WT/DS491/R  
 
6 December  2017  
(17-6670) Page: 1/111 
  Original: English  
 
  UNITED STATES – ANTI -DUMPING AND COUNTERV AILING MEASURES 
ON CERTAIN COATED PA PER FROM INDONESIA  
REPORT OF THE PANEL   
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 WT/DS491/R  
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TABLE OF CONTENTS  
1   INTRODUCTION  ................................ ................................ ................................ ........  13 
1.1   Complaint by Indonesia  ................................ ................................ ............................... 13 
1.2   Panel establishment and composition  ................................ ................................ ............ 13 
1.3   Panel proceedings  ................................ ................................ ................................ .......14 
1.3.1    General  ................................ ................................ ................................ .................. 14 
1.3.2    Additional working procedures concerning BCI  ................................ ............................. 14 
1.3.3    Request for a preliminary ruling  ................................ ................................ ................. 14 
1.3.4    Requests of a procedural nature by certain third parties  ................................ ............... 14 
2   FACTUAL ASPECTS AND MEASURES AT ISSUE  ................................ ...........................  15 
3   PARTIES' REQUESTS FO R FINDINGS AND RECOM MENDATION  ................................ .. 16 
4   ARGUMENTS OF THE PAR TIES  ................................ ................................ ...................  17 
5   ARGUMENTS OF THE THI RD PARTIES  ................................ ................................ ........  17 
6   INTERIM REVIEW  ................................ ................................ ................................ ...... 17 
7   FINDINGS  ................................ ................................ ................................ .................  17 
7.1   Introduction  ................................ ................................ ................................ ............... 17 
7.2   General principles regarding treaty interpretation , the applicable standard of review, 
and burden of proof  ................................ ................................ ................................ ........... 18 
7.2.1    Treaty interpretation  ................................ ................................ ................................ 18 
7.2.2    Standard of review ................................ ................................ ................................ ...18 
7.2.3    Burden of proof  ................................ ................................ ................................ .......19 
7.3   Special and differential treatment  ................................ ................................ ................. 19 
7.4   Terms of reference – United States' request for a preliminary ruling  ................................ .19 
7.5   "As applied" claims concerning the USDOC's subsidy determination  ................................ ..22 
7.5.1    Introduction  ................................ ................................ ................................ ............ 22 
7.5.2    Claims under Article 14(d) of the SCM Agreement (rejection of in -country prices 
as benchmarks to calculate benefit)  ................................ ................................ ..................... 23 
7.5.2.1    Introduction  ................................ ................................ ................................ ......... 23 
7.5.2.2    Legal standard under Article 14(d) of the SCM Agreement  ................................ ......... 24 
7.5.2.3    The USDOC's finding that there were no market -determined prices for standing 
timber in Indonesia upon which to base the benchmark  ................................ .......................... 26 
7.5.2.4    The USDOC's finding tha t there were no market prices for logs in Indonesia 
upon which to base the benchmark  ................................ ................................ ...................... 33 
7.5.2.5    Overall conclusion concerning Indonesia's claims under Article 14(d) of the SCM 
Agreement  ................................ ................................ ................................ ........................ 39 
7.5.3    Claim under Article 12.7 of the SCM Agreement ("facts available") with respect  to 
the debt buy -back ................................ ................................ ................................ .............. 39 
7.5.3.1    Introduc tion ................................ ................................ ................................ ......... 39 
7.5.3.2    Legal standard under Article 12.7 of the SCM Agreement  ................................ ........... 43 
7.5.3.3    Whether the conditions for resorting to fa cts available were met  ................................ .44 WT/DS491/R  
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  7.5.3.4    Whether the facts relied upon by the USDOC "reasonably replaced" the missing 
"necessary information"  ................................ ................................ ................................ ......50 
7.5.4    Claims under Article 2.1(c) and the chapeau of Article 2.1 of the SCM Agreement 
(specificity)  ................................ ................................ ................................ ....................... 53 
7.5.4.1    Introduction  ................................ ................................ ................................ ......... 53 
7.5.4.2    Legal standard under Article 2.1(c) and the chapeau of Article 2.1 of the SCM 
Agreement  ................................ ................................ ................................ ........................ 54 
7.5.4.3    Whether the USDOC's determinations of de facto  specificity are inc onsistent 
with Article 2.1(c) of the SCM Agreement  ................................ ................................ .............. 56 
7.5.4.4    Whether the USDOC's determination of de facto  specificity in connection with 
the debt buy -back is inconsistent with the chapeau of Article 2.1 of the SCM Agreement  ............ 62 
7.5.4.5    Indonesia's allegations concerning the USDOC's determination that the debt 
buy-back was a company -specific subsidy  ................................ ................................ ............. 63 
7.5.4.6    Overall conclusion concerning Indonesia's claims under Article 2.1(c) of the SCM 
Agreement and the chapeau of Article 2.1 of the SCM Agreement  ................................ ............ 67 
7.6   "As applied" claims concerning the USITC's threat of injury determination  ......................... 67 
7.6.1    Introduction  ................................ ................................ ................................ ............ 67 
7.6.2    Claims und er Article 3.5 of the Anti -Dumping Agreement and Article 15.5 of the 
SCM Agreement (non -attribution)  ................................ ................................ ........................ 68 
7.6.2.1    Introduction  ................................ ................................ ................................ ......... 68 
7.6.2.2    Legal standard under Article 3.5 of the Anti -Dumping Agreement and 
Article  15.5 of the SCM Agreement  ................................ ................................ ....................... 69 
7.6.2.3    The USITC's consideration of the three alleged "other factors"  ................................ ....72 
7.6.2.4    The USITC's re -statement of the legal standard under US law  ................................ ....74 
7.6.2.5    The USITC's finding of vulnerability  ................................ ................................ ......... 75 
7.6.2.6    Projected decline in demand  ................................ ................................ ................... 78 
7.6.2.7    Expiration of the "black liquor" tax credit  ................................ ................................ .80 
7.6.2.8    Non-subject imports  ................................ ................................ .............................. 82 
7.6.2.9    Overall conclusion concerning Indonesia's claims under Article 3.5 of the 
Anti-Dumping Agreement and Article 15.5 of the  SCM Agreement  ................................ ............ 83 
7.6.3    Claims  under Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the 
SCM Agreement (threat of injury)  ................................ ................................ ........................ 83 
7.6.3.1    Introduction  ................................ ................................ ................................ ......... 83 
7.6.3.2    Legal standard under Article 3 .7 of the Anti -Dumping Agreement and Article  
15.7 of the SCM Agreement  ................................ ................................ ................................ 84 
7.6.3.3    The USITC's finding that subject imports would gain market share at the 
expense of the domestic industry  ................................ ................................ ......................... 85 
7.6.3.3.1    Market share trends during the POI  ................................ ................................ ......88 
7.6.3.3.2    The likely increase in production capacity in China  ................................ ................. 92 
7.6.3.3.3    The Unisource affidavit and the establishment of  Eagle Ridge  ................................ ..95 
7.6.3.4    The USITC's finding that subject imports would have adverse effects on 
domestic prices  ................................ ................................ ................................ .................. 98 
7.6.3.5    Overall conclusion concerning Indonesia's claims under Article 3.7 of the 
Anti-Dumping Agreement and Article 15.7 of the SCM Agreement  ................................ ..........  101 
7.6.4    Claims under Article 3.8 of the Anti -Dumping Ag reement and Article 15.8 of the 
SCM Agreement ("special care")  ................................ ................................ ........................  101 WT/DS491/R  
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  7.6.4.1    Introduction  ................................ ................................ ................................ ....... 101 
7.6.4.2    Legal standard under Art icle 3.8 of the Anti -Dumping Agreement and 
Article  15.8 of the SCM Agreement  ................................ ................................ .....................  102 
7.6.4.3    Whether the USITC's threat of injury determination is inconsistent with 
Article  3.8 of the Anti -Dumpi ng Agreement and Article 15.8 of the SCM Agreement  .................  102 
7.7   "As such" claims alleging inconsistency of Section 771(11)(B) of the US Tariff Act of 
1930 ("tie vote" provision) with Article 3.8 of the Anti -Dumping Agreement and 
Article  15.8 of the SCM Agreement ("special care")  ................................ ..............................  104 
7.7.1    Introduction  ................................ ................................ ................................ ..........  104 
7.7.2    Legal standard under Article 3.8 of the Anti -Dumping Agreement and Article 15.8 
of the SCM Agreement  ................................ ................................ ................................ ...... 105 
7.7.3    Whether the US "tie vote" provision is inconsistent with Article 3.8 of the 
Anti-Dump ing Agreement and Article 15.8 of the SCM Agreement  ................................ ..........  110 
8   CONCLUSIONS ................................ ................................ ................................ .........  110  
 
 
 
 
 
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  LIST OF ANNEXES  
ANNEX A  
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex A-1 Working Procedures of the Panel  A-2 
Annex A-2 Additional Working Procedures of the Panel concerning Business Confidential 
Information  A-7 
ANNEX B  
ARGUMENTS OF THE PAR TIES 
Contents  Page  
Annex B-1 First integrated executive summary of Indonesia  B-2 
Annex B-2 First integrated executive summary of the United States  B-17 
Annex B-3 Second integrated executive summary of Indonesia  B-33 
Annex B-4 Second integrated executive summary of the United States  B-48 
ANNEX C 
ARGUMENTS OF THE THI RD PARTIES  
Content s Page  
Annex C-1 Integrated executive summary of Brazil  C-2 
Annex C-2 Integrated executive summary of Canada  C-5 
Annex C-3 Integrated executive summary of the European Union  C-8 
Annex C-4 Integrated executive summary of Turkey  C-12 
ANNEX D  
PROCEDURAL  RULINGS OF THE PANEL   
Contents  Page  
Annex D-1 Decision of the Panel concerning Canada's request for enhanced third -party 
rights  D-2 
Annex D -2 Decision of the Panel concerning the European Union's request regarding BCI  D-5 
ANNEX E  
INTERIM REVIEW  
Conte nts Page  
Annex E-1 Interim Review  E-2 WT/DS491/R  
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CASES CITED IN THIS REPORT  
Short title  Full case title and citation  
Brazil – Aircraft  Appellate Body Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/AB/R , adopted 20 August 1999, DSR 1999:III, p. 1161  
China – GOES  Appellate Body Report, China – Countervailing and An ti-Dumping Duties on 
Grain Oriented Flat -Rolled Electrical Steel from the United States , 
WT/DS414/AB/R , adopted 16 November 2012, DSR 2012:XII, p. 6251  
China – GOES  Panel Report, China – Countervailing and Anti -Dumping Duties on Grain 
Oriented Flat -Rolled Electrical Steel from the United States , WT/DS414/R  
and Add.1, adopted 16 November 2012, upheld by Appellate Body Report 
WT/DS414/AB/R, DSR 2012: XII, p. 6369  
China – HP-SSST (Japan) / 
China – HP-SSST (EU)  Appellate Body Reports, China – Measures Imposing Anti -Dumping Duties on 
High-Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High-Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European Union , 
WT/DS454/AB/R  and Add.1 / WT/DS460/AB/R  and Add.1, adopte d 
28 October 2015  
China – HP-SSST (Japan) / 
China – HP-SSST (EU)  Panel Reports, China – Measures Imposing Anti -Dumping Duties on High -
Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High -Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European Union , 
WT/DS454/R  and Add.1 / WT/DS460/R , Add.1  and Corr.1, adopted 
28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R / 
WT/DS460/AB/R  
Dominican Republic – Import 
and Sale of Cigarettes  Appellate Body Report, Dominican Republic – Measures Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R , adopted 
19 May 2005, D SR 2005:XV, p. 7367  
EC – Chicken Cuts  Appellate  Body Report, European  Communities – Customs Classification of 
Frozen Boneless Chicken Cuts , WT/DS269/AB/R , WT/DS286/AB/R , adopted 
27 Septembe r 2005, and Corr.1, DSR 2005:XIX, p.  9157 
EC – Countervailing Measures 
on DRAM Chips  Panel Report, European Communities – Countervailing Measures on Dynamic 
Random Access Memory Chips from Korea , WT/DS299/R , adopted 
3 August  2005, DSR 2005:XVIII, p. 8671  
EC – Hormones  Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 13 February 1998, 
DSR 1998:I, p. 135  
EC – Salmon (Norway)  Panel Report, European Communi ties – Anti-Dumping Measure on Farmed 
Salmon from Norway , WT/DS337/R , adop ted 15 January 2008, and Corr.1, 
DSR 2008:I, p. 3  
EC – Tube or Pipe Fittings  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R , 
adopted 18 August 2003, DSR 2003:VI, p. 2613  
EC and certain member States 
– Large Civil Aircraft  Appellate Bod y Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p. 7  
EC and certain member States 
– Large Civil Aircraft  Panel Report, European Communities and Certain Member States – Measures 
Affecting Trade in Large Civil Aircraft , WT/DS316/R , adopted 1 June 2011, as 
modified by Appellate Body Report, WT/D S316/AB/R, DSR 2011:II, p. 685  
Egypt – Steel Rebar  Panel Report, Egypt – Definitive Anti -Dumping Measures on Steel Rebar from 
Turkey , WT/DS211/R , adopted 1 October 2002, DSR 2002:VII, p. 2667  
EU – Biodiesel (Argentina)  Panel Report, European Union – Anti-Dumping Measures on Biodiesel from 
Argentina , WT/DS473/R  and Add.1, adopted 26 October 2016, as modi fied 
by Appellate Body Report WT/DS473/AB/R  
EU – Footwear (China)  Panel Report, European Union – Anti-Dumping Measures on Certain Footwear 
from China , WT/DS405/R , adopted 22 February 2012, DSR 2012:IX, p. 4585  
Japan – Alcoholic Beverages II  Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R , WT/DS10/AB/R , WT/DS11/AB/R , adopted 1 November 1996, 
DSR 1996:I, p. 97  WT/DS491/R  
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  Short title  Full case title and citation  
Japan – DRAMs (Korea)  Panel Report, Japan – Countervailing Duties on Dynamic Random Access 
Memories from Korea , WT/DS336/R , adopted 17 December 2007, as 
modified by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, p. 2805  
Mexico – Anti-Dumping 
Measures on Rice  Appellate Body Report , Mexico – Definitive Anti -Dumping Measures on Beef 
and Rice, Complaint with Respect to Rice , WT/DS295/AB/R , adopted 
20 December 2005, DSR 2005:XXII, p. 10853  
Mexico – Corn Syrup  Panel Report, Mexico – Anti-Dumping Investigation of High Fructose Corn 
Syrup (HFCS) from the United States , WT/DS132/R , adopted 
24 February  2000, and Corr.1, DSR 2000:III, p . 1345  
Mexico – Corn Syrup 
(Article  21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High 
Fructose Corn Syrup (HFCS) from the Unit ed States – Recourse to 
Article  21.5 of the DSU  by the United States , WT/DS132/AB/RW , adopted 
21 November 2001, DSR 2001:XIII, p. 6675  
Thailand – H-Beams  Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes 
and Sections of Iron or Non -Alloy Steel and H -Beams from Poland , 
WT/DS122/AB/R , adopted 5 April 2001, DSR 2001:VII, p. 2701  
US – Anti-Dumping and 
Countervailing Duties (China)  Appellate Body Report, United States – Definitive Anti -Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R , 
adopted 25 March 2011, DSR 2011:V, p. 2869  
US – Anti-Dumping and 
Countervailing  Duties (China)  Panel Report, United States – Definitive Anti -Dumping and Countervailing 
Duties on Certain Products from China , WT/DS379/R , adopted 
25 March  2011, as modified by Appellate  Body Report WT/DS379/AB/R, 
DSR 2011:VI, p. 3143  
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion -Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R  and Corr.1, adopted 19  December 2002, DSR 2002:IX, 
p. 3779 
US – Carbon Steel (India)  Appellate Body Report, United States – Countervailing Measures on Certain 
Hot-Rolled Carbon Steel Flat Products from India , WT/DS436/AB/R , adopted 
19 December 2014, DSR 2014:V, p. 1727  
US – Continued Zeroing  Appellate Body Report, United St ates – Continued Existence and Application 
of Zeroing Methodology , WT/DS3 50/AB/R , adopted 19 February 2009, 
DSR 2009:III, p. 1291  
US – Countervailing Duty 
Investigation on DRAMS  Appellate Body Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20 July 2005, DSR 2005:XVI, p. 8131  
US – Countervailing D uty 
Investigation on DRAMS  Panel Report, United States – Countervailing Duty Investigation on Dynamic 
Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/R , adopted 20 July 2005, as modified by Appellate Body Report 
WT/DS296/AB/R, DSR 2005:XVII, p. 8243  
US – Countervailing Measures 
(China)  Appellate Body Report, United States – Countervailing Duty Measures on 
Certain Products from China , WT/DS437/AB/R , adopted 16 January 2015  
US – Countervailing Measures 
(China)  Panel Report, United States – Countervailing Duty Measures on Certain 
Products from China , WT/DS437/R  and Add.1, adopted 16 January 2015, as 
modified by Appellate Body Report WT/DS437/AB/R  
US – Export Restraints  Panel Report, United States – Measures  Treating Exports Restraints as 
Subsidies , WT/DS194/R  and Corr.2 , adopted 23 August 2001, DSR 2001:XI, 
p. 5767  
US – Gambling  Appellate Body Report, United States – Measures Affecting the Cross -Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R , adopted 
20 April 2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)  
US – Hot-Rolled Steel  Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R , adopted 
23 August  2001, DSR 2001:X, p. 4697  
US – Lamb  Appellate Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R , WT/DS178/AB/R , adopt ed 16 May 2001, DSR 2001:IX, 
p. 4051 
US – Large Civil Aircraft (2nd 
complaint)  Appellate Body Report, United States – Measures Affecting Trade in Large 
Civil Aircraft (Second Complaint) , WT/DS353/AB/R , adopted 23 March 2012, 
DSR 2012:I, p. 7  WT/DS491/R  
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  Short title  Full case title and citation  
US – Line Pipe  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Circular Welded Carbon Quality Line Pipe from Korea , 
WT/DS202/AB/R , adopted 8 March 2002, DSR 2002:IV, p. 1403  
US – Oil Country Tubular 
Goods Sunset Reviews  Appellate Body Report, United States – Sunset Reviews of A nti-Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS26 8/AB/R , 
adopted 17 December 2004, DSR 2004:VII, p. 3257  
US – Shrimp II (Viet Nam)  Panel Report, United States – Anti-Dumping Measures on Certain Shrimp 
from Viet Nam , WT/DS429/R  and Add.1, adopted 22 April 2015, upheld by 
Appellate Body Report WT/DS429/AB/R  
US – Softwood Lumber IV  Appellate Body Report, United States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R , adopted 17 February 2004, DSR 2004:II, p. 571  
US – Softwood Lumber IV  Panel Report, United States – Final Countervailing Duty Determination with 
Respect to Certain Softwood Lumber from Canada , WT/DS257/R  and Corr.1, 
adopted 17 February 2004, as modified by Appellate Body Report 
WT/DS257/AB/R, DSR 2 004:II, p. 641  
US – Softwood Lumber VI  Panel Report, United States – Investigation of the International Trade 
Commission in Softwood Lumber from Canada , WT/DS277/R , adopted 
26 April 2004, DSR 2004:VI, p. 2485  
US – Softwood Lumber VI 
(Article 21.5 – Canada)  Appellate Body Report, United States – Investigation of the Internationa l 
Trade Commission in Softwood Lumber fr om Canada – Recourse to 
Article  21.5 of the DSU by Canada , WT/DS277/AB/RW , adopted 9 May 2006, 
and Corr.1, DSR 2006:XI, p. 4865  
US – Wool Shirts and Blouses  Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R , adopted 23 May 1997, 
and Corr.1, DSR 1997:I, p. 323  
US – Zeroing (Japan) 
(Article 21.5 – Japan)  Appellate Body Report, United States – Measures Relating to Zeroing and 
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan , 
WT/DS322/AB/RW , adopted 31 August 2009, DSR 2009:VIII, p. 3441  
 
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  EXHIBITS REFERRED TO  IN THIS REPORT  
Exhibit  Short Title  Description/Long title  
IDN-1 Anti-Dumping Duty Order  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia: Antidumping Duty 
Order, United  States Federal Register , Vol. 75, No. 221, 
(17 November  2010)  
IDN-2 Countervailing Duty Order  Certain Coated Paper S uitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia: Countervailing Duty 
Order, United States Federal Register , Vol. 75, No. 221 
(17 November  2010)  
IDN-
3/US-66 Initiation of Anti -Dumping 
Investigation s Certain Coated Paper Suita ble for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia and the People's 
Republic of China: Initiation of Antidumping Duty Investigations, 
United States Federal Register , Vol. 74 No. 201 
(20 October  2009)  
IDN-
4/US-65 Initiation of Coun tervailing 
Duty Investigation  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia: Initiation of 
Countervailing Duty Investigation, United States Federal Register , 
Vol. 74 No.  201 (20 October 2009)  
IDN-
5/US-48 Preliminary Countervailing 
Duty Determination  Certain Coated Paper from Indonesia: Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final 
Countervailing Duty Determination with Final Antidumping Duty 
Determination, United Sta tes Federal Register , Vol. 75, No. 45 
(9 March 2010)  
IDN-
6/US-47 Final Countervailing Duty 
Determination  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia: Final Affirmative 
Countervailing Duty Determinat ion, United States Federal 
Register , Vol. 75, No.  186 (27 September 2010)  
IDN-
7/US-67 Final Anti -Dumping 
Determination  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia: Final Determination of 
Sales at Le ss than Fair Value, United States Federal Register , 
Vol. 75, No.  186 (27 September 2010)  
IDN-8 USITC Notice of Preliminary 
Determination  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from China and Indonesia: 
Determ inations, United States Federal Register , Vol. 74, No. 224 
(23 November 2009)  
IDN-
9/US-70 USITC Notice of Final 
Determination  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from China and Indonesia: 
Determinations, United States Federal Register , Vol. 75, No. 221 
(17 November 2010)  
IDN-10 Excerpt from USDOC Issues 
and Decision Memorandum, 
pp. 1-20 and 48 -56 Issues and Decision Memorandum for High -Quality Print Graphics 
Using Sheet -Fed Presses from Indonesia: Final Af firmative 
Countervailing Duty Determination (20 September 2010), 
pp. 1-20 and 48 -56 
IDN-12 Excerpt from CFS USDOC 
Issues and Decision 
Memorandum, pp. 1, 27-28 
and 40 -46 Issues and Decision Memorandum for the Final Affirmative 
Countervailing Duty Determina tion: Coated Free Sheet Paper from 
Indonesia (17 October 2007) , pp. 1, 27-28 and 40 -46 
IDN-13 Regulation of Minister of Trade 
of the Republic of Indonesia, 
No. 20/M -DAG/PER/5/2008  Regulation of Minister of Trade of  the Republic of Indonesia, 
No. 20/M-DAG/ PER/5/2008, concerning provision for export of 
forestry industry products (29 May 2008)  
IDN-14 Excerpt from Part Two of GOI 
First Supplemen tal Questionnaire 
Response, pp.  22-38 Part Two of the Government of Indonesia's First Supplemental 
Questionnaire Res ponse (22 Febru ary 2010) , questions 55 -60, 
pp. 22-38 
IDN-15 GOI Third Supplemental 
Questionnaire Response  Government of Indonesia's Third Supplemental Questionnaire 
Response (27 May 2010)  
IDN-16 GOI Fourth and Fifth 
Supplemental Questionnaire 
Response  Government of Indonesia's Fourth and Fifth Supplemental 
Questionnaires Response  (22 June 2010)  
IDN-18 Excerpt from USITC Final 
Determination, pp. 3 -39 and 
C-3-C-7 USITC, Certain Coated Paper Suitable for High -Quality Print 
Graphics Using Sheet -Fed Presses f rom China and Indonesia, Final 
Determination, Publication 4192 (November  2010), pp.  3-39 and 
C-3-C-7 WT/DS491/R  
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  Exhibit  Short Title  Description/Long title  
IDN-20 Other Members' Laws on Tie 
Voting  Canadian International Trade T ribunal Act (current to 
21 June 2016), South African International Trade Administra tion 
Act (22 January 2003), Turkish Regulation on the Prevention of 
Unfair Competition in Imports (20 October 1999), and Argentinian 
Presidential Decree No. 766/94 (12 May 1994)  
IDN-24 USITC Continuation Notice  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from China and Indonesia: 
Determinations, United States Federal Register , Vol. 81, No. 250 
(29 December 2016)  
IDN-25 
(BCI)  Excerpt from APP/SMG Initial 
Questionnaire Response, pp. 
1, 25, 27, 29, and 30  PT. Pindo D eli Pulp and Paper Mills, PT. Pabrik Kertas Tjiwi Kimia, 
Tbk, and PT. Indah Kiat Pulp & Paper  Tbk's Initial Questionnaire 
Response (29 December 2009), pp. 1, 25, 27, 29, and 30 (BCI)   
IDN-27 
(BCI)  Exhibit D -8 to APP/SMG 
Questionnaire Response in 
Anti-Dump ing investigation  PT. Pabrik Kertas Tjiwi Kimia Tbk, PT. Pindo Deli Pulp, and Paper 
Mills, Supplemental Section D Re sponse, exhibit D -8 
(20 January  2010) (BCI) 
IDN-28 
(BCI)  Exhibit SD3 -9 to APP/SMG 
Questionnaire Response in 
Anti-Dumping investigation  PT. Pabrik Kertas Tjiwi Kimia Tbk, PT. Indah Kiat Pulp and Paper 
Tbk, and PT. Pindo Deli Pulp and Paper Mills, Supplemental 
Section D Response, exhibit SD3-9 (5 April 2010) (BCI)  
IDN-30 Log Export Ban  Joint Decree of the Minister of Forestry No. 1132/KPTS -II/2001 
and the Min ister of Industry and Trade 
No. 292/MPP/Kep/10/2001, Discontinuation of Log/Chip Raw 
Material Exports (8  October  2001)  
IDN-36 Excerpt from APP Pre -hearing 
Brief to USITC, pp. 5 and 51  Pre-hearing Brief of APP-China and APP -Indonesia 
(13 September  2010), pp. 5 and 51  
IDN-37 Safeguard Tie Vote  United States Code , Title 19 , Section 1330  
IDN-41 
(BCI)  Exhibit 33 to Part Two of the 
GOI First Supplemental 
Questionnaire Response  Part Two of the Government of Indonesia's First Supplemental 
Questio nnaire Response , exhibit 33 (22 February 2010) (BCI)  
IDN-45 APP Pre -hearing Brief to USITC  Pre-hearing Brief of APP-China and APP -Indonesia 
(13 September  2010)  
IDN-47 ICJ Statute  Statute of the International Court of Justice, Chapter XIV of the 
United Na tions Charter, San Francisco (1945)  
IDN-51 Excerpt from U SITC Conference 
Transcript , pp. 181-182 USITC, Investigations Nos. 701 -TA-470-471 and 731 -TA-1169-
1170 (Preliminary), Conference Tr anscript (14 October 2009), 
pp. 181-182 
IDN-52 Exhibit 28 to APP P re-hearing 
Brief to USITC on RISI Data Respondents'  Pre-hearing Brief , exhibit 28  (13 September  2010) 
(RISI Data)  
US-1 USITC Final Determination  USITC, Certain Coated Paper Suitable for High -Quality Print 
Graphics Using Sheet -Fed Presses from China and In donesia, Final 
Determination, Publication 4192 (November 2010)  
US-4 Excerpt from Petitioners 
Post-hearing Brief to USITC  Petitioners' Post -hearing Brief to USITC, Responses to 
Commissioner Questions, Commissioner Pinkert Question 3, 
exhibit 1, p. 21 (4 Oc tober 2010)  
US-12 19 U.S.C. , Section 1677  United States Code , Title 19, Section 1677  
US-26 Group on Anti -Dumping 
Policies, Anti -Dumping Code 
draft (August 1966)  Sub-Committee on Non -Tariff Barriers, Group on Anti -Dumping 
Policies, Possible Elements to be  Considered for Inclusion in an 
Anti-Dumping Code, TN.64/NTB/W/13 (23 August 1966)  
US-27 Anti-Dumping Code 
(July 1967)   Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade, L/2812 ( 12 July 1967)  
US-29 South Korea, Act on the 
Investigation of Unfair 
International Trade Practices  South Korea, Act on the Investigation of Unfair International 
Trade Practices No. 6417 (3 February 2001)  
US-30 Group on Anti -Dumping 
Policies, Anti -Dumping Code 
draft (December 1966)  Sub-Committ ee on Non -Tariff Barriers, Group on Anti -Dumping 
Policies, Possible Elements to be Considered for Inclusion in an 
Anti-Dumping Code, TN.64/NTB/W/14 (9 December 1966)  
US-31 USDOC Issues and Decision 
Memorandum  Issues and Decision Memorandum for the Final A ffirmative 
Countervailing Duty Determination of Certain Coated Paper 
Suitable for High -Quality Print Graphics Using Sheet -Fed Presses 
from Indonesia (20 September 2010)  
US-32 GOI Initial Questionnaire 
Response  Government of Indonesia's Ini tial Questionnai re Response 
(29 December 2009)  
US-34 
(BCI)  Part Two of GOI First 
Supplemental Questionnaire 
Response  Part Two of the Government of Indonesia's First Supplemental 
Questionnaire Response (22 February 2010) (BCI)  
US-35 
(BCI)  USDOC Verification of GOI 
Questi onnaire  Response  Verification of the Questionnaire Response Submitted by the 
Government of Indonesia: Countervailing Duty Investigation of 
Certain Coated Paper from Indonesia (3 August 2010) (BCI)  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
- 11 - 
 
