EUROPEAN
UNION – COUNTERVAILING AND ANTI-DUMPING
DUTIES ON STAINLESS STEEL COLD-ROLLED
FLAT PRODUCTS FROM INDONESIA
REPORT OF THE PANEL
BCI
deleted, as indicated [[***]]
TABLE OF CONTENTS
1 INTRODUCTION
1.1 Complaint by Indonesia
1.2
Panel establishment and composition. 16
1.3
Panel proceedings. 16
1.4
Additional Working Procedures concerning business confidential information. 18
1.5
Request for enhanced third-party rights. 18
1.6
Disclosure of information under the Rules of Conduct for the Understanding on
Rules and Procedures Governing the Settlement of Disputes. 18
2 FACTUAL ASPECTS: THE MEASURES AT ISSUE. 19
2.1
Anti-dumping investigation. 19
2.2
Countervailing duty investigation. 20
3 PARTIES' REQUESTS FOR FINDINGS AND
RECOMMENDATIONS. 21
4 ARGUMENTS OF THE PARTIES. 22
5 ARGUMENTS OF THE THIRD PARTIES. 22
6 INTERIM REVIEW.. 22
7 FINDINGS. 23
7.1
General principles regarding treaty interpretation, standard of review, and
burden of proof 23
7.1.1
Treaty interpretation. 23
7.1.2
Standard of review. 23
7.1.3
Burden of proof 24
7.2
Special and differential treatment 24
7.3
Enhanced third-party rights. 25
7.3.1
Arguments of the requesting third parties and the parties. 25
7.3.2
Evaluation. 26
7.4
Claims concerning the Commission's findings in the underlying countervailing
duty investigation regarding the alleged provision of preferential financing
and other support by Chinese grantors to Indonesian SSCRFP producers. 27
7.4.1
Introduction. 27
7.4.2
Did the specific method by which the Commission attributed the Chinese
financial contributions to the GOID contravene Article 1.1(a)(1) of
the SCM Agreement?. 28
7.4.2.1
Did Article 1.1(a)(1) of the SCM Agreement preclude the
Commission from
employing the specific method of attribution used in the investigation to
attribute to the
GOID the financial contributions provided by Chinese grantors (i.e. via the
concept of "inducement")?. 29
7.4.2.1.1
The Commission's specific method of attribution. 29
7.4.2.1.2
Evaluation. 32
7.4.3
Whether the Commission's specificity determination was inconsistent with
Articles 1.2, 2.1, 2.2, and 2.4 of the SCM Agreement 42
7.4.4
Whether the Commission's determination of the existence, and the
calculation, of a benefit was inconsistent with Articles 1.1(b), 10, 14,
and 32.1 of the SCM Agreement 43
7.5
Claims concerning the Commission's findings in the underlying countervailing
duty investigation regarding the alleged provision of nickel ore at less than
adequate remuneration. 44
7.5.1
Introduction. 44
7.5.2
Claim under Article 1.1(a)(1) of the SCM Agreement: the public body
determination. 45
7.5.2.1
Introduction. 45
7.5.2.2
Brief overview of the Commission's public body determination. 46
7.5.2.3
Requirements under Article 1.1(a)(1) of the SCM Agreement 48
7.5.2.4
Evaluation. 49
7.5.2.4.1
"Cross-cutting" issue. 49
7.5.2.4.1.1
An investigating authority's public body analysis. 50
7.5.2.4.1.2
Commission's assessment of ownership and "formal indicia" of control 57
7.5.2.4.1.3
Commission's assessment of the domestic regulatory framework. 60
7.5.2.4.1.4
Overall conclusion with respect to the "cross-cutting" issue. 66
7.5.2.4.2
Other arguments presented by Indonesia. 67
7.5.3
Claim under Article 1.1(a)(1)(iv) of the SCM Agreement: entrustment or
direction. 68
7.5.3.1
Introduction. 68
7.5.3.2
Brief overview of the Commission's determination. 68
7.5.3.3
Evaluation. 70
7.5.3.3.1
Requirements for entrustment or direction. 70
7.5.3.3.2
Export restrictions and the DPO. 73
7.5.3.4
Mandatory pricing mechanism.. 82
7.5.4
Claims under Articles 1.1, 10, 14, 19, and 32.1 of the SCM Agreement 82
7.5.4.1
The benchmark used by the Commission for its benefit analysis. 83
7.5.4.2
Duty rate for the non-sampled stainless steel producer 83
7.5.5
Claims under Articles 1.2, 2.1, and 2.4 of the SCM Agreement: Specificity. 84
7.6
Claims concerning the Commission's findings in the underlying countervailing
duty investigation regarding the alleged government revenue foregone that is
otherwise due. 85
7.6.1
Introduction. 85
7.6.2
Import duty exemptions for raw materials imported into bonded zones. 86
7.6.2.1
Introduction. 86
7.6.2.2
Evaluation. 88
7.6.2.2.1
Eligibility of Indonesia's import duty exemptions to "not be deemed to be
a subsidy" 88
7.6.2.2.2
Countervailing the entire amount of exempted import duties rather than only the
amounts of exemptions "in excess" of duties that were otherwise due. 96
7.6.2.2.3
Specificity. 96
7.6.3
Income tax holiday. 97
7.6.3.1
Introduction. 97
