DS:European Union — Countervailing Duties on Imports of Biodiesel from Indonesia

This dispute concerns Indonesia's complaint against countervailing duties the European Union has applied since 2019 on imports of biodiesel from Indonesia. Indonesia challenged the European Commission's determination that Indonesia maintains certain subsidy programmes to the benefit of such imports, as well as the Commission's determination that the same subsidized imports threaten the EU biodiesel producers with material injury. In addition, Indonesia challenged various procedural aspects of the Commission's underlying anti-subsidy investigation.

Claims related to alleged subsidization provided to the Indonesian biodiesel industry pursuant to certain subsidy programmes

In relation to the Commission's determination that the GOI provides a countervailable subsidy to biodiesel producers through the Oil Palm Plantation Fund (OPPF), the Panel concluded as follows:

1. Indonesia has not established that the Commission acted inconsistently with Article 1.1(a)(1) of the SCM Agreement by determining that disbursements from the OPPF to the biodiesel producers constituted a financial contribution by a government or public body;
2. Indonesia has not established that the Commission acted inconsistently with Article 1.1(a)(1) of the SCM Agreement by determining that disbursements from the OPPF to biodiesel producers constituted financial contributions in the form of grants;
3. Indonesia has not established that the Commission acted inconsistently with Article 1.1(b) of the SCM Agreement by determining that disbursements by the OPPF to biodiesel producers conferred a benefit to Indonesian biodiesel producers;
4. Indonesia has not established that the Commission acted inconsistently with Articles 19.1, 19.4 and 21.1 of the SCM Agreement, or Article VI:3 and Article XVI:1 of the GATT 1994, by  failing to properly allocate the alleged subsidy amounts resulting from the OPPF payments, or otherwise failing to accurately determine the per unit subsidy amount or impose countervailing duties at the level not exceeding that amount;
5. Indonesia has not established that the Commission acted inconsistently with Articles 1.1(a)(1)(ii), 14, 19.3, 19.4 and 32.1 of the SCM Agreement, and Article VI:3 of the GATT 1994, by failing to adjust the amount of the alleged subsidy "to account for discounts granted as well as export levies, transport and credit costs"; by failing to adequately explain its benefit calculation method or ascertain as accurately as possible the amount of subsidization bestowed on the investigated producer; or by failing to levy countervailing duties in the appropriate amounts; and
6. Indonesia has not established that the Commission acted inconsistently with Articles 1.2, 2.1 and 2.4 of the SCM Agreement by determining that disbursements from the OPPF, confer a benefit to the recipients which is de jure specific. In light of this finding, the Panel refrained from ruling on Indonesia's additional claims that the Commission acted inconsistently with Articles 1.2, 2.1 and 2.4 of the SCM Agreement by determining that disbursements from the OPPF are de facto specific

In relation to the Commission's determination that the GOI provides a countervailable subsidy to biodiesel producers through the provision of crude palm oil (CPO), the Panel concluded as follows:

1. the Commission acted inconsistently with Article 1.1(a)(1)(iv) of the SCM Agreement by determining that, through a set of measures, including an export tax and export levy, and by de facto acting as a price setter in the domestic CPO market, the GOI induced the domestic CPO producers to sell CPO locally and thereby entrusted or directed private CPO suppliers to provide CPO to biodiesel producers in Indonesia for less than adequate remuneration. In light of this finding, the Panel refrained from ruling on Indonesia's additional claim that the Commission acted inconsistently with Article 1.1(a)(1)(iv) of the SCM Agreement by determining that the provision of CPO to biodiesel producers in Indonesia is a type of function which "would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments", as specified in Article 1.1(a)(1)(iv);
2. the Commission acted inconsistently with Articles 1.1(a)(2) and 32.1 of the SCM Agreement by determining that, through a set of measures, including an export tax and export levy, and by de facto acting as a price setter in the domestic CPO market, the GOI provides income or price support to the biodiesel industry;
3. in light of its findings that the Commission acted inconsistently with Article 1.1(a)(1)(iv) and Article 1.1(a)(2) of the SCM Agreement, the Panel refrained from ruling on Indonesia's additional claims that the Commission acted inconsistently with Articles 1.1(b) and 14(d) of the SCM Agreement by determining that CPO suppliers provide CPO to biodiesel producers in Indonesia for less than adequate remuneration, thereby conferring a benefit upon Indonesian biodiesel producers;
4. in light of its findings that the Commission acted inconsistently with Article 1.1(a)(1)(iv) and Article 1.1(a)(2) of the SCM Agreement, the Panel also refrained from ruling on Indonesia's additional claims that the Commission acted inconsistently with Articles 1.2, 2.1 and 2.4 of the SCM Agreement by determining that the provision of CPO and provision of income or price support to the biodiesel industry are specific;
5. Indonesia has not established that the Commission acted inconsistently with Article 12.7 of the SCM Agreement by resorting to facts available in respect of information concerning Indonesian state-owned enterprise, PT Perkebunan Nusantara (PTPN);
6. Indonesia has not established that the Commission acted inconsistently with Article 12.7 of the SCM Agreement by disregarding any information submitted by independent CPO suppliers when making findings concerning whether PTPN depreciated CPO prices in Indonesia; and
7. the Commission acted inconsistently with Article 12.7 of the SCM Agreement by resorting to facts available in respect of independent CPO suppliers on the ground that the GOI purportedly failed to ensure submission of independent CPO suppliers' Appendix B responses.