  Exhibit  Short Title  Description/Long title  
US-40 Petitioners' General Factual 
Information Submission  Petitioner General Factual Information Submission (21 June 2010)  
US-41 GOI Third Supplemental 
Questionnaire  Third Supplemental Questionnaire to the Government of 
Indonesia  (29 April 2010)  
US-42 GOI Fifth Supplemental 
Questionnaire  Fifth Supplemental Ques tionnaire to the Government of Indonesia 
(11 June 2010)  
US-43 CFS USDOC Issues and 
Decision Memorandum  Issues and Decision Memorandum for the Final Affirmative 
Countervailing Duty Determination: Coated Free Sheet Paper from 
Indonesia (17 October 2007)  
US-44 GOI and APP/SMG Case Brief 
to USDOC  Government of Indonesia and  APP-Indonesia's Case Brief 
(17 August 2010)  
US-56 19 U.S.C. , Section 1671d  United States Code , Title 19, Section 1671d  
US-60 19 U.S.C. , Section 1673d   United States Code , Title 19, Sect ion 1673d  
US-68 Final Countervailing Duty 
Determination on Coated 
Paper from China  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from the People's Republic of China: 
Final Affirmative Countervailing Duty Determinati on, 
United  States Federal Register , Vol. 75, No. 186 
(27 September  2010)  
US-69 Final Anti -Dumping 
Determination on Coated 
Paper from China  Certain Coated Paper Suitable for High -Quality Print Graphics 
Using Sheet -Fed Presses from the People's Republic of China: 
Final Determination of Sales at Less Than Fair Value, United 
States Federal Register , Vol. 75, No. 186 (27 September 2010)  
US-74 CFS Final Countervailing Duty 
Determination  Certain Coated Paper from Indonesia: Final Affirmative 
Countervailing Duty Determination, United States Federal 
Register , Vol. 72, No. 206 (25 October 2007)  
US-76 Letter to GOI regarding 
Verification  Letter dated 24 June 2010 from Barbara Tillman, USDOC, to the 
GOI 
US-77 GOI Verification Outline  USDOC, Verification Outline (18 June 2010)  
US-80 Petition  Petitions for the Imposition of Antidumping and Countervailing 
Duties on Certain Coated Paper from Indonesia and the People's 
Republic of China  (23 September 2009)  
US-81 CFS Memorandum: Meeting 
with an Independent Expert  Counter vailing Duty Investigation of Coated Free Sheet Paper 
from Indonesia: Memorandum to File Regarding Verification 
Meeting with an Independent Expert (24 August 2007)  
US-83 
(BCI)  Exhibit 5S -4 to GOI Fourth and 
Fifth Supplemental 
Questionnaire s Response  Gover nment of Indonesia's Fourth and Fifth Supplemental 
Questionnaires Response , exhibit 5S -4 (22 June 2010) (BCI)  
US-84 Exhibit 1 to GOI Third 
Supplemental Questionnaire 
Response  Government of Indonesia's Third Supplemental Questionnaire 
Response , exhibit 1  (29 April 2010)  
US-87 GOI Letter to USDOC 
Regarding IBRA  Letter dated 3 August 2010 from the Government of Indonesia to 
the USDOC Regarding IBRA  
US-91 
(BCI)  APP/SMG Initial Questionnaire 
Response  PT. Pindo Deli Pulp and Paper Mills, PT. Pabrik Kertas Tjiw i Kimia, 
Tbk, and PT. Indah Kiat Pulp & Paper , Tbk's Initial Questionnaire 
Response (29 December 2009) (BCI)  
US-95 Excerpt from APP Pre -hearing 
Brief to USITC, pp. 24, 30, 36, 
49-53, and 72  Pre-hearing Brief APP -China and APP -Indonesia 
(13 September  2010), pp. 24, 30, 36, 49 -53, and 72  
US-102 Monthly Import Statistics  Certain Coated P aper: Monthly Import Statistics  
US-104 APP Post -hearing Brief to 
USITC  APP Post -hearing B rief to USITC (4 October 2010)  
US-105 APP Final Comments to USITC  APP Final Commen ts to USITC (21 October 2010)  
US-107 Redacted excerpts of USITC 
Final Determination and APP 
Final Comments to USITC  Previously -Redacted Discussion of the Unisource Affidavit (Exhibit 
US-2) in the Commission 's Determination (Exhibit US -1) and 
APP's Final Comments (Exhibit US -105)  
US-108 Excerpt from USITC  
Conference Transcript, pp. 
45-48 and 179 -180 USITC, Investigations Nos. 701 -TA-470-471 and 731 -TA-1169-
1170 (Preliminary), Excerpt  from Conference Transcript 
(14 October 2009), pp . 45-48 and 179 -180 
US-110 18 U.S.C. , Section 208  Acts affecting a personal financial interest, United States Code , 
Title 18, Section 208  
US-118 Section 771(5A) of Tariff Act of 
1930 Tariff Act of 1930 , Section 771(5A) (2 July 2015)  
 
 WT/DS491/R  
BCI deleted, as indicated [[***]] 
- 12 - 
 
   
ABBREVIATIONS USED I N THIS REPORT  
Abbre viation  Description  
Anti-Dumping  Agreement  Agreement on Implementation of Article VI of the General Agreement on Tariffs 
and Trade 1994  
APP Asia Pulp and Paper, Ltd. (China) and Asia Pulp and Paper, Ltd. (Indonesia)  
APP/SMG  Asia Pulp and Paper/Sinar Ma s Group  
BCI Business Confidential Information  
CCP Certain coate d paper  
CFS Coated free sheet  paper  
China  People's Republic of China  
COGS  Cost of goods sold  
DR Dana Reboisasi (rehabilitation) fee  
DSB Dispute Settlement Body  
DSU Understanding on R ules and Procedures Governing the Settlement of Disputes  
Eagle Ridge  Eagle Ridge Paper Co.  
GATT 1994  General Agreement on Tariffs and Trade 1994  
GOI Government of Indonesia  
HTI Hutan Tanaman Industria  
IBRA Indonesia Bank Restructuring Agency  
IDR Indonesian Rupiah  
Indah Kiat or IK  PT. Indah Kiat Pulp & Paper, Tbk  
ILC International Law Commission  
Korea  Republic of Korea  
Orleans  Orleans Offshore Investment Limited  
POI Period of investigation1 
PPAS Strategic Asset Sales Program  
Pindo Deli or PD  PT. Pindo Deli Pulp and Paper Mills  
PSDH  Provisi Sumberdaya Hutan  
RISI Resource Information Systems Inc.  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
SOE State -owned enterprise  
Tjiwi Kimia or TK  PT. Pabrik Kertas Tjiwi Kimia Tbk  
Unisource  Unisource Worldwide, Inc.  
United  States  United  States of America  
USD United States dollar  
USDOC  US Department of Commerce  
USITC  US International Trade Commission  
Vienna Convention  Vienna Convention on the Law of Treaties, Done at Vienna, 23  May 1969, 1155 
UNTS 331; 8 International Legal Materials 679  
WKS PT. Wirakarya Sakti  
WTA World Trade Atlas  
WTO World Trade Organization  
 
                                                
1 For the POI considered by the USDOC, see fn  57; for the POI considered by the USITC, see 
para. 7.197 . WT/DS491/R  
BCI deleted, as indicated  [[***]] 
- 13 - 
 
   
1  INTRODUCTION  
1.1  Complaint by Indonesia  
1.1.  On 13 March 2015, Indonesia requested consultations with the United States p ursuant to 
Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes 
(DSU), Article 17 of the Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994 (Anti -Dumping Agreement), Article 3 0 of the Agreement on Subsidies and 
Countervailing Measures (SCM Agreement), and Article XXII:1 of the General Agreement on Tariffs 
and Trade 1994 (GATT 1994), with respect to:  
a. the anti -dumping and countervailing duties imposed by the United States on impo rts of 
certain coated paper (CCP) from Indonesia; and  
b. Section 771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 of the 
United States Code, Section 1677(11)(B).2 
1.2.  Consultations were held on 25 June 2015 but failed to resolve the dispute . 
1.2  Panel establishment and composition  
1.3.  On 9 July 2015, Indonesia requested the establishment of a panel pursuant to Article  6 of the 
DSU, with standard terms of reference.3 On 20 August 2015, Indonesia submitted a new request 
for the establishment of a pane l.4 At its meeting on 28 September 2015, the Dispute Settlement 
Body (DSB) established a panel pursuant to the request of Indonesia in document WT/DS 491/3 , in 
accordance with Article  6 of the DSU.5 
1.4.  The Panel's terms of reference are the following:  
To exami ne, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by Indonesia in document 
WT/DS491/3 and to make such findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.6 
1.5.  On 25 January 2016 , Indonesia requested the Director -General to determine the composition 
of the Panel, pursuant to Article 8.7 of the DSU . On 4 February 2016, the Director -General 
accordingly compos ed the Panel as follows:  
Chairperson:  Mr Hanspeter Tschäni  
 
Members:   Mr Martin Garcia  
   Ms Enie Neri de Ross  
 
1.6.  Brazil, Canada, China, the European Union, India, Korea, and Turkey notified their interest in 
participating in the Panel proceedings as third p arties.  
                                                
2 Request for consultations by Indonesia, WT/DS491/1.  
3 Request for the establishment of a panel by Indonesia, WT/DS491/2.  
4 Request for the establishmen t of a panel by Indonesia WT/DS491/3 (here inafter Indonesia's panel 
request).  
5 DSB, Minutes of the meeting held on 28 September 2015, WT/DSB/M/368.  
6 Constitution of the Panel, WT/DS491/4.  WT/DS491/R  
BCI deleted, as indicated [[***]] 
- 14 - 
 
  1.3  Panel proceedings  
1.3.1   General  
1.7.  After consultation with the parties, the Panel adopted its Working Procedures7 and timetable 
on 29 July 2016. The timetable was revised on 15 August 2016 and on 23 May 2017.  
1.8.  The Panel began its work on this dispute later t han it would have wished due to staff 
constraints in the WTO Secretariat.8 The Panel held a first substantive meeting with the parties on 
6-7 December 2016. A session with the third parties took place on 7 December 2016. The Panel 
held a second substantive  meeting with the parties on 28 -29 March 2017. On 23 May 2017, the 
Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to 
the parties on 24 August 2017 . The Panel issued its Final Report to the parties on 6 October 2017 . 
1.3.2   Additional working procedures concerning BCI  
1.9.  On 11 July 2016, Indonesia requested the Panel to adopt additional working procedures 
concerning Business Confidential Information (BCI). To that end, on 20 July 2016 the parties 
submitted to the Pa nel a joint proposal for additional BCI procedures.  After considering the parties' 
proposal, the Panel adopted additional working procedures for t he protection of BCI on 
29 July 2016.9 
1.3.3   Request for a preliminary ruling  
1.10.   In its first written submission dated 12 September 201610, the United States requested that 
the Panel make a preliminary ruling that certain arguments raised by Indonesia in its first written 
submission are not within the Panel's terms of reference.11 Indonesia responded to the 
United  States' re quest on 26 September 2016.12 The parties further addressed each other's 
arguments concerning the United States' request in their subsequent submissions and statements 
to the Panel.13 Third parties were also invited to comment on the United States' request i n their 
third-party submissions but did not do so.14 We address the United States' request in our findings 
below.  
1.3.4   Requests of a procedural nature by certain third parties  
1.11.   On 8 July 2016, Canada requested that the Panel grant it certain additional "passive" 
third-party rights in these proceedings. The parties provided comments on Canada's request orally 
at the organizational meeting and the United States provided additional written comments on 
20 July 2016.  By communication dated 3 November 2016, the Panel in formed the parties and the 
third parties that it had denied Canada's request for enhanced third -party rights.  The Panel's 
decision is set out in Annex D -1. 
1.12.   In its third -party submission dated 26 September 2016, the European Union objected to the 
additional  BCI procedures adopted by the Panel for failing to provide for third-party access to BCI 
submitted by the parties, and requested that third parties be given access to the exhibits 
containing BCI submitted by the parties with their first written submission s. The parties provided 
written comments on the European Union's request on 2 November 2016. On 4 November 2016, 
                                                
7 Panel's Working Procedures, Annex A -1. 
8 Communication from the Panel, WT/DS491/5.  
9 Additional Working Procedures of the Panel concerning Business Confidential Information, Annex A -2. 
10 On 16 September 2016, the United States submitted corrections to its first written submission. At the 
request of the Panel, on 6 Octo ber 2016 the United States submitted a corrected, consolidated version of its 
first written submission. In this Report, the Panel refers to the corrected, consolidated, version of the 
United  States' first written submission dated 6 October 2016.  
11 United S tates' first written submission, paras. 33 -40. 
12 Indonesia's response to the United States' preliminary ruling request.  
13 Indonesia's opening statement at the first meeting of the Panel, paras. 14 -17; response to Panel 
question Nos. 4 and 6; second written  submission, paras. 11 -16; and opening statement at the second 
meeting of the Panel, paras. 4 -7. United States' opening statement at the first meeting of the Panel, 
paras.  6-8; response to Panel question Nos. 3, 5, and 7; second written submission, paras. 10-18; and opening 
statement at the second meeting of the Panel, para. 3.  
14 Panel communication to the parties and third parties dated 16 September 2016.  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
- 15 - 
 
  the Panel informed the parties and the third parties that it considered it neither appropriate nor 
necessary to grant the European Union's requ est. The Panel's decision is set out in Annex D -2. 
2  FACTUAL ASPECTS AND MEASURES AT ISSUE  
2.1.  This dispute concerns two sets of measures of the United States.  
2.2.  First, Indonesia challenges the imposition by the United States of anti -dumping and 
countervailing du ties on imports of certain coated paper from Indonesia pursuant to anti -dumping 
and countervailing duty orders published on 17 November 2010.15 Specifically, Indonesia's "as 
applied" claims concern certain aspects of the US Department of Commerce (USDOC)'s final 
determination in its countervailing duty investigation on certain coated paper from Indonesia, as 
well as the US International Trade Commission (USITC)'s final threat of injury determination 
concerning subsidized and dumped imports from Indonesia and  China.  
2.3.  Second, Indonesia challenges "as such", i.e. independently of its application in specific 
instances, Section 771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 of the 
United States Code, Section 1677(11)(B).16 In particular, Indo nesia challenges "as such" the use 
of this statutory provision in affirmative threat of injury determinations.  
2.4.  With respect to the first set of measures, on 23 September 2009, three companies and a 
labour union filed a petition on behalf of the domestic in dustry in the United States for the 
application of anti -dumping and countervailing duties on imports of certain coated paper from 
Indonesia and China.17 On 20 October 2009, the USDOC initiated parallel anti -dumping and 
countervailing duty investigations on imports of certain coated paper from Indonesia and on 
imports of the same product from China.18 
2.5.  In the countervailing duty investigation on coated paper from Indonesia, the USDOC selected 
the Asia Pulp and Paper/Sinar Mas Group (APP/SMG) as the sole mandato ry respondent in the 
investigation.19On 9 March 2010 the USDOC issued its preliminary countervailing duty 
determination, in which it calculated a subsidy rate of 17.48% for APP/SMG, and assigned the 
same rate to all other producers and exporters.20 The USDOC  issued its final determination on 
27 September 2010.21 In its final determination, the USDOC determined, inter alia , that three 
Government of Indonesia (GOI) measures – the provision of standing timber, the log export ban, 
and the debt forgiveness in favou r of APP/SMG – constituted countervailable subsidies. The USDOC 
calculated an overall net subsidy rate of 17.94% for APP/SMG, and assigned the same rate to all 
other producers and exporters.22 
2.6.  The USITC published the notice of initiation of its prelimi nary injury investigation on 
30 September 2009, and issued a preliminary affirmative determination on 23 November 2009.23 
It issued its final determination on 17  November 2010, finding that the US domestic industry was 
threatened with material injury by reason o f imports of certain coated paper from China and 
                                                
15 Indonesia's first written submission, paras. 1, 15, and 16 (referring to Anti -Dumping Duty Order, 
(Exhibit IDN -1); and Countervailing Duty Order, (Exhibit IDN -2)). 
16 Indonesia's first written submission, para. 5.  
17 Petition , (Exhibit US -80). 
18 Initiation of Anti -Dumping Duty Investigations, (Exhibits IDN -3/US-66 (exhibited twice)); Initiation of 
Counterv ailing Duty Investigation, (Exhibits IDN -4/US-65 (exhibited twice)) ; and USITC Final Determination, 
(Exhibit  US-1), p. I-1. 
19 The respondent APP/SMG companies were PT. Pabrik Kertas Tjiwi Kimia Tbk (Tjiwi Kimia or TK), PT. 
Pindo Deli Pulp and Paper Mills ( Pindo Deli or PD), and PT. Indah Kiat Pulp & Paper, Tb k (Indah Kiat or IK).  
20 Preliminary Countervailing Duty Determination, (Exhibits IDN -5/US-48 (exhibited twice)).  
21 Final Countervailing Duty Determination, (Exhibits IDN -6/US-47 (exhibited twice)). The accompanying 
USDOC Issues and Decision Memorandum, (Exhibits IDN -10/US -31), is dated 20 September 2010. Indonesia's 
exhibit contains excerpts of the Issues and Decision Memorandum whereas Exhibit US -31 includes the entire 
document. For this reason, in our findings, we generally refer to the latter rather than to Exhibit IDN -10. 
22 Final Countervailing Duty Determination, (Exhibits IDN -6/US-47 (exhibited twice)), p. 59211; USDOC 
Issues and Decision Memorandum, (Exhibit US -31). On the same date, the USDOC issu ed its final 
determinations in the parallel countervailing duty investigation on coated paper from China and anti -dumping 
investigations on coated paper from Indonesia and from China. (Final Anti -Dumping Determination, (Exhibits 
IDN-7/US-67 (exhibited twic e)); Final Anti -Dumping Determination on Coated Paper from China, (Exhibit 
US-69); and Final Countervailing Duty Determination on Coated Paper from China, (Exhibit US -68)). 
23 USITC Notice of Preliminary Determination, (Exhibit IDN -8). WT/DS491/R  
BCI deleted, as indicated [[***]] 
- 16 - 
 
  Indonesia.24 On the same date, the USDOC issued anti -dumping and countervailing duty orders 
imposing, inter alia , countervailing duties at a rate of 17.94% on imports from APP/SMG and "all 
other" Indonesian p roducers/exporters.25 
3  PARTIES' REQUESTS FO R FINDINGS AND RECOM MENDATION  
3.1.  In the context of its "as applied" claims  concerning the anti -dumping and countervailing 
measures at issue, Indonesia requests that the Panel find:  
a. With respect to the USDOC's subsidy  determination, that26: 
i. the USDOC's findings that the GOI provides standing timber for less than adequate 
remuneration and that the GOI log export ban confers a benefit are inconsistent with 
Article 14(d) of the SCM Agreement because the USDOC made a per se  
determination of price distortion based solely on the predominant market share of 
standing timber from public forests;  
ii. the USDOC's finding, based on an adverse inference, that the GOI "knowingly 
allowed an affiliate of a debtor to buy back its own debt in c ontravention of 
Indonesian law " is inconsistent with Article 12.7 of the SCM Agreement;  
iii. the USDOC's findings of specificity are inconsistent with Article 2.1(c) of the SCM 
Agreement because the USDOC did not determine that the collection of stumpage 
fees, the log export  ban, or the alleged forgiveness of debt were part of a plan or 
scheme intended to confer a benefit ; 
iv. the USDOC's finding of specificity in connection with the debt forgiveness is 
inconsistent with Article 2.1 of the SCM Agreement because the USDOC "did not 
identify the jurisdiction allegedly providing a benefit, thereby calling into question the 
specificity analysis "27; 
b. With respect to the USITC's threat of injury determination, that28: 
i. the USITC's threat of injury determination is inconsistent with Article 3.5 of the 
Anti-Dumping Agreement and Article 15.5 of the SCM Agreement because the USITC 
attributed to the subject imports adverse effects caused by other factors;  
ii. the USITC's threat of injury determination is inconsistent with Article 3.7 o f the 
Anti-Dumping Agreement and Article 15.7 of the SCM Agreement because the USITC 
based its threat findings on conjecture and remote possibility; and  
iii. the USITC's threat of injury determination is inconsistent with Article 3.8 of the 
Anti-Dumping Agreeme nt and  Article 15.8 of the SCM Agreement because the USITC 
failed to exercise special care.  
                                                
24 USITC Notice of Fin al Determination, (Exhibits IDN -9/US-70 (exhibited twice)); USITC Final 
Determination, (Exhibits IDN -18/US -1). As indicated below, fn 357, Exhibit IDN -18 contains excerpts of the 
determination whereas Exhibit U S-1 includes the entire determination. For this reason, in our findings, we 
generally refer to the latter.   
25 Anti-Dumping Duty Order, (Exhibit IDN -1), p. 70206; Countervailing Duty Order, (Exhibit IDN -2), 
p. 70207. The  USITC instituted five -year ("sunset" ) reviews with respect to the anti -dumping and 
countervailing duties on imports of certain coated paper from Indonesia and China  on 1 October 2015. On 
29 December 2016, the USITC published its determination that revocation of the duties would be likely to lead 
to continuation or recurrence of material injury to an industry in the United States within a reasonably 
foreseeable time. (USITC Continuation Notice , (Exhibit IDN -24), p. 96044).  
26 Indonesia's first written submission, paras. 3 and 166; second writte n submission, paras. 2 -5. 
27 Indonesia initially also challenged the USDOC's findings of specificity with respect to the provision of 
standing timber and the log export ban, arguing that they were inconsistent with Article 2.1 of the SCM 
Agreement because t he USDOC did not identify the jurisdiction allegedly providing a benefit. (Indonesia's first 
written submission, para. 3). However, at the first meeting of the Panel, Indonesia informed the Panel that it 
had decided not to pursue those claims. (Indonesia's  opening statement at the first meeting of the Panel, 
para. 56). 
28 Indonesia's first written submission, paras. 4 and 166; second written submission, paras. 6 -9. WT/DS491/R  
BCI deleted, as indicated  [[***]] 
- 17 - 
 
  3.2.  In the context of its "as such" claims , Indonesia requests that the Panel find that 
Section  771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 o f the United States 
Code, Section 1677(11)(B), which deems a tie vote on threat of injury to be an affirmative  threat 
of injury determination , is "as such" inconsistent with Article 3.8 of the Anti -Dumping Agreement 
and Article 15.8 of the SCM Agreement be cause it precludes the exercise of special care.29 
3.3.  Indonesia further requests, pursuant to Article 19.1 of the DSU, that the Panel recommend 
the United States to bring its measures into conformity with the Anti -Dumping Agreement and the 
SCM 2Agreement.30 
3.4.  The United States requests that the Panel reject Indonesia's claims in this dispute in their 
entirety.31 Moreover, as noted above, the United States requests that the Panel find that certain 
arguments raised by Indonesia are not within the Panel's terms of ref erence.  
4  ARGUMENTS OF THE PAR TIES  
4.1.  The arguments of the parties are reflected in their executive summaries, provided to the 
Panel in accordance with paragraph 19 of the Working Procedures adopted by the Panel (see 
Annexes B -1, B-2, B-3, and B -4). 
5  ARGUMENTS O F THE THIRD PARTIES  
5.1.  The arguments of Brazil, Canada, the European Union, and Turkey are reflected in their 
executive summaries, provided in accordance with paragraph 20 of the Working Procedures 
adopted by the Panel (see Annexes C -1, C-2, C-3, and C -4). Ch ina submitted responses to 
questions from the Panel to the third parties but did not submit an executive summary of its 
arguments to the Panel. India and Korea did not submit written or oral arguments to the Panel.  
6  INTERIM REVIEW  
6.1.  On 24 August 2017 , the Pan el issued its Interim Report to the parties.  On 6 September 2017, 
the United States submitted a written request for the Panel to review specific aspects of the 
Interim Report. On the same date, Indonesia informed the Panel that it had no comments on the 
Interim Report. Neither party requested an interim review meeting. On 14 September 2017, 
Indonesia submitted comments on certain of the United States' requests for review.  
6.2.   Annex E -1 sets out the requests made by the United States at the interim review stag e, 
Indonesia's comments on the United States' requests, as well as the Panel's discussion and 
disposition of those requests . 
7  FINDINGS  
7.1  Introduction  
7.1.  In addressing the complaint in this dispute, we first set out the relevant principles guiding our 
review, inc luding the relevant principles concerning treaty interpretation, the standard of review, 
and the burden of proof in WTO dispute settlement proceedings. We  then address the application 
of Article 12.11 of the DSU concerning special and differential treatmen t, after which we examine 
the request for a preliminary ruling submitted by the United States. Thereafter, we consider, in the 
following order: (a) Indonesia's "as applied" claims concerning the USDOC's subsidy determination 
on coated paper from Indonesia;  (b) Indonesia's "as applied" claims concerning the USITC's threat 
of injury determination on coated paper from China and Indonesia; and (c) Indonesia's "as such" 
claims concerning US Section 771 (11)(B)  of the US Tariff Act of 1930 ( the "tie vote" provisio n). 
                                                
29 Indonesia's first written submission, paras. 5 and 166; second written submission, para. 10.  
30 Indonesia's first written submission, para. 166; second written submission, para. 87. Although 
Indonesia refers to the United States' measures also being inconsistent with the "GATT 1994" (Indonesia's first 
written submission, para. 1) and requests that  the Panel recommend that the United States bring its measures 
into conformity with, inter alia , the GATT 1994 . (Indonesia's first written submission, para. 166; second written 
submission, para. 87) . Indonesia does not make any specific claim under any pro vision of the GATT 1994.  
31 United States' first written submission, para. 355.  WT/DS491/R  
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  7.2  General principles regarding treaty interpretation, the applicable standard of 
review, and burden of proof  
7.2.1   Treaty interpretation  
7.2.  Article  3.2 of the DSU provides that the dispute settlement system serves to clarify the 
existing provisions of the covered  agreements "in accordance with customary rules of 
interpretation of public international law". Article  17.6(ii) of the Anti -Dumping Agreement similarly 
requires panels to interpret that Agreement's provisions in accordance with the customary rules of 
interpretation of public international law. It is generally accepted that the principles codified in 
Articles  31 and 32 of the Vienna Convention are such customary rules.32 
7.2.2   Standard of review  
7.3.  Panels generally are bound by the standard of review set forth in Art icle 11 of the DSU, which 
provides, in relevant part, that:  
A panel should make an objective assessment of the matter before it, including an 
objective assessment of the facts of the case and the applicability of and conformity 
with the relevant covered a greements[.]  
7.4.  Further to Article 11 of the DSU, Article  17.6 of the Anti -Dumping Agreement sets forth a 
specific standard of review applicable to disputes under the Anti -Dumping Agreement:  
(i) in its assessment of the facts of the matter, the panel shall d etermine whether 
the authorities' establishment of the facts was proper and whether their evaluation of 
those facts was unbiased and objective. If the establishment of the facts was proper 
and the evaluation was unbiased and objective, even though the pane l might have 
reached a different conclusion, the evaluation shall not be overturned;  
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance 
with customary rules of interpretation of public international law. Where the panel 
finds that a relevant provision of the Agreement admits of more than one permissible 
interpretation, the panel shall find the authorities' measure to be in conformity with 
the Agreement if it rests upon one of those permissible interpretations.  
7.5.  Thus, Artic le 11 of the DSU and Article  17.6 of the Anti -Dumping Agreement together 
establish the standard of review we are to apply with respect to both the factual and the legal 
aspects of the present dispute.  
7.6.  The "objective assessment" to be made by a panel revie wing an investigating authority's 
determination is to be informed by an examination of whether the investigating authority has 
provided a reasoned and adequate explanation as to: (a) how the evidence on the record 
supported its factual findings; and (b) ho w those factual findings support ed its overall 
determination.33 Moreover, with respect to a "reasoned and adequate explanation", the 
Appellate  Body observed:  
What is "adequate" will inevitably depend on the facts and circumstances of the case 
and the partic ular claims made, but several general lines of inquiry are likely to be 
relevant. The panel's scrutiny should test whether the reasoning of the authority is 
coherent and internally consistent. The panel must undertake an in -depth examination 
of whether the  explanations given disclose how the investigating authority treated the 
facts and evidence in the record and whether there was positive evidence before it to 
support the inferences made and conclusions reached by it. The panel must examine 
whether the exp lanations provided demonstrate that the investigating authority took 
proper account of the complexities of the data before it, and that it explained why it 
rejected or discounted alternative explanations and interpretations of the record 
                                                
