DS: European Union — Countervailing and Anti-Dumping Duties on Stainless Steel Cold-Rolled Flat Products from Indonesia

This dispute concerns a challenge by Indonesia against the application of certain countervailing  and anti-dumping duty measures by the European Union on imports of stainless steel cold-rolled flat products (SSCRFP) from Indonesia. With regard to the countervailing duty measures, Indonesia challenged the European Commission's determination that: (a) certain preferential financing and other support that Chinese grantors provided to Indonesian SSCRFP producers could be attributed to the Government of Indonesia (GOID) and thus countervailed; (b) the GOID had provided nickel ore to the country's SSCRFP producers at less than adequate remuneration; and (c) the GOID had foregone revenue that was otherwise due under an import duty exemption scheme, an income tax holiday, and an income tax allowance facility. Indonesia also challenged certain actions and omissions of the Commission in the underlying countervailing duty investigation. With regard to the anti-dumping duty measures, Indonesia challenged certain elements of the Commission's dumping determination in connection with its obligation to make a fair comparison between the export price and the normal value and to make due allowances for differences affecting price comparability.

Claims challenging the Commission's determination to apply countervailing duty measures to SSCRFP imports from Indonesia

a. With respect to the Commission's determination that certain allegedly preferential financing and other support (i.e., support that Chinese grantors had provided to Indonesian SSCRFP producers) could be attributed to the Government of Indonesia and thus countervailed, the Panel concluded as follows:

i. The Commission acted inconsistently with Article 1.1(a)(1) of the SCM Agreement by: (a) relying on its finding of "inducement" to attribute to the GOID the financial contributions that Chinese grantors provided to the IRNC Group  in Indonesia; and (b) considering these attributed financial contributions to be subsidies within the meaning of that provision.

ii. Having found that the Commission acted inconsistently with Article 1.1(a)(1) of the SCM Agreement by attributing to the GOID the financial contributions provided by the Chinese grantors to the IRNC Group in Indonesia, the Panel declined to make findings on Indonesia's claims under Articles 1.2, 2.1, 2.2, and 2.4 of the SCM Agreement challenging the Commission's specificity determination.

 

iii. Given the conditional nature of Indonesia's challenge and having found that the Commission acted inconsistently with Article 1.1(a)(1) of the SCM Agreement by attributing to the GOID the financial contributions provided by the Chinese grantors to the IRNC Group in Indonesia, the Panel declined to make findings on Indonesia's claims under Articles 1.1(b), 10, 14, and 32.1 of the SCM Agreement challenging the Commission's benefit determination.

b. With respect to the Commission's determination that the GOID had provided nickel ore for less than adequate remuneration to the country's SSCRFP producers, the Panel concluded as follows:

i. The Commission acted inconsistently with Article 1.1(a)(1) of the SCM Agreement by concluding that information on the record demonstrated that all nickel ore mining companies in Indonesia are "public bodies".

ii. The Commission acted inconsistently with Article 1.1(a)(1)(iv) of the SCM Agreement by concluding that the GOID entrusted or directed nickel ore mining companies – as private bodies – to provide nickel ore to the stainless steel producers in Indonesia.

iii. Having found that the Commission's public body and entrustment or direction findings, that formed the basis for its financial contribution determination, are inconsistent with Article 1.1(a)(1) of the SCM Agreement, the Panel declined to make findings on Indonesia's claims under Articles 1.1, 10, 14, 19, and 32.1 of the SCM Agreement challenging: (a) the benchmark that the Commission selected for its benefit analysis; and (b) the duty rate that the Commission determined for the sole non-sampled cooperating steel producer. For the same reason, the Panel also declined to make findings on Indonesia's claims under Articles 1.2, 2.1, and 2.4 of the SCM Agreement challenging the Commission's specificity determination.

c. With respect to the Commission's determination that the GOID had improperly forgone  revenue that was otherwise due, the Panel concluded as follows:

i. The Commission acted inconsistently with Article 1.1(a)(1)(ii) and Footnote 1 of the SCM Agreement by deeming import duty exemptions for raw materials imported into bonded zones to be financial contributions and subsidies without providing Indonesia an appropriate opportunity to undertake a "further examination" pursuant to Annex II(II)(2) of the SCM Agreement.

ii. Having found that the Commission's financial contribution and subsidy determination with respect to import duty exemptions for raw materials imported into bonded zones is inconsistent with Article 1.1(a)(1)(ii) and Footnote 1 of the SCM Agreement, the Panel declined to make findings on Indonesia's consequential claims under Articles 1.1(b), 3.1(a), 10, 14, and 32.1 of the SCM Agreement and Articles VI:3 and VI:4 of the GATT 1994.

iii. The Panel declined to make findings with respect to Indonesia's claim under Article 1.1(a)(1)(ii) and Footnote 1 of the SCM Agreement that the Commission was obligated to determine whether excess exemptions were granted even if the exemptions were ineligible to "not be deemed to be a subsidy" pursuant to Footnote 1. Having found that the Commission's financial contribution and subsidy determination with respect to import duty exemptions for raw materials imported into bonded zones is inconsistent with Article 1.1(a)(1)(ii) and Footnote 1, the Panel found that the circumstance contemplated by this claim did not exist.