Claims related to the European Commission's determination that imports of biodiesel from Indonesia cause a threat of material injury to EU biodiesel producers

The Panel concluded as follows:

1. Indonesia has not established that the Commission acted inconsistently with Articles 15.1 and 15.2 of the SCM Agreement by failing to ensure price comparability, when examining the effect of Indonesian imports on the prices of domestic like products, and by failing to consider the existence of significant price undercutting for the product as a whole;
2. the Commission acted inconsistently with Articles 15.1 and 15.2 of the SCM Agreement by failing to make an objective examination, on the basis of positive evidence, of the effect of Indonesian imports on the prices of domestic like products and improperly found significant price depression, in breach of Articles 15.1 and 15.2 of the SCM Agreement;
3. the Commission acted inconsistently with Articles 15.1 and 15.4 of the SCM Agreement by failing to make an objective examination, on the basis of positive evidence, of the factors having a bearing on the state of the domestic industry;
4. the Commission acted inconsistently with Articles 15.1 and 15.7 of the SCM Agreement by concluding that the totality of threat factors that the Commission examined indicated that "the fragile economic condition of the Union industry is likely to be aggravated by the imminent and continuing subsidised imports of biodiesel from Indonesia";
5. the Commission acted inconsistently with Article 15.7 of the SCM Agreement by failing to properly consider the existence of a change in circumstances in its threat of injury determination;
6. Indonesia has not established that the Commission acted inconsistently with Article 15.2 of the SCM Agreement in considering that there had been a significant increase in the volume of Indonesian imports;
7. in light of inconsistencies in the preceding steps of inquiry into the existence of a threat of material injury and in the absence of a valid finding of material injury or threat thereof, the Panel refrained from ruling on Indonesia's additional claims that the Commission acted inconsistently with Articles 15.5 and 15.7 of the SCM Agreement in assessing whether the subject imports or other known factors were the cause of a threat of material injury to EU biodiesel producers; and
8. in light of inconsistencies in the preceding steps of inquiry into the existence of a threat of material injury and in the absence of a valid finding of material injury or threat thereof, the Panel refrained from ruling on Indonesia's claim that the Commission acted inconsistently with Article 15.8 of the SCM by failing to exercise "special care" in the application of countervailing measures.

Claims related to the European Commission's rejection of a price undertaking offer in the investigation:

The panel concluded that Indonesia has not established that the Commission acted inconsistently with Article I:1 of the GATT 1994 and Articles 15.8 and 18.3 of the SCM Agreement by declining a price undertaking offer by Indonesian biodiesel producer, Wilmar, after it had accepted a price undertaking in respect of Argentine exporters.

Claims related to the European Commission's non‑disclosure of certain information:

The Panel concluded as follows:

1. Indonesia has not established that the Commission acted inconsistently with Articles 12.1, 12.3, 12.4, and 12.4.1 of the SCM Agreement by failing to require the relevant EU producers to provide a non‑confidential summary of submitted information; and
2. Indonesia has not established that the Commission acted inconsistently with Articles 12.1, 12.3, and 15.1 of the SCM Agreement by failing to provide necessary information to interested parties, including necessary information to propose alternative methodologies to determine the existence of price undercutting; or by providing a late disclosure of essential information concerning, among others, price elasticity and changes in the EU market.

Pursuant to Article 19.1 of the DSU, the Panel recommended that the European Union bring its measures into conformity with its obligations under the SCM Agreement.