32 Appellate Body Report, Japan – Alcoholic Beverages  II, p. 10.  
33 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS , para.  186; US – Lamb , 
para. 103. WT/DS491/R  
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  evidence. A panel must be open to the possibility that the explanations given by the 
authority are not reasoned or adequate in the light of other plausible alternative 
explanations, and must take care not to assume itself the role of initial trier of facts, 
nor to be passiv e by "simply accept[ing]  the conclusions of the competent 
authorities".34  
7.7.  Therefore , it is clear that a panel should n either undertake a de novo  review of the evidence 
nor substitute its judgment for that of the investigating authority. A panel must limit its 
examination to the evidence that was before the investigating authority during the course of the 
investigation and must take into account all such evidence submitted by the parties to the 
dispute.35 At the same time, a panel must not simply defer to the  conclusions of the investigating 
authority; a panel's examination of those conclusions must be "in -depth" and "critical and 
searching".36 
7.2.3   Burden of proof  
7.8.  The general principles applicable to the allocation of the burden of proof in WTO dispute 
settlement r equire that a party claiming a violation of a provision of a WTO Agreement must assert 
and prove its claim.37 Therefore, as the complaining party, Indonesia bears the burden of 
demonstrating that the US measures it challenges are inconsis tent with the provi sions of the 
covered agreements that it invokes. The Appellate Body has stated that a complaining party will 
satisfy its burden when it establishes a prima facie  case, namely, a case which, in the absence of 
effective refutation by the defending party, req uires a panel, as a matter of law, to rule in favour 
of the complaining party.38 It is generally for each party asserting a fact to provide proof thereof.39  
7.3  Special and differential treatment  
7.9.  Article 12.11 of the DSU provides that:  
Where one or more of the parties is a developing country Member, the panel's report 
shall explicitly indicate the form in which account has been taken of relevant 
provisions on differential and more -favourable treatment for developing country 
Members that form part of the covered agreements which have been raised by the 
developing country Member in the course of the dispute settlement procedures.  
7.10.   In the present dispute, Indonesia refers to Article 15 of the Anti -Dumping Agreement and 
Article 27 of the SCM Agreement, which both prov ide special and differential treatment for 
developing countries.  However, Indonesia makes no claims of inconsistency with those provisions, 
and, a s indicated in our Report be low, Article 15 of the Anti -Dumping Agreement and Article 27 of 
the SCM Agreement are not r elevant to the interpretation and application of the provisions invoked 
by Indonesia  in its claims .40 
7.4  Terms of reference – United States ' request for a preliminary ruling  
7.11.   As indicated above41, in its first written submission, the United States reque sted that the 
Panel find  that certain arguments raised by Indonesia in its first written submission are not within 
the Panel's terms of reference.42 The United States' objection concerns two series of arguments 
advanced by Indonesia before the Panel.  
7.12.   First, the United States argues that in the context of its Article 14(d) claim concerning the 
benefit calculation with respect to the log export ban, and its Article 2.1(c) claim regarding the 
                                                
34 Appellate Body Report, US – Softwood Lumber VI (Article  21.5 – Canada) , para.  93 (referring to 
Appellate Body Report, US – Lamb , para. 106). (emphasis original)  
35 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , paras. 187 -188. 
36 Appell ate Body Report, US – Softwood Lumber VI (Article  21.5 – Canada) , para.  93. 
37 Appellate Body Report, US – Wool Shirts and Blouses , p. 14. 
38 Appellate Body Report, EC – Hormones , para.  104. 
39 Appellate Body Report, US – Wool Shirts and Blouses , p. 14. 
40 See below, paras. 7.120  and 7.346 . 
41 See above, para. 1.10. 
42 United States' first written submission, paras. 33 -40. WT/DS491/R  
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  "subsidy programme" aspect of the specificity determination concerni ng that ban , Indonesia 
advances arguments that are "tantamount" to claims under Article 1.1(a) of the SCM Agreement, 
concerning the issue of financial contribution.43 The United States refers, in particular, to 
Indonesia's arguments, in support of its claim s under Article  2.1(c) and Article 14(d) , that the log 
export ban is a type of export restraint that cannot constitute a subsidy  and that the log export 
ban does not constitute government -entrusted or -directed provision of goods.  The United States 
submits  that these arguments pertain to whether an export ban constitutes a financial contribution 
within the meaning of Article 1.1(a), and therefore  Indonesia's arguments are equivalent to claims 
under that provision.  
7.13.   Second, the United States objects to certai n arguments that Indonesia makes in support of 
its claims  under Article 14(d), Article 2.1(c), and the chapeau  of Article 2.1, which in the 
United  States' view in fact concern whether the USDOC 's determination  set forth " in sufficient 
detail the findings a nd conclusions reached on all issues of fact and law considered material", a 
matter governed by Article 22.3 of the SCM Agreement.44 The United States submits that, while 
the relevant standard of review under Article  11 of the DSU and Article 17.6 of the An ti-Dumping 
Agreement requires a reviewing panel to examine whether an investigating authority has provided 
reasoned and adequate explanations of how the evidence supported its factual findings and how 
those findings in turn support ed its determination, the  question of the level of detail memorialized 
in the public notice of an investigating authority's determination is a separate, substantive, inquiry 
that properly falls under Article 22.3 of the SCM Agreement. In this case, the United States 
argues, Indone sia's concern with the USDOC's use of certain words, phrases, or elements in its 
explanations and the amount of space taken by them  belongs properly to a claim under 
Article  22.3 rather than under the provisions cited by Indonesia.45 
7.14.   The United States  notes  that Indonesia's panel request does not include claims under 
Articles  1.1(a) or 22.3 of the SCM Agreement. Thus, citing Articles 6.2 and 7 of the DSU, the 
United States submits that there is no jurisdictional basis for the Panel to address the merits of t he 
Indonesian arguments described above, and that these arguments are outside the Panel's terms of 
reference.46  
7.15.   Initially, the United States requested a preliminary ruling , to the effect that the arguments 
of Indonesia described above are not within the Pa nel's terms of reference . The United States 
subsequently revised its request  for a preliminary ruling .47 With respect to its objection that 
certain arguments concerning the log export ban are tantamount to claims under Article  1.1(a), 
the United States ulti mately asks the Panel to issue a preliminary ruling in which it either: (a) finds 
that Indonesia's "putative" Article 1.1(a) claims are outside the Panel's terms of reference; (b) 
finds that Indonesia's Article 14(d) and Article 2.1(c) claims are in fact " financial contribution 
claims", and therefore, outside the Panel's terms of reference; or (c) rejects Indonesia's financial 
contribution arguments because there is no legal basis for the Panel to address the merits of 
arguments on matters that are outside the Panel's terms of reference.48  
                                                
43 United States' first written submission, paras. 37 -38 and fns 43 and 47; opening statement at the 
first meeting of the Panel, para. 7 ; response to Panel question Nos. 3, 5(a) , and 5(c) ; and second written 
submission, para. 10.  The United States identifies the a rguments at issue as those set forth in Indonesia's first 
written submission, paras.  44-45 in support of its Article 14(d) claim, and par a. 79 in support of its 
Article  2.1(c) claim.  
44 The United States refers, in particular, to Indonesia's arguments that the USDOC did not adequately 
explain its decisions with respect to Article 14(d), did not make findings of specifi city in accordance with 
Article  2.1(c), and did not identify the relevant jurisdiction in accordance with the chapeau  of Article 2.1. The 
United States indicates that these arguments are set forth in Indonesia's first written submission, paras. 33 -34 
and 41-42 (concerning Indonesia's claim under Article 14(d) with respect to the provision of standing timber); 
74, 78, 79, and 81 (concerning Indon esia's claim s under Article 2.1(c) with respect to the three subsidies), and 
95 (concerning Indonesia's claim under the chapeau  of Article 2.1 with respect to the debt forgiveness). 
(United States' first written submission, para. 39 and fn 51; response to Panel question No.  7(d)).  
45 United States' first written submission, para. 40; response to Panel question No. 7(c).  
46 United States' first written submission, paras. 35 -36; response to Panel question No. 5(a).  
47 United States' opening statement at the firs t meeting of the Panel, para. 6; response to Panel 
question Nos. 3 and 5; and opening statement at the second meeting of the Panel, para. 3.  
48 United States' second written submission, para. 18.  WT/DS491/R  
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  7.16.   With respect to its objection that certain arguments concerning the sufficiency of 
explanations are tantamount to claims under Article 22.3, the United States asks the Panel to rule 
that Indonesia's arguments are outside i ts terms of reference.49 
7.17.   Indonesia submits that the Panel should reject the United States' request. Indonesia argues 
that it is not seeking findings under Articles 1.1(a) or 22.3 of the SCM Agreement. According to 
Indonesia, the arguments to which the Unite d States objects regarding the log export ban support 
its claim of violation under Article 14(d) concerning the issue of "benefit" and its claim under 
Article 2.1(c) concerning the existence of a "subsidy programme". With respect to the second set 
of argum ents, Indonesia argues that the fact that the United States  may also have violated 
Article  22.3 does not preclude that the United States may have violated Articles  14(d) and 2.1(c), 
and the chapeau  of Article 2.1.50 
7.18.   We did not consider it necessary to addre ss the United States' objections in the form of a 
preliminary ruling. For the following reasons, we also consider it neither necessary nor 
appropriate51, for the purpose of resolving this dispute, to make the specific findings requested by 
the United States .  
7.19.   First, Article 6.2 of the DSU provides that a panel request "shall … identify the specific 
measures at issue and provide a brief summary of the legal basis of the complaint sufficient to 
present the problem clearly". Consequently, as the United States correctly notes, where a panel 
request fails to specify a particular claim under a specific provision, such claim does not form part 
of the matter covered by the panel's terms of reference.52 In this case, however, Indonesia has 
made it clear that it is not making any claims under Articles 1.1(a) and Article 22.3 of the SCM 
Agreement. Second, arguments, as opposed to  claims, are in principle not circumscribed by a 
panel's terms of reference.  The United States has not convinced us that that it would be 
appropr iate for us to issue a ruling that Indonesia's arguments referring to those two provisions, 
as opposed to claims, which Indonesia has not made, are outside our terms of reference.  
7.20.   We do agree, however, that in some of its arguments, Indonesia effectively seeks to 
challenge aspects of the USDOC 's determination of the existence of a financial contribution despite 
having made no claim of violation under Article 1.1(a) . In our findings below, we consider whether 
Indonesia has established a violation of the pro visions it has invoked in light of the legal 
requirements of these provisions and of the arguments and evidence it presented in support of its 
claims. Where Indonesia's arguments do not pertain to a claim that it has properly stated in its 
panel request an d that it pursues before the Panel, but rather pertain to a claim which it has not 
properly stated, we disregard these arguments.  
7.21.   Finally , with respect to the United States' objection that Indonesia is effectively making 
claim s under Article 22.3 by argui ng that the USDOC was required to provide certain explanations 
for its determinations, we recall that an investigating authority's determination must provide a 
reasoned and adequate explanation as to how the evidence on the record supported the 
investigati ng authority's factual findings, and how those factual findings support ed its overall 
determination.53 The requirement for an investigating authority to explain the basis for its decision 
is an aspect of the substantive requirements of the provisions of the  Anti-Dumping and SCM 
Agreements invoked by Indonesia. This is distinct from the public notice requirements of Article 22 
of the SCM Agreement.54 Indonesia has not, in our view, made any claims or arguments with 
respect to the latter requirement s. Rather, I ndonesia challenges the analysis and conclusions of 
the USDOC in its determinations under Article 14(d), Article 2.1(c), and the chapeau  of 
                                                
49 United States' first written submission, para. 40.  
50 Indone sia's response to the United States' preliminary ruling request, paras. 4 -7. 
51 We note that one of the rulings the United States seeks , in the alternative,  is for the Panel to find that 
Indonesia's Article  14(d) and Article 2.1(c) claims with respect to th e log export ban are in fact financial 
contribution claims  that are outside the Panel's terms of reference , on the basis that Indonesia's arguments are 
limited to arguing that an export ban cannot constitute a financial contribution (see para. 7.15 above ). In our 
view, Indonesia's arguments in support of its Article 14(d) and Article 2.1(c) claims are not limited to those 
objected to by the United States, and the U nited States'  argument in this regard is without merit.  
52 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 120.  
53 See above, para. 7.6. 
54 Article 22.3, in particular, requires that the public notice of a final determination (or separate report) 
set forth in sufficient detail the findings and conclusions reached on all issues of fact and law the investigating 
authority considered material.  WT/DS491/R  
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  Article  2.1.55 For this reason, the United States' request, as it concerns arguments allegedly 
amounting to claims un der Article 22.3, is unfounded, and we reject it.  
7.5  "As applied" claims concerning the USDOC's subsidy determination  
7.5.1   Introduction  
7.22.   In this section, we consider Indonesia's claims with respect to the USDOC's final 
determination in its countervailing duty inve stigation on certain coated paper from Indonesia. The 
USDOC issued its final determination on 27  September 2010.56 In the determination, the USDOC 
determined that the GOI granted, inter alia , the following subsidies to APP/SMG: (a) provision of 
standing tim ber; (b) provision of logs and chipwood by forestry/harvesting companies entrusted 
and directed by the GOI through the log export ban imposed by Indonesia; and (c) debt 
forgiveness (or "buy -back") through the sale by the GOI of APP/SMG's debt to an affilia ted entity, 
Orleans Offshore Investment Limited ( Orleans ).57 Indonesia challenges several aspects of the 
USDOC's findings with respect to these three subsidies. Indonesia claims that the USDOC's final 
subsidy determination is inconsistent with:  
a. Article 14(d ) of the SCM Agreement because the USDOC's benefit determinations with 
respect to the provision of standing timber and the log export ban are based on a per se  
determination of price distortion based solely on the GOI's predominant market share of 
standing  timber from public forests;  
b. Article 12.7 of the SCM Agreement because the USDOC found, based on an adverse 
inference, that the GOI "knowingly allowed an affiliate of a debtor to buy back its own 
debt in contravention of Indonesian law "; and  
c. Article 2.1(c ) of the SCM Agreement  because, in its findings of de facto  specificity, the 
USDOC failed to determine that the collection of stumpage fees, the log export  ban, and 
the debt forgiveness were each part of a plan or scheme intended to confer a benefit ; 
and t he chapeau  of Article 2.1 of the SCM Agreement because, with respect to the debt 
forgiveness, the USDOC also failed to identify "the jurisdiction allegedly providing a 
benefit ". 
7.23.   We note that, prior to the coated paper investigation, the USDOC conducted a 
countervailing duty investigation in relation to imports of coated free sheet paper from Indonesia 
(CFS investigation). In that investigation, APP/SMG was also the sole respondent and the 
programmes examined in the CFS investigation mirror the programmes at issue in the coated 
paper investigation.58 On 25 October 2007, before the initiation of the investigation underlying the 
countervailing duties at issue in this dispute, the USDOC issued its final determination in the CFS 
investigation , finding inter alia  that the provision of standing timber, the log export ban , and 
APP/SMG's debt buy -back constituted countervailable programmes.59 In parallel to the USDOC's 
investigation, the USITC conducted an injury investigation with respect to imports of coated free 
sheet paper from China, Indonesia, and Korea. The USITC determined that the US industry was 
                                                
55 In the paragraphs of its first written submission that the United States objects to, Indon esia argues, 
inter alia , that: (a) the USDOC failed to make an evidentiary finding of price distortion in the market for 
standing timber and, instead, based its price distortion finding entirely on the fact that the GOI was the 
predominant supplier of stan ding timber, in violation of Article 14(d) (paras. 33, 34, 41, and 42); (b) that the 
USDOC acted inconsistently with Article 2.1(c) by failing to cite to evidence that the GOI had in place a plan, 
scheme, or systematic series of actions to confer a benefit  (paras. 74, 78, and 81) and, in addition in the case 
of the log export ban, to cite any evidence that the law confers a benefit on paper producers (para. 79); and 
(c) that the USDOC was required to identify the government entity that allegedly forgave APP /SMG's debt 
(para. 95).  
56 Final Countervailing Duty Determination, (Exhibits IDN -6/US-47 (exhibited twice)), p. 59211; USDOC 
Issues and Decision Memorandum, (Exhibit US -31). 
57 As noted above, para. 2.5, APP/SMG was the sole Indonesian producer/exporter individually 
investigated by the USDOC. The period of investigation (POI) with respect to which the USDOC conducted its 
subsidy analysis was the period 1 January to 31 December 2008.  
58 Preliminary Countervailing Du ty Determination , (Exhibits IDN -5/US-48 (exhibited twice)), p. 10764 
and fn 7. The POI for the USDOC's CFS investigation was 1 January to 31 December 2005. (CFS Final 
Countervailing Duty Determination, (Exhibit US -74), p. 60643).  
59 CFS Final Countervailing  Duty Determination, (Exhibit US -74), p. 60644.  WT/DS491/R  
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  not materially injured or threatened with material injury by reason of imports from these countries  
and, as a result, no measures were imposed .60 While the USDOC's CFS i nvestigation is not the 
subject of this dispute, several of the USDOC's findings in that investigation are relevant to our 
analysis of Indonesia's claims in the present dispute, particularly as the USDOC, in its 
determination in the coated paper investigat ion, frequently referred to its findings in the CFS 
investigation. Consequently, where appropriate, in our findings below we also refer to relevant 
aspects of the USDOC's final determination in the CFS investigation  (as contained, in particular, in 
the Iss ues and Decision Memorandum accompanying that determination) , and to the record 
evidence before the USDOC in that investigation that has been submitted to the Panel.  
7.5.2   Claims under Article 14(d) of the SCM Agreement ( rejection of in -country prices 
as benchma rks to calculate benefit)  
7.5.2.1   Introduction  
7.24.   As indicated above, in the coated paper investigation the USDOC conducted a countervailing 
duty investigation into whether the GOI's provision of standing timber and the ban on exports of 
logs and chipwood (hereinafte r "log export ban") maintained by Indonesia constituted 
countervailable subsidies. The USDOC determined that both the provision of standing timber and 
the log export ban constituted financial contributions in the form of provision of goods by the 
governmen t and that a benefit was conferred in both cases .61 
7.25.   With respect to the provision of standing timber, t he USDOC, relying on its findings in the 
CFS investigation, found that the GOI allowed timber to be harvested from government -owned 
land under two main ty pes of licen ces: Hutan Tanaman Industria ( HTI) licences to establish, and 
harvest timber from, plantations, and HPH licen ces to harvest timber from the natural forest.62 The 
USDOC observed that, as it had found in the CFS investigation, HTI licen ce holders paid "cash 
stumpage fees"63 known as "PSDH" (Provisi Sumberdaya Hutan) royalty fees, paid per unit of 
timber harvested. The USDOC noted that, in addition to paying PSDH fees, HPH licen ce holders 
paid per -unit rehabilitation fee ("Dana Reboisasi" or DR) for timber harvested from natural forests, 
and licen ce holders in Jambi province also paid a "PSDA" fee for harvesting from plantations. In 
addition, the USDOC noted that in the CFS investigation it had found that all of the stumpage fees 
were administratively  set by the GOI.64 Because the GOI did not provide in the investigation at 
issue here new information that materially altered the information concerning the procedures 
through which the GOI provided standing timber or how it priced standing timber, the USDO C 
determined that the provision of standing timber constituted a financial contribution in the form of 
provision of goods by the government.65 
7.26.   The USDOC also found that the log export ban constituted a financial contribution. Relying 
on its findings in the CFS investigation, the USDOC found that the GOI, through the log export 
ban, entrusted and directed forestry/harvesting companies to provide goods (i.e. logs and 
chipwood) to pulp and paper producers.66 Of relevance to Indonesia's claims, in the CFS 
investi gation, the USDOC had found that Article 1(1) of the Joint Decree of the Ministry of Forestry 
and the Ministry of Industry and Trade of Indonesia concerning the Discontinuation of Log/Chip 
Raw Material Exports67 "provide[d] for an outright ban on the export  of logs and chipwood from 
Indonesia", and that the ban was implemented by preventing the issuance of the export permits 
required for all products to be exported.68 The log export ban was administered and operated in 
                                                
60 USITC Final Determination, (Exhibit US -1), p. I -5. 
61 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 7  and 11-14. 
62 According to Indonesia, the type of logs used in pulp production differs based on whether they are 
harvested from plantations or natural forests. (Indonesia's first written submission, para. 12).  
63 The USDOC used the term "stumpage fees" to refer to fees paid for harvesting standing timber.  
64 USDOC Issues and Decision Memorandum, (Ex hibit US -31), p. 6  (referring to CFS USDOC Issues and 
Decision Memorandum, (Exhibit US -43), p. 69).  
65 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 6 -7. 
66 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 13.  
67 Joint Decree of the Mini stry of Forestry and the Ministry of Industry and Trade No. 1132/Kpts -II/2001 
and No. 292/MPP/Kep/10/2001 . (Log Export Ban,  (Exhibit IDN -30)). 
68 CFS USDOC Issues and Decision Memorandum, (Exhibit US -43), p. 27. In the CFS investigation, the 
USDOC had also found that the GOI had imposed export bans on eight categories of products that included 
"Forestry Products," under which logs and chipwood were listed. (Ibid.). See also Log Export Ban, (Exhibit 
IDN-30), Article 1(1).  WT/DS491/R  
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  accordance with the Joint Decree of the Ministry of Forestry and the Ministry of Industry and 
Trade, who were responsible for enforcing the ban.69 In the investigation at issue here, the USDOC 
found that neither the GOI nor APP/SMG had placed any additional information on the record that 
caused i t to reconsider its prior finding, and determined that the ban constituted a financial 
contribution.70 
7.27.   The USDOC found that both the provision of standing timber and the export ban  on logs and 
chipwood  conferred a benefit because the GOI provided standing t imber and logs and chipwood to 
producers of coated paper in Indonesia for less than adequate remuneration when measured 
against a market benchmark. The USDOC declined to use in -country prices for standing timber and 
logs as the basis for determining the ap propriate market benchmark , and instead relied on 
out-of-country benchmarks. In both cases, as the basis for determining the benchmark , the 
USDOC used Malaysian export prices for acacia pulpwood and mixed  tropical hardwood as reported 
in the World Trade At las (WTA) trade statistics, exclusive of shipments to Indonesia.71  
7.28.   Indonesia challenges the USDOC's conclusion that there were no market -determined 
stumpage fees or market prices for logs in Indonesia that could have been used as a benchmark 
and, as a cons equence, the USDOC's decision to resort to out -of-country benchmark s.72 Indonesia 
claims that the USDOC's findings  that the GOI provided standing timber for less than adequate 
remuneration and that the log export ban conferred a benefit are inconsistent wit h Article 14(d) of 
the SCM Agreement because the USDOC improperly made a per se  determination of price 
distortion based solely on the GOI's predominant share of the Indonesian market for standing 
timber and, as a consequence, failed to determine the adequa cy of remuneration in relation to 
prevailing market conditions in Indonesia.73 According to Indonesia, instead of using Indonesian 
prices, the USDOC resorted to "aberrationally high" out -of-country benchmark s.74 
7.29.   The United States requests that the Panel reje ct Indonesia's claims.75  
7.30.   We first address the legal standard under Article 14(d) of the SCM Agreement before 
examining Indonesia's claims under that provision with respect to the provision of standing timber 
and the log export ban.  
7.5.2.2   Legal standard under Art icle 14(d) of the SCM Agreement  
7.31.   Article 14 of the SCM Agreement sets forth guidelines for an investigating  authority's 
calculation of the amount of the benefit to the recipient of a subsidy. It provides, in relevant part : 
Article 14  
Calculation of the Amou nt of a Subsidy in Terms  
of the Benefit to the Recipient  
For the purpose of Part V, any method used by the investigating authority to calculate 
the benefit to the recipient conferred pursuant to paragraph 1 of Article 1 shall be 
provided for in the nationa l legislation or implementing regulations of the Member 
concerned and its application to each particular case shall be transparent and 
adequately explained. Furthermore, any such method shall be consistent with the 
following guidelines:  
…  
                                                
69 Part Two of GOI First Supplemental Questionnaire Response , (Exhibit US -34 (BCI)), appendix 1, 
pp. 1-2. 
70 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 13.  
71 The USDOC made certain adjustments to this data to arrive at the benchmarks it used; t o establish 
the benchmark for the pr ovision of standing timber, the USDOC adjusted  the WTA prices for logs to remove the 
Indonesian  costs of harvesting the standing timber  and to add an amount for profit for harvesting . (USDOC 
Issues and Decision Memorandum, (Exhibit US -31), p. 11).  
72 Indone sia's first written submission, paras. 41 -42 and 45.  
73 Indonesia's first written submission, paras. 3 and 29.  
74 Indonesia 's first written submission, para. 29 . 
75 United States' first written submission, para. 355; opening statement at the first meeting of the 
Panel, para. 2; and second written submission, para. 186.  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  (d) the provisi on of goods or services or purchase of goods by a government shall not 
be considered as conferring a benefit unless the provision is made for less than 
adequate remuneration, or the purchase is made for more than adequate 
remuneration.  The adequacy of remu neration shall be determined in relation to 
prevailing market conditions for the good or service in question in the country of 
provision or purchase (including price, quality, availability, marketability, 
transportation and other conditions of purchase or sale).  
7.32.   The first sentence of Article 14(d) establishes that the provision of goods by a government 
shall not be considered as conferring a benefit unless  the goods are provided for "less than 
adequate remuneration ". How to determine whether adequate remune ration was paid is dealt with 
in the second sentence of Article  14(d), which provides that the adequacy of remuneration shall be 
determined in relation to prevailing market conditions in the country of origin . The second 
sentence of Article  14(d) thus make s clear that a benchmark for adequate remuneration must be 
determined "in relation to prevailing market conditions", and that the relevant conditions are those 
existing "in the country of provision".76 Prevailing market conditions in the country of provisio n is 
thus the standard for assessing the adequacy of remuneration.77 
7.33.   The Appellate Body has found78, and the parties agree79, that the primary  benchmark and, 
therefore, the starting point  of the analysis under Article 14(d) is the prices at which the same or 
similar  goods are sold by private suppliers in arm's -length transactions in the country of provision. 
They also agree that, while  the analysis begins with a consideration of these in -country prices, it 
would not be appropriate to rely on private domestic p rices as the benchmark in certain situations 
where those prices are not market -determined. This would be the case, for instance, where the 
government is the only supplier of the particular goods in the country, or where the government 
administratively cont rols all the prices for those goods in the country . In these situations , it 
would  not be possible to use in -country prices as the benchmark .80 
7.34.   In addition, whenever  the government is the predominant provider of the investigated 
goods, even if not the sole p rovider, an investigating authority may reject in -country private prices 
as a benchmark if it concludes that these prices are distorted due to the predominant participation 
of the government as a provider in the market, thus rendering the comparison requir ed under 
Article 14(d) circular.81  
7.35.   Having said that, the possibility under Article  14(d) for an investigating authority to use a 
benchmark other than private  market prices in the country of provision is very limited and the 
mere fact that the government is  a significant, or even the predominant su pplier of the relevant 
good, cannot automatically lead to a finding of price distortion.82 The Appellate Body has excluded 
the application of a per se  rule, under which an investigating authority could conclude in e very 
case, and regardless of any other evidence, that the fact that the government is the predominant 
supplier means that private prices in the country of provision are distorted and, for this reason, 
unusable as a benchmark.83 Thus, the distortion of price s in the domestic market for the good in 
question must be established on a case -by-case basis, based on the particular facts in the 
investigation .84  
                                                
76 Appellate Body Report, US – Countervailing Measures (China) , para. 4.45.  
77 Appellate Body Report, US – Carbon Steel (India) , para. 4.149.  
78 Appellate Body Reports, US – Carbon Steel (India) , para. 4.154; US – Softwood Lumber IV , para. 90.  
79 Indonesia's first written submission, para. 31; United States' first written submission, para. 48.  
80 The panel in US – Softwood Lumber IV  considered that, "in these situations, the only remaining 
possibilit y would appear to be the construction of some sort of a proxy for, or estimate of, the market price for 
the good in that country". (Panel Report, US – Softwood Lumber IV , para. 7.57 (quoted in Appellate Body 
Report, US – Softwood Lumber IV , para. 98 )). 
81 Appellate Body Report s, US – Softwood Lumber IV , paras. 100 -101; US – Anti-Dumping and 
Countervailing Duties (China) , paras. 444 and 4 46; US – Carbon Steel  (India) , para. 4.155 ; and US – 
Countervailing Measures (China) , para. 4.50.  
82 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 439 (referring to 
Appellate Body Report, US – Softwood Lumber IV , para. 102).  
83 Appellate Body Reports, US – Carbon Steel (India) , para. 4.156; US – Anti-Dumping and 
Countervailing Duties (China) , para. 443; and US – Softwood Lumber IV , para. 100.  
84 Appellate Body Report s, US – Countervailing Measures (China) , para. 4. 59; US – Carbon Steel 
(India) , para. 4.15 6. WT/DS491/R  
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  7.36.   What an investigating authority must do in conducting the necessary  analysis for the 
purpose of arriving at a proper benchmark will vary depending on the circumstances of the case, 
the characteristics of the market being examined, and the nature, quantity, and quality of the 
information supplied  by petitioners and respondents, including any additional informati on the 
investigating authority seeks so that it may base its determination on positive evidence on the 
record . In its analysis  of whether in -country prices are distorted , an investigating authority may be 
called upon to examine various aspects of the relev ant market, such as its structure, including the 
type of entities operating in that market, their respective market share, as well as any entry 
barriers. It may also have to assess the behavio ur of the entities operating in that market in order 
to determin e whether the government itself, directly or acting through government -related 
entities, exerts market power so as to distort private in -country prices.85 
7.37.   That said, the Appellate Body has also observed that the fact that the government is the 
predominant s upplier of the good in question makes it likely that private prices for that good in the 
country of provision will be distorted. The more predominant a government's role in the market  is, 
the more likely this role will result in the distortion of private p rices.86 However, there is no 
threshold above which the government's significance as a supplier in the market alone becomes 
sufficient  to establish price distortion.87 An investigating authority thus cannot  refuse to consider 
evidence pertaining to factors other than the government's predominance simply because the 
government is a significant, or even predominant , supplier of the relevant good.88 Evidence 
regarding other factors on the record must always be considered, but the weight accorded to such 
evidence will vary depending on how predominant the government's role is and on how relevant 
these other factors are.89 While a finding of price distortion may not be based merely on 
government predominance, "the extent to which [evidence other than government predo minance] 
carries weight depends on how predominant the government's role is and on the relevance of 
other factors" and "there may be cases … where the government's role as a provider of goods is so 
predominant that price distortion is likely and other evid ence carries only limited weight ".90  
7.38.   Finally, t he investigating authority must explain the basis for its  conclusions in arriving at a  
proper  benchmark .91 Moreover, the authority must ensure that the benchmark it determines – 
including an out -of-country benc hmark – relates or refers to, or is connected with, prevailing 
market conditions in the country of provision, and reflects price, quality, availability, marketability, 
transportation, and other conditions of purchase or sale.92 
7.5.2.3   The USDOC's finding that there were no market -determined prices for standing 
timber in Indonesia upon which to base the benchmark  
7.39.   Indonesia argues that the USDOC acted inconsistently with Article 14(d) because it 
improperly concluded that Indonesian prices for standing timber paid to private owners were 
distorted or not market -determined and, therefore, unusable for benchmarking purposes, based 
solely on the fact that the GOI was the predominant supplier of standing timber .93 In Indonesia's 
view, the USDOC failed to analyse whether such  prices were actually  distorted  and applied a " per 
                                                
