Indonesia Requests WTO Panel to Settle Pakistan Paper Products Case

Consultations between Indonesia and Pakistan over the latter’s duties on imported paper products have failed to bear fruit, officials said last week, with Jakarta requesting that a WTO dispute panel hear the case. While the request was rejected by Pakistan on Friday, Indonesia has the option to file it a second time, in which case a panel would automatically be established.

At issue in the case are a set of anti-dumping and countervailing duty investigations that Pakistan has launched into imports of Indonesian paper products.

Indonesia claims that Pakistan failed to terminate the investigations in a timely manner, despite the expiry of the 18-month time limit stipulated by the Anti-Dumping Agreement and Subsidies and Countervailing Measures (SCM) Agreement.

The investigations began in November 2011, with Pakistan examining whether Indonesian paper products were being sold abroad at prices below their normal value – a practice known in trade jargon as dumping – and whether these producers were also receiving unfair subsidies.

Both investigations were suspended by Pakistani court proceedings. Indonesia claims that it has not been officially informed of the content of the final court judgement on the anti-dumping probe. With respect to the countervailing investigation, according to Indonesia, the Pakistani court issued a definitive ruling declaring the investigation was legal under Pakistani law.

Consequently, Indonesia claims that the length of the trade remedy investigations – now well over two years – is at odds with the requirements embodied in the WTO’s Anti-Dumping Agreement, as well as the Agreement on Subsidies and Countervailing Measures.

Indonesia has also cited alleged violations of the WTO’s General Agreement on Tariffs and Trade (GATT) in its complaint.

Industry impact

Paper exports are a major industry in Indonesia, worth over US$600 million per year. Indonesia remains one of the top ten largest paper and pulp producers worldwide, mainly due to a wealth of raw materials.

Indonesia claims Pakistan’s ongoing investigations have hurt the former’s domestic paper makers, including Asia Pulp and Paper (APP). Arvin Gupta, APP’s commercial director, says the probes have cost his company approximately US$1 million each month.

“Customers are cautious about placing orders with the paper mills because they do not know when the Pakistan government will decide upon the case,” Gupta said.