 2.6, 3.1, 3.2, 3.3, 3.4, 3.5, 4.1, 5.8, 6.7, 6.9, 9.2, 9.4, 18 of the Anti‑Dumping Agreement; and
     
  • Articles VI and X:3(a) of the GATT 1994.

 

Panel and Appellate Body proceedings

On 1 May 2013, Indonesia requested the establishment of a panel. At its meeting on 24 May 2013, the DSB deferred the establishment of a panel.

At its meeting on 25 June 2013, the DSB established a panel. India, Korea and the United States reserved their third party rights.  Subsequently, Malaysia, Thailand and Turkey reserved their third party rights.

On 8 December 2014, Indonesia requested the Director-General to determine the composition of the panel. On 18 December 2014, the Director-General composed the panel.

On 11 June 2015, the Chair of the panel informed the DSB that the panel's work had been delayed as a result of a lack of available experienced lawyers in the Secretariat. The panel expects to begin its substantive work shortly and to issue its final report to the parties in the second half of 2016.

On 16 December 2016, the panel report was circulated to Members.

Background

  • This dispute concerns anti-dumping measures imposed by the European Union on imports of certain fatty alcohols from Indonesia.
     
  • Following an anti-dumping investigation carried out between 13 August 2010 and 11 November 2011, the European Union determined that certain fatty alcohols exported by an Indonesian producer (PT Musim Mas) were sold in the territory of the European Union at less than their normal value. On this basis, the European Union imposed anti-dumping duties on imports of fatty alcohols from Indonesia for a period of 5 years (from 11 November 2011 to 12 November 2016).

Claim concerning the allowance made for a trading commission

  • Before the WTO Panel, Indonesia challenged the fairness of the comparison made by the European Union between the export price of fatty alcohols when sold in the European market and its normal value when sold in Indonesia. Article 2.4 of the Anti-Dumping Agreement states that this comparison is to be made normally at the ex-factory level, i.e. at the moment when the product leaves the factory to be sold domestically or for export. Thus, costs incurred after a product leaves the factory are to be deducted to the extent that they are included in the price. Article 2.4 goes on to require that due allowance shall be made in each case, on its merits, for any difference affecting price comparability between the export price and the normal value.
     
  • In this case, the European investigating authority made an allowance on the export price of fatty alcohols in order to account for the price mark-up received by a Singapore-based trader for sales to the EU. In particular, the European Union considered that the price mark-up — which was not paid on Indonesian domestic sales of fatty alcohols — was a factor affecting the comparability of the export price and the normal value. For this reason it had to be deducted from the export price in order to make a fair comparison. Indonesia disagreed: it claimed that since the Indonesian producer and the Singapore-based trader were closely related entities, no deduction for the mark-up should have been made to the export price. For Indonesia, the mark-up was not a difference affecting price comparability but merely a way of allocating profits within a single economic entity.
     
  • After reviewing the facts on the record, the Panel considered that the European Union had a sufficient evidentiary basis to treat the price mark-up as a difference affecting price comparability between the export price and the normal value of fatty alcohols. In addition, the Panel found no legal basis in the text of the Anti-Dumping Agreement for Indonesia's claim that costs incurred within a single economic entity could not be deducted in the process of calculating the dumping margin of a product. It ruled that the existence of a close relationship between the producer and the trader was not dispositive of whether a payment could be treated as a factor affecting price comparability.

Claim concerning the European Union's failure to disclose the results of the on-the-spot verifications of indonesian producers

  • The Panel also ruled that the European Union had not complied with the provisions of Article 6.7 of the Anti-Dumping Agreement, which establishes an obligation for investigating authorities to make the results of verification visits available to the companies concerned.
     
  • In the present case, the Panel found that the European Union had not disclosed the results of the verification visit at the premises of PT Musim Mas because it had failed to explain which information was requested from the company, whether PT Musim Mas had made available the information requested and whether the investigating authority had been able to confirm the accuracy of the information supplied in writing by the company.     

On 10 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 15 February 2017, the European Union notified the DSB of its decision to cross-appeal.

On 11 April 2017, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. The Appellate Body also informed the DSB that the circulation date of the Appellate Body report in this appeal would be communicated to the participants and third participants after the oral hearing. On 7 August 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 5 September 2017.

On 5 September 2017, the Appellate Body report was circulated to Members.

Indonesia appealed aspects of the Panel's findings and conclusions under Article 2.4 of the Anti‑Dumping Agreement relating to the obligation of investigating authorities to make a fair comparison between the export price and the normal value. The European Union appealed the Panel's findings and conclusions under Article 6.7 of the Anti-Dumping Agreement concerning the scope of the "results" of the on-the-spot investigation to be disclosed to the interested parties, as well as the Panel's ruling that its authority had not lapsed under Article 12.12 of the DSU. Referring to the expiry of the measure at issue and invoking Articles 3 and 19 of the DSU, the European Union also contested the appropriateness of the appeal lodged by Indonesia and of the recommendation made by the Panel in its report. Finally, the European Union contested the Panel's treatment of certain information as BCI and its consequent redaction of that information from the circulated version of the Panel Report.

The Appellate Body upheld the Panel's finding that Indonesia had not demonstrated that the EU authorities acted inconsistently with Article 2.4 of the Anti-Dumping Agreement by treating the mark‑up paid by PT Musim Mas to ICOF-S as a difference affecting price comparability, and therefore making a downward adjustment to the export price.

The Appellate Body also upheld the Panel's finding that the EU authorities had failed to make available or disclose the results of their on-the-spot investigations to PT Musim Mas, and had therefore acted inconsistently with Article 6.7 of the Anti-Dumping Agreement.

The Appellate Body found that Indonesia did not act inconsistently with Article 3 of the DSU by appealing the Panel Report notwithstanding the expiry of the measure at issue shortly before circulation of the Panel report to WTO Members. The Appellate Body therefore rejected the European Union's requests to find it unnecessary to rule on the matter raised in Indonesia's appeal, or to declare moot and of no legal effect all of the findings and conclusions made by the Panel. The Appellate Body further found that the Panel did not err or act inconsistently with Article 19.1 or Article 11 of the DSU in making a recommendation with respect to the measure at issue.

With respect to the European Union's claim under Article 12.12 of the DSU, the Appellate Body found that only a composed panel can take the decision to suspend panel proceedings. The Appellate Body upheld the Panel's findings that the work of the Panel had not been suspended, and that the authority for the establishment of the Panel had not lapsed.

Finally, the Appellate Body found it unnecessary to rule on whether the Panel erroneously designated certain information as BCI and consequently erred by redacting that information from five paragraphs of the Panel Report.

The three Members of the Division hearing this appeal completed their work and signed this Report on 31 July 2017, and it was sent for translation. On 1 August 2017, Mr Hyun Chong Kim invoked Rule 14 of the Working Procedures for Appellate Review and resigned from the Appellate Body with immediate effect (WT/DSB/73), in view of Article 17.3 of the DSU.

At its meeting on 29 September 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.

 

Reasonable period of time

At the DSB meeting on 23 October 2017, the European Union informed the DSB that it intended to fully comply with the DSB's recommendations and rulings.

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