85 Appellate Body Reports, US – Countervailing Measures (China) , para s. 4.51-4.52 and 4.86; US – 
Carbon Steel (India) , para s. 4.15 3 and 4.157 and fn 754 . 
86 Appellate Body Report, US – Countervailing Measures (China) , para. 4.52 (quoting Appellate Body 
Report,  US – Anti-Dumping and Countervailing Duties (China) , para.  444).  
87 Appellate Body Repo rt, US – Carbon Steel (India) , para. 4.156.  
88 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , paras. 444 and 446.  
89 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 453.  
90 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , paras. 446 and 453 
(emphasis added). In that dispute the Appellate Body considered that in a situation where the government has 
a 96.1% market share, the position of the government in the market is much closer to a situation where the 
government is the sole supplier of the goods than to a situation where it is merely a significant supplier of the 
goods. The Appellate Body was of the view that this makes it likely that the government, as the predominant 
supplier, has the market power to affect through its own pricing the pricing by private providers for the same 
goods, and induce them to align with government prices. The Appellate Body further considered that, in such a 
situation, evidence of factors other than government market share will have less weight in the determination of 
price distortion than in a situation where the government has only a "significant" presence in the market. ( Ibid. 
para. 455).  
91 Appellate Body Report, US – Carbon Steel (India) , paras. 4.153  and 4.157.  
92 Appellate Body Report, US – Softwood Lumber IV , para. 106.  
93 Indonesia's first written submission, paras. 3, 27, 29 , and 42; opening statement at the first meeting 
of the Panel, para. 30.  WT/DS491/R  
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  se rule of price distortion". In this regard, Indonesia faults the USDOC for not having made an 
evidentiary finding of price distortion in the private market in Indonesia, and for not having 
explained whet her and how the market share held by the GOI actually resulted in the 
government's possession and exercise of market power such that price distortion occurred through 
private suppliers aligning their prices with those of the government -provided goods.94 Indonesia, 
in addition, submits that APP/SMG reported actual price data for stumpage paid to a private 
supplier, but the USDOC decided , without providing a reason, not to use this data.95  
7.40.   The United States disagrees that the USDOC applied "a per se  rule of pr ice distortion". The 
United States submits that the GOI's market share in the market for standing timber (over 93%) 
and ownership of harvestable land in Indonesia (approximately 99.5%) were the key bases for the 
USDOC's finding that there were no market -determined prices for stumpage in Indonesia. 
However, the United States submits, the USDOC also looked to other features of the Indonesian 
market that rendered it distorted.96 Notwithstanding the above, the United States submits that the 
facts of the present case – the GOI's overwhelming share of the harvest of standing timber and 
near total control of the supply of standing timber – in themselves properly supported the 
USDOC's conclusion that there were no in -country prices that were not influenced by the GOI 's 
market predominance.  According to the United States, private transactions in the relevant market 
were nominal and, therefore, this is not a situation in which an investigating authority could be 
expected to find and cite to significant market -determined  activity or other factors that undercut 
the likelihood of price distortion. For the United States, this is a situation in which the government 
is overwhelmingly predominant, and, for all intents and purposes, the sole provider of the input.97 
In addition, the United States submits that there was no evidence in the record concerning private 
prices for standing timber, because although the USDOC requested the GOI and APP/SMG to 
report stumpage fees paid for timber on private land, neither responded with infor mation on such 
fees. The United States disagrees that certain information submitted by the APP/SMG in the 
investigation and referred to by Indonesia constituted evidence of in -country prices for 
stumpage.98 
7.41.   Before we address Indonesia's claim regarding the benchmark, we address certain 
allegations presented by Indonesia pertaining to the USDOC's finding that the GOI provided 
standing timber to producers of coated paper.  
7.42.   Indonesia  allege s that the entirety of the USDOC's benefit determination is affected by a  
fundamental misconception of the nature of the purported subsidy. According to Indonesia, the 
GOI does not sell, provide or supply "stumpage", or timber, to concession holders; rather, it only 
grants land -use concessions. Indonesia submits that the GOI do es not "own" standing timber; the 
standing timber is planted, grown and harvested by plantation owners on timber plantations that 
they (or others) have established at their own cost on government land pursuant to land -use 
concessions. Indonesia submits tha t the fees payable to the GOI  are simply fees for the right to 
use land, in the nature of royalties, and therefore do not constitute " remuneration " for the supply 
of timber.99 On this basis, Indonesia submits that the USDOC improperly determined that the GO I 
was the predominant supplier of standing timber in the market. Indonesia further argues that, 
because the GOI was not providing standing timber, it made no sense for the USDOC to calculate 
the adequacy of remuneration based on purported third -country ben chmarks for standing timber. 
Instead, USDOC should have solicited information to examine benchmarks relating to the per 
hectare cost of a lease for degraded forest land.  
                                                
94 Indonesia's first written submission, para.  42 (referring to Appellate Body Report, US – Countervailing 
Measures (China) , para. 4.101).  
95 Indonesia's response to Panel question Nos. 11, 15, and 17.  
96 United States' first written submission, paras. 43, 59, 61, and 67; response to Panel question No.  23. 
97 United States' first written submission, para s. 52 and 65.  
98 United States' second written submission, paras. 30 -34. 
99 Indonesia's opening statement at the first meeting of the Panel, paras. 18 -22; response to Panel 
question No. 8; and second writte n submission, paras. 17 -18. Indonesia argues that 93% of the timber at 
issue during the POI  was planted, grown , and harvested from a plantation and was not pre -standing, and that 
concession holders must perform a number of services at their own expense. Th ese include forest management 
planning, seed and seedling procurement and planting, maintenance, fire and forest protection, social and 
environmental obligations, and infrastructure development. Indonesia also argues that the GOI does not 
control or influe nce the price at which concession holders sell timber harvested from the plantations they 
operate.  WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  7.43.   The United States argues that the issues Indonesia raises are not relevant to the adeq uacy 
of remuneration under Article 14(d). For the United States, these allegations go to the issue of 
financial contribution, and Indonesia has no basis for asking the Panel to examine them as it has 
not made any claims under Article 1.1(a) of the SCM Agre ement. The United States submits that, 
in any event, Indonesia's argument is contradicted by record evidence and by the GOI's 
representations in the investigation. In particular, the United States contends that the evidence 
shows that independently of whether timber is pre -existing or cultivated, the harvesting company 
must pay species -specific PSDH cash stumpage fees as a royalty for harvesting the timber. Thus, 
the United States asserts, the concessionaire pays stumpage fees on the volume of wood  
harveste d from the land, rather than pay ing to  lease a given acreage ; hence, the royalties are tied 
to stumpage, not land use.100 
7.44.   In our view, Indonesia alleges that the USDOC misread the relevant characteristics of the 
GOI's concession or stumpage programme and, as  a consequence, improperly found that measure 
to be a financial contribution, consisting of the provision of standing timber by the GOI. However, 
whether the USDOC properly found that the GOI provided a good, standing timber, pertains to its 
finding of the  existence of a financial contribution, a question that falls under Article 1.1(a) of the 
SCM Agreement.  While we agree that the nature of the alleged financial contribution will affect 
what methodology is appropriate to determine the adequacy of the remun eration, "financial 
contribution" and "benefit" are two separate elements of the existence of a subsidy .101 Only the 
latter is at issue in this dispute.  
7.45.   Indonesia has not made any claims under Article 1.1(a) of the SCM Agreement challenging 
the USDOC's dete rmination that the GOI measure constituted a financial contribution in the form 
of provision of goods – standing timber.102 In the absence of a claim by Indonesia challenging this 
finding, for purposes of considering Indonesia's benefit claim under Article 1 4(d), we must assume 
that the USDOC properly found that there was a financial contribution. Thus, the only question 
before us is Indonesia's claim under Article 14(d), which concerns solely whether the USDOC 
improperly determined that the GOI's provision o f standing timber conferred a benefit because it 
concluded that there were no market -based prices in Indonesia for stumpage  and as a result 
resorted to an out -of-country benchmark .103 
7.46.   Turning to Indonesia's claims regarding the USDOC's benchmark determinatio n, in the 
investigation at issue here the USDOC explained that, under its Regulations, the preferred 
benchmark was an observed market price for the good in the country under investigation, from a 
private supplier located either within the country or outsid e the country (the latter transaction, in 
the form of an import). The USDOC explained that this was because "such prices generally would 
be expected to reflect most closely the commercial environment of the purchaser under 
investigation".104  
7.47.   In examining wh ether there were such prices for stumpage in Indonesia, the USDOC noted 
that private forests in Indonesia accounted for only 6.27% of the total harvest during the  period of 
investigation  (POI) and that, in the CFS investigation, it had found that private l and accounted for 
only 233,811 hectares of private forest land out of 57 million hectares in Indonesia  (approximately 
0.5%). The GOI did not provide any updated information on the percentage of government 
ownership of forest land in the coated paper invest igation. Based on this evidence, the USDOC 
concluded that:  
                                                
100 United States' second written submission, para. 24 (referring to USDOC Issues and Decision 
Memorandum, (Exhibit US -31), p. 6).  
101 Appellate Body Report, Brazil – Aircraft , para. 157.  
102 Indonesia's panel request, para. 1;  response to Panel question No. 2. See also para. 3.1 of this Panel 
Report.  
103 The parties differ on whether, under the stumpage programme, the GOI retains title to the standing 
timber cultivated by the private companies until the applicable stumpage fees are paid. (Indonesia's opening 
statement at the second meeting of the Panel, para. 14; United States'  second written submission, para. 25). 
In the c ircumstances of this case, we need not decide this question.  
104 The USDOC explained that its Regulations at 19 CFR 351.511(a)(2) set forth the basis for identifying 
benchmarks to determine whether a government good or service is provided for less than adequ ate 
remuneration. These potential benchmarks, the USDOC continued, are listed in hierarchical order of 
preference: (a) market prices from actual transactions within the country under investigation; (b) world market 
prices that would be available to purchas ers in the country under investigation; or (c) an assessment of 
whether the government price is consistent with market principles. (USDOC Issues and Decision Memorandum, 
(Exhibit US -31), pp. 7 -8). WT/DS491/R  
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  [T]he GOI clearly plays a predominant role in the market for standing timber. As such, 
we determine that there are no market -determined stumpage fees in Indonesia upon 
which to base a "first tier" benchmark. Furthermore, because standing timber cannot 
be imported, there are no actual stumpage import prices to consider.105  
7.48.   The USDOC then considered whether there were world market prices for standing timber 
and concluded that there were no ne given that  standing timber cannot be traded across 
borders .106 The USDOC next examined whether the GOI's stumpage fees were established in 
accordance with market principles. It also reached a negative conclusion in this regard.107 The 
USDOC then looked for an appropriat e proxy to determine a market -based stumpage benchmark. 
The USDOC relied on Malaysian log export price data from the WTA exclusive of shipments to 
Indonesia.108 In the CFS investigation, the USDOC had used these same prices as the basis for the 
stumpage benc hmark.109  
7.49.    Other than its allegations that the GOI does not provide standing timber discussed in 
paragraph 7.42 above, Indonesia does not disagree with the factual findings underlying the 
USDOC's conclusion that the GOI played a predominant role in the market for standing timber, i.e. 
Indonesia does not dispute that over 93% of timber harvested in the POI was from GOI land and 
that almost all of the forest land in Indonesia was owned by the GOI. Rather, Indonesia submits 
that the USDOC's conclusion of price distortion was improperly based solely on these factual 
findings. Given the undisputed evidence that the GOI was the predominant supplier of standing 
timber, the question before us is whether , considered as a wh ole, the USDOC's conclusion  – which 
was primarily based on this predominant role of the GOI – is consistent with Article 14(d) , in light 
of the circumstances of the case.  
7.50.   As we have noted above, the more predominant a government's role in the market, the 
more likely this role will result in the distortion of private prices.110 In a situation where, as in the 
present case, the government's market share is 93.73%, the government's position in the market 
approaches  that of a  sole supplier of the goods.111 Even in such a situation, a n investigating 
authority should consider evidence regarding other factors that is on the record , e.g. evidence of 
private prices of the good at issue. However, the extent to which other  evidence carries weight 
depends on how predominant  the government's role is and on how relevant these other factors 
are.112  
7.51.   The United States submits that the USDOC considered , in addition to the GOI's market 
share, certain features of the market for standing timber that rendered it distorted, namely t he 
fact that the GOI administratively set the stumpage fees , the Indonesian ban on log exports, the 
negligible level of log imports and the "aberrationally low " prices of log imports into Indonesia 
relative to the surrounding region.113 For the United States, the USDOC's consideration of these 
factors, in addition to the GOI's predominant market share and control of virtually all harvestable 
land, established that the GOI actually possessed and exercised near -complete control over the 
domestic supply of timber, w hich depressed and distorted domestic market prices.  
                                                
105 USDOC Issues and Decision Memorandum, (Exhibit US -31), p.  8. Indonesia does not take issue with 
the USDOC's finding that there were no actual stumpage import prices to consider.  
106 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 8.  
107 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 9.  
108 In expl aining the use of log prices  as the basis  to determine a market -based stumpage benchmark, 
the USDOC observed that it was generally accepted that the market value of timber is derivative of the value 
of the downstream products. The USDOC explained that " [t]he species, dimension, and growing condition of a 
tree largely determine the downstream products that can be produced from a tree; the value of a standing tree 
is derived from the demand for logs produced from that tree and the demand for logs is, in turn,  derived from 
the demand for the products produced from those logs". (USDOC Issues and Decision Memorandum, (Exhibit 
US-31), p. 9). Because the GOI dominated the Indonesian stumpage market and because the stumpage and 
pulpwood markets were inextricably int ertwined, the USDOC considered it inappropriate to use import prices 
for pulpwood as a starting point to determine whether Indonesian stumpage prices reflect market prices. 
(USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 10).  
109 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 8 -10. 
110 Appellate Body Report, US – Countervailing Measures (China) , para. 4.52 (referring to Appellate 
Body Report,  US – Anti-Dumping and Countervailing Duties (China) , para.  444).  
111 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 455.  
112 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 453.  
113 United States' first written submission, paras. 43 and 58; response to Panel question No s. 9, 12, 
and 23. WT/DS491/R  
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  7.52.   Indonesia responds that the additional features of the market cited by the United States all 
pertain to the issue of market predominance or do not show price distortion, in particular because 
the USDOC' s conclusion that the prices of log imports in Indonesia were "aberrationally low" was 
not based on a comparison of comparable products .114  
7.53.   We find it relevant that i n the context of its benchmark analysis in the present investigation, 
the USDOC examined whether the stumpage fees charged by the GOI were set in accordance with 
market principles . The USDOC observed that the GOI established the stumpage fees as a 
percentage of the so -called "reference price of logs" , which in turn was determined solely on the 
basis of domestic prices for logs  during the POI . The USDOC concluded that the reference price for 
logs could not be considered to be market -based because, through its ownership of virtually all of 
Indonesia's harvestable forests, t he GOI had almost complet e control over access to the timber 
supply and because "the ban on the export of logs ban affect[ed] the price for logs". In addition, 
the percentage applied to the reference price to calculate the stumpage fees was administratively 
set by the GOI. Consequ ently, the USDOC concluded that the stumpage fees charged by the GOI, 
determined as a percentage of a non -market -determined reference price, were not based on 
market principles.115  
7.54.   While the USDOC did not explicitly link these considerations to its conclusi on that there 
were no market -determined stumpage fees in Indonesia, in our view, this consideration of features 
of the market for standing timber in Indonesia went beyond merely the GOI's predominant role in 
the supply of standing timber. We consider that the USDOC's examination in a different part of its 
benefit analysis of the fact that the price at which over 93% of the standing timber in Indonesia 
was commercialized during the POI was not market -determined, inform ed the USDOC's analysis of 
whether in -country prices for stumpage could be used as the benchmark.116 
7.55.   Regarding evidence of private prices, u nlike in the CFS investigation117, in this case the 
USDOC did not refer in its determination to the fact that the GOI and APP/SMG supplied no 
information on pri vate stumpage prices before reaching its determination that private prices for 
stumpage were not market -determined. However, t here is no indication in the record that the GOI 
and APP/SMG presented arguments to the USDOC suggesting that  it use  private price s for 
stumpage in Indonesia as the benchmark, nor that they connected any evidence on the record to 
such arguments . 
7.56.   Nevertheless, Indonesia in this dispute argues that suitable data on private prices for 
standing timber paid to private owners in Indonesia during the POI was before the USDOC. 
Indonesia argues that APP/SMG reported fees it paid to private  land owners for the use of their 
private forest land to plant, grow and harvest acacia, and that the USDOC  gave no weight to this 
evidence.  Indonesia submit s that the USDOC did not pose further questions about this 
arrangement  with private parties , suggesting it was satisfied with APP/SMG's response.118 In 
addition, in reaction to the United States' arguments in this respect, Indonesia submits that the 
informat ion provided by APP/SMG regarding this private arrangement, "answered all of the 
remaining questions USDOC asked" and that the USDOC was required to make its own 
determination irrespective of how APP/SMG had characterized the price paid to individuals owni ng 
private land. Indonesia also  submits that the fact that the arrangement concerned small quantities 
does not mean that prices could be disregarded.119  
7.57.   The United States  submits that neither the GOI nor APP/SMG placed  on the record any data 
concerning priv ate prices for stumpage in Indonesia. Moreover, the United States submits that the 
                                                
114 Indonesia's opening statement at the first meeting of the Panel, paras. 30 -33. 
115 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 9.  
116 Indonesia submits that since the stumpage fees were determined with reference to domestic market 
prices for logs , they were market -driven . (Indonesia's opening statement, para. 22). Indonesia, however, has 
not persuaded us that the USDOC erred in concluding that the stumpage fees were not market -determined in 
light of undisputed evidence that the government set the percentage to be applied to the reference price, 
which was also based on the domestic prices for logs subject to the log export ban.  
117 CFS USDOC Issues and Decision Memorandum, (Exhibit US -43), p. 19.  
118 Indonesia's opening statement at the second meeting of the Panel, para. 16. Indonesia maintains 
that this evidence showed that APP/SMG paid higher fees for acacia harvested from a GOI concession than 
from the private forest. (Indonesia's response to Panel question No. 11, fn 13 (referring to Excerpt from 
APP/SMG Initial Questionnaire Response, pp. 1, 25, 27, 29, and 30 , (Exhibit IDN -25 (BCI)), pp. 27 and 29)).  
119 Indonesia's response to Panel question No. 78.  WT/DS491/R  
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  GOI provided information only on the volume of timber harvested from private forests during the 
POI, and APP/SMG reported only payments to the GOI (PSDH, DR, and PSDA fees).120 The 
Unite d States acknowledges that APP/SMG submitted certain information, but contends that the 
USDOC could not have used it for establishing the benchmark. According to the United States, 
APP/SMG identified only a single arrangement, concerning small q uantities, under which one of its 
cross-owned companies rented land from private owners, on which the affiliate paid the expenses 
by growing and maintaining timber.121  
7.58.   During the investigation, t he USDOC asked the GOI to report the value and volume of 
timbe r harvested on private land, to which the GOI responded that  the only information it collected 
with respect to such timber  was the total volume of timber harvested, i.e.  it did not collect price 
information on timber harvested from private land.122 The USDOC  also asked APP/SMG to report 
fees and charges paid to private owners. Specifically, the USDOC initially requested APP/SMG to 
"provide a description of each type of arrangement for private  timber harvested during the 
[POI]".123 The initial questionnaire to A PP/SMG also contains questions concerning public and 
private concession arrangements to harvest timber, including total quantity harvested, value of 
fees and charges paid to the GOI or the owner. These questions, in our view, seem to seek 
information conce rning, as applicable, harvest of both public timber and private timber.124 In 
response to the first question, APP/SMG submitted certain information concerning a private 
arrangement with individuals owning private land around the perimeter of its plantations,  in the 
context of which one of its cross -owned forestry companies – PT. Wirakarya Sakti  (WKS) – "pa[id] 
the private owners a fee of 20,000 IDR per ton of acacia harvested".125 In response to the 
subsequent questions, APP/SMG reported information concerning the stumpage fees it paid to the 
GOI during the POI, and did not mention or report any fees paid by WKS for private timber 
harvested during the POI.126  
7.59.   In light of these answers, we agree that there was some information regarding prices for 
timber harvested  on land owned by individuals not related to the GOI before the USDOC. However, 
APP/SMG's own description of the data concerning these payments suggests that APP/SMG itself 
                                                
120 United States' response to Panel question Nos. 10 -11. 
121 The United States questions the value of th at information because  it: (a)  was based on "a small 
quantity"; (b) was not reflected in the stumpage payment records APP/SMG provided to the USDOC; (c) was 
not substantiated by any contract or other documentation; (d) was not confirmed to be arm's -length;  and (e) 
was based on an atypical type of commercial activity that was arranged merely because the private individual's 
land abutted the cross -owned company 's plantation . The United States adds that APP/SMG did not characterize 
the payment as a "stumpage f ee", but instead stated that it was a "pure rental payment" and provided 
conflicting information regarding whether it was the private individuals or the APP/SMG affiliate involved (WKS) 
that grew the timber. (United States' second written submission, paras . 30-34). 
122 GOI Initial Questionnaire Response, (Exhibit US -32), pp. 17 -18. 
123 APP/SMG Initial Questionnaire Response, (Exhibit US -91 (BCI)), p. 27, appendix 2, question (c). 
(emphasis added)  
124 Question (d) at pp. 27 and 28 asked APP/SMG the following:  
For each concession arrangement for public timber held by your company or a cross -owned 
company, and each arrangement to harvest private timber, please provide the following 
information for the POI:  
1. For each species, the stumpage fee and the total quantit y harvested and the value of fees and 
charges paid to the administering authority or owner.  
(APP/SMG Initial Questionnaire Response, (Exhibit US -91 (BCI)), pp. 27 -28)  
See also question 2 at p. 30: "For each species harvested under the concession arrangem ents or private 
arrangements , please provide a breakdown of the volume and the value of fees and charges paid to the 
administering authority or owner for logs that went to: a. pulp and paper mills". ( APP/SMG Initial Questionnaire 
Response, (Exhibit US -91 (BCI)), p. 30). 
125 Specifically, APP/SMG responded:  
TK, IK, PD, and the cross -owned forestry companies generally did not harvest timber from 
private lands during the POI. WKS purchased a small quantity of logs from private individuals in 
villages from the J ambi region, who individually grow trees on their private land. These 
individuals own private land around the perimeter of the WKS plantations. During 2008, these 
purchases represented [[***]] of total AA and WKS sales of [[***]]. The arrangement with 
these private owners is that WKS plants the acacia, incurs all the expenses to maintain the trees, 
and then incurs all the costs to harvest the trees. WKS pays the private owners a fee of 20,000 
IDR per ton of acacia harvested. Since WKS incurs all the expense , this fee is a pure rental 
payment for the use of the land to grow the trees.  
(APP/SMG Initial Questionnaire Response, (Exhibit US -91 (BCI)), p. 27 , cited in Indonesia's response to Panel 
question 78(a) ) 
126 APP/SMG Initial Questionnaire Response, (Exhibit  US-91 (BCI)), pp. 28 -34. WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  did not consider that they were representative of the private stumpage market – APP/SMG 
indicated that "generally [it] did not harvest timber from private lands during the POI" and that 
the payments corresponded to a small quantity of logs – and did not refer to these payments when 
subsequently asked to report all the stumpage fees it ha d paid during the POI. This being the case , 
we consider that there was no meaningful information concerning private prices for standing 
timber before the USDOC .  
7.60.   Indonesia suggests that the USDOC should have sought more evidence from other sources, 
e.g. ot her companies, in order to assess whether the GOI possessed and exercised market power 
so as to distort private stumpage prices.  Indonesia submits that the USDOC structured its entire 
investigation around the mistaken premise that the GOI was a provider of  standing timber because 
the USDOC was blinded by the GOI's ownership of the forests. Indonesia argues that had the 
USDOC undertaken a good faith analysis based on the facts before it, the USDOC's investigative 
path should have been altogether different.127 The United States submits that the SCM Agreement 
does not obligate investigating authorities to collect data from non -interested parties, and that the 
USDOC complied with its obligations by asking parties participating in the investigation to provide 
such information.128 We are not convinced that Article 14(d) requires the types of investigative 
actions Indonesia proposes. In our view, given the near absence of a private market for standing 
timber in Indonesia, and the fact that APP/SMG was the main producer,  and the company selected 
for examination, it was reasonable for the USDOC to limit its request s for information on private 
prices to the GOI and APP/SMG, and not to seek to obtain such information from sources not 
participating in the investigation.  
7.61.   In the circumstances of this case, in particular the characteristics of the market for standing 
timber in Indonesia and the evidence before the USDOC and which has been placed before the 
Panel , in our view, an unbiased and objective investigating authority coul d have reached the 
conclusion – as the USDOC did – that there were no market -determined in -country private prices 
for stumpage that could be used for benchmarking purposes. In particular, th e fact that the GOI 
was the predominant supplier of timber harvest ed during the POI – with over 93% of the market – 
made it likely that private prices would be distorted  and that owners of private land would align 
their prices for the harvesting of standing timber to those established by the GOI, particularly in 
light of  the USDOC's conclusion that the GOI fees were not market -determined.  In this respect, we 
consider that the position of the government in the market of standing timber was much closer to 
that of a sole supplier than to that of a significant supplier of thi s good. In our view, in such a 
situation, other evidence would carry limited weight. In addition, we have concluded that there 
was not meaningful evidence on the record of private prices for stumpage in Indonesia. Moreover,  
as noted above129, the record does  not indicate that the parties presented arguments to the 
USDOC suggesting that it use private stumpage prices as the benchmark, or that they submitted 
evidence to that effect. In light of the foregoing, we consider that the USDOC did not err in 
concluding  that the GOI's involvement in the market for standing timber resulted in an absence of 
market -determined private stumpage fees in Indonesia upon which to base the benchmark.130  
7.62.   For the foregoing reasons, we conclude that Indonesia has failed to establish t hat the 
USDOC act ed inconsistently with Article 14(d) of the SCM Agreement by not using domestic prices 
for standing timber in Indonesia as the basis for calculating the benchmark.  
                                                
127 Indonesia's response to Panel question Nos. 10 -11. 
128 United States' response to Panel question No. 11.  
129 Para. 7.55. 
130 Indonesia relies on the Appellate Body Report, US – Countervaili ng Measures (China) , for the 
proposition that the USDOC erred by not having explained "whether and how the mentioned market shares 
held by … [the GOI] actually resulted in the government's possession and exercise of market power, such that 
the price distor tion occurred in a way that private suppliers [of standing timber] aligned their prices with those 
of the government -provided goods". (Indonesia's first written submission, para. 42 (quoting Appellate Body 
Report, US – Countervailing Measures (China) , para . 4.101)). Th e US – Countervailing Measures (China)  
dispute involved the provision of inputs by state -owned enterprises (SOEs). In this context, the Appellate Body 
found that the USDOC failed to explain "whether and how the mentioned market shares held by SOEs actually 
resulted in the government's possession and exercise of market power, such that the price distortion occurred 
in a way that private suppliers aligned their prices with those of the government -provided goods". Thus, the 
Appellate Body dealt wi th a particular situation in which goods were provided by SOEs, requiring a 
demonstration that "market shares held by SOEs actually resulted in the government's possession and exercise 
of market power"  (emphasis added).  We do not understand the Appellate B ody to have concluded that a 
similar demonstration is required in other circumstances  such as where the government itself is a supplier of 
the goods at issue .  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  7.5.2.4   The USDOC's finding that there were no market prices for logs in Indonesia 
upon which to base the benchmark  
7.63.   Indonesia claims that the USDOC's determination of benefit with respect to the log export 
ban suffers from the same WTO -inconsistency as the benefit determination for the provision of 
standing timber: the USDOC refused to u se market prices in Indonesia as a result of a per se  
determination of price distortion based solely on the GOI's predominant market share of timber 
harvested from public forests.131 Indonesia submits that the USDOC had information on in -country 
prices for l ogs which it chose not to examine. In this regard, Indonesia argues that APP/SMG 
placed on the record prices of some of its affiliates' purchases and sales of timber from affiliated 
and unaffiliated parties, and the names and addresses of APP/SMG's  unaffil iated log suppliers.132  
7.64.   In addition, Indonesia takes issue with the USDOC's findings regarding the purpose and 
effects of the log export ban. Indonesia submits that the USDOC improperly found that the 
purpose of the log export ban was to develop downstream industries and that this meant that 
forestry/harvesting companies were directed to provide inputs to pulp and paper companies at low 
or supressed prices.133 Indonesia submits that the ban does not create oversupply or result in low 
prices for inputs used by Indonesian paper producers.134 Indonesia submits that the ban was 
created to confront the growing problem of deforestation and illegal logging in Indonesia.135 
Indonesia adds that the export of the downstream products used to make paper – pulp, chipwood, 
and w ood chips – was not prohibited.136 Therefore, if the purpose of the ban was to benefit paper 
producers, it made no sense to allow these downstream products to be exported.137 Indonesia, in 
addition, challenges the relevance of the evidence the USDOC, in the CF S investigation, relied 
upon in its findings of the purpose and effects of the ban.138 Indonesia submits that, even if the 
effects of the ban were an increased domestic supply of logs, potentially benefitting downstream 
industries in Indonesia, the panel in US – Export Restraints  and subsequent panels found that 
export restraints, including export bans , do not constitute countervailable subsidies within the 
meaning of the SCM Agreement.139 In response to the United States' arguments in this respect, 
Indonesia a rgues that the USDOC's discussion of the purpose of the log export ban was not limited 
                                                
