EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM INDONESIA

Case Analysis

FACTUAL ASPECTS OF THE CASE


This dispute concerns the anti-dumping measures imposed by the European Union on imports of biodiesel from Indonesia that were adopted following the conclusion of an investigation on imports of biodiesel from Argentina and Indonesia. This investigation was previously the subject of the dispute EU – Biodiesel concerning a complaint by Argentina, in respect of imports of biodiesel from Argentina.

The investigation was initiated by the European Commission on 29 August 2012 following a complaint submitted by the European Biodiesel Board (EBB). The EU authorities imposed provisional anti-dumping duties on 29 May 2013 and definitive anti-dumping duties on27 November 2013. Provisional anti-dumping duties were applied ranging from zero to 9.6% and were subsequently definitively collected on 27 November 2013. Definitive dumping margins were calculated ranging from 8.8% to 23.3% and definitive anti-dumping duties were applied corresponding to the calculated injury margins, which ranged from 8.8% to 20.5%. The duties were applied in the form of specific duties expressed as a fixed amount in euro/tonne.

On 20 December 2016, the European Commission initiated a review of the anti-dumping measures imposed on imports of biodiesel originating in Argentina to bring them into conformity with the recommendations and rulings adopted by the DSB, following the adoption of the panel report, as modified by the Appellate Body report in the EU – Biodiesel (Argentina) dispute. In its notice of initiation, the European Commission indicated that it also considered it appropriate to examine the anti-dumping measures imposed on imports of biodiesel from Indonesia, considering that:

(a) the anti-dumping measures imposed on imports of biodiesel from Indonesia are subject to a WTO dispute and involve essentially the same claims as raised by Argentina in the EU – Biodiesel (Argentina) dispute; and (b) the legal interpretations contained in the adopted panel and Appellate Body reports in EU – Biodiesel (Argentina) appear also to be relevant for the investigation concerning Indonesia



Contentions of the complainants-


Indonesia contended that the Panel find that the anti-dumping measures imposed by the European Union on imports of biodiesel from Indonesia are inconsistent with:

1. Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 in light of the fact that in forming the normal value for the Indonesian producers under scrutiny, the European Union did not ascertain the expense of production of biodiesel based on the records kept by those producers despite the fact that the records were as per the sound accounting standards and precisely and sensibly mirrored the real expense of generation of biodiesel, and in light of the fact that the European Union in this manner neglected to legitimately figure the expense of production and appropriately develop the typical normal value for those producers.

2. Article 2.2 of the Anti-Dumping Agreement because the European Union failed to construct the normal value for the Indonesian producers under investigation on the basis of the cost of production of biodiesel in the country of origin, i.e. Indonesia.

3. Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement since while developing the normal value for the Indonesian makers under scrutiny, the European Union did not build up a Cap for profits (profit margins set @ 15%) as required by Article 2.2.2(iii) and the sum for profits built up was not dictated by the European Union based on a sensible technique. The European Union in this manner neglected to legitimately build the normal value for those makers.

4. Articles 2.3 and 2.4 of the Anti-Dumping Agreement because the European Union did not construct the export price for single Indonesian producer under investigation on the basis of the price at which the imported biodiesel was first resold to independent buyers in the European Union.

5. Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 because on account of the inconsistencies with Article 2 specified above in the context of the calculation of the dumping margin for the Indonesian producers, the European Union calculated a margin of dumping and imposed and collected anti-dumping duties in excess of the actual dumping margin, if any, by the Indonesian producers. This resulted in the levy of anti-dumping duties on the Indonesian producers that exceeded their margin of dumping which, under Article 9.3 of the Anti-Dumping Agreement, operates as the ceiling for the amount of anti-dumping duty that can be levied in respect of the sales made by a producer/exporter.

6. Articles 3.1 and 3.2 of the Anti-Dumping Agreement because the European Union's determination of injury to the Union industry was not based on an objective examination of the effect of those imports on prices in the domestic market for biodiesel and the consequent impact of those allegedly dumped imports on domestic producers of biodiesel. The European Union's findings regarding the price effects of the allegedly dumped imports including price undercutting were not based on an objective examination of the evidence on the record as, among others, the European Union did not ensure price comparability in terms of physical characteristics and model-matching and based its determination of price undercutting on partial and unexplained sales of the sampled European Union producers.


7. Articles 7.1, 7.2, 9.2, and 9.3 (chapeau) of the Anti-Dumping Agreement because the European Union incorrectly imposed and definitively collected provisional anti-dumping duties with respect to the imports from one Indonesian producer under investigation, in excess of the actual provisional margin of dumping of this producer, as it based itself on a provisional dumping margin tainted by calculation errors.

