DS: United States — Anti-Dumping and Countervailing Measures on Certain Coated Paper from Indonesia

Indonesia challenged: (i) the anti-dumping and countervailing measures imposed by the United States on imports of certain coated paper from Indonesia following an investigation by the United States Department of Commerce (USDOC) and the United States International Trade Commission (USITC); and (ii) a provision of US law that deems a tie vote of the USITC Commissioners in injury determinations to be an affirmative determination (“tie vote” provision).

Terms of reference

The United States requested that the Panel find that certain of Indonesia's arguments in support of its claims under Articles 14(d), 2.1(c) and the chapeau of Article 2.1 of the SCM Agreement with respect to a subsidy in the form of a log export ban were tantamount to claims under provisions of the SCM Agreement (Articles 1.1(a) and 22.3) which were not included in Indonesia's panel request, and as a consequence, that these arguments were outside the Panel's terms of reference. Particularly as Indonesia had made clear that it was not making any claims under the provisions at issue, the Panel found it neither necessary nor appropriate, for the purpose of resolving the dispute, to make the specific findings requested by the United States. Nevertheless, the Panel agreed that some of Indonesia's arguments challenged aspects of the USDOC's determination of the existence of a financial contribution despite having made no claim of violation under Article 1.1(a). The Panel indicated that it would assess the relevance of these arguments in the course of addressing Indonesia's claims.

Rejection of in-country prices as benchmarks to calculate benefit

Indonesia challenged as inconsistent with Article 14(d) of the SCM Agreement the USDOC's benefit calculations regarding two forestry measures: the provision of standing timber and the log export ban. In particular, Indonesia challenged the USDOC's conclusions that there were no market-determined stumpage fees or market prices for logs in Indonesia that could have been used as a benchmark to calculate benefit and the USDOC's decisions, as a result, to resort to out-of-country benchmarks.

With respect to the provision of standing timber, the Panel noted that the USDOC based its conclusion that there were no market-determined stumpage fees in Indonesia on the Government of Indonesia (GOI)'s predominant role in the market for standing timber. In assessing the consistency with Article 14(d) of this conclusion, the Panel found it relevant that in the context of its benchmark analysis, the USDOC examined other  features of the market for standing timber in addition to the GOI's predominance as a supplier of the good at issue. In addition, the Panel concluded that there was no meaningful information concerning private prices for stumpage before the USDOC. Considering these elements in light of the circumstances of the case, in particular the characteristics of the market for standing timber in Indonesia and the market share held by the GOI, the Panel concluded that the USDOC did not err in concluding that there were no market-determined in-country private prices for stumpage that could be used as the benchmark.

Regarding the log export ban, the Panel noted that it was undisputed that the ban applied to all logs produced in Indonesia; therefore, there logically remained no Indonesian private log market unaffected by the financial contribution. The Panel considered that this rendered domestic log prices unsuitable as a benchmark. The Panel also considered that the USDOC did not err in concluding that import prices for logs did not constitute an appropriate benchmark, particularly in light of the fact that the log export ban applied to all logs in Indonesia and that import quantities were minimal relative to domestic production.

The Panel therefore rejected Indonesia's claims under Article 14(d) of the SCM Agreement.

Use of facts available

Indonesia challenged as inconsistent with Article 12.7 of the SCM Agreement the USDOC's finding that the GOI provided a subsidy to APP/SMG in the form of debt forgiveness. Specifically, Indonesia challenged the USDOC's finding, based on an adverse inference, that the buyer of the investigated producer's debt was affiliated with that investigated producer. The Panel found that the USDOC reasonably considered that the missing information was necessary to complete the determination, and that the GOI had failed to provide necessary information within a reasonable period and failed to act to the best of its ability to cooperate in the investigation. Further, the Panel concluded that there was a sufficiently close connection between the missing information and the conclusion reached on the basis of an adverse inference — regarding the question of affiliation between the buyer and the investigated producer — to conclude that the “facts available” relied upon reasonably replaced the missing information. The Panel therefore rejected Indonesia's claim under Article 12.7 of the SCM Agreement.