131 Indonesia's first written submission, para. 45 (referring to Excerpt from USDOC Issues and Dec ision 
Memorandum, pp. 1 -20 and 48 -56, (Exhibit IDN -10), p. 13); opening statement at the first meeting of the 
Panel, para. 4.  
132 Indonesia's response to Panel question Nos. 11 , 15 and 17 (referring to Exhibit D -8 to APP/SMG 
Questionnaire Response in Anti -Dumping investigation , (Exhibit IDN -27 (BCI));  and Exhibit SD3 -9 to APP/SMG 
Questionnaire Response in Anti -Dumping investigation , (Exhibit  IDN-28 (BCI))) ; closing statement at the first 
meeting of the Panel, para. 3.  
133 Indonesia's first written submission, p ara. 44 (referring to Excerpt from USDOC Issues and Decision 
Memorandum, pp. 1 -20 and 48 -56, (Exhibit IDN -10), p. 13; and Excerpt from CFS USDOC Issues and Decision 
Memorandum, pp. 1, 27 -28, and 40 -46, (Exhibit IDN -12), p. 27. Indonesia also takes issue wi th the fact that 
the USDOC's discussion of the purpose of the ban  in the CFS investigation refers to  a WTO trade policy review, 
which Indonesia considers cannot properly serve as a statement of policy.   
134 Indonesia's opening statement  at the first meeting of the Panel , para. 25.  
135 Indonesia's first written submission, para. 4 4 (referring to Regulation of Minister of Trade of the 
Republic of Indonesia, No. 20/M -DAG/PER/5/2008 , (Exhibit IDN -13), Article 3).  
136 Indonesia indicates that the logs that a forestry company harvests to sell to a pulp mill are called 
"chip wood" (or "chipwood"), and that the 2001 Joint Decree imposing the ban was amended in 2003 to allow 
chipwood to be exported. Indonesia also submits that the ban never applied to wood chips or pulp , which 
together with chipwood, constitute the inputs for making paper. (Indonesia's f irst written submission, 
paras.  11, 13, 44,  and 79; opening statement at the first meeting of the Panel, paras. 25, 38 -39, and 52; 
response to Panel question Nos. 21(a), 73( a), and 80; second written submission, paras. 22, 28 -29, and 47; 
and opening statement at the second meeting of the Panel, paras. 2, 21, and 33).  
137 Indonesia submits that if the log export ban had distorted the price of wood used as an input to 
make paper,  sellers of logs were free to turn that wood into chips (or pulp) and export that product. 
(Indonesia's opening statement at the second meeting of the Panel, para. 23).  
138 Indonesia's opening statement at the first meeting of the Panel , paras. 38 -40. Indone sia takes issue 
with the fact that , in its view,  the USDOC relied on studies that concerned another industry, pertained to a 
period preceding the POI, and/or emanate d from the domestic industry and are not on the record of this 
proceeding.   
139 Indonesia's f irst written submission, para. 44 (quoting Panel Reports, US – Export Restraints , 
para. 8.75; China – GOES , para. 7.90; and US – Countervailing Measures (China) , para. 7.401); response to 
Panel question No. 6.  WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  to the financial contribution issue but extended to its benefit analysis because the USDOC 
concluded that, due to the ban, APP/SMG purchased inputs at below -market price s.140 
7.65.   The United States submits that the USDOC's decision to resort to an out -of-country 
benchmark was based on record evidence of the GOI's predominance as a supplier of logs and 
owner of harvestable forests. In addition, the United States submits that the empirical evidence on 
the record, in particular Malaysian export prices to Indonesia and the surrounding region, 
confirmed that Indonesian domestic log prices were, in fact, distorted because shipments of logs to 
Indonesia were at prices lower than shipmen ts to other destinations in the region.  The 
United  States submits that the information referred to by Indonesia regarding prices for logs in 
Indonesia was submitted by APP/SMG in the context of the parallel anti -dumping investigation 
and, therefore was not  on the record of the countervailing duty investigation. In addition, the 
United States requests that the Panel find that Indonesia's arguments concerning the purpose and 
the effects of the export ban are outside its term of reference, as they do not relat e to issues 
under Article 14(d), but rather refer to issues  concerning the existence of a financial contribution 
under Article 1.1(a)  – and Indonesia's panel request sets out no claim under Article 1.1(a) .141 The 
United States nevertheless responds to Indone sia's arguments that the log export ban does not 
constitute a "financial contribution" and submits that the USDOC correctly determined  that the 
export ban constituted a countervailable subsidy.142 
7.66.   As indicated above143, in its final determination, the USDOC re lied on its findings in the CFS 
investigation and found as it had in the earlier case, that the prohibition on log exports 
"constituted a financial contribution … through the GOI's entrustment and direction of 
forest/harvesting companies to provide goods ( i.e. logs and chipwood)" to companies in the pulp 
and paper producing industries.  The USDOC indicated that it would assess whether the log export 
ban conferred a benefit by comparing the price paid by APP/SMG for the logs it purchased during 
the POI from u naffiliated logging companies to a benchmark price  based on world market prices . 
The USDOC used , as the basis for its  benchmark , the same data  that it had used in determin ing 
the benefit conferred by the stumpage programme – that is, Malaysian export price s for acacia 
pulpwood and mixed tropical hardwood from the WTA, exclusive of shipments to Indonesia.144 
While the final determination does not lay out the USDOC's reasons for not using in -country prices 
for logs, the preliminary determination sets forth the reasons for its decision in this respect.145 In 
the preliminary determination, the USDOC explained its conclusion that there were no meaningful 
or usable private domestic prices for logs or actual import prices to evaluate for purposes of 
establishing the be nchmark:  
In the instant case, there are no meaningful or usable private domestic prices for logs 
or actual import prices to evaluate for purposes of identifying a "first tier" benchmark 
(i.e., market prices from actual transactions within the country under  investigation). 
As discussed above, the GOI did not place any updated information on the record 
concerning the fact that the GOI owns 99 percent of the harvestable forest land in 
Indonesia. … Furthermore, the GOI reported that the harvest from privately o wned 
forest lands is 2,007,156 m3 out of a total of 31,984,443 m3 (or only 6.27 percent) of 
the total harvest. … We also note that all logs, including logs harvested from private 
land, are subject to the export ban . Therefore, because of the GOI's predomin ant role 
in the Indonesian market for logs, we find that it is not possible to determine a private 
domestic log benchmark price in Indonesia … for the GOI's log export ban. 
Accordingly, Indonesian import prices likewise would not reflect market prices.146  
                                                
140 Indonesia's response to Panel question No. 6  (referring to Excerpt from USDOC Issues and Decision 
Memorandum, pp. 1 -20 and 48 -56, (Exhibit IDN -10), p. 12).  
141 See also para. 7.12 above, concerning the United States' request for a preliminary ruling in this  
respect.  
142 United States' first written submission, paras. 84 -91. 
143 Para. 7.26. 
144 USDOC, Issues and Decision Memorandum, (Exhibit US -31), p. 13.  
145 In response to a question from the Panel,  the United States indicated that the basis for using world 
market prices rather than an in -country benchmark is contained in the pre liminary determination. 
(United  States' response to Panel question No. 70). We do not understand Indonesia to dispute that the 
preliminary determination provided  the rationale for the USDOC's decision not to resort to in -country prices in 
the final determination. (Indonesia's comments to United States' response to Panel question No. 70).  
146 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhib ited twice) ), p. 10769.  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  7.67.   With respect to Indonesia's allegation that the USDOC based its conclusion that there were 
no market -based prices for logs in Indonesia solely on the GOI's market share and ownership of 
harvestable lands in Indonesia, we note that, in addition to these cons iderations, the USDOC 
observed that "all logs, including logs harvested from private land, [were] subject to the export 
ban". This consideration clearly forms part of the basis for the USDOC's conclusion that it was not 
possible to determine a private dome stic log benchmark price in Indonesia.  
7.68.   It is undisputed that the scope of the log export ban covered all logs produced within 
Indonesia, i.e. those harvested from private land and those harvested from public land.147 As we 
have noted before, the USDOC determ ined that the log export ban constituted a financial 
contribution because, by means of the ban, the GOI entrusted and directed domestic log suppliers 
to provide  logs and chipwood .148 In the CFS investigation, the USDOC based this conclusion on the 
provision of logs and chipwood  at "low er" or "suppressed" prices to pulp and paper  producing 
industries.149 Contrary to Indonesia's suggestion150, the USDOC did not , either in the CFS or in the 
coated paper investigation,  establish that a benefit was conferred on the ba sis that the prices of 
the logs and chipwood provided were "lower"  or "suppressed" . As we have noted above, the 
USDOC established that a benefit was conferred by comparing the price paid by APP/SMG for the 
logs and chipwood it purchased during the POI from  unaffiliated logging companies to an (out-of-
country ) benchmark.  
7.69.   In our view, it logically followed from the manner in which the USDOC defined the measure 
at issue that all log sales in Indonesia constituted the financial contribution (government provisio n 
of goods) that needed to be tested against a market -based benchmark. In other words, given the 
financial contribution at issue, there logically remained no Indonesian "private" log market 
unaffected by the financial contribution. We recall that in cases where the government is the sole 
supplier of the good at issue or where it administratively sets all the prices, in -country prices 
would not provide an appropriate benchmark and therefore Article 14(d) does not require an 
investigating authority to rely on  in-country prices in such situations .151 Logically, a similar 
reasoning applies in the case of an export ban which affects all domestic transactions. 
Consequently, the nature of the financial contribution defined by the USDOC implied that there 
were no dome stic private transactions that could be used as the benchmark.  
7.70.   This meant that there were no log prices in Indonesia outside of the scope of the log export 
ban that could have been used for benchmarking purposes. While Indonesia considers that the 
USDOC w as required to determine whether domestic price for logs were actually distorted as a 
consequence of the export ban152, accepting Indonesia's position would lead to an assessment 
whether the price charged by the government – that is, the remuneration itself – was distorted. 
We do not see how that assessment could be meaningful for determining the adequacy of that 
remuneration, which requires a comparison of the government price, i.e. the level of remuneration 
in question, with a market -based price.   
7.71.   Moreover,  we understand Indonesia to argue that the USDOC acted inconsistently with 
Article 14(d) by improperly determining that a benefit was conferred because prices were "low er" 
or "suppressed" and that these conclusions were not sufficient to establish that dom estic prices 
were distorted. It is in this context that Indonesia makes arguments related to the purpose and 
effects of the log export ban, the fact that it did not extend to downstream products, and the fact 
                                                
147 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice) ), p. 10769; 
Part Two of GOI First Supplemental Questionnaire Response , (Exhibit US -34 (BCI)), appendix 1, pp. 2 and 5. 
We note that in the CFS investigation, the USDOC considered that the complete ban on the export of logs had 
been in place since 1985, with the exception of a short period of time from 1998 to 2001. (CFS USDOC Issues 
and Decision Memorandum, (Exhibit US -43), p. 29).  
148 USDOC Issues  and Decision Memorandum, (Exhibit US -31), p. 13.  
149 USDOC Issu es and Decision Memorandum, (Exhibit US -31), p p. 12-13 (referring to CFS USDOC 
Issues and Decision Memorandum, (Exhibit US -43), p. 27 ). See also CFS USDOC Issues and Decision 
Memorandum, (Exhibi t US-43), p. 32. 
150 Indonesia's response to Panel q uestion No. 6; opening statement at the second meeting of the Panel, 
para. 23.  
151 Panel Report, US – Softwood Lumber IV , para. 7.57  (quoted in Appellate Body Report, US – 
Softwood Lumber IV , para. 98 ). 
152 Indonesia submits that the mere existence of a ban does not necessarily affect prices; whether a 
measure distorts prices for all sales of the good concerned (i.e. impacts them) is precisely what must be 
determined based on an examination of the evidence rathe r than a per se  determination. (Indonesia's response 
to Panel question No. 73(a)).  WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  that, in its view, prior disputes established t hat export restraints cannot constitute countervailable 
subsidies within the meaning of the SCM Agreement.  
7.72.   We recall that the issue of the effects of the log export ban was briefly discussed by the 
USDOC in the investigation at issue here, in the context of its financial contribution analysis. The 
USDOC referred to its prior findings in the CFS investigation that one purpose of the log export ban 
was to develop downstream industries, which was why it had determined that the GOI entrusted 
and directed domes tic log suppliers to sell logs and chipwood at suppressed prices to domestic 
consumers.153 In the CFS investigation, the USDOC had found that:  
[T]he totality of the record evidence refutes the GOI's claim that the log export ban is 
used to protect forest re sources and prevent illegal logging, and that it is not 
"entrusting or directing" (or inducing) log suppliers to provide a financial contribution 
to the wood processing industries. To the contrary, these studies show that the GOI 
imposed or maintained the log export ban in order to provide lower priced inputs ( i.e., 
logs and chipwood) to the industries that consume those inputs, which actually led to 
increased deforestation and greater illegal logging. Furthermore, these studies show 
that the pulp and paper  industries are among the few beneficiaries of this indirect 
subsidy. Accordingly, we find that the GOI used its authority to impose a log export 
ban that directed these logs suppliers, under threat of criminal sanctions, to provide 
logs and chipwood for l ess than adequate remuneration to downstream wood 
processing industries. These industries include the pulp and paper industry that 
produces subject merchandise. As such, the log export ban provides a financial 
contribution in accordance with section 771(5) (D)(iii) of the Act.154  
7.73.   In our view, Indonesia's allegations that the USDOC erred in finding that the log export ban 
had an impact on domestic prices for logs by suppressing them effectively challenges the USDOC's 
finding that, by banning the export of logs , the GOI entrusted and directed domestic log suppliers 
to sell lower -priced logs and chipwood to paper producers. We recognize that, because the benefit 
conferred by a financial contribution is determined based on the nature of the financial 
contribution,  an improper determination of the financial contribution would impact the 
methodology used to calculate the benefit. However, in the present dispute, Indonesia has not 
advanced any claims against the USDOC's financial contribution determination in respect to the log 
export ban under Article 1.1 (a) of the SCM Agreement. As a consequence, we decline to address 
Indonesia's arguments in this respect as they relate to an issue that is not properly before us. In 
sum, we find that Indonesia's arguments regarding t he purpose and effects of the log export ban 
are not relevant to its claim under Article 14(d) concerning the determination of the benchmark. 
We are required to consider Indonesia's challenge to the USDOC's benefit determination on the 
premise that the USD OC properly found that the GOI's log export ban constituted a financial 
contribution in the form of entrustment and direction.  Consequently, we express no views on the 
USDOC's finding that the log export ban constituted a financial contribution in the form  of 
entrustment or direction of domestic log suppliers to sell logs to domestic consumers.  
7.74.   In addition, Indonesia argues that if the log export ban does not constitute a financial 
contribution neither can it bestow or "confer" a benefit under Article 14(d ) of the SCM Agreement. 
For Indonesia, there must be a "causal link "between the "provision of goods … by a government" 
and any "benefit" or, otherwise, no benefit is "conferred by" a financial contribution by the GOI. 
While we agree that there is a connec tion between the financial contribution and the manner the 
investigating authority determines the benefit, without a claim challenging the financial 
contribution, it is not within our jurisdiction to address this aspect of the USDOC's 
determination.155 There is no support in WTO jurisprudence for the proposition that  a "causal link" 
between the financial contribution and the benefit must be found, such that, even in the absence 
of a specific claim under Article 1.1(a) of the SCM Agreement, a claim challenging  a benefit 
determination allows a panel to also resolve issues related to the existence of a financial 
contribution .  
7.75.   Similarly, we consider that Indonesia's arguments regarding the product scope of the ban 
during the POI, i.e. whether the export of certai n downstream products was also prohibited , are 
                                                
153 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 13.  
154 CFS USDOC Issues and Decision Memorandum, (Exhibit US -43), p. 32. (emphasis original)  
155 Indonesia's respon se to Panel question No. 6.  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  not relevant to our assessment. As indicated above , Indonesia submits  that during the POI the log 
export ban did not apply to certain "downstream products" – namely, chipwood, wood chips and 
pulp – which in In donesia's view means that the log export ban did not distort domestic prices for 
logs. Indonesia submits that the 2001 GOI Joint Decree of the Ministry of Forestry and the Ministry 
of Industry and Trade of Indonesia was amended in 2003 to exclude the expor t of chipwood , and 
that the log export ban never prohibited exports of wood chips and pulp.156  
7.76.   We understand Indonesia to argue that, because the export of certain downstream products 
was allowed during the POI, the log export ban could not have had the dis tortive effects on 
domestic prices that the USDOC found  it had . We recall that the USDOC found that by means of 
the export ban, the GOI supplied logs and chipwood  through government -entrusted or -directed 
companies. Therefore, Indonesia's allegation that t he ban did not apply to chipwood effectively 
challenges the USDOC's financial contribution determination – particularly the USDOC's 
determination of the goods that were provided by the GOI – which  is matter regulated by 
Article  1.1 of the SCM Agreement . We recall that Indonesia has not challenged the USDOC's 
financial contribution determination with respect to the log export ban.  Moreover, in our view, 
even if  the export of wood chips and pulp had been allowed during the POI , this would not have 
made the us e of domestic log prices appropriate  as this would not change the fact that the export 
ban applied to all logs produced in Indonesia and, for this reason, the use of domestic log prices 
would have rendered the comparison required under Article 14(d) circul ar. In other words , we 
consider that, even if the export ban had had a lesser  impact on domestic log prices given the 
absence of a prohibition to export certain downstream products, domestic log prices could not 
have been used as the benchmark, as they con stitute the prices at whi ch the GOI, through 
government -entrusted or -directed entities, provided the good s at issue.   
7.77.   Moreover, Indonesia's arguments regarding the findings of the panel in US – Export 
Restraints  are not relevant to the issue of the determ ination of the benchmark because those 
findings were limited to the question of whether an export restraint (as defined by the complainant 
in that case) constituted the provision of a good by entrustment or directio n within the meaning of 
Article  1.1(a)(iv ) of the SCM Agreement and, thus, a financial contribution.  Likewise, the findings 
of the panel s in China – GOES  and US – Countervailing Measures (China)  cited by Indonesia 
pertain to the issue of financial contribution.157 As Indonesia has not advanced any claim under 
Article 1.1(a), the decisions of these previous panels are not relevant to the issues before us in the 
present dispute.  We recall that since the issue is not before us, we express no views as to whether 
the USDOC's finding that the export ban c onstituted a financial contribution was consistent with 
Article 1.1(a) of the SCM Agreement. Thus, as discussed above, we must, in our analysis of 
Indonesia's claims under Article 14(d), assume that the export ban constitutes a financial 
contribution in th e form of the provision of goods, and must therefore analyse the consistency of 
the USDOC's determination on that basis.  
7.78.   The parties disagree as to whether the USDOC had information on private prices of logs that 
it should have used for determining the be nchmark. It is clear to us that there was ample evidence 
of private domestic and import log prices on the record. Indeed, the USDOC determined the 
benefit conferred by the log export ban by comparing the price of private log transactions between 
APP/SMG an d unaffiliated private entities to the WTA data concerning Malaysian export prices. 
Moreover, the record before the Panel suggests that most, if not all, log sales in Indonesia were 
between private entities. However, as indicated above, the fact that all l ogs in Indonesia were 
subject to the export ban rendered these domestic log prices un suitable  for benchmarking 
purposes.  
7.79.   Indonesia also faults the USDOC for having rejected log import prices in its benefit analysis . 
Indonesia submits that absent evidence t hat the import price data does not reflect an arm's length 
transaction, the transaction reflects the price at which an out -of-country supplier is willing to sell 
the good in question to a purchaser in the country . In Indonesia's view, the very fact that im ports 
took place, even in small volumes, confirms that the Indonesian prices were not distorted.158 
According to the United States, where government intervention has distorted the prices in a 
                                                
156 See para. 7.64 and fn 136. 
157 Panel Reports, US – Export Restraints , para. 8.21; China – GOES , para. 7.90; and US – 
Countervailing Meas ures (China) , para. 7.401 .  
158 Indonesia's opening statement at the first meeting of the Panel, para. 35; opening statement at the 
second meeting of the Panel, para. 19;  and response to Panel question No. 73.  WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  domestic market, the distortion will affect any private sales, tha t is, both private sales of 
domestically -produced logs and imported logs.159  
7.80.   In our view, import prices could also be used as the basis for establish ing an  in-country 
benchmark  under Article 14(d) . The USDOC assessed whether import prices into Indonesia cou ld 
be used as the basis for the benchmark calculation. In its consideration of whether in -country 
prices could be used as the benchmark, the USDOC concluded that Indonesian import prices would 
not reflect market prices given the GOI's predominant role in t he market, i.e. the fact that nearly 
all timber was harvested on public lands, that the GOI owned almost the totality of the harvestable 
forest land in Indonesia, and the fact that all logs, harvested from private and public lands, were 
subject to the expo rt ban.160 In the same vein, in its assessment of the benchmarks based on 
Malaysian export prices, the USDOC considered that shipments to Indonesia were an inappropriate 
source for a benchmark as they were distorted.161 It therefore excluded such shipments fro m the 
Malaysian export data that it used as benchmark.162 The USDOC explained that, in the case at 
issue, only two undisputed factors were necessary to demonstrate overwhelmingly the 
predominance of the GOI in the Indonesia timber market: that over 93% of th e harvest volume 
during the POI was from government -owned land, and imports were less than 1% of the timber 
produced domestically. The USDOC considered that foreign shippers would have to match the 
prices of the overwhelming majority of transactions distor ted through government action. The 
USDOC added that this conclusion was "borne out by the data on the record, demonstrating a 
significant price difference between Malaysian exports of acacia to Indonesia and Malaysian 
exports of acacia to other countries i n the surrounding region".163 In this respect, the USDOC took 
the view that export data before it revealed a significant difference between import prices into 
Indonesia and the prices of exports from Malaysia to other countries in the surrounding region.164 
In particular, the USDOC considered that "Indonesian domestic prices [were]  in fact distorted, and 
… trading [took]  place at prices significantly lower than those found in the surrounding region for 
the identical timber."165 
7.81.   As just noted,  the USDOC based its decision not to use import prices on the fact that the 
GOI dominated the market for logs  and the fact that the log export ban applied to all logs in 
Indonesia . We consider that the fact that the log export ban applied to all logs in Indonesia and 
the fact that, as noted by the USDOC, import quantities were minimal (less than 1%) relative to 
domestic production made it likely that import prices would have to match the government prices 
and consequently, would not be usable as benchmark . This  therefore provid ed a reasonable basis 
for the USDOC's decision .166 Consequently, i n our view, the analysis conducted by the USDOC as 
described above was sufficient to conclude that import prices of logs were also distorted.  
7.82.   Finally, we note that Indonesia asserts that the WTA data does not reflect sales of logs that 
would be used to make pulp, that is, the logs and log prices relevant to the underlying 
investigation, but rather refers to a different type of product (furniture wood with a very high price 
                                                
159 United States' response to Panel question No.  70(a).  
160 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice) ), p. 10769 
(emphasis added). See para. 7.66 above.  
161 As indicated above, para. 7.27 and 7.66, the USDOC relied on an out -of-country benchmark to 
determine the benefit conferred by the log export ban. The USDOC used as the basis for determining the 
benchmark Malaysian export prices for acacia pulpwood and mixed tropical hardwood, exclusive of shipments 
to Indonesia (i.e. log imports to Indonesia were excluded).  
162 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 28, 32, 34, 36, and 40.  
163 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 31 -32. 
164 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 27 and 32. The USDOC considered 
that, given the distortion in import prices into Indonesia, "it should not be surprising that figures based on 
shipments to Indonesia are obviously lower than price s for goods shipped elsewhere, such as the WTA data, 
based on Malaysian shipments to all destinations besides Indonesia, indicates". (USDOC Issues and Decision 
Memorandum, (Exhibit US -31), p. 40).  
165 USDOC Issues and Decision Memorandum, (Exhibit US -31), p.  27. 
166 We note that in the US – Anti-Dumping and Countervailing Duties (China) dispute, in which the 
government's market share amounted to 96.1%, the Appellate Body, in its assessment whether the USDOC 
acted inconsistently with Article 14(d), appears to ha ve given some positive consideration to the fact the 
USDOC had considered the role of imports in the market, noting that the USDOC had concluded that import 
quantities (3% of the market) were small relative to domestic production. (Appellate Body Report, US – 
Anti-Dumping and Countervailing Duties (China) , para. 455).  WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  instead of pulp wood ).167 The United States rejects Indonesia's assertion that the out -of-country 
benchmark selected by the USD OC based on WTA data referred to a different type of product.168 
Given that the USDOC used evidence regarding actual price difference between shipments i nto 
Indonesia and other markets merely to corroborate its conclusion  that import prices did not 
constitute an appropriate benchmark , we need not address Indonesia's arguments that the 
products were not comparable.  
7.83.   In light of the foregoing, we find that an  unbiased and objective investigating authority 
could have concluded, as the USDOC did, that import prices of logs did not constitute an 
appropriate benchmark.  
7.84.   For the foregoing reasons, we conclude that Indonesia failed to establish that the USDOC 
acted inconsistently with Article 14(d) by declining to use private prices for logs in Indonesia as 
the basis for calculating the benchmark.  
7.5.2.5   Overall conclusion concerning Indonesia's claims under Article 14(d) of the SCM 
Agreement  
7.85.   In light of the foregoing, we find that Indonesia has failed to establish that the USDOC acted 
inconsistently with Article 14(d) of the SCM Agreement by not using private prices for standing  
timber in Indonesia as the basis for establishing the benchmark for the provision of standing 
timber.  
7.86.   In addition, we find that Indonesia has failed to establish that the USDOC acted 
inconsistently with Article 14(d) of the SCM Agreement by not using private prices for logs in 
Indonesia as the basis for establishing the benchmark for the log export  ban.  
7.5.3   Claim under Article 12.7 of the SCM Agreement ("facts available") with respect  to 
the debt buy -back  
7.5.3.1   Introduction  
7.87.   Indonesia challenges as inconsistent with Article 12.7 of the SCM Agreement the USDOC's 
finding that the GOI provided a subsidy to APP/ SMG in the form of a debt buy -back. In particular, 
Indonesia challenges the USDOC's finding that Orleans was affiliated with APP/SMG, which the 
USDOC made on the basis of an adverse inference after concluding that the GOI had failed to 
cooperate in providi ng necessary information requested by the USDOC.169  
7.88.   Indonesia's claim pertains to the USDOC's determination that the sale of APP/SMG's debt to 
Orleans in 2004 by the Indonesia Bank Restructuring Agency (IBRA) constituted a subsidy in the 
form of debt forgiv eness. Of relevance to Indonesia's claim, in the aftermath of the late 1990s 
financial crisis, the GOI took ownership of various banks, including their non -performing assets  
(loans and equity ).170 In 1998, to manage the restructuring of the Indonesian financ ial sector, the 
GOI created IBRA. IBRA managed several programmes to dispose of the assets that had been 
acquired by the GOI.171 One of those programmes was the Strategic Asset Sales Program (PPAS), 
a special programme created in 2003 to sell assets of mixed  packages of loans and/or equity that 
involved particularly large debt amounts, or that the GOI had identified as having particular social 
or economic significance. The assets of five companies were offered for sale through a bidding 
process in various pha ses of the PPAS programme. The initial PPAS programme involved the sale 
of the assets of four companies but did not result in any successful  bids, and the assets were 
offered again in a new phase, referred to as "PPAS 2", which resulted in the sale of the assets of 
                                                