7.6.3.2
Evaluation. 100
7.6.4
Income tax allowance facility. 102
7.6.4.1
Introduction. 102
7.6.4.2
Evaluation. 103
7.7
Claims concerning the Commission's alleged actions and omissions in the
underlying countervailing duty investigation. 105
7.7.1
Introduction. 105
7.7.2
Claims under Articles 12.9, 12.1, and 10 of the SCM Agreement: treatment of the
nickel ore mining companies and conduct of the investigation. 106
7.7.2.1
Introduction. 106
7.7.2.2
Brief overview of relevant facts in the underlying investigation. 107
7.7.2.3
Requirements under Articles 12.9, 12.1, and 10 of the SCM Agreement 108
7.7.2.4
Claim under Article 12.9 of the SCM Agreement: Whether the Commission erred
by not including the nickel ore mining companies as "interested
parties" 109
7.7.2.5
Claim under Article 12.1 of the SCM Agreement 114
7.7.2.6
Conclusion with respect to Indonesia's claims under Articles 12.9, 12.1, and 10
of
the SCM Agreement 117
7.7.3
Claims under Article 12.7 of the SCM Agreement: application of facts available. 117
7.7.3.1
Introduction. 117
7.7.3.2
Indonesia's "cross-cutting" arguments. 118
7.7.3.3
Requirements under Article 12.7 of the SCM Agreement 121
7.7.3.4
Claims concerning the application of facts available in the context of the
provision of nickel ore for less than adequate remuneration. 122
7.7.3.4.1 Introduction. 122
7.7.3.4.2 Facts available applied in the context
of the public body analysis. 123
7.7.3.4.3 Consumption of nickel ore in Indonesia. 124
7.7.3.4.4 Nickel ore prices in Indonesia. 125
7.7.3.4.5 GOID's cooperation. 126
7.7.3.5 Claims concerning the application of
facts available in the context of the
alleged provision of preferential financing and other support by Chinese grantors. 128
7.7.3.6 Claims concerning the application of
facts available in the context of
government revenue forgone or not collected. 128
7.7.3.6.1 BC forms. 128
7.7.3.6.2 Origin of the machinery imported from
the Chinese parent companies of the
IRNC Group. 129
7.7.4
Claims under Articles 12.1 and 12.8 of the SCM Agreement: essential facts. 135
7.7.4.1
Introduction. 135
7.7.4.2
Claim of insufficient time to comment on the disclosure of essential facts. 135
7.7.4.2.1
Introduction. 135
7.7.4.2.2
Evaluation. 136
7.7.4.3
Claims of failure to disclose essential facts under consideration. 140
7.7.4.3.1
Introduction. 140
7.7.4.3.2
Evaluation. 141
7.7.4.3.2.1
Essential facts regarding provision of nickel ore for less than
adequate remuneration. 141
7.7.4.3.2.2
Essential facts regarding the provision of land at less than
adequate remuneration. 144
7.7.4.3.2.3
Essential facts regarding preferential financing. 145
7.7.4.3.2.4
Essential facts regarding injury to the domestic industry. 145
7.7.5
Claims under Article 22.3 of the SCM Agreement: sufficient detail of findings
and conclusions. 146
7.7.5.1
Introduction. 146
7.7.5.2
Evaluation. 147
7.7.5.2.1
Decision to "require" the GOID "to conduct" a part of the
countervailing duty investigation. 148
7.7.5.2.2
Determination regarding provision of nickel ore at less than
adequate remuneration. 149
7.7.5.2.3
Determination regarding cooperation between the GOID and the GOC. 150
7.7.5.2.4
Determination regarding preferential financing. 150
7.7.5.2.5
Determinations regarding government revenue foregone or not collected. 150
7.7.5.2.5.1
Import duty exemptions for raw materials imported into bonded zones. 150
7.7.5.2.5.2
Income tax holiday. 151
7.7.5.2.5.3
Income tax allowance facility. 152
7.7.6 Conditional claims
under Articles 12.8, 14, and 22.3 of the SCM Agreement regarding pass-through
analysis. 152
7.8
Claims concerning the Commission's findings in the underlying anti-dumping
investigation in connection with fair comparison and due allowances. 153
7.8.1
Introduction. 153
7.8.2
Deduction of certain transport and storage expenses from export price but not
from normal value. 153
7.8.2.1
Introduction. 153
7.8.2.2
Evaluation. 154
7.8.2.2.1
The second sentence of Article 2.4 of the Anti‑Dumping Agreement 155
7.8.2.2.2
The third sentence of Article 2.4 of the Anti‑Dumping Agreement 158
7.8.3
Deduction of SG&A expenses and notional profit for related traders from
export price but not from normal value. 161
7.8.3.1
Introduction. 161
7.8.3.2
Evaluation. 162
7.8.3.2.1
Export price adjustment 162
7.8.3.2.2
Normal value non-adjustment 164
7.8.4
Indication of information necessary to ensure a fair comparison. 165
7.8.4.1
Introduction. 165
7.8.4.2
Evaluation. 165
8 CONCLUSIONS AND RECOMMENDATIONS. 167