Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994

According to Indonesia, the EU's anti-dumping measures against its biodiesel products were inconsistent with Article 2.2.1.1 of the Anti-Dumping Agreement, and, consequently, Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. Indonesia alleged that the EU failed to calculate the cost of production on the basis of the costs reports kept by the producers. Indonesia additionally argued that the EU failed to construct the normal value for the investigated Indonesian producers based on the cost of production of biodiesel from the country of origin, i.e. Indonesia. Indonesia considered that the substance of its claims similar to those raised by Argentina in EU–Biodiesel (Argentina).Footnote ¹

With regard to Indonesia's first claim, the panel found no reason to deviate from the panel's findings in EU–Biodiesel (Argentina). In the context of the current dispute, the panel found that the EU authorities did not provide a sufficient legal basis under Article 2.2.1.1 of the Anti-Dumping Agreement to conclude that Indonesia's producers' records did not reasonably reflect the costs associated with the production and sale of biodiesel in Indonesia. Thus, the panel ruled that the EU authorities acted inconsistently with that provision by failing to calculate the producers' cost of production using the costs reflected on the producers' records. Regarding Article VI:1(b)(ii) of the GATT 1994, the panel followed the approach of the panel in EU–Biodiesel (Argentina) and did not make a finding under that provision because it considered it unnecessary to resolve this dispute.Footnote ²

Regarding Indonesia's second claim, the panel again followed the panel's findings in EU–Biodiesel (Argentina). The current panel found that the EU replaced the actual price of crude palm oil (CPO) that was reflected in the producers' records with an international reference price established by the Indonesian authorities. The EU authorities then found the prices of CPO artificially lower than international prices and considered that the reference price published by Indonesia served as the price at which domestic biodiesel producers would have bought CPO in the absence of this distortion. The panel thus concluded that the EU acted inconsistently with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by using a CPO for Indonesian producers was not a cost ‘in the country of origin’.Footnote ³

Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement

Indonesia claimed the methods used by the EU to establish a profit amount for Indonesian producers to be inconsistent with Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement because (i) the EU did not comply with the requirement to calculate a cap for profits; and (ii) the EU did not determine an amount for profits on the basis of a ‘reasonable method’.

The panel recalled the findings of the panel in EU–Footwear (China) and affirmed that an investigating authority may not be excused from calculating the cap when applying a method pursuant to Article 2.2.2(iii) by arguing that there were no data available.Footnote ⁴ The panel concluded that Indonesia had demonstrated that the EU failed to comply with Article 2.2.2(iii) in determining the profit amounts for Indonesian producers by failing to determine the profit cap. The panel also found that the EU, consequently, acted inconsistently with Article 2.2. Further, the panel recalled the analysis of the previous panel in EU–Biodiesel (Argentina) of the EU methodology by which the EU established profit amounts for Indonesian producers. This methodology was the same one that the EU had used for Indonesian products.Footnote ⁵ The panel considered the approach taken by the EU authorities to be a ‘method’ within the meaning of Article 2.2.2(iii), which also applied in the current dispute.Footnote ⁶ In this regard, the panel rejected Indonesia's request to find that the EU acted inconsistently with Article 2.2.2(iii) because the EU had failed to determine the profit amount based on a ‘reasonable method’.Footnote ⁷

Articles 2.3 and 2.4 of the Anti-Dumping Agreement

Indonesia argued that the EU violated Article 2.3 and Article 2.4, fourth and fifth sentences of the Anti-Dumping Agreement by failing to construct the export price of the Indonesian exporting producer P.T. Musim Mas based on the price at which the imported biodiesel produced by this exporter was first resold to independent buyers in the EU.Footnote ⁸

The panel found that Indonesia made a prima facie case of inconsistency by the EU with Article 2.3. The panel concluded that the EU authorities failed to include the double counting premiumFootnote ⁹ as part of the price at which imported biodiesel produced by P.T. Musim Mas was first resold to an EU-based independent buyer. In the light of this finding, the panel considered that it was not required to address Indonesia's additional arguments under Article 2.4.Footnote ¹⁰

Articles 3.1 and 3.2 of the Anti-Dumping Agreement

Indonesia claimed the EU authorities' consideration of the price effects of dumped imports to be inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement because the EU authorities failed to: (i) ensure price comparability between imported and domestic biodiesel. They relied on low volume sales of cold filter plugging point 13 °C biodiesel produced in the EU to calculate an adjustment to the price of Indonesian imports; and (ii) establish the existence of significant price undercutting by not taking into account the noticeable differences between imported and domestic biodiesel and by not examining the significance of price undercutting in respect of the majority of the EU industry's sales.Footnote ¹¹

