Indonesia Challenges US 20% Anti-dumping Duty on Art Paper at WTO

Indonesia has formally challenged a series of US anti-dumping and countervailing measures on imports of coated paper used for high-quality print graphics, with the Asian archipelago filing a request for consultations at the WTO last Friday.

Under WTO rules, countries are allowed to apply retaliatory measures against imports that are sold within their borders at below normal value– a practice known as “dumping” in trade parlance – while countervailing duties are meant to target instances of allegedly unfair subsidies being provided by governments to domestic producers.

The measures currently challenged by Indonesia stem from a September 2009 investigation by the US Commerce Department. The probe was launched following a request by four petitioners and covered imports of coated paper products from Indonesia and China during 2007-2009.

The probe ultimately led to US authorities imposing anti-dumping duties of 20.13 percent and countervailing duties of 17.94 percent on these goods in November 2010.

Indonesia has now challenged these measures on both substantive and procedural grounds, citing provisions of the WTO’s Antidumping Agreement (AD) and Subsidies and Countervailing (SCM) Agreement in its consultations request.

Under the SCM Agreement, one of the factors involved in determining the presence of a subsidy is that the alleged subsidy must confer a benefit and be specific to certain enterprises within the granting authority.

Indonesia claims that the US Commerce Department, which is tasked with Washington’s trade remedy investigations, erred in its determinations of “benefit” and “specificity.”

For instance, the US agency allegedly failed to determine properly whether Jakarta provided standing timber for adequate remuneration. Indonesia also claims that the US Commerce Department failed to examine whether there was a “subsidy programme,” along with failing to identify the entity providing the alleged government support, and therefore was wrong to determine that it was specific to an enterprise.

In Indonesia’s view, the US authorities also wrongly applied adverse facts available without assessing information provided by Jakarta in examining the allegedly forgiven debt – one form of financial contribution, which is another element for determining a “subsidy.”

Indonesia has also challenged the determination of threat of injury to US domestic industry and the existence of a causal relationship between the imports and the injury in both Washington investigations.

Under WTO rules, the finding of injury to a domestic industry and the causal link are preconditions for imposing anti-dumping and countervailing duties.

China dispute in the background

The coated paper industry across various Asian countries has been the subject of several anti-dumping (AD) and countervailing duty (CVD) investigations by US authorities in recent years.

The first investigation was launched upon the request of one US company against imports from Indonesia, Korea, and China during the 2004-2006 period, with the investigation leading to a finding of no injury to domestic industry in late 2007. Notably, this marked the very first combined AD/CVD investigation against China; previously, non-market economy countries were not the subject of US countervailing investigations.

Beijing had challenged US countervailing duties against various Chinese products in 2012 (DS437). The WTO Appellate Body granted a mixed victory in China’s favour last year.

Unlike Indonesia, China had challenged only the imposition of the countervailing duty measures under 17 investigations conducted by the US Commerce Department between 2007-2012. These involved a range of products, including coated paper during 2009-2010, and therefore reflected different litigation strategies.

For instance, China referred to the coated paper investigations as evidence that the US Commerce Department deemed, as a general rule, that majority government-owned entities are public bodies within the meaning of Article 1.1(a)(1) of the SCM Agreement.