167 Indonesia's opening statement at the first meeting of the Panel, paras. 27 and 36; closing statement 
at the first meeting of the Panel, para. 3; and second written submission, paras. 24 and 27. 
168 United States' opening statement at the first meeting of the Panel, paras. 17 -20. 
169 Indonesia's first written submission, paras. 3 and 28.  
170 Excerpt from Part Two of GOI First Supplemental Questionnaire Response, pp. 22 -38, (Exhibit 
IDN-14), p. 25; I ndonesia's first written submission, para. 47; and United States' first written submission, 
para. 120. 
171 According to the GOI, IBRA sold 300,000 non -performing loans. ( CFS USDOC Issues and Decision 
Memorandum , (Exhibit US -43), p. 44).  WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  three of the four companies involved.172 As explained in more detail below, the USDOC's decision 
to apply an adverse inference rested on the fact that, in the investigation at issue, the GOI failed 
to provide documentation that had been requested b y the USDOC w ith respect to these three 
PPAS 2 sales.  
7.89.   The sale of APP/SMG's GOI -owned assets, which were composed only of debt, was managed 
subsequently and separately from the assets of the other companies because APP/SMG was in the 
process of restructur ing its debt at the time of the initial PPAS and of the PPAS 2  biddings .173 
APP/SMG's asset portfolio consisted of a mix of loan instruments of various companies of the 
APP/SMG group, totalling approximately IDR 7.9 trillion .174 Three companies submitted bids for 
this asset portfolio. Orleans, a company incorporated in the British Virgin Islands, won the bid and 
eventually purchased APP/SMG's debt for [[***]].175  
7.90.   According to the information before the USDOC, IBRA Regulation SK -7/BPPN/0101176 
prohibited IBRA from selling assets that were under its control back to the original owner, or to a 
company affiliated with the original owner. To ensure that this prohibition was not violated, IBRA 
relied on representations by the buyer and the buyer's outside counsel that th e buyer was not 
affiliated with the debtor. In addition, the sales contracts177 and (at least for some of the sales) 
[[***178 ***179]] provided for penalties in case IBRA discovered that the buyer was, in fact, 
affiliated with the debtor ; in that case, the buyer  would have to pay the entire value of the assets 
sold, and not only the amount agreed with IBRA. Moreover, Regulation SK -7/BPPN/0101 contained 
a provision allowing IBRA to, if necessary, conduct due diligence on the potential affiliation of the 
purchaser with the debtor.180 
7.91.   In the earlier CFS investigation , the USDOC had determined that the GOI provided a subsidy 
to APP/SMG in the form of debt forgiveness. In reaching this determination, the USDOC relied on 
facts available and applied an adverse inference to  conclude that Orleans was affiliated with 
APP/SMG, on the basis that the GOI had not acted to the best of its ability to cooperate in the 
investigation by failing to provide, inter alia , Orleans' bid package (which would have revealed 
Orleans' ownership) and information regarding IBRA's internal procedures for reviewing and 
evaluating bid documents.181 The USDOC considered that, in light of certain other evidence – a 
World Bank Report and press articles that suggested that Orleans was  affiliated with APP/SMG  – 
the requested documents were crucial for the evaluation of whether Orleans was in fact affiliated 
with APP/SMG. The USDOC also concluded that it was unable to evaluate the procedures followed 
by IBRA in the APP /SMG  sale in order to determine whether nor mal procedures had been followed, 
or whether company -specific exceptions had been made in the case of the Orleans sale. The 
USDOC concluded that information on the record supported its finding of affiliation. In particular, 
the USDOC noted that the World B ank Report mentioned above indicated that "some IBRA sales 
allegedly allowed debtors to buy back their loans at a steep discount through third parties, against 
its rules"; that court records included speculation that the Widjaja family (owners of APP/SMG) 
                                                
172 GOI Third Supplemen tal Questionnaire Response, (Exhibit IDN -15), responses to question No.  4, 
pp. 5-6, and No. 22(c), p. 16.  
173 GOI Third Supplemental Questionnaire Response, (Exhibit IDN -15), response to question No. 9, p. 9.  
174 GOI Third Supplemental Questionnaire Response, (Exhibit IDN -15), response to question No. 3(a), 
p. 3. Unlike the other companies in the PPAS programme, APP/SMG's asset portfolio did not include any equity.  
175 Exhibit 33 to Part Two of the GOI First Supplemental Questionnaire Response,  (Exhibit IDN -41 
(BCI)), p. 6), Article 1.1(1 5). Petitioners  alleged that the value of APP/SMG's asset portfolio, and of the price 
paid by Orleans amounted, respectively, to approximately USD 880 million and 214 million. ( USDOC Issues 
and Decision Memorandum , (Exhibit US -31), p. 17) . Before the USDOC , the GOI stated that  Orleans ha d paid 
USD [[ ***]] for APP/SMG's debt , which totalled USD [[ ***]] at the time of the purchase . (Part Two of GOI 
First Supplemental Questionnaire Response, (Exhibit US -34 (BCI)), internal exhibit 21,  Appendix 4, question 
(e)). 
176 Exhibit 1 to GOI Third Supplemental Quest ionnaire Response , (Exhibit US -84). 
177 Excerpt from Part Two of GOI First Supplemental Questionnaire Response, pp. 22 -38, (Exhibit 
IDN-14)/ Part Two of GOI First Supplemental Questionnai re Response, (Exhib it US-34 (BCI)), pp. 28, and 
33-35; and [[ ***]] 
178 [[***]] 
179 [[***]] 
180 Exhibit 1 to GOI Third Supplemental Questionnaire Response , (Exhibit US -84), Article 3. As discussed 
below, during the course of the investigation, the GOI indicated t hat to the best of its knowledge, IBRA did not 
exercise this provision with regard to either the sale of APP/SMG's debt to Orleans, or the other assets sales, 
and that it relied on the buyers' statements of non -affiliation.  
181 CFS USDOC Issues and Decision Memorandum , (Exhibit US -43), pp. 40 -46. WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  was buying up its own debt through third parties; and that news articles suggested that APP/SMG 
was "surreptitiously buying back its debt". In addition, the USDOC stated that during verification, 
it had met with an independent expert knowledgeable about th e debt and banking crisis in 
Indonesia and that in the expert's opinion, it was likely that Orleans was related to APP /SMG  or 
the Widjaja family.182  
7.92.   In its initial questionnaire to the GOI in the coated paper investigation , i.e. the one  at issue  
in the pres ent dispute , the USDOC requested that if the GOI disagreed with its conclusions in the 
CFS investigation concerning the debt forgiveness subsidy, it submit any relevant documents  in 
this respect . In response, the GOI responded that it believed the USDOC's finding in the CFS 
investigation  to be factually and legally incorrect. The GOI also stated that it would continue to 
review archived documents and would provide any new information that might develop.183 In a 
supplemental questionnaire issued to the GOI on 29 January 2010, and to APP/SMG the following 
day, the USDOC requested that if they disagreed with its determination in the CFS investigation, 
they provide complete information about the APP/SMG 's debt sale and provide documentation 
demonstrating that Orle ans had no affiliation with APP/SMG. The USDOC also requested that the 
GOI provide it with Orleans' registration and bid package, including Orleans' articles of association 
showing its shareholders. In its response, submitted on 22 February 2010, the GOI e xplained that 
IBRA structured its bidding policy to ensure that only qualified parties would be allowed to bid. 
Requirements for bidding included: (a) the submission of a Letter of Compliance as part of the bid 
package, confirming that the bidder was not a ffiliated with the original debtor; (b) a contractual 
representation that served as a self -certification from the bidder that it was not affiliated with the 
original debtor; and (c) an opinion letter from outside counsel confirming the eligibility of the 
bidder to bid on the assets; the GOI provided these documents, as they pertained to the APP/SMG 
debt sale, as well as Orleans' articles of association, to the USDOC.184  
7.93.   In its 9 March 2010 preliminary determination, the USDOC recalled its findings in the CFS  
investigation. It stated that the identification of Orleans' shareholders was pivotal to its ability to 
analyse the alleged affiliation between APP/SMG and Orleans, and that Orleans' articles of 
association, which it had understood would reveal Orleans' s hareholders in fact did not contain 
ownership information, and did not constitute sufficient new factual information to warrant 
changing its determination in the CFS investigation.185 The USDOC indicated that, in addition, 
there was other information on the record "to indicate that Orleans is affiliated with APP/SMG". In 
this respect, the USDOC referred to the above -mentioned meeting between USDOC officials and 
the independent expert.186 The USDOC indicated that based on its initial review of the documents, 
there appeared to be some gaps in the documentation and they raised additional questions about 
                                                
182 CFS USDOC Issues and Decision Memorandum , (Exhibit US -43), pp. 40 -45. The expert also opined 
that it was not uncommon for hedge funds to set up special purpose vehicles for the purpose of participating in 
one parti cular deal and that these special purpose vehicles could easily be established in a way that would 
make their ultimate ownership unknowable.  
183 GOI Initial Questionnaire Response , (Exhibit US -32), response to question No. E, pp.  29-30. 
184 Part Two of GOI Fir st Supplemental Questionnaire Response , (Exhibit US -34 (BCI)), response to 
question No. 59, p p. 34-36. In addition, at verification in the CFS investigation, GOI officials had informed the 
USDOC that the purchaser would be required, through the documentati on it submitted, to establish that it was 
not affiliated with the company whose debt it was purchasing. In its response to the first supplemental 
questionnaire in the coated paper investigation, the GOI stated that these GOI officials were probably giving 
explanations based on their experience in other transactions in which the articles of association did in fact 
identify the owners . The GOI stated that it now had identified officials involved in the sale of APP/SMG's debt to 
Orleans who had not been presen t at verification in the CFS investigation, and who would be made available to 
answer the USDOC's questions at verification  in the coated paper investigation.  (Ibid. pp. 25-34; Preliminary 
Countervailing Duty Determination, (Exhibits IDN -5/US-48 (exhibited  twice), p. 10772 ). 
185 The USDOC also noted that the GOI was discounting statements made at the CFS verification by 
former IBRA officials that ownership information would be part of a purchaser's file. The USDOC found that 
those statements were more probati ve at that point in the investigation, because the officials were discussing 
overall IBRA procedures with which they were familiar, even though they may have not been the officials 
responsible for the PPAS.  
186 Petitioners in the coated paper investigation i ncluded in the petition and in their submissions to the 
USDOC the World Bank Report and the press articles mentioned above. These documents were provided to the 
Panel in Exhibit US -40. Petitioners also attached the Issues and Decision Memorandum to the USD OC's Final 
Determination in the CFS investigation to their petition, thereby placing the USDOC's discussion of its meeting 
with the independent expert in the CFS investigation on the record of the coated paper investigation. APP/SMG 
later placed on the rec ord, as exhibit 52 to its First Supplemental Questionnaire Response, Part Two, the public 
version of the USDOC Memorandum reporting on the same meeting. It was submitted to the Panel as CFS 
Memorandum: Meeting with an Independent Expert , (Exhibit US -81). WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  how IBRA handled the APP/SMG sale. On this basis, it found that the documentation submitted by 
the GOI was not sufficient to overcome its determination in the CFS i nvestigation that Orleans was 
affiliated with APP/SMG. It therefore preliminarily determined that the GOI's sale of APP/SMG's 
debt to an affiliate constituted a financial contribution, in the form of debt forgiveness, and that a 
benefit was received equal to the difference between the value of the outstanding debt and the 
amount Orleans paid for it.187 
7.94.   Subsequently, in its third supplemental questionnaire, dated 29 April 2010, the USDOC 
requested that the GOI provide it with IBRA's internal guidelines for rev iewing and evaluating bids 
under the PPAS programme; the "bid protocols" and terms of reference for PPAS debt sales; 
IBRA's due diligence requirements, internal guidelines and procedures; as well as all relevant 
documents pertaining to the winning bids for  each of the other three sales under the PPAS 
programme . With respect to the latter, the USDOC requested that the GOI provide, in each case, 
the winning bidder's : (a) articles of association; (b) certificate of incorporation; (c) Statement 
Letter confirmin g that it would comply with the rules of the bid/sale process; (d) the Asset Sale 
and Purchase Agreement , includ ing a representation of non -affiliation;  and (e) the letter from 
outside counsel confirm ing the purchaser's compliance with the conditions of th e debt purchase.188 
After receiving an extension, the GOI responded on 27 May 2010 that the documents pertaining to 
other PPAS sales were not available at that time , in addition  to question ing their relevance to the 
question of Orleans' affiliation with APP/ SMG. The GOI also indicated that IBRA's due diligence 
procedures were the same under the various PPAS sales and that the GOI approached its due 
diligence of possible buyers in the same manner in each PPAS sale.189 The GOI stated that while 
IBRA had the legal  authority to exercise further due diligence, IBRA had relied primarily "upon the 
contractual obligations and the enforceability of those provisions ".190 The GOI further stated that 
to the best of its knowledge, IBRA did not have any written internal due dil igence guidelines for 
evaluating the documentation and other information submitted by potential bidders  and had not 
been able to locate any such documents, and that "[t]here were no specific threshold factors that 
would necessarily trigger more in -depth du e diligence of bidders."191  
7.95.   The USDOC again sought the same documents in its Fifth Supplemental Questionnaire, 
issued on 11 June 2010  and, in addition, asked further questions  pertaining to whether IBRA had 
conducted d ue diligence in other PPAS and non -PPAS sales and whether it maintained any form of 
internal due diligence guidelines.192 Moreover, o n 18 June 2010, the USDOC transmitted to the 
GOI an outline for the verification that was to take place from 28 June to 1 July 2010, in which it 
identified the APP/ SMG's debt buy -back as a verification item. The verification outline indicated 
that the GOI had outstanding questionnaire responses due on 22 June 2010 and that, depending 
on the USDOC's analysis of these responses, the outline might be amended, and that i n case the 
USDOC deemed the GOI's responses unresponsive on some issues, those issues may be deleted 
from the verification agenda.193 In its response to the Fifth Supplemental Questionnaire, the GOI 
responded that the documents concerning the other PPAS winn ing bids were still not available, but 
that it would "continue making its best efforts to collect and organize these documents so they will 
be available during the verification".  The GOI submitted the bid protocol and terms of reference for 
the PPAS 2 prog ramme . The GOI also repeated that it was not aware of any due diligence 
conducted regarding winning PPAS bidders, including in the APP/SMG 's debt sale, and of any 
specific documentation regarding due diligence. It also reiterated tha t the USDOC could discu ss 
these issues further with former IBRA officials at verification.194  
                                                
187 Preliminary Countervailing Duty Determination,  (Exhibits IDN -5/US-48 (exhibited twice)), 
pp. 10071 -10773.  
188 GOI Third Supplemental Questionnaire , (Exhibit US -41), question Nos. 5, 6, 7, 12, 17, 18, and 22(c).  
189 GOI Third Supplemental Questionnaire Respon se, (Exhibit IDN -15), response to question No.  5, 
pp. 6-7).  
190 The GOI added that if IBRA had had a specific reason to suspect affiliation between a bidder and the 
debtor, it would have had the authority to investigate further, and would have undertaken fu rther 
investigation. (GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), response to question No. 7, 
p. 8).  
191 GOI Third Supplemental Questionnaire Response, (Exhibit IDN -15), response s to question Nos.  6, 
p. 7, and 7, pp . 7-8. 
192 GOI Fifth Sup plemental Questionnaire, (Exhibit US -42), question Nos. 3, 4, 5, and 8.  
193 GOI Verification Outline, (Exhibit US -77). 
194 The GOI also stated that it could not confirm whether formal or informal inquiries or follow -up may 
have been made at the time of the sal es, particularly as these activities had taken place several years ago, and WT/DS491/R  
BCI deleted, as indicated  [[***]] 
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  7.96.   The USDOC informed the GOI on 24 June 2010 that it was cancelling verification of the debt 
buy-back issue because the GOI had not provided the information and documentation concerning 
the other PPAS sales.  The USDOC explained that "[g]iven that the GOI has not provided the 
requested information and documentation, it has deprived the Department and other interested 
parties of the opportunity to examine this information before verification" , and that "neither the 
Department nor interested parties can conduct a meaningful analysis or verification of the GOI's 
claims that information on the bidders' ownership structure was not required to be submitted to 
IBRA, or of other aspects of IBRA's sta ndard operating procedures under the PPAS program."195 
The GOI and APP/SMG later asserted , in a letter that the GOI sent to the USDOC on 3 August 2010 
and in a 17 August 2010 submission by the GOI and APP/SMG, that the GOI had succeeded in 
locating at least some of the requested documents on 26 June 2010, two days before verification 
was set to begin.196  
7.97.   In its final determination  and the accompanying Issues and Decision Memorandum , the 
USDOC found that, as a result of the GOI's failure to provide the requeste d information pertaining 
to the other PPAS sales by the required deadlines, there was a hole in its record pertaining to 
IBRA's procedures under the PPAS programme, and that without information pertaining to other 
transactions, it could not "test" the GOI' s claims that Orleans and APP/SMG were not affiliated. The 
USDOC considered that this information was necessary to ensure that IBRA followed normal 
procedures in the Orleans transaction in not inquiring further into the ownership of Orleans and its 
possibl e affiliation with APP/SMG. The USDOC further considered that the GOI had failed to act to 
the best of its ability in responding to the questionnaires  as "[o]n balance, the GOI did not put 
forth its maximum efforts, despite its many protest s to the contrar y" and that "it was reasonable 
to expect the GOI to be more forthcoming with this information". O n this basis, the USDOC drew 
an adverse inference to the effect that Orleans was affiliated with APP/SMG.197 Consequently, the 
USDOC determined that the sale of APP/SMG's debt to Orleans constituted a financial contribution 
to APP/SMG in the form of debt forgiveness. The USDOC considered that APP/SMG's overall debt 
obligation was reduced by the difference between the amount of APP/SMG 's debt held by IBRA and 
the a mount that APP/SMG (through Orleans) paid for this debt because, through this sale, 
APP/SMG was effectively relieved of the liability of repaying its debt to an outside party; the 
USDOC determined that the transaction provided a benefit in the same amount.  On this basis, the 
USDOC determined that the debt sale to Orleans provided a subsidy to APP/SMG, and that this 
subsidy was company -specific.198 
7.98.   Indonesia makes two principal arguments in its challenge of the USDOC's determination 
that Orleans was affiliated  with APP/SMG: (a) the conditions for resorting to facts available under 
Article 12.7 of the SCM Agreement were not met; and (b) the "facts available" relied upon by the 
USDOC in its determination did not "reasonably replace" the information that the GOI a llegedly 
failed to provide, as required by Article 12.7.  
7.99.   The United States requests that the Panel reject Indonesia's claim. The United States argues 
that the USDOC acted consistently with Article 12.7 in its determination that Orleans was affiliated 
with APP/SMG. The United States submits that the requirements for resorting to facts available 
under this provision were met and that the "facts available" that the USDOC used "reasonably 
replaced" the missing information.  
7.5.3.2   Legal standard  under Article 12.7 of the SCM Agreement  
7.100.   Article 12.7 of the SCM Agreement allows an investigating authority to make 
determinations on the basis of the facts available under certain conditions. It provides as follows:  
In cases in which any interested Member or interested party r efuses access to, or 
otherwise does not provide, necessary information within a reasonable period or 
                                                                                                                                                  
that the underlying documents had already been archived. ( GOI Fourth and Fifth Supplemental Questionnaire 
Response , (Exhibit IDN -16), responses to question No. 3, pp. 4 -5, No. 4, p. 4, No. 5, pp. 5 -6, and No. 8, p. 7).  
195 Letter to GOI regarding Verification , (Exhibit US -76).  
196 GOI Letter to USDOC Regarding IBRA , (Exhibit US -87); GOI and APP/SMG Case Brief to USDOC, 
(Exhibit US -44), pp. 62 -63. The Letter states that the GOI "had fi nally located the remaining few documents 
and had them ready to be reviewed during the verification"; the Case Brief is less clear as to whether the GOI 
had located all or only some of the requested documents.  
197 USDOC Issues and Decision Memorandum , (Exhib it US-31), pp.  52-55. 
198 USDOC Issues and Decision Memorandum, (Exhibit  US-31), p . 20. WT/DS491/R  
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  significantly impedes the investigation, preliminary and final determinations, 
affirmative or negative, may be made on the basis of the facts available.  
7.101.   The "process of identifying the 'facts available' should be limited to identifying 
replacements for the 'necessary information' that is missing from the record".199 Thus, Article 12.7 
is concerned with overcoming the absence of information required to complete  a determination; it 
is not directed at mitigating the absence of "any" or "unnecessary" information.200 Moreover,  an 
investigating authority must use those "facts available" that " reasonably replace  the information 
that an interested party failed to provide ", with a view to arriving at an accurate determination.201 
The explanations and analysis provided in the determination must be sufficient to allow a panel to 
assess whether the facts available relied upon by the authority are reasonable replacements for 
the missing information.202  
7.102.   In addition, paragraph 7 of Annex II of the Anti -Dumping Agreement, which is relevant to 
the interpretation and application of Article 12.7203, provides that "if an interested party does not 
cooperate and thus relevant information is being withheld from the authorities, this situation could 
lead to a result which is less favourable to the party than if the party did cooperate."  
7.5.3.3   Whether the conditions for resorting to facts available were met  
7.103.   We first consider Indonesia's argument that  the conditions for resorting to facts available 
under Article 12.7 of the SCM Agreement were not met in this case.  
7.104.   Indonesia argues that the GOI acted to the best of its ability and cooperated with the 
USDOC's many requests for information by submitting all the necessary information requested by 
the USDOC on the issue of affiliation – i.e. the documents concerning Orleans and the debt sale to 
that buyer – as well as information on IBRA's internal procedures as it provided all evidence 
required under Indon esian law to certify that the debt sale in question was not to an affiliate.204 
Indonesia adds that the information requested by the USDOC relating to the other PPAS debt sales 
was not "necessary" to assess the APP/SMG sale and would not have shed light on a ffiliation 
because these sales involved different companies.205 Thus, in Indonesia's view, this information 
was not "necessary" to assess the APP/SMG sale and the question of affiliation.  
7.105.   Indonesia also argues that information concerning Orleans' ownership was not missing; it 
was simply not part of the documents that IBRA required from buyers in the PPAS programme. 
Indonesia asserts that there were obstacles to the GOI's ability to cooperate, given that IBRA was 
dissolved in 2004, its records (which were not  in electronic format) archived, and its employees 
released. Indonesia contends that the USDOC set a constantly moving target, which it used as a 
pretext for drawing an adverse inference. In particular, Indonesia argues that the USDOC waited 
before request ing information on the other PPAS sales even though it knew from the beginning of 
the investigation that it would require these documents. Indonesia argues that the "organic 
principle of good faith" embodied in Annex II of the Anti -Dumping Agreement restra ins 
investigating authorities from imposing on interested parties burdens which are unreasonable in 
the circumstances.206 Indonesia also takes issue with the fact that the USDOC cancelled 
verification of the Orleans transaction, noting in particular that the  GOI had indicated that officials 
with knowledge of the transaction would be present at verification and that it would continue to 
                                                
199 Appellate Body Report, US – Carbon Steel (India) , para. 4.416.  
200 Appellate Body Report, US – Carbon Steel (India) , para. 4.416.  
201 Appellate Body Report,  US – Carbon Ste el (India) , para. 4.416  (quoting Appellate Body Report 
Mexico – Anti-Dumping Measures on Rice , paras. 293 -294). (emphasis by the Appellate Body in US – Carbon 
Steel (India) ) 
202 Appellate Body Report, US – Carbon Steel (India) , para. 4.421.  
203 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice , para. 295; US – Carbon Steel 
(India) , paras. 4.423 and 4.425.  
204 Indonesia's first written submission, para. 55; opening statement at the first meeting of the Panel, 
para. 46; and closing statement at the fir st meeting of the Panel, para. 5.  
205 Indonesia's first written submission, para. 65.  
206 Indonesia's first written submission, paras. 62 -65 (quoting Appellate Body Report, US – Hot-Rolled 
Steel, para. 101).  WT/DS491/R  
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  search for the missing documents and would make them available at verification if they could be 
located.207  
7.106.   Finally, Indonesia  considers that the application of facts available with an adverse 
inference is limited to situations in which the party possesse s the requested information and 
withh olds it. The facts of the underlying investigation did not permit USDOC to apply facts 
available with an adverse inference because Indonesia was not withholding the information from 
USDOC.208 
7.107.   The United States argues that the USDOC rightly found that the GOI failed to cooperate to 
the best of its ability such that an adverse inference was warrant ed.209 In this respect, the 
United  States considers that the phrase "does not cooperate" in paragraph 7 of Annex II of the 
Anti-Dumping Agreement, which informs the meaning of Article 12.7, is not limited to situations in 
which the party possesses the reques ted information and withholds it, but also covers other types 
of non -cooperation such as failing to provide information in a timely manner, failing to take steps 
to obtain requested information, or misrepresenting the meaning of certain information.210  
7.108.   The United States submits that the GOI was aware from the beginning of the investigation 
that affiliation would be an issue, that it had multiple opportunities and a reasonable period of time 
(seven weeks) to submit the information requested and did not reques t an extension of the 
deadline (as it could have), that the USDOC warned the GOI that it might resort to facts available 
if the GOI did not provide the information, and that Indonesia does not cite valid reasons for the 
alleged "difficulties"  encountered i n providing the information . The United States also submits that 
the USDOC did not create a "moving target". Rather, the focus of the USDOC's enquiries changed 
during the investigation because the documents concerning the Orleans transaction that were 
eventually provided by the GOI did not reveal Orleans' ownership, as expected. The documentation 
that was eventually provided by the GOI concerned IBRA's policies and did not allow the USDOC to 
confirm the extent of IBRA's efforts in other PPAS sales to identi fy the buyers' ownership and 
ensure that debtors did not buy back their own debt. The USDOC then altered its focus to test the 
validity of the GOI's assertions that IBRA had not inquired into Orleans' ownership beyond 
requiring Orleans' (and other purchase rs') statements of non -affiliation, and that proceeding in this 
manner was consistent with IBRA's procedures and the level of diligence it applied in other PPAS 
sales. This is why the USDOC sought more information concerning IBRA guidelines and policies, a s 
well as documents concerning the other PPAS transactions. The GOI provided documentation 
concerning the former, but this documentation did not allow the USDOC to confirm the extent of 
IBRA's efforts in other PPAS sales to identify the buyers' ownership a nd ensure that debtors did 
not buy back their own debt.211 
7.109.    The United States submits that the information sought was, in the absence of direct 
evidence of non -affiliation on the record, "necessary" for the USDOC to determine the plausibility 
of the GOI's as sertions concerning IBRA's efforts in the Orleans sales and its level of diligence in 
other PPAS transactions, in particular its representation that IBRA acted in the Orleans sale in the 
same manner as in other PPAS sales , i.e. that  it relied on statements  of no affiliation from the 
buyer and did not carry out additional verifications. Thus, due to the GOI's failure to provide the 
requested information, necessary information was absent from the record and the USDOC 
appropriately resorted to Article 12.7 "to  fill in gaps". Finally, the United States argues that it was 
appropriate for the USDOC to cancel the verification because the purpose of verification is not to 
review new evidence.212  
7.110.   We first consider whether the missing information requested by the USDOC  – i.e. the 
documents pertaining to the other four PPAS sales213 – was "necessary" within the meaning of 
Article 12.7.  
                                                
207 Indonesia's first written submission, paras. 57 -59 and 63.  
208 Indonesia's response to Panel question No. 87.  
209 United States' first written submission, para. 150.  
210 United States' comments on Indonesia's response to Panel question No. 87.  
211 United States' first written submission, paras. 136 -140 and 150 -156. 
212 United States' first written submission, paras. 136 -140 and 150 -156. 
213 Winning bidder's articles of association, certificates of incorporation, and certifications that the 
winning bidder was not affiliated with the original debtor.  WT/DS491/R  
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  7.111.   In its determination, the USDOC linked its request for the information concerning the other 
PPAS sales "to the GOI's claims that IBRA does  not inquire into the ownership of bidders under this 
program and accepts various affirmations that the bidders are not affiliated with the debtor 
companies". The USDOC considered that the missing information "was needed to test the validity 
of the GOI's c laims that it was normal procedure not to further inquire into the ownership or 
possible affiliations of bidders" and was "necessary to ensure that IBRA followed proper procedures 
in the Orleans -APP/SMG transaction in not inquiring further into the ownersh ip of Orleans or any 
relationship between the entities".214 The USDOC also stated that the failure to provide the 
requested information, "combined with the apparent lack of any procedural guidelines used in the 
PPAS program or other IBRA administered program s", prevented it from corroborating the GOI's 
claims regarding the inquiries made concerning Orleans and the contents of its application file.215 
7.112.   As we have noted above, the term "necessary information" has been interpreted to refer to 
information that is "r equired to complete a determination ".216 It is, in the first instance, for the 
investigating authority to determine what information it considers "necessary" to make its 
determination, in light of the specific circumstances of the investigation at issue.217 In our view, an 
authority may reasonably consider that information needed to verify the accuracy of information 
submitted by interested parties or to corroborate such information is "necessary" within the 
meaning of Article 12.7, particularly as Article 12.5  of the SCM Agreement requires investigating 
authorities to "satisfy themselves as to the accuracy of the information supplied".218 The 
information requested by the USDOC was not information that would have directly established 
affiliation or non -affiliation  between Orleans and APP/SMG. It was, however, information that the 
USDOC would have used to ascertain the accuracy of the GOI's statement that IBRA did not 
enquire into the ownership of bidders beyond the statements of non -affiliation. For this reason, we  
consider that the USDOC reasonably considered the information to be "necessary" for the USDOC 
to satisfy itself of the accuracy of the GOI's representations that IBRA had followed normal 
procedures in the Orleans sale. In addition, in arriving at this con clusion we consider it relevant 
that the information submitted by the GOI did not conclusively establish who were Orleans'  
shareholders, and that other information on the record of the investigation – in particular the press 
reports, World Bank Report, and  the expert statement mentioned above219 – raised doubts 
concerning Orleans'  non-affiliation with APP/SMG. In our view, this other information justified the 
USDOC further probing IBRA's procedures concerning the question of affiliation.  
7.113.   We now turn to consi dering Indonesia's allegation that the GOI did not fail to provide 
necessary information within a reasonable period, in light of the USDOC's determination that the 
GOI had not cooperated as it had failed to act to the best of its ability, which was the bas is for the 
USDOC's decision to apply an "adverse inference". This being the case, we consider whether an 
objective and unbiased investigating authority could reasonably have concluded, in light of the 
circumstances of the case and the facts before the USDO C, that the GOI failed to cooperate.  
                                                