iv. Having found that the Commission's financial contribution and subsidy determination with respect to import duty exemptions for raw materials imported into bonded zones is inconsistent with Article 1.1(a)(1)(ii) and Footnote 1 of the SCM Agreement, the Panel declined to make findings on Indonesia's claim that this alleged subsidy was determined to be specific inconsistently with Articles 1.2, 2.1, 2.2, 2.3, and 2.4 of the SCM Agreement.

v. Indonesia has not established that the Commission's specificity determination with respect to the income tax holiday is inconsistent with Articles 1.2, 2.1, and 2.4 of the SCM Agreement.

vi. The Commission acted inconsistently with Articles 1.2 and 2.1 of the SCM Agreement because it did not provide a reasoned and adequate explanation sufficient to justify its determination that the income tax allowance facility is specific.

vii. Having found that the Commission did not provide a reasoned and adequate explanation sufficient to justify its determination that the income tax allowance facility is specific, the Panel declined to make further findings with respect to Indonesia's claim that the Commission's specificity determination with respect to the income tax allowance facility is also inconsistent with Article 2.4 of the SCM Agreement.

d. With respect to Indonesia's claims challenging the Commission's actions and omissions in the underlying countervailing duty investigation, the Panel concluded as follows:

i. Indonesia has not established that, by not designating nickel ore mining companies as "interested parties", the Commission acted inconsistently with Article 12.9 of the SCM Agreement. Indonesia has also not established that the Commission acted inconsistently with Article 12.1 of the SCM Agreement because it did not directly notify the nickel ore mining companies of the information that was required from them, or because it allegedly transferred its fact-finding responsibilities as an investigating authority to the GOID. Accordingly, Indonesia has also not established its consequential claim that the Commission acted inconsistently with Article 10 of the SCM Agreement.

ii. Indonesia has not established that the Commission acted inconsistently with Article 12.7 by improperly: (a) applying facts available "against" or "with respect to" the nickel ore mining companies; or (b) attributing these companies' non-cooperation to the GOID.

iii. Indonesia has not established that the Commission acted inconsistently with Article 12.7 of the SCM Agreement with respect to the data that the GOID submitted regarding the domestic consumption of nickel ore or the Commission's conclusion that the GOID failed to provide information about nickel ore prices in Indonesia, or because "the GOID cooperated to the best of its abilities, despite the unreasonable burdens placed upon it by the Commission".

iv. The Commission acted inconsistently with Article 12.7 of the SCM Agreement in determining to apply facts available on the grounds that the IRNC Group did not provide necessary information with respect to the origin of the machinery imported from the Chinese parent companies.

v. Indonesia has not established that the Commission acted inconsistently with Articles 12.1 and 12.8 of the SCM Agreement in establishing a period of 21 calendar days to comment on the disclosure of essential facts.

vi. Indonesia has not established that the Commission acted inconsistently with Article 12.8 of the SCM Agreement: (a) when it determined it was unable to reconcile the data that the GOID submitted regarding the domestic consumption of nickel ore with the IRNC Group's purchases of nickel ore; (b) when it disclosed the essential fact that the Commission considered that the GOID had owned and provided land; or (c) based on the fact that it did not state that the analysis of competitive conditions was conducted using product control numbers.

vii. Indonesia has not demonstrated that the Commission's final determination with respect to the income tax holiday is inconsistent with Article 22.3.

viii. The Commission acted inconsistently with Articles 1.2 and 2.1 of the SCM Agreement because it did not provide a reasoned and adequate explanation sufficient to justify its determination that the income tax allowance facility is specific.

ix. The Panel determined that it did not need to make findings on a number of related procedural claims  in order to provide a positive resolution to this dispute. As neither of the conditions that Indonesia posited for asserting its conditional claims under Articles 12.8, 14, and 22.3 of the SCM Agreement regarding the Commission's pass-through analysis were satisfied, the Panel also did not address these claims.

Claims challenging the Commission's determination to apply anti-dumping duty measures to imports of SSCRFP from Indonesia

a. With respect to Indonesia's claims concerning the Commission's findings in the underlying anti-dumping investigation in connection with fair comparison and due allowances, the Panel concluded that:

i. Indonesia has not established that the Commission acted inconsistently with its obligation to make comparisons at the same level of trade within the meaning of the second sentence of Article 2.4.

ii. Indonesia has not established that the Commission acted inconsistently with the third sentence of Article 2.4 of the Anti-Dumping Agreement and the chaussette of Article VI:1 of the GATT 1994 when rejecting adjustments to the normal value to reflect transport-related expenses between a party's warehouses.

iii. Indonesia has not established that the Commission's downward adjustment to the export price for the involvement of related traders in the export sales was inconsistent with the third sentence of Article 2.4 of the Anti‑Dumping Agreement.

iv. Indonesia has not established that the Commission's decision not to make adjustments to the normal value for the involvement of related traders in domestic sales is inconsistent with the third sentence of Article 2.4 of the Anti‑Dumping Agreement.

v. Indonesia has not established that the Commission failed to indicate what information was necessary to ensure a fair comparison inconsistently with the final sentence of Article 2.4 and Article 6.1 of the Anti-Dumping Agreement