Indonesia submitted that, as a result of the measures forced by the European Union, the advantages accumulating to Indonesia under the Anti-dumping Agreement and the GATT 1994 were debilitated or invalidated. Indonesia thinks about that the measures at issue ought to be pulled back.

Contentions of the respondents


1. The respondents in the case of DS480: EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM INDONESIA, is the European Union. The dispute in the case arises out of the anti-dumping measures imposed by European Union on Indonesia. The burden of proof is on Indonesia to establish a prima facie case that the in the absence of proper refutation, a panel body should as a matter of law, rule in its favor (referring para 7.2.3). This means that Indonesia should establish facts which if not reputed by the defendants, would ideally win them the case or dispute.


2. Indonesia argued that the case was similar to that of Argentina wherein similar action was taken by the EU.


3. The EU imposed anti-dumping measures on Indonesia, based on its analysis of the working of the DET (differential export tax). In the case of Indonesia, the EU authorities noted that during the investigation period, biodiesel exports were taxed between 2% and 5%, while CPO (main raw material input for producing biodiesel) exports were taxed between 15% and 20%. This meant that the DET system enabled easier export of biodiesel. The EU also contended that the CPO was available at significantly lower prices in the domestic Indonesian market as compared to the international reference price and the DET taxed the CPO export to help match the price to that of the international reference price. (referring para 7.3.2)


4. Thus, based on the above arguments the EU authorities decided to replace the recorded costs of CPO (recorded by the producers and manufacturers of Indonesia) with the constructed normal value (based on HPE- a referential price published by Indonesian authorities).


5. The question of law was whether the European Union acted inconsistently with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, by failing to calculate the cost of production of biodiesel on the basis of the records kept by the producers.

6. The calculation of cost of production being calculated on HPE price rather than the records of the producers, was held to be violative of the relevant provisions in dispute.

7. “Article 2.2.1.1 provides for two circumstances in which an investigating authority can choose not to follow the general rule to calculate costs on the basis of the records kept by the producer/exporter. The first is that the records are inconsistent with the generally accepted accounting principles of the exporting country. The second is that the records do not reasonably reflect the costs associated with the production and sale of the product under investigation.”

8. Based on the above rationale, as established in the EU- Biodiesel (Argentina), the concluded that the EU acted inconsistently with the provisions. Thus, a strict interpretation was followed in that records have to be considered and the only two exceptions are the ones cited above.

9. The second major question of law was regarding whether the European Union established an amount for profits inconsistently with Articles 2.2 and 2.2.2(iii) of the Anti-Dumping Agreement. The EU based on its analysis determined a profit margin cap- the profit normally realized by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin, at 15%. The EU contentions were twofold- Firstly, there was no mandate for calculation of price cap and secondly there was no data provided for calculation ‘normally’ (as per methodology under the article 2.2.2(iii)). The first contention was rejected, based on precedents stating otherwise.


10. The second contention was that the EU was unable to calculate the profit cap, due the sale of blended biodiesel with mineral diesel- which are not to be in the ordinary course of trade because they contained domestically sold biodiesel in their blend- which was found not to be in the ordinary course of trade. While the European Union does not suggest an "ordinary course of trade" requirement is included in Article 2.2.2(iii), the European Union argues that the fact that sales of a given product are not in the ordinary course of trade informs the analysis of "normally" under Article 2.2.2(iii). The EU also contended that the ‘same general category’ was to be equated to ‘other fuels’ and cannot include oleo chemicals, as against the contention of Indonesia. The second contention was rejected in part- the argument regard ‘same general category’ was the only contention accepted. Thus, EU was held to be violating article 2.2.2.

11. Consequently, it was held that EU was violative of article 2.2.2 and 2.2 (relating to calculation of the measure) of the anti-dumping agreement and Article VI:2 of the GATT 1994.

CONCLUSIONS AND RECOMMENDATION


Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. We conclude that, to the extent that the measures at issue are inconsistent with the Anti-Dumping Agreement and the GATT 1994, they have nullified or impaired benefits accruing to Indonesia under these agreements.

Pursuant to Article 19.1 of the DSU, we recommend that the European Union bring its measures into conformity with its obligations under the Anti-Dumping Agreement and the GATT 1994. Indonesia requests that we use our discretion under the second sentence of the same article to suggest ways in which the European Union should bring its measures into conformity with the Anti-Dumping Agreement and the GATT 1994. Indonesia considers that the measures at issue in this dispute should be withdrawn. We decline to exercise our discretion under the second sentence of Article 19.1 of the DSU in the manner requested by Indonesia.

15 views0 comments

Subscribe Form

9742309008

  • Facebook
  • Instagram

©2020 by Juristrix. Proudly created with Wix.com