The panel found that Indonesia failed to establish that the EU had violated Articles 3.1 and 3.2 of the Anti-Dumping Agreement by relying on the prices of CFPP 13 biodiesel produced by the EU industry in calculating an adjustment to the price of Indonesian imported biodiesel. Indonesia raised arguments in its second written submission that were founded on a completely different basis from those alleged in its first written submission. Thus, the panel did not consider it appropriate to make findings based on the new arguments.Footnote ¹²

Moreover, the panel found the EU authorities' analysis of the price relationship between palm methyl ester (PME, the main biodiesel produced by Indonesia and exported to the EU) and the domestically produced CFPP 0 biodiesel was inadequate because it failed to establish whether imports of the Indonesian biodiesel has a price effect on the biodiesel sold by the EU industry. Therefore, the panel concluded that Indonesia had demonstrated that the EU authorities failed to establish the price effects of PME on CFPP 0. As a result, the EU failed to establish the existence of significant price undercutting with regard to Indonesian imports.Footnote ¹³

Articles 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994

Indonesia argued that the EU violated Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 by applying anti-dumping duties that exceeded the dumping margin that should have been established pursuant to Article 2 of the Anti-Dumping Agreement. Indonesia's argument follows from the fact that the EU acted inconsistently with Articles 2.2, 2.2.1.1, 2.2.2(iii), and 2.3 of the Anti-Dumping Agreement when constructing the normal value for Indonesian exporters and establishing the constructed export price for P.T. Musim Mas. Indonesia argues that if the EU authorities had fulfilled the requirements of Article 2, they would have found negative or much lower dumping margins than those relied upon to calculate the dumping duties.Footnote ¹⁴

The panel recalled that Argentina made similar claims in EC–Biodiesel (Argentina).Footnote ¹⁵ Similar to the findings of that panel, the current panel considered it appropriate to rely on the margins calculated in the EU's Provisional Regulation to find that the definitive anti-dumping duties imposed on Indonesian producers exceeded the dumping margins that the EU authorities would have established if they complied with Article 2 of the Anti-Dumping Agreement. The panel thus upheld Indonesia's claim under Article 9.3 of the Anti-Dumping Agreement. The panel also followed the panel's approach in EU–Biodiesel (Argentina) regarding Indonesia's claim under Article VI:2 of the GATT 1994. The panel found that the same considerations taken into account under Article 9.3 were applicable mutatis mutandis. The panel thus found that the EU acted inconsistently with Article VI:2 of the GATT 1994.Footnote ¹⁶

Articles 7 and 9 of the Anti-Dumping Agreement

Indonesia claimed that the EU made several errors in calculating a provisional dumping margin of 2.8% for P.T. Musim Mas, which resulted in an inflated provisional dumping margin. Specifically, Indonesia argued that the EU acted inconsistently with: (i) Article 7.1 of the Anti-Dumping Agreement because it applied provisional measures to P.T Musim Mas based on a WTO-inconsistent preliminary determination of the existence of dumping; (ii) Article 7.2 because the EU applied to P.T Musim Mas a provisional anti-dumping duty in excess of the provisionally estimated margin of dumping; (iii) Article 9.2 because P.T Musim Mas' provisional and definitive anti-dumping duties were not ‘appropriate amount[s]’; andFootnote ¹⁷ (iv) Article 9.3 because P.T Musim Mas' provisional and definitive anti-dumping duties exceeded the provisionally estimated dumping margin for this exporter.Footnote ¹⁸

The panel concluded that Indonesia failed to establish a basis for its claims under Articles 7.2 and 7.1(ii) regarding the definitive collection of provisional anti-dumping duties on imports from P.T. Musim Mas. The panel further rejected Indonesia's claims that the EU acted inconsistently with Article 9.2 or the chapeau of Article 9.3.

The report was adopted on 28 February 2018. The panel recommended the EU to bring its measures into conformity with its obligations under the Anti-Dumping Agreement and the GATT 1994. However, contrary to Indonesia's request, the panel declined to exercise its discretion under Article 19.1 of the Understanding on the Rules and Procedures Governing the Settlement of Disputes to recommend the EU to comply by withdrawing its measures.Footnote ¹⁹