TWN Info Service on WTO and Trade Issues (Sept15/01)
8 September 2015
Third World Network

Panel set over EU's AD measures on Indonesian bio-diesel
Published in SUNS #8085 dated 2 September 2015

Geneva, 1 Sep (Kanaga Raja) -- The Dispute Settlement Body (DSB) of the World Trade Organisation (WTO) on Monday agreed to establish a panel, at the request of Indonesia, to examine anti-dumping (AD) measures imposed by the European Union on bio-diesel from Indonesia.

This was a second-time request and panel establishment was automatic.

The United States, Japan, Turkey, Singapore, India, China, Canada, Argentina, Australia, Norway and the Russian Federation reserved their third party rights to the dispute.

In other actions, three other panel requests were blocked by the respondents: one by Indonesia over US anti-dumping and countervailing measures on certain coated paper from Indonesia; another by Japan over Korea's import bans and testing and certification requirements for radionuclides in the aftermath of the Fukushima nuclear accident in 2011; and a third by Chinese Taipei over Indonesian safeguard measures on certain iron or steel products.

Panels establishment will be automatic when these three requests come up again before the DSB.

The DSB also adopted two panel reports, one on US measures affecting the importation of animals, meat and other animal products from Argentina, and the other on Chinese countervailing and AD duties on grain oriented flat-rolled electrical steel from the US (recourse to Article 21.5 of the Dispute Settlement Understanding).

The EU-Indonesia bio-diesel dispute concerns specific provisions of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (Basic AD Regulation) and its related practices and measures, as well as the anti-dumping measures imposed on bio-diesel imports from Indonesia including provisional measures imposed as regards one Indonesian exporting producer.

In its communication to the DSB, Indonesia said that pursuant to the second paragraph of Article 2(5) of the Basic AD Regulation, the European Union assesses the reasonability of the actually incurred costs of inputs used in the production of the product under consideration by investigated exporters or producers on the basis of a non- distortion test against prices or benchmarks of those inputs in supposedly undistorted markets/from undistorted sources.

It disregards the actually incurred and accurately recorded costs of inputs as not being reasonable and thus not reasonably reflected in the accounting records of the investigated exporters or producers even though the records of those exporters or producers are in accordance with the generally accepted accounting principles of the investigated country.

The Indonesian communication highlighted the European Union's "cost adjustment methodology, procedure or administrative practice" pursuant to Article 2(5) of the Basic AD Regulation, in original investigations and reviews for the establishment of the cost of production of the product under consideration.

Indonesia further pointed to Article 2(6)(b) of the Basic AD Regulation, whereby under this provision, the European Union requires that the sales of the same general category of products be in the ordinary course of trade, in order for the actual profit amount realized by the exporter or producer subject to investigation in respect of the sales of the same general category of products to be used for the construction of the normal value, if the amount for the profit cannot be based on the actual data pertaining to sales, in the ordinary course of trade, of the like product, by the exporter or producer under investigation.

In this context, Indonesia highlighted the European Union's "profit establishment methodology, procedure or practice" pursuant to Article 2(6)(b) of the Basic AD Regulation, in original investigations and reviews, for the establishment of the constructed normal value.

Indonesia also noted that on 17 July 2012, the European Bio-diesel Board filed an anti-dumping complaint on behalf of certain European Union producers of bio-diesel and on 29 August 2012, the European Commission initiated an anti-dumping investigation against imports of this product from Indonesia and Argentina.

On 28 May 2013, provisional measures were imposed, followed by the imposition of definitive anti-dumping duties on 26 November 2013.

Indonesia considers that the anti-dumping measures imposed by the European Union on imports of bio-diesel originating in Indonesia and the underlying investigation are inconsistent with the provisions of the Anti- Dumping Agreement and of the GATT 1994.

In its statement at the DSB, the EU pointed out that the measures challenged by Indonesia are also subject to a dispute with Argentina (DS473) where the panel is expected to issue its final report to the parties by the end of 2015.

The EU said that as in the dispute with Argentina, it is convinced that the measures identified in the request for consultations fully respect its obligations under the WTO and will defend them vigorously before a panel.

KOREA'S CONCERNS OVER DELAYS IN DISPUTE SETTLEMENT PROCESS

Meanwhile, under a separate agenda item, Korea expressed its concerns over the growing delays in the WTO dispute settlement process.

It noted that on 25 March 2015, the DSB established a panel on US anti-dumping measures on certain oil country tubular goods from Korea (DS488). The panel was subsequently composed, and in accordance with the DSU, the adjudication process should have proceeded without delay.

Instead, the WTO Secretariat informed Korea that the Panel would not begin its work until the end of 2016, at the earliest, a date some fifteen months away from the time that Korea was notified of the delay.

Korea said that this remarkable and extraordinary delay is not because the panellists are unavailable. "Rather, we are told it is due to the constraints affecting the Secretariat."

Korea said it understands the challenges to the Secretariat posed by the current case-load. However, a delay of this magnitude between panel composition and the initiation of panel proceedings is simply unreasonable - in light of both the DSU provisions and the associated economic reality.

In fact, said Korea, it undermines the very purpose of the dispute settlement system. Korea referred to Article 12.9 of the DSU which provides that in no case "should the period from the establishment of the panel to the circulation of the report to the Members exceed nine months."

Korea said that in spite of this unambiguous language, it was asked to wait fifteen months just for the case to get started.

Korea further said that it is aware that in some instances the deadlines laid out in the DSU can be surpassed by practical realities. However, the delay proposed in DS488 (the dispute) is so excessive and so far removed from the deadlines set forth by the drafters that it is impossible to reconcile with the principle of prompt settlement of disputes that is at the core of the DSU.

"Unless the problem is urgently addressed, the dispute settlement mechanism risks becoming toothless, as a delay of this kind is effectively a denial of remedy."

According to Korea, WTO disputes are not about abstract disagreements. Real world economic interests underlie every single dispute. There are people who are suffering real losses while a dispute is pending.

DS488 illustrates this vividly, said Korea, noting that this dispute involves anti-dumping measures applied by the US against imports of certain Korean steel products.

As a result of these punitive measures, the affected Korean companies are sustaining losses of US$10 million a month. A delay of fifteen months means losses of US$150 million.

"And these are just the losses from the delay in getting the panel proceedings operational. By the time we actually receive a panel report, the damage will likely be double that figure. These companies may very well have gone out of business by then and thousands of people may have lost their jobs. At that point, any ruling, however favourable, will have become an afterthought."

Korea said that it is critical that the Secretariat provide more information to Members on the specific constraints that it is facing. The information, updated regularly, should include hard numbers on staff members available to assist panels, and the allocation of staff among the various dispute settlement divisions of the Secretariat in relation to each division's evolving work-load.

Additionally, the Secretariat needs to provide case-specific information to the parties that can help them better understand how the Secretariat's across-the-board work-load problems affect their disputes.

This information needs to be detailed and tailored enough so that parties can appreciate in non-conceptual terms why, for instance, the Secretariat cannot commit its staff to a case before a certain date, said Korea. +