EUROPEAN UNION – COUNTERVAILING DUTIES ON
IMPORTS OF BIODIESEL FROM INDONESIA
FINAL REPORT OF THE PANEL
BCI deleted, as indicated [[***]]
TABLE OF CONTENTS
1 Introduction.. 15
1.1 Complaint by Indonesia. 15
1.2 Panel establishment and composition. 15
1.3 Panel proceedings. 15
2 Factual aspects. 16
3 Parties' requests for findings and
recommendations. 16
4 Arguments of the parties. 16
5 Arguments of the third parties. 16
6 Interim review.. 17
7 Findings. 17
7.1 Introduction. 17
7.2 General principles regarding treaty
interpretation, standard of review, and
burden of proof 17
7.2.1 Treaty interpretation. 17
7.2.2 Standard of review. 17
7.2.3 Burden of proof 18
7.3 The Commission's determination
that the GOI provides a countervailable subsidy
to biodiesel producers through the OPPF. 18
7.3.1 Introduction. 18
7.3.2 Factual aspects concerning the
functioning of the OPPF and the Commission's determinations. 19
7.3.3 Claims related to the
Commission's characterization of the OPPF disbursements as
financial contributions to biodiesel producers. 21
7.3.3.1 Whether the Commission erred in
finding that the OPPF disbursements to biodiesel producers entail a financial
contribution by a government or
public body. 21
7.3.3.2 Whether the Commission erred by
characterizing the OPPF payments as "grants" to biodiesel producers
within the meaning of Article 1.1(a)(1)(i) of the SCM Agreement 26
7.3.4 Whether the Commission improperly
determined that the OPPF disbursements
conferred a benefit to Indonesian biodiesel producers. 32
7.3.4.1 The applicable standard for
determining the existence of benefit in the case of grants. 33
7.3.4.2 Evaluation. 33
7.3.5 Whether the Commission erred in
allocating OPPF subsidy amounts or by failing
to correctly adjust the amount of subsidy. 36
7.3.5.1 Whether the Commission erred in
allocating OPPF subsidy amounts to
biodiesel exports. 36
7.3.5.2 Whether the Commission erred by
failing to adjust the amount of subsidy to
account for discounts, transportation, and credit costs. 39
7.3.6 Whether the Commission erred in
determining that the OPPF was specific. 41
7.3.7 Conclusion. 44
7.4 The Commission's determination
that the GOI provides a countervailable subsidy to
biodiesel producers through the provision of CPO. 44
7.4.1 Introduction. 44
7.4.2 Whether the Commission established
that GOI intervention in the CPO market constitutes a financial contribution
within the meaning of Article 1.1(a)(1)(iv) of the SCM Agreement 45
7.4.2.1 The
Commission's "entrustment or direction" findings. 46
7.4.2.2 Evaluation. 50
7.4.2.3 Indonesia's additional claim
that the Commission acted inconsistently with
Article 1.1(a)(1)(iv) by failing to establish that the alleged
provision of CPO is a type of function that would "normally be
vested" in the government 58
7.4.3 Whether the Commission established
that GOI provides "income" or "price" support to Indonesian
biodiesel producers. 59
7.4.3.1 The Commission's "income
or price support" findings. 59
7.4.3.2 Evaluation. 61
7.4.4 Whether the Commission erred in
determining that the provision of CPO conferred
a benefit on Indonesian biodiesel producers. 64
7.4.5 Whether the Commission erred in its
specificity determination concerning the provision
of CPO. 65
7.4.6 Whether the Commission's resort
to facts available was inconsistent with Article 12.7
of the SCM Agreement 65
7.4.6.1 Relevant procedural facts. 66
7.4.6.2 The Commission's explanations
regarding its decision to resort to facts available
and its findings based on facts available. 67
7.4.6.3 Whether Indonesia has established
the Commission acted inconsistently with
Article 12.7 of the SCM Agreement 68
7.4.6.3.1 Whether the Commission
improperly resorted to facts available in relation to information concerning
PTPN. 68
7.4.6.3.2 Whether the Commission
improperly made determinations concerning
independent CPO suppliers on the basis of the facts available. 72
7.4.6.3.2.1 Did the Commission resort to
facts available in respect of information concerning independent CPO suppliers?. 73
7.4.6.3.2.2 Did the Commission resort to
facts available on ground of the GOI's alleged
failure to ensure submission of information concerning independent CPO
suppliers?. 74
7.4.6.3.2.3 Did the Commission err by
resorting to facts available on the ground of the GOI's failure to ensure
submission of information concerning independent CPO suppliers?. 75