Specificity

Indonesia challenged the USDOC's findings of de facto specificity with respect to the three subsidies at issue on the ground that the USDOC failed to identify the relevant subsidy programme in connection with each of these subsidies, contrary to Article 2.1(c) of the SCM Agreement. The Panel rejected Indonesia's interpretation of Article 2.1(c) as requiring, where a subsidy programme is manifested in the form of written instruments, that both the financial contribution and the benefit be discernible from such instruments. The Panel found that, with respect to each of the subsidies at issue, the USDOC had identified the relevant subsidy programme consistently with Article 2.1(c).

In addition, the Panel rejected Indonesia's claim that, in its determination that the debt buy-back subsidy was de facto specific, the USDOC failed to identify the granting authority, in contravention of the chapeau of Article 2.1 of the SCM Agreement. The Panel considered that the USDOC had clearly identified the granting authority providing the subsidy — an agency of the GOI — as well as the jurisdiction of that authority.

The Panel therefore rejected Indonesia's claims under the Article 2.1(c) and the chapeau of Article 2.1 of the SCM Agreement.

Non-attribution

Indonesia  challenged as inconsistent with Articles 3.5 of the Anti-Dumping Agreement and 15.5 of the SCM Agreement the USITC's non-attribution analysis with respect to three “other factors” it argued would injure the domestic industry in the future at the same time as subject imports. As a preliminary matter, the Panel rejected an argument of Indonesia that if a domestic industry is found to be vulnerable to future injury for reasons other than the effect of subject imports during the POI, then it cannot be found to be threatened with injury by future subject imports. The Panel found that the USITC's explanations and treatment of the first and second “other factors” (projected decline in demand and the expiration of a tax credit) were reasonable conclusions that could have been reached by an objective and unbiased investigating authority. The Panel considered that Indonesia had failed to make a prima facie case of violation with respect to the third alleged “other factor” (“non-subject imports”) given that Indonesia had not alleged that such imports were threatening to cause injury to the domestic industry. For these reasons, the Panel rejected Indonesia's claims.

Threat of injury

Indonesia challenged as inconsistent with Articles 3.7 of the Anti‑Dumping Agreement and 15.7 of the SCM Agreement the USITC's threat of injury determination as based on conjecture and remote possibility. Indonesia's claims focused on two intermediate findings reached by the USITC, that subject imports would gain market share at the expense of the domestic industry, and that subject imports would have adverse price effects on domestic prices. The Panel found that Indonesia had not demonstrated that the USITC based these findings on conjecture or remote possibility. The Panel therefore rejected Indonesia's claims.

“Special care” in threat of injury cases

Indonesia claimed that, contrary to Article 3.8 of the Anti-Dumping Agreement and Article 15.8 of the SCM Agreement, the USITC had failed to exercise “special care” in its threat of injury determination. Indonesia argued that the deficiencies it had identified in the context of its other claims against the USITC's threat of injury determination also rendered this determination inconsistent with Articles 3.8 and 15.8. The Panel rejected Indonesia's claims on the basis that it had already found that Indonesia had failed to establish its other claims and that Indonesia had not presented additional arguments in support of its claims under Articles 3.8 and 15.8. The Panel also rejected, as without support in the text of the Agreements, arguments by Indonesia to the effect that the USITC had failed to exercise “special care” because of the cumulative effect of the alleged deficiencies.

WTO-consistency of the us “tie vote” provision

Indonesia challenged Section 771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 of the United States Code, Section 1677(11)(B) as inconsistent “as such” with the “special care obligation” under Article 3.8 of the Anti-Dumping Agreement and Article 15.8 of the SCM Agreement. This “tie vote” provision deems an evenly split vote by the USITC Commissioners on inter alia, threat of injury, to be an affirmative injury determination. The Panel considered that the “special care” requirement under Articles 3.8 and 15.8 applies to an investigating authority's consideration of the substantive requirements for a determination of threat of injury and that the Anti-Dumping and the SCM Agreements generally do not discipline Members' voting procedures or the manner in which decisions to apply duties are made in anti-dumping or countervailing duty investigations. Consequently, the Panel rejected Indonesia's claim.