214 USDOC Issues and Decision Memorandum , (Exhibit US -31), pp. 5 -6 and 48 -55. 
215 USDOC Issues and Decision Memorandum , (Exhibit US -31), p. 20.  
216 See, e.g. Appellate Body Report, US – Carbon Steel (India) , para. 4.416.  
217 Panel Report, Egypt – Steel Rebar , para. 7.155.  
218 In this respect, we agree with the EC – Countervailing Measures on DRAM Chips  panel's statement 
that:  
Article 12.7 … enables an authority to continue with the investigation and make determinations 
based on the facts that are available in case the information nece ssary to make such 
determinations is not provided by the interested parties , or, for example, verification of the 
accuracy of the information submitted is not allowed by an interested party , thereby significantly 
impeding the investigation.  
(Panel Report, EC – Countervailing Measures on DRAM Chips , para. 7.245 (emphasis added))  
219 As noted above, fn 186, the press reports and World Bank Report were placed on the record of the 
coated paper investigation by the pet itioners and provided to the Panel in Exhibit US -40. The press reports 
contain statements to the effect that, inter alia : (a) APP/SMG had past dealings with companies in the British 
Virgin Islands (internal exhibit 11 to Petitioners' General Factual Inform ation Submission, (Exhibit US -40)); (b) 
there were suspicions among foreign creditors that APP and the Widjaja family purchase d substantial portions 
of APP's debt in an effort to manipulate its restructuring (internal exhibit 18 to Petitioners' General Fac tual 
Information Submission, (Exhibit US -40)); and (c) creditors and bidders had raised questions about who might 
be behind the Orleans bid, in part because of the mysterious nature of the bidder and the long -running 
suspicions that APP had been "surreptit iously buying back its debt" (internal exhibit 33 to Petitioners' General 
Factual Information Submission, (Exhibit US -40)). Other press reports contained more general information 
concerning APP/SMG's debt situation and IBRA's sale of APP/SMG's debt. The Wo rld Bank Report stated that 
IBRA was allegedly allowing debtors to buy back their debt through third parties. (Internal exhibit 24 to 
Petitioners' General Factual Information Submission, (Exhibit US -40)). WT/DS491/R  
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  7.114.   We recall that  paragraph 7 of Annex II of the Anti -Dumping Agreement recognizes that " if 
an interested party does not cooperate and thus relevant information is being withheld from the 
authorities, this situation could lead to a result which is less favourable to the party than if the 
party did cooperate."  
7.115.   We note that the ordinary meaning of "cooperate" is, inter alia , to "act jointly with or with 
another (in a task … to an end); participate in a joint or mutual enterp rise".220 Moreover, in our 
view the use of the term "failure to cooperate" in paragraph 7 can be contrasted with the more 
neutral term "or otherwise does not provide" in Article 12.7 of the SCM Agreement and Article 6.8 
of the Anti -Dumping Agreement. We also  find it relevant that paragraph 5 of Annex II provides 
that " [e]ven though the information provided may not be ideal in all respects, this should not 
justify the authorities from disregarding it, provided the interested party has acted to the best of 
its ability. "221 In light of the foregoing, the use of the term "fails to cooperate" in paragraph 7 of 
Annex II connotes more than simply a party's failure to provide the requested information, and 
goes instead to the question whether the interested party from w hom information was requested 
applied its best efforts – "acted to the best of its ability" – in attempting to provide it. The 
foregoing suggests that, for instance, if an interested party is prevented from providing necessary 
requested information by exte rnal factors outside its control, an investigating authority could not 
reasonably conclude that that party "fail[ed] to cooperate". The Appellate Body reached a similar 
conclusion in US – Hot-Rolled Steel : 
[C]ooperation is a process , involving joint effort , whereby parties work together 
towards a common goal. In that respect, we note that parties may very well 
"cooperate" to a high degree, even though the requested information is, ultimately, 
not obtained. This is because the fact of "cooperating" is in its elf not determinative of 
the end result of the cooperation. Thus, investigating authorities should not arrive at a 
"less favourable" outcome simply because an interested party fails to furnish 
requested information if, in fact, the interested party has "co operated" with the 
investigating authorities, within the meaning of paragraph 7 of Annex II of the 
Anti-Dumping Agreement .222 
7.116.   In the same decision, the Appellate Body further considered – on the basis of, inter alia , 
paragraph 5 of the Annex II, that "the le vel of cooperation required of interested parties is a high 
one – interested parties must act t o the 'best' of their abilities".223 The Appellate Body also 
considered, however, that paragraph 2 of Annex II224 requires investigating authorities to strike a 
balance between the effort s that they can expect interested parties to make in responding to 
questionnaires, and the practical ability of those interested parties to comply fully with all demands 
made of them by the investigating authorities. The Appellate Bo dy saw this provision as another 
detailed expression of the principle of good faith, which, in this particular context, restrains 
investigating authorities from imposing on exporters burdens which, in the circumstances, are not 
reasonable.225 The Appellate Bo dy thus considered that paragraphs 2 and 5 of Annex II of the 
Anti-Dumping Agreement  reflect a careful balance between the interests of investigating 
authorities and exporters, adding that:  
In order to complete their investigations, investigating authoriti es are entitled to 
expect a very significant degree of effort – to the "best of their abilities" – from 
investigated exporters. At the same time, however, the investigating authorities are 
not entitled to insist upon absolute  standards or impose unreasonab le burdens upon 
those exporters.226 
                                                
220 Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 517.  
221 Emphasis added.  
222 Appellate Body Report, US – Hot-Rolled Steel , para. 99. (emphasis original)  
223 Appellate Body Report, US – Hot-Rolled Steel , para. 100.  
224 Paragraph 2 of Annex II authorizes i nvestigating authorities to request responses to questionnaires 
in a particular medium (for example, computer tape) but, at the same time, states that such a request should 
not be "maintained" if complying with that request would impose an " unreasonable ex tra burden " on the 
interested party, that is, would "entail unreasonable additional cost and trouble ". (emphasis added in Appellate 
Body Report, US – Hot-Rolled Steel , para. 101)  
225 Appellate Body Report, US – Hot-Rolled Steel , para. 101.  
226 Appellate Body R eport,  US – Hot-Rolled Steel , para. 102. (emphasis original)  WT/DS491/R  
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  7.117.   In addition, the Appellate Body considered that Article 6.13 of the Anti -Dumping 
Agreement227 (which is identical to Article 12.11 of the SCM Agreement) underscores that 
"cooperation" is a two -way process involving joint eff ort as it requires investigating authorities to 
make certain allowances for, or take action to assist, interested parties in supplying information, 
adding that "if the investigating authorities fail to 'take due account' of genuine 'difficulties' 
experienc ed by interested parties, and made known to the investigating authorities, they cannot … 
fault the interested parties concerned for a lack of cooperation".228 Consistent with these 
principles, the Appellate Body also explained that the term "'reasonable peri od' must be 
interpreted consistently with the notions of flexibility and balance that are inherent in the concept 
of 'reasonableness', and in a manner that allows for account to be taken of the particular 
circumstances of each case" , adding that : 
In consid ering whether information is submitted within a reasonable period of time, 
investigating authorities should consider, in the context of a particular case, factors 
such as: (i) the nature and quantity of the information submitted; (ii) the difficulties 
encountered by an investigated exporter in obtaining the information; (iii) the 
verifiability of the information and the ease with which it can be used by the 
investigating authorities in making their determination; (iv) whether other interested 
parties are li kely to be prejudiced if the information is used; (v) whether acceptance 
of the information would compromise the ability of the investigating authorities to 
conduct the investigation expeditiously; and (vi) the numbers of days by which the 
investigated exp orter missed the applicable time -limit.229 
7.118.   While the Appellate Body made these statements in the context of considering claims 
under the Anti -Dumping Agreement, the Appellate Body has indicated that it would be anomalous 
if Article 12.7 of the SCM Agreement were to permit the use of "facts available" in countervailing 
duty investigations in a manner markedly different from that in anti -dumping investigation.230  
7.119.   In the present case, it is clear from the record that the GOI provided a large amount of 
information  sought by the USDOC, including Orleans' bid package. It is also clear, however, that 
the GOI did not provide all the information sought by the USDOC. In particular, the GOI failed to 
provide the USDOC with the information pertaining to other PPAS sales th at the USDOC had 
requested. In its final determination, the USDOC found that the GOI "failed to cooperate by not 
acting to the best of its ability". The USDOC noted in this respect that the GOI had not been asked 
to provide the missing information on short  notice as it had had seven weeks' notice  that the 
USDOC required the specific information at issue concerning the other sales under IBRA's PPAS 
programme. The USDOC considered that, on balance, the GOI did not put forth its maximum 
efforts, despite its ma ny protests to the contrary. The USDOC added that the GOI was aware as of 
the initiation of this investigation in October 2009 that the possible affiliation of APP/SMG and 
Orleans would be an issue. The USDOC also considered that there was nothing overly b urdensome 
in its request for information  – it was neither "boundless", nor would it appear to involve "several 
bankers boxes of information", as the Indonesian respondents had characterized it. For this 
reason, "it was reasonable to expect the GOI to be mo re forthcoming with this information". The 
USDOC also considered that the GOl's repeated refusal to provide the requested information by the 
deadlines evinced, at a minimum, inadequate inquiries and attempts to locate the information.231  
7.120.   Indonesia argues th at, as a developing country, the GOI's difficulties in locating the 
documents requested by the USDOC should be taken into account in assessing its efforts and its 
cooperation in the investigation. Indonesia argues that Article 27 of the SCM Agreement and 
Article 15 of the Anti -Dumping Agreement provide "context" to the interpretation and application 
of the specific requirements in Article 12.7 of the SCM Agreement and Annex II of the 
Anti-Dumping Agreement.232 The provisions invoked by Indonesia, Articles 15 of the Anti -Dumping 
Agreement and Article 27 of the SCM Agreement are, on their face, not relevant to an 
investigating authority's use of facts available under Article 12.7 , and nothing in Article 12.7 or 
                                                
227 Article 12.11 of the SCM Agreement and Article 6.13 of the Anti -Dumping Agreement provide that: 
"The authorities shall take due account of any difficulties experienced by interested parties, in  particular small 
companies, in supplying information requested, and shall provide any assistance practicable."  
228 Appellate Body Report,  US – Hot-Rolled Steel , para. 104.  
229 Appellate Body Report, US – Hot-Rolled Steel , para. 85.  
230 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 295.  
231 USDOC Issues and Decision Memorandum , (Exhibit US -31), pp. 54 -55. 
232 Indonesia's first written submission, paras. 50 -53, and 65; response to Panel question No. 32.  WT/DS491/R  
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  elsewhere in the SCM Agreement suggests that a Memb er's developing country status, per se , 
modifies the disciplines of Article 12.7, interpreted in light of Annex II of the Anti -Dumping 
Agreement.233  
7.121.   Article 12.7 strikes a balance between the obligation for an interested party to submit 
necessary informatio n and to have that information taken into account, on the one hand, and the 
obligation placed upon the investigating authority to conclude its investigation within prescribed 
timeframes, on the other.234 This means that there came a time in the coated paper investigation 
when the information had to be provided, or the USDOC could resort to using facts available. 
Taking into account the extensions received, the GOI effectively had more than seven weeks (from 
the date the USDOC issued the thir d questionnaire to  the GOI's response to the fifth 
questionnaire ) to provide the requested information. Even taking into consideration the fact that 
the USDOC requested voluminous information from the GOI, the GOI's explanations concerning 
factual circumstances surrounding the fact that IBRA's operations had been terminated several 
years prior and the resulting difficulties in locating the documents alleged by the GOI, we are of 
the view that in the circumstances of this case, the USDOC did not act unreasonably in concluding  
that by failing to provide the requested information within the seven weeks it had to do so, the 
GOI failed to provide necessary information within a "reasonable period".  As discussed above, the 
information was initially requested as part of the USDOC's T hird Questionnaire to the GOI, but not 
submitted, and requested anew as part of the USDOC's Fifth Questionnaire to the GOI. In this 
respect, we note, by way of comparison, the Agreement mandates a 37 -day minimum period to 
respond to an initial questionnair e.235 
7.122.   Moreover, we note that the USDOC progressively gained knowledge about the Orleans sale 
and IBRA's procedures, which led to further questions and requests for information.  For instance, 
the USDOC initially requested that the GOI provide it with Orleans'  complete bid package, which 
the GOI had not provided in the CFS investigation. The USDOC stated that once it obtained th ese 
document s, given that they did not contain information revealing Orleans'  ownership, it broadened 
the scope of its inquiry and requ ested that the GOI provide it with documents pertaining to the 
other PPAS sales and IBRA's due diligence procedures for ascertaining compliance with the 
prohibition on debtors buying back their own debt: "we altered our focus to test the validity of the 
GOI's claims not to have inquired into the ownership of Orleans, or any other company purchasing 
debt, beyond requiring certain affirmations from bidders regarding their bona fides , which the GOI 
stated was consistent with IBRA's evaluation procedures for sa les in the PPAS."236 This being the 
case, we do not consider that the USDOC's successive requests for the information were unduly 
burdensome in the circumstances or created a "moving target".  We also note that the USDOC 
informed the GOI that failure to provi de requested information may result in the USDOC resorting 
to the use of "facts available".237 
7.123.   The USDOC's decision to cancel "verification" regarding the debt buy -back issue because 
the GOI had not provided the requested information and documentation concer ning the other PPAS 
sales238 does not affect our conclusion in this respect. Verification visits are only one of several 
                                                
233 This is not to say that specific problem s which may or may not be related to the fact that a Member 
is a developing country may not be relevant in considering whether information is submitted within a 
"reasonable period", in assessing the burden placed on the interested party from which informat ion is sought, 
and in determining whether it has failed to cooperate.  
234 The Appellate Body has recognized the importance for investigating authorities of being able to set 
deadlines for the submission of information, adding that investigating authorities m ust be able to control the 
conduct of their investigation and to carry out the multiple steps in an investigation required to reach a final 
determination. (Appellate Body Report, US – Hot-Rolled Steel , para. 73).  
235 Article 12.1.1 and fn 40 of the SCM Agree ment.  
236 USDOC Issues and Decision Memorandum , (Exhibit US -31), p.  31. (underline original)  
237 GOI Third Supplemental Questionnaire , (Exhibit US -41), cover letter; GOI Fifth Supplemental 
Questionnaire, (Exhibit US -42), cover letter.  
238 Letter to GOI regarding  Verification , (Exhibit US -76), quoted above, para. 7.96. In the final 
determination, the USDOC reiterated the reasons provided in the letter for cancelling the verification, and 
added that "it is well -established that verifica tion is not an opportunity to submit new information, but rather is 
intended only to establish the accuracy of the information already submitted", that "neither the Department 
nor Petitioners will have adequate time to prepare probing verification question s or suggestions for questions", 
and that "the resources available at verification are completely different than those available at Department 
headquarters." ( USDOC Issues and Decision Memorandum , (Exhibit US -31), p. 56).  WT/DS491/R  
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  ways in which an authority may satisfy itself of the accuracy of the information before it239, and 
the SCM Agreement does not require an in vestigating authority to conduct such visits.240  
7.124.   In addition, Indonesia's argument is premised on the assumption that the USDOC would 
have been required to accept the missing information had it been provided by the GOI at 
verification. However, paragraph 7 of Annex VI of the SCM Agreement241 notes that the primary 
purpose of verifications is to verify information provided in questionnaire responses, suggesting 
that the receipt of new evidence is not. Moreover, the Appellate Body explained in China – 
HP-SSST (J apan) / China – HP-SSST (EU) , with respect to Article 6.7 of the Anti -Dumping 
Agreement, which is identical to Article 12.6 of the SCM Agreement in all relevant respects, that 
"investigating authorities have some degree of latitude in deciding whether to a ccept and use 
information submitted by interested parties during on -the-spot investigations and thereafter"242, 
and that an investigating authority is not required "to accept all information presented to it during 
a verification visit."243 In the present insta nce, the deadline set by the USDOC for the submission 
of the information was six days prior to verification. The GOI could not unilaterally decide to 
extend the deadline for the submission of the requested information by promising to make it 
available at v erification – if it were located – when the USDOC would be less able to verify it, if it 
could do it at all, without a prior opportunity to consider it. In any event, the GOI made no effort 
to submit the requested information either before or after verific ation, even though it later 
asserted that it had located some of the documents after the USDOC cancelled verification of the 
debt buy -back issue.  
7.125.   In sum, in the investigation at issue, the GOI provided some of the information that was 
requested by the USD OC, and thus, did cooperate to some extent, but ultimately failed to provide 
the USDOC with necessary information it sought concerning the other PPAS transactions. The 
information sought by the USDOC was in the control of the GOI, and even though it stated  that 
some of the information requested had ultimately been located, the GOI never attempted to 
submit the information. In light of the foregoing, we consider that in the circumstances of this 
case, an unbiased and objective authority could have concluded,  as the USDOC did, that the GOI 
had failed  to provide necessary information within a reasonable period, and thereby failed  to act to 
the best of its ability to cooperate in the investigation .  
7.5.3.4   Whether the facts relied upon by the USDOC "reasonably replaced " the missing 
"necessary information"  
7.126.   Indonesia submits that the facts used by the USDOC did not "reasonably replace" the 
missing information, as required by Article 12.7. Indonesia argues that the APP/SMG transaction 
documents submitted by the GOI to the USDOC show that there was no affiliation between Orleans 
and APP/SMG, and that the information sought by the USDOC would not have shed light on 
whether Orleans was an affiliate because those other transactions involved different companies. 
Moreover, the ot her evidence (newspaper articles and World Bank Report) that the USDOC relied 
upon was either uninformative (did not relate to APP/SMG itself), or speculative (merely suggested 
affiliation between the Orleans and APP/SMG). Indonesia also argues that by giv ing more weight to 
speculative newspaper articles and rumour than to the actual documents from the transaction, the 
USDOC acted inconsistently with the requirement, in Annex II of the Anti -Dumping Agreement that 
                                                
239 Panel Report, EC – Salmon (Norwa y), para. 7.358. Article 12.5 of the SCM Agreement requires 
investigating authorities to "satisfy themselves as to the accuracy of the information supplied".  
240 Article 12.6 of the SCM Agreement provides that "The investigating authorities may carry out 
investigations in the territory of other Members [i.e. verifications] as required …" (emphasis added).  
241 Paragraph 7 of Annex VI provides that:  
As the main purpose of the on -the-spot investigation is to verify information provided or to 
obtain further details , it should be carried out after the response to the questionnaire has been 
received unless the firm agrees to the contrary and the government of the exporting Member is 
informed by the investigating authorities of the anticipated visit and does not object  to it[.]  
242 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU ), para. 5.74.  
243 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU ), para. 5.75 (quoting Panel 
Reports, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 7.100). (emphasis added by the Appellate 
Body)  WT/DS491/R  
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  investigating authorities, if they are to re ly on information from a secondary source, do so with 
special circumspection.244 
7.127.   The United States argues that the facts relied upon by the USDOC – newspaper articles, 
the World Bank Report and the expert statement, all suggesting an affiliation between Orle ans and 
APP/SMG – were "on the record" and that Indonesia's contention that the USDOC gave more 
weight to "speculative newspaper articles and rumour than the actual documents from the 
transaction" is mistaken, given that the actual documents on the record provided no information 
on Orleans' ownership. The United States further argues that, in the present case, it would not 
have been practicable for the USDOC to comparatively evaluate record information to determine 
the "best" facts available. The question o f affiliation was a binary one (yes/no), and although the 
GOI placed information on the record to support its contention that the two companies were not 
affiliated, it failed to satisfy its evidentiary burden in this respect by failing to provide all the 
information necessary to allow the USDOC to make a determination. Finally, the United States 
argues that Article 12.7 acknowledges that non -cooperation can lead to an outcome that is less 
favourable for the non -cooperating party, and that the selection of " facts available" leading to "a 
less favourable result" is permissible under the Anti -Dumping Agreement and the SCM 
Agreement.245 In the present case, to avoid rewarding the GOI for its failure to cooperate, the 
USDOC selected facts on record that reflected t he GOI's non -cooperation and led to a less 
favourable outcome.246  
7.128.   We recall that  Article 12.7 " permits the use of facts available solely for the purpose of 
replacing information that may be missing"; consequently, a n investigating authority must use 
those " facts available" that " reasonably replace  the information that an interested party failed to 
provide"247, with a view to arriving at an accurate determination248, i.e. with a view to selecting 
the best information.249 The Appellate Body has stressed that an inve stigating authority must 
consider the evidence on the record through a process of reasoning and evaluation, with a view to 
selecting information that reasonably replaces the missing information, although the degree and 
nature of the reasoning and evaluatio n required will depend on the circumstances of a particular 
case.250 Where there are multiple "available facts" from which to choose, the process of reasoning 
and evaluation should involve a degree of comparison251; conversely, there may be situations in 
which  a comparative approach is not feasible, such as where there is only one set of reliable 
information on the record that is relevant to a particular issue .252 The Appellate Body has also 
indicated that an investigating authority may take  into account  the proc edural circumstances in 
which information is missing, including the non -cooperation of an interested party, as part of the 
process of reasoning and evaluation of which facts available constitute replacements for missing 
necessary information.253 However, the  use of inferences in order to select adverse facts that 
punish non -cooperation would not accord with Article 12.7, and procedural circumstances, 
including any resulting inferences, may not alone form the basis of a determination; rather, 
determinations pu rsuant to Article 12.7 must be made on the basis of "facts" that reasonably 
replace the "necessary information" that is missing.254 
7.129.   Moreover, w e recall and agree with the views of the panel in EC – Countervailing Measures 
on DRAM Chips  that an interested par ty's failure to cooperate is an element that may be taken into 
account by the authority when weighing the evidence and the facts before it, and may be the 
                                                
244 Indonesia's first written submission, paras. 66 -71; opening statement at the first meeting of the 
Panel, para. 42;  and second written submission, para. 32.  
245 United States' response to Panel question No. 87. 
246 United States' first written submission, paras. 119, 141, and 158 -165. 
247 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 294. (emphasis added)  
248 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice , para. 293;  US – Carbon Steel 
(India) , para. 4.416 (quoting Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , 
paras.  293-294).  
249 Appellate Body Report, US – Carbon Steel (India) , para. 4.435.  
250 Appellate Body Report, US – Carbon Steel (India) , paras. 4.418, 4.424,  and 4.431. The Appellate 
Body explained that the extent of the evaluation of the "facts available" that is required, and the form it may 
take, will "depend on the particular circumstances of a given case, including the nature, quality, and amount of 
the evidence on the record, and the particular determinations to be made in the course of an investigation". 
(Appellate Body Report, US – Carbon Steel (India) , paras. 4.421 -4.422) . 
251 See, in particular, Appellate Body Report, US – Carbon Steel (India)  para. 4.4 26. 
252 Appellate Body Report, US – Carbon Steel (India) , paras. 4.417 and 4.428.  
253 Appellate Body Report, US – Carbon Steel (India) , paras. 4.426  and 4.468.  
254 Appellate Body Report, US – Carbon Steel (India) , para. 4.468.  WT/DS491/R  
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  element that tilts the balance in a certain direction . The panel also considered that while facts 
available should not be used in a punitive manner, and that non -cooperation does not allow an 
investigating authority to simply use the information available which leads to the worst possible 
result for the interested party, this does not render completely ir relevant the failure to cooperate 
in weighing and assessing the information before the authority.255 
7.130.   In the case before us, the USDOC's determination that Orleans was affiliated with 
APP/SMG rested on an adverse inference drawn from its finding that:  
[T]he GOI failed to cooperate by not acting to the best of its ability in responding to 
our requests. Therefore, the application of an adverse inference is warranted. As an 
adverse inference, we are determining that Orleans is affiliated with APP/SMG and 
that, t herefore, the purchase of APP/SMG's debt by Orleans from the GOI constituted 
a buyback by APP/SMG of its own debt.256 
7.131.   The USDOC referred to the other evidence on the record in the next subsection of the 
determination , stating that "[n] evertheless, newspaper articles and reports suggesting that 
APP/SMG may have purchased its own debt, and that Orleans was an affiliate of APP/SMG, have 
been placed on the record of this investigation. "257 
7.132.   We recall that th e GOI provided factual evidence to the USDOC that stated th at Orleans 
was unaffiliated with APP/SMG. The USDOC reasonably considered that other factual evidence, 
submitted by the petitioners (World Bank Report , press reports  and expert statement ) raised 
doubts as to the accuracy and veracity of those documents. We  have found above that , 
particularly  in light of this other information, it was reasonable for the USDOC to seek additional 
information in order to test the veracity of the various statements of non -affiliation and of the 
GOI's representations concerning t he processes – or lack thereof – that IBRA followed in 
ascertaining compliance with the prohibition on parties purchasing the debt of an affiliated debtor. 
We have also concluded that the USDOC was justified in concluding that the information it had 
reques ted was necessary and had not been provided to it, in spite of clear requests to do so, and 
that it was reasonable for the USDOC to consider that the GOI had failed to cooperate by not 
providing the missing information.258 In our view, in these circumstances , there was a sufficiently 
close connection between the missing information, which pertained to other PPAS sales and, 
indirectly, to IBRA's due diligence, and the USDOC's conclusion – reached on the basis of an 
adverse inference – regarding the broader que stion of the affiliation between Orleans and 
APP/SMG.259 We reach this conclusion in light of the fact that the information not provided was 
requested for the purpose of verifying the accuracy of the GOI's position that it was normal for 
IBRA not to enquire into the question of ownership or possible affiliation.  
7.133.   Moreover, w e agree with the United States that the issue on which necessary information 
was missing  – i.e. that of the affiliation of Orleans to APP/SMG  – being a binary "yes or no" one, 
the USDOC's use of an inference in light of the GOI's failure to cooperate logically could only lead it 
                                                
255 Panel Report, EC – Countervaili ng Measures on DRAM Chips , para. 7.80 ; see also ibid. para. 7.61 . 
256 USDOC Issues and Decision Memorandum , (Exhibit US -31), pp. 5 -6; see also ibid. pp. 48 -55. 
257 USDOC Issues and Decision Memorandum , (Exhibit US -31), p. 6. (fn omitted)  
258 See a bove, para. 7.112 . 
259 We note in this respect that the USDOC indicated that it determined that Orleans was affiliated with 
APP/SMG:  
[B]ecause the GOI has been unable to demonstrate the accuracy of its assertion that it did not 
inquire into the ownership of Orleans, and that information regarding the ownership of Orleans 
was never included in Orleans' application file. Failure to provide the requested information for 
the three other PPAS bidders, combined with the apparent lack o f any procedural guidelines used 
in the PPAS program or other IBRA administered programs, prevented the Department from 
corroborating the GOI's claims regarding the Orleans inquiry and the contents of its application 
file.  
(USDOC Issues and Decision Memor andum, (Exhibit US -31), p. 20)  
See also ibid. p. 53:  
Due to the GOI's failure to provide this information by the required deadlines, there is a hole in 
the record pertaining to IBRA's procedures during the strategic asset sales. The GOI has provided 
information pertaining to the Orleans transaction, but there is little indication on the record that 
this transaction was handled according to normal IBRA procedures, especially as pertains to the 
bona fides of bidders. Without information pertaining to other transactions, we cannot "test" the 
GOI's claims that Orleans and APP/SMG were not affiliated.  WT/DS491/R  
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  to conclude that Orleans was affiliated with APP/SMG. In such circumstances, Article 12.7 does not 
require the authority to perform a comparative evaluation – there  simply were not different facts 
for the USDOC to consider as the drawing of an inference in light of the GOI's failure to cooperate 
could only lead the USDOC to find that Orleans was affiliated with APP/SMG.260, 261  
7.134.   In light of the foregoing, we find that Indonesia has failed to establish that the USDOC 
acted inconsistently with Article 12.7 in its determination  that Orleans was affiliated with APP/SMG . 
7.5.4   Claims under Article 2.1(c) and the chapeau  of Article 2.1 of the SCM Agreement 
(specificity)  
7.5.4.1   Introduction  
7.135.   Indonesia challenges the USDOC's specificity determinations with respect to the three 
subsidies at issue in this dispute , i.e. the provision of standing timber, the log export ban, and the 
debt buy -back.262 
7.136.   The USDOC determined that each of these subsidies were de facto  specific. In the case of 
the provision of standing timber, the USDOC found that, of the 23 industry categories recognized 
by the GOI, "standing timber was provided by the GOI to five industries during the POI, including 
the paper industry".263 The USDOC determined, on this basis, that "the provision of stumpage 
[was]  specific …  because it [was]  limited to a group of industries".264 The USDOC also determined 
that the log export ban was de facto  specific "because the industries receiving subsidies f rom the 
operation of the ban [were]  limited in number".265 Finally, the USDOC determined that the debt 
buy-back constituted a company -specific subsidy. It found, in this respect, that " [b]ecause the 
debt was sold to an APP/SMG affiliate, in violation of the GOI's own prohibition against selling debt 
to affiliated companies … the sale was company -specific."266 
7.137.   Indonesia claims that these findings are inconsistent with Article 2.1(c) because, in each 
case, the USDOC failed to determine that the subsidies "were part of a plan or scheme intended to 
confer a benefit", i.e. a "subsidy programme". In addition, Indonesia claims that the USDOC's 
finding of de facto  specificity with respect to the debt buy -back is also inconsistent with the 
                                                