7.4.6.3.3 Whether the Commission
improperly disregarded information submitted by
independent CPO suppliers. 80
7.4.7 Conclusion. 80
7.5 The Commission's determination
that imports of biodiesel from Indonesia cause
a threat of material injury to EU biodiesel producers. 81
7.5.1 Introduction. 81
7.5.2 Claims related to the
Commission's consideration concerning the impact of Indonesian imports on
the prices of domestic like products. 82
7.5.2.1 Claims concerning the
Commission's consideration of price effects. 82
7.5.2.2 Factual aspects of the
Commission's determination. 82
7.5.2.3 Main arguments of the parties. 84
7.5.2.4 Whether the Commission objectively
considered the existence of significant price undercutting. 85
7.5.2.4.1 The relationship between the
Commission's methods for examining
price undercutting. 87
7.5.2.4.2 Price comparability. 88
7.5.2.4.3 Significance and the
representativeness of the sample of EU sales. 92
7.5.2.4.4 Observations on methods 2 and 3. 96
7.5.2.4.5 Conclusion. 98
7.5.2.5 Whether the Commission objectively
considered the existence of significant price depression. 98
7.5.3 Claims related to the examination of
the state of the EU industry. 102
7.5.3.1 Introduction. 102
7.5.3.2 Factual aspects of the
Commission's consideration. 103
7.5.3.3 Main arguments of the parties. 104
7.5.3.4 Whether the Commission objectively
considered the state of the EU industry. 106
7.5.4 Claims related to the
Commission's assessment of threat of material injury. 111
7.5.4.1 Indonesia's claim concerning
the factors supporting the existence of a threat of
material injury. 111
7.5.4.1.1 The Commission's evaluation
of the threat of material injury factors. 111
7.5.4.1.2 Whether the Commission breached
its obligation in its examination of the
threat factors. 112
7.5.4.1.3 Nature of the alleged subsidies
and the trade effects likely to arise therefrom.. 114
7.5.4.1.3.1 Nature and likely trade
effects of the OPPF payments and the
bonded zone scheme. 115
7.5.4.1.3.2 Nature and likely trade
effects of the provision of CPO for less than adequate remuneration. 116
7.5.4.1.4 Significant rate of increase of
subsidized imports. 117
7.5.4.1.5 Sufficient freely disposable
capacity and absorption capacity of third countries. 122
7.5.4.1.5.1 Impact of the B30 mandate on
spare capacity. 123
7.5.4.1.5.2 Remote geographic location of
certain biodiesel production facilities. 126
7.5.4.1.5.3 Use of biodiesel production
lines for making other products. 126
7.5.4.1.5.4 Availability of China as an
alternative export market 128
7.5.4.1.5.5 Price level of subsidized
imports. 128
7.5.4.1.6 Whether the
Commission's determination, based on the totality of the
threat factors considered, is consistent with Article 15.7 of the
SCM Agreement 130
7.5.4.2 Whether the Commission identified
a relevant change in circumstances within the meaning of Article 15.7 of
the SCM Agreement 131
7.5.5 Claims related to the
Commission's determination of the existence of a causal link and
evaluation of other known factors. 133
7.5.5.1 Factual aspects of the
Commission's causation analysis. 133
7.5.5.2 Main arguments of the parties. 134
7.5.5.3 Whether the Commission properly
evaluated the existence of a causal link and
considered other known factors causing injury. 135
7.5.6 Claims that the Commission did not
exercise "special care" in the application of countervailing measures. 136
7.5.7 Conclusion. 137
7.6 The Commission's rejection of a
price undertaking offer 137
7.6.1 The Commission's decision to
reject Wilmar's voluntary price undertaking offer 138
7.6.2 Whether the Commission erred by
rejecting Wilmar's price undertaking offer 138
7.6.2.1 The number of exporters covered by
the two undertaking offers. 139
7.6.2.2 The adequacy of the proposed
minimum import price. 139
7.6.2.3 Did Indonesia show that the
Commission did not accord the same "advantage" to Indonesian
biodiesel?. 140
7.7 Whether the Commission failed to
provide meaningful non‑confidential summaries of
EU producers' submissions. 141
7.7.1 Factual background. 141
7.7.2 Did the Commission fail to require
meaningful non‑confidential summaries?. 141
7.7.2.1 EU producer Masol 142
7.7.2.2 EU producers Saipol and
Verbio. 142
7.8 Whether the Commission failed to
provide necessary information concerning
the price effects analysis. 144
8 Conclusions and Recommendation.. 145