260 As noted above, para.  7.128 , in US – Carbon Steel (India) , the Appellate Body rejected the 
proposition that Article  12.7 of the SCM Agreement requires a comparative evaluation of the "facts available" in 
every case and pointed to a situation in which "there is only one set of reliable information on the record that is 
relevant to a particular issue and may thus serve a s a factual basis for a determination" as an example of 
situation where a comparative approach would not be feasible. (Appellate Body Report, US – Carbon Steel 
(India) , para. 4.434).  
261 In the light of this conclusion, and given that the USDOC did not base its determination on the other 
evidence on the record (press articles, World Bank Report, statement by the expert), we do not consider that 
we need to consider any further Indonesia's argument that the USDOC gave undue weight to the other 
evidence on recor d and that it should have used circumspection in relying on these documents. Nor do we need 
to consider Indonesia's objections with respect to the expert statement, pertaining to the fact that the USDOC 
did not disclose the expert's identity and the USDOC' s characterization of the person as an independent expert . 
(Indonesia's comments on the United States' response to Panel question No. 68).  
262 Indonesia's first written submission, para. 3.   
263 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 7 (ref erring to Part Two of GOI First 
Supplemental Questionnaire Response , (submitted to the Panel as Exhibit US -34 (BCI)), p. 40).  
264 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 7.  
265 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 13.  
266 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 20.  The USDOC's determinations of de 
facto specificity were made pursuant to section 771(5A)(D)(iii)(I) of the US Tariff Act  of 1930 . The 
United  States indicated that this provision implements Artic le 2.1(c) of the SCM Agreement.  (United States' 
response to Panel question No. 82(a)). Section 771(5A)(D)(iii)(I) of the US Tariff Act of 1930  provides that:  
(D) Domestic subsidy. In determining whether a subsidy (other than a subsidy described in 
subpara graph (B) or (C)) is a specific subsidy, in law or in fact, to an enterprise or industry 
within the jurisdiction of the authority providing the subsidy, the following guidelines shall apply:  
…  
(iii) Where there are reasons to believe that a subsidy may be  specific as a matter of fact, the 
subsidy is specific if one or more of the following factors exist:  
(I) The actual recipients of the subsidy, whether  considered on an enterprise or industry basis, 
are limited in number.  
(Section 771(5A) of the Tariff Ac t of 1930, (Exhibit US -118), p. 303)  WT/DS491/R  
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  chapeau  of Article 2.1 because the USDOC failed to "identify the jurisdiction allegedly providing a 
benefit" .267  
7.138.   The United States requests that the Panel reject Indonesia's claim s.268  
7.139.   We first address the legal standard under the provisions at issue before examining 
Indonesia's claims un der Article 2.1(c), and then its claim under the chapeau  of Article 2.1. Finally, 
we address, in a separate section, certain allegations presented by Indonesia , in the context  of its 
claims under both Article 2.1(c) and the chapeau  of Article 2.1, that per tain to the USDOC's 
determination that the sale of APP/SMG to Orleans was a company -specific  subsidy .269  
7.5.4.2   Legal standard under Article 2.1(c) and the chapeau  of Article 2.1 of the SCM 
Agreement  
7.140.   Indonesia's claims concern the notion of "subsidy programme" in the first factor under 
Article 2.1(c) and the identification of the granting authority providing the subsidy under the 
chapeau  of Article 2.1 of the SCM Agreement.270  
7.141.   Article 2.1 of the SCM Agreement provides as follows:  
Article 2  
Specificity  
 
2.1 In order to determine whether a subsidy, as defined in paragraph 1 of Article 1, 
is specific to an enterprise or industry or group of enterprises or industries (referred to 
in this Agreement as "certain enterprises") within the jurisdiction of the granting 
authorit y, the following principles shall apply:  
(a) Where the granting authority, or the legislation pursuant to which the granting 
authority operates, explicitly limits access to a subsidy to certain enterprises, such  
subsidy shall be specific.  
(b) Where the gra nting authority, or the legislation pursuant to which the granting 
authority operates, establishes objective criteria or conditions governing the eligibility 
for, and the amount of, a subsidy, specificity shall not exist, provided that the 
eligibility is a utomatic and that such criteria and conditions are strictly adhered to. The 
criteria or conditions must be clearly spelled out in law, regulation, or other official 
document, so as to be capable of verification.  
(c) If, notwithstanding any appearance of no n-specificity resulting from the 
application of the principles laid down in subparagraphs (a) and (b), there are reasons 
to believe that the subsidy may in fact be specific, other factors may be considered.  
Such factors are: use of a subsidy programme by a  limited number of certain 
enterprises , predominant use by certain enterprises, the granting of disproportionately 
large amounts of subsidy  to certain enterprises, and the manner in which discretion 
has been exercised by the granting authority in the decis ion to grant a subsidy.  In 
applying this subparagraph, account shall be taken of the extent of diversification of 
                                                
267 Indonesia's first written submission, para. 3. As noted in para. 3.1 and fn 27 above, Indonesia 
initially submitted claims und er the chapeau  of Article 2.1 of the SCM Agreement against the USDOC's findings 
of specificity in connection with the provision of standing timber and the log export ban. However, Indonesia 
informed the Panel at the first meeting that it had abandoned thos e claims. (Indonesia's first written 
submission, para. 3; opening statement at the first meeting of the Panel, para. 56).   
268 United States' opening statement at the first meeting of the Panel, para. 43.  
269 In the case of the provision of standing timber an d the log export ban, Indonesia does not dispute 
the USDOC's findings that the recipients of the subsidies were limited in number.  
270 Indonesia's claim under the chapeau  of Article 2.1 concerns an alleged failure by the USDOC to 
"identify the jurisdiction a llegedly providing a benefit" or "the relevant jurisdiction". (Indonesia's first written 
submission, para. 3; see also opening statement at the first meeting of the Panel, para. 56; and closing 
statement at the first meeting of the Panel, para. 6). However , as we describe in more detail below, the 
arguments raised by Indonesia in support of its claim fault the USDOC for not having properly identified the 
granting authority  that conferred the subsidy. (See, for instance, Indonesia's first written submission,  
paras.  94-95; response to Panel question No. 30; and second written submission, para. 49).  WT/DS491/R  
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  economic activities within the jurisdiction of the granting authority, as well as of the 
length of time during which the subsidy programme has  been in operation.271 
7.142.   We start by noting that the issue of specificity concerns the limitation of access to a 
subsidy.  The specificity requirement is not about the existence of a subsidy, which is dealt with in 
Article 1.1, but rather about access thereto.272 This distinction is explicitly reflected in Article 1.2 , 
which states that "[a] subsidy as defined in paragraph 1  shall be su bject to the provisions of 
Part II or shall be subject to the provisions of Part III or V only if such a subsidy is specific  in 
accordance with the provisions of Article 2".273 The chapeau  of Article 2.1 also reflects this 
distinction by limiting the analysis of specificity to measures that constitute a subsidy "as defined 
in paragraph 1 of Article 1". The specificity analysis, therefo re, assumes the existence of a subsidy, 
that is, a financial contribution that confers a benefit274 and the determination that a given 
measure constitutes a subsidy informs the scope and content of the analysis required to establish  
de facto specificity  with respect to that subsidy .275 
7.143.   Article 2 of the SCM Agreement elaborates on the concept of "specificity" . Article 2.1 sets 
out principles for determining whether a subsidy is specific by virtue of its limitation to " an 
enterprise or industry or group of enterp rises or industries" .276 Article 2.1(a) establishes that a 
subsidy is specific if the granting authority, or the legislation pursuant to which the granting 
authority operates, explicitly limits access to that subsidy to eligible enterprises or industries.  This 
is referred to as de jure  specificity, i.e. the limitation of access to a subsidy is explicitly set forth in 
the particular legal instrument pursuant to which the granting authority operates. Article 2.1(b)  in 
turn sets out that specificity "shall not e xist" if the granting authority, or the legislation pursuant to 
which the granting authority operates, establishes objective criteria or conditions that guard 
against selective eligibility.277  
7.144.   Article 2.1(c) points to certain indicia that an investigating a uthority may evaluate in 
determining whether, despite not being de jure  specific, a subsidy is specific in fact.278 In 
particular, the inquiry under Article 2.1(c) focuses on whether a subsidy, although not appearing  
to be specific on the face of the relevan t legislation, is nevertheless granted in a manner that 
belies the apparent neutrality of the measure.279 The focus of this provision is, therefore, on 
factual circumstances surrounding the granting of a subsidy.280 Article 2.1(c) lists factors that an 
investi gating authority may consider in its evaluation. The first factor under this provision , which is 
the one at issue here, pertains to the "use of a subsidy programme by a limited number of certain 
enterprises". The focus under the first factor of Article 2.1 (c) is on a quantitative assessment of 
the entities that actually use a subsidy programme and, in particular, on whether such use is 
shared by a "limited number of certain enterprises".281 
7.145.   With regard to the notion of "subsidy programme"  in the first factor of Article 2.1(c) , in US 
– Countervailing Measures (China) , the Appellate Body understood this term to refer to "a plan or 
scheme regarding the subsidy at issue".282 The Appellate Body considered that the reference to 
"use of a subsidy programme" in Article 2.1(c) suggests that "it is relevant to consider whether 
subsidies have been provided to recipients pursuant to a plan or scheme of some kind".283 The 
panel in the same dispute was of the view that the fact that the term "programme" is used only in 
the conte xt of an analysis of de facto  specificity, combined with the fact that the SCM Agreement 
contains no definition of the term, suggests that the term "subsidy programme" should be 
interpreted broadly. A broad interpretation of the term "subsidy programme" gi ves due recognition 
                                                
271 Emphasis added; fns omitted.  
272 Panel Report, US – Anti-Dumping and Countervailing Duties (China) , para. 9.21.  
273 Emphasis added.  
274 Appellate Body Report, US – Countervailing Measures (China) , para. 4.144.  
275 Appellate Body Report, US – Countervailing Measures (China) , para. 4.140 (referring to Appellate 
Body Report, US – Large Civil Aircraft (2nd complaint) , para.  750).  
276 By contrast, Article 2.2 establishes principl es relevant to determine whether a subsidy is 
regionally -specific.  
277 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 367.  
278 Appellate Body Report, US – Carbon Steel (India) , para. 4.369.  
279 Appellate Body Report, US – Large  Civil Aircraft (2nd complaint) , para. 877.  
280 Appellate Body Report, US – Carbon Steel (India) , para. 4.369.  
281 Appellate Body Report, US – Carbon Steel (India) , para. 4.374.  
282 Appellate Body Report, US – Countervailing Measures (China) , para. 4.142.  
283 Appellate Body Report, US – Countervailing Measures (China) , para. 4.141.  WT/DS491/R  
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  to the reality that subsidies can take many forms and can be provided through many different 
kinds of mechanisms, some more and some less explicit.284 
7.146.   The Appellate Body in US – Countervailing Measures (China)  held that evidence regarding  
the nature and scope of a subsidy programme may be found in a wide variety of forms, for 
instance, in the form of a law, regulation, or other official document or act setting out criteria or 
conditions governing the eligibility for a subsidy. It further f ound that a subsidy scheme or plan 
may also be evidenced by a systematic series of actions pursuant to which financial contributions 
that confer a benefit have been provided to certain enterprises.285 The panel in EC and certain 
member States – Large Civil A ircraft  considered that an understanding of the legal regime 
pursuant to which an alleged subsidy is granted is a relevant and important consideration when 
making a specificity determination under Article 2.1(c) as it helps to define the relevant 
"programm e".286 
7.147.   With respect to the duty imposed on an investigating authority to identify the subsidy 
programme as part of its specificity analysis, the Appellate Body observed in US – Countervailing 
Measures (China)  that, because Article  2.1 assumes the existence o f a financial contribution that 
confers a benefit, and focuses on the question of whether that subsidy is specific , "[i]t stands to 
reason … that the relevant 'subsidy programme', under which the subsidy at issue is granted, often 
may already have been ide ntified and determined to exist in the process of ascertaining the 
existence of the subsidy at issue under Article  1.1."287  
7.148.   A specificity analysis under Article 2.1 also requires a proper determination of whether the 
jurisdiction of the granting authority c overs the entire territory of the relevant WTO Member or is 
limited to a designated geographical region within that territory.288 Since in determining whether a 
financial contribution exists, an investigating authority must inquire into the nature of the fin ancial 
contribution at issue and determine whether such contribution was provided by the "government", 
by "any public body within the territory of a Member", or by a "private body" entrusted or directed 
by the government, such assessment will inform the id entification of the jurisdiction of the 
granting authority.289 Thus, the chapeau  of Article  2.1 does not require an investigating authority 
to identify the jurisdiction of the granting authority in an explicit manner or in any specific form, as 
long as it is  discernible from the determination.290 
7.149.   With these considerations in mind, we assess Indonesia's claims against the USDOC's 
specificity determinations in the underlying investigation.  
7.5.4.3   Whether the USDOC's determinations of de facto  specificity are inconsisten t 
with Article 2.1(c) of the SCM Agreement  
7.150.   Indonesia claims that, in the underlying investigation, the USDOC failed to determine or 
identify the relevant "subsidy programme" in connection with each of the subsidies at issue, in 
contravention of Article 2.1 (c) of the SCM Agreement.291 
7.151.   Before we turn to Indonesia's arguments in this regard, we note that although it 
formulates it s claims as pertaining to the subsidy programmes at issue, Indonesia is in fact 
challenging the USDOC's findings with respect to the ex istence of the three subsidies at issue. The 
                                                
284 Panel Report, US – Countervailing Measures (China) , para. 7.240 (quoting Panel Report, US – 
Anti-Dumping and Countervailing Duties (China) , para. 9.32).  
285 Appellate Body Report, US – Countervailing Measures (China) , para. 4.141. The Appellate Body held, 
in addition, that " [a]n examination of the existence of a plan or scheme regarding the use of the subsidy at 
issue may also require assessing the operation of such plan or scheme over a period of time." (I bid. 
para. 4.142) . 
286 Panel Report, EC and certain member States – Large Civil Aircraft , para. 7.988.  
287 Appellate Body Report, US – Countervailing Measures (China) , para. 4.144.  
288 Appellate Body Report, US – Countervailing Measures (China ), para s. 4.165-4.166. This is because if 
the granting authority is a regional or local government, a subsidy available to enterprises throughout the 
territory over which that regional or local government has jurisdiction would not be specific; conversely,  if the 
granting authority is the central  government, a subsidy available to the same enterprises would be specific.  
289 Appellate Body Report, US – Countervailing Measures (China) , para. 4.167.  
290 Appellate Body Report, US – Countervailing Measures (China) , paras. 4.169.  
291 Indonesia's first written submission, para. 3; response to Panel question No. 26; and opening 
statement at the second meeting of the Panel, para. 31.  WT/DS491/R  
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  gist of Indonesia's challenge is that the USDOC improperly found that the measures at issue 
constituted financial contributions conferring a benefit. In so doing, Indonesia is effectively seeking 
to challenge an ew, under Article 2.1(c), findings which are not governed by that provision but are 
primarily governed by Article 1.1 of the SCM Agreement. This being the case, it would be 
inappropriate for us to consider Indonesia's arguments challenging the USDOC's find ings of 
financial contribution and benefit in our analysis of its claims under 2.1(c) .292 
7.152.   Indonesia submits that the use of the term "subsidy programme" in the first factor of 
Article 2.1(c) means that, in determining whether a subsidy is de facto  specific, an investigating 
authority is required to identify that a subsidy programme exists. Indonesia agrees with the 
United  States that evidence regarding a subsidy programme may be found in a wide variety of 
forms, e.g. in the form of written instruments or by a  systematic series of actions pursuant to 
which subsidies are provided to certain enterprises, and that an investigating authority is not 
required to rely, in every instance, on both types of evidence.293 Indonesia submits that, when the 
subsidies at issue e manate from legal instruments, and these "on the face of the writing" do not 
provide sufficient evidence to conclude that a plan or scheme that confers a benefit to certain 
enterprises  exists, further analysis is required. Indonesia considers that, consist ent with the 
Appellate Body Report in US – Countervailing Measures (China) , if there is no written plan or 
scheme that evidences the existence of a subsidy programme on the face of the writing, the 
investigating authority must cite evidence of a systematic  series of actions that constitutes a 
subsidy programme.294 
7.153.   Indonesia also agrees with the United States that, in the underlying investigation, the 
measures the USDOC found to constitute countervailable subsidies were manifested in certain laws 
and decrees i ssued by the GOI.295 However, Indonesia contends that these written instruments 
were insufficient to demonstrate the existence of subsidy programmes because none of them, on 
their face, provided evidence of a financial contribution conferring a benefit. Indo nesia in particular 
contends that the written instruments at issue did not confer, or suggest that the measures were 
designed to confer, a benefit to paper producers in Indonesia or, in the case of the debt buy -back, 
to APP/SMG.296 Indonesia  links this conte ntion to what it considers are shortcomings in the 
USDOC's benefit findings for the three subsidies at issue.297 In addition, Indonesia raises certain 
arguments challenging the USDOC's findings that the measures constituted financial contributions.  
7.154.   Indonesi a argues, first, that the legal instruments regulating the collection of stumpage 
fees do not confer a benefit to paper producers because : (a) the GOI does not "provide " standing 
timber  within the meaning of Article 1.1(a) given that nearly all the timber at issue during the POI 
was grown on plantations by licence holders; and (b) these instruments impose obligations on the 
licence holders, including the payment of revenues from the use of the land, which ultimately 
                                                
292 We recall that the United States argues that the arguments that Indonesia advances in pa ragraph 79 
of its first written submission are addressed to a claim under Article 1.1(a) of the SCM Agreement, which is not 
one of the provisions enumerated in Indonesia's panel request. ( See above, fn 43). In paragraph 79 of its first 
written submission, Indonesia argues, inter alia , that a ban on export of logs does not entrust or direct the sale 
of logs at suppressed prices in Indonesia especially as chipwood and pulp could be freely exported.  
293 Indonesia's r esponse to Panel question No. 27; second written submission, para. 45. We note that 
Indonesia's position evolved through the course of these panel proceedings. Initially, Indonesia argued that to 
establish the existence of a subsidy programme under the fir st factor of Article  2.1(c), the investigating 
authority must have adequate evidence of the existence of "a systematic series of actions" pursuant to which 
financial contributions that confer a benefit are provided to certain enterprises.  Indonesia argued that, in the 
underlying investigation, the USDOC failed to make a finding that the provision of standing timber, the log 
export ban , and the debt buy -back each constituted "a systematic series of actions" that confers a benefit, 
because in each instance, i t failed to establish that there was a "plan or scheme" based on evidence of "a 
systematic series of actions" that confers a benefit. ( Indonesia's first written submission, para. 73). In other 
words, Indonesia initially argued that irrespective of whether the subsidy programme at issue is expressed in 
written form, the authority is required to find that there exists a "systematic series of actions". We understand 
Indonesia to now accept that there is no such requirement where the programme is manifested in written 
form, insofar as both elements pertaining to the existence of a subsidy (financial contribution conferring a 
benefit) are evident from the written manifestation of the subsidy programme.  
294 Indonesia's first written submission, paras. 72 -83; opening  statement at the first meeting of the 
Panel, para. 50; second written submission, para. 45; and opening statement at the second meeting of the 
Panel, para. 31  (all referring to Appellate Body Report, US – Countervailing Measures (China) , para. 4.143).  
295 Indonesia's response to Panel question No s. 27(b) and 27(c).  
296 Indonesia's second written submission, paras. 46 -48. 
297 Indonesia's response to Panel question No. 27(b).  WT/DS491/R  
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  benefit the  GOI.298 Second, regarding the l og export ban, Indonesia takes issue with the USDOC's 
finding , in the CFS investigation,  that the ban results in inputs being provided to producers of 
coated paper  at "lower" or "supressed" prices299, contests that the Indonesian decree imposing the 
ban conf ers, or was designed to confer, a benefit because its purpose was to address illegal 
logging and deforestation, and argues that the ban did not confer a benefit because it did not 
extend to pulp or wood chips .300 Indonesia also submits that, even if the effe ct of the log export 
ban were an increased domestic supply of logs potentially benefitting downstream industries in 
Indonesia, the panel in US – Export Restraints  found , and subsequent panels confirmed, that 
export restraints including export bans do not c onstitute countervailable subsidies within the 
meaning of the SCM Agreement.301 Finally, regarding the debt buy -back, Indonesia argues that the 
written instruments pursuant to which IBRA sold APP/SMG's debt to Orleans suggested no benefit 
was conferred. Indo nesia argues that, in fact, these instruments prohibited the sale of debt to 
affiliates, and that the USDOC only found that a subsidy existed because it determined, following 
the application of adverse facts available, that APP/SMG and Orleans were affilia ted and that the 
GOI violated its own law.302 
7.155.   Indonesia argues that, given the lack of evidence of a benefit conferred in the relevant 
legal instruments, the USDOC was required to establish the existence of each subsidy programme 
by citing to evidence of a " systematic series of actions" that confer a benefit, but failed to do so.303 
7.156.   The United States asks the Panel to reject Indonesia's claims. For the United States, 
Indonesia misreads the findings of the Appellate Body in US – Countervailing Measures (China)  
and conflates the issue of specificity with elements that are relevant for the establishment of a 
subsidy, i.e. the existence of a financial contribution and a benefit.304 Moreover, the United States 
submits that the three subsidies before the USDOC – the pro vision of standing timber, the log 
export ban, and the debt buy -back – were evidenced by specific documents laying out the 
respective subsidy programmes concerning the granting of the s ubsidies. Therefore, the 
United  States submits, there was no need for t he USDOC to additionally consider whether each 
subsidy constituted a "systematic series of actions".305 
7.157.   We turn  first to the question whether, as claimed by Indonesia, Article 2.1(c) requires an 
investigating authority to establish that the written instrumen ts concerning the subsidy at issue 
provide sufficient evidence to conclude that a plan or scheme that confers a benefit  exists and 
consequently, whether in the absence of such evidence, Article 2.1(c) requires a finding of "a 
systematic series of actions" that confers a benefit  to certain enterprises.  
7.158.   We agree with Indonesia that an analysis under the first factor of Article 2.1(c) entails the 
identification of the relevant "subsidy programme" pursuant to which the subsidy is provided .306 
However, we reject the view that, in considering a subsidy programme that is manifested in the 
                                                
298 Indonesia's first written submission, paras. 76 -77; opening statement at the first meet ing of the 
Panel , para. 51; response to Panel question No. 27(b); second written submission, para. 46; and opening 
statement at the second meeting of the Panel, para. 32.  
299 Indonesia's first written submission, paras. 79 -80; opening statement at the first meeting of the 
Panel, paras. 52 -53; response to Panel question No. 27(b); and second written submission, para. 47.  
300 Indonesia's second written submission, para. 47.  
301 Indonesia first written submission, para. 79 (referring to Panel Reports, US – Export Re straints , 
para. 8.75; China – GOES , para. 7.90 ; and  US – Countervailing Measures (China) , para. 7.401).  
302 Indonesia's first written submission, para. 83; response to Panel question No. 27(b).  In addition, 
Indonesia argues that to the extent there was even a "programme" at issue, "it concerned the sale of 
approximately 300,000 non -performing loans" (Indonesia's response to Panel question No. 85), and that what 
informed the USDOC's specificity finding that a subsidy programme had been used was not the existen ce of the 
programme "operating in its intended fashion" but the USDOC's adverse facts available finding that Indonesia 
acted contrary to the terms of the programme, i.e. violated its own law and allowed an affiliate of a debtor to 
buy-back debt, without an y "hard" evidence supporting that finding. Indonesia submits that "a newspaper 
article is the only piece of evidence propping up USDOC's finding that a subsidy programme was used". ( Ibid.). 
303 Indonesia 's opening statement at the first meeting of the Panel,  paras. 31 and 50; response to Panel 
question No. 27(b); and second written submission, para. 45.  
304 United States' second written submission, para. 90.  
305 United States' second written submission, paras. 89 and 96.  
306 As noted above para. 7.145 , in US – Countervailing Measures (China) , the Appellate Body considered 
that the reference to "use of a subsidy programme" in Article 2.1(c) suggests that "it is relevant to consider 
whether subsidies have been provided to r ecipients pursuant to a plan or scheme of some kind". ( Appellate 
Body Report, US – Countervailing Measures (China) , para. 4.141).  WT/DS491/R  
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  form of written instruments in order to assess whether it has been used by a limited number of 
certain enterprises, Article 2.1(c) requires that both the financial contribution and the benefit be 
discernible from such instruments. In our view, the term "subsidy programme" in Article 2.1(c) 
does not require the determination or identification of the relevant subsidy programme on the 
basis of evidence showing a particular conjunction o f elements.  
7.159.   We recall, in this respect that the relevant inquiry under Article 2 is whether access to a 
subsidy already found to exist is limited to certain enterprises. Hence, t he identification of the 
subsidy programme presupposes that the subsidy in que stion exists .307 It would, in our view, be 
redundant and incongruous if the reference to a "subsidy programme" in Article 2.1(c) were 
understood to have the effect of requiring the investigating authority not only to address anew 
whether a subsidy exists, bu t further to show that the relevant laws or regulations governing the 
subsidy programme explicitly provide for both elements of the subsidy , i.e. a financial contribution 
conferring a benefit . In our view, this is, in effect, the logical outcome of Indones ia's interpretation 
of Article 2.1(c).  
7.160.   Requiring that both the financial contribution and the benefit be set forth explicitly in the 
written instruments for those instruments to constitute a "subsidy programme" would not 
acknowledge the reality that gover nments provide subsidies under programmes that take many 
forms, some more explicit than others.  In many cases, it will not be evident on the face of the 
written instruments  or acts of the granting authority  whether the financial contribution at issue 
confe rs a benefit . Rather than by reference to the written instrument, the investigating authority 
will only know whether a benefit exists (and in what amount) after comparing the terms of the 
financial contribution  to a market -determined benchmark.308 
7.161.   We note th at Indonesia bases its interpretation of Article 2.1(c) largely on the following 
paragraph in the Appellate Body Report in US – Countervailing Measures (China) : 
The mere fact that financial contributions have been provided to certain enterprises is 
not suf ficient, however, to demonstrate that such contributions have been granted 
pursuant to a plan or scheme for purposes of Article  2.1(c) of the SCM  Agreement. In 
order to establish that the provision of financial contributions constitutes a plan or 
scheme un der Article  2.1(c), an investigating authority must have adequate evidence 
of the existence of a systematic series of actions pursuant to which financial 
contributions that confer a benefit are provided to certain enterprises.309 
7.162.   We note that, unlike the sub sidies in question in this dispute, the subsidies at issue in US – 
Countervailing Measures (China)  were not reflected or expressed in written instruments, but 
consisted of the consistent provision of certain inputs by state -owned enterprises for less than 
adequate remuneration.310 We read the Appellate Body's statement quoted above as addressing a 
specific situation in which a subsidy programme is not manifested in written form . We recall in this 
regard the earlier statement by the Appellate Body in the same case, to the effect that a subsidy 
programme may either be expressed in written form or manifest itself as a systematic series of 
actions.311 In any event, we do not understand the above statement to stand for the proposition 
that when a subsidy programme is  manifested in written instruments, Article 2.1(c) requires the 
investigating authority to find that these written instruments set forth both a financial contribution 
and the benefit conferred by that financial contribution, or alternatively, where either element is 
                                                
307 See above, para. 7.142 ; and Appellate Body Report, US – Anti-Dumping and Counte rvailing Duties 
(China) , para. 413:  
[T]he purpose of Article 2 of the SCM Agreement  is not to identify the elements of the subsidy as 
set out in Article 1.1, but to establish whether the availability of the subsidy is limited inter alia 
by reason of the el igible recipients (Article 2.1(a)) or by reason of the geographical location of 
beneficiaries (Article 2.2).  
308 In this respect, we share the view of the panel in US – Anti-Dumping and Countervailing Duties 
(China)  that a wide variety of possible forms of s ubsidization falls within the definition in Article 1 of the SCM 
Agreement, and that nothing in Article 2 appears to narrow down those forms. (Panel Report, US – 
Anti-Dumping  and Countervailing Duties (China) , para. 9.29).  
309 Appellate Body Report, US – Countervailing Measures (China) , para. 4.143 . 
310 Panel Report, US – Countervailing Measures (China) , para. 7.242; Appellate Body Report, US – 
Countervailing Measures (China) , para. 4.149.  
311 Appellate Body Report, US – Countervailing Measures (China) , para. 4.1 41. WT/DS491/R  
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  not apparent from the written instruments, the authority needs to establish the existence of "a 
systematic series of actions" revealing the missing element(s).  
7.163.    We also find it relevant that the panel in US – Anti-Dumping and Countervailing Dut ies 
(China) , in the context of a claim under Article 2.1(a) challenging a finding of de jure  specificity, 
i.e. where the limitation of access to a subsidy was set forth in the relevant legal instruments, 
considered that such legal instruments need not refl ect a limitation of each of the definitional 
elements of the subsidy. The panel considered that, although "there are many ways in which 
access to a subsidy could be explicitly limited", it was not the case "that both the financial 
contribution and the bene fit necessarily would have to be set forth explicitly to effect such a 
limitation".312 If limitation of access to both elements of the subsidy is not required in the relevant 
legal instruments in a de jure  specificity analysis – where the focus of the analys is is those 
relevant legal instruments – we see no reason why an investigating authority should be required to 
find that the relevant legal instruments  evidence both constitutive elements of the subsidy in the 
context of de facto  specificity – where the an alysis normally focuses on the actual use of , or access  
to, the subsidy.  
7.164.   In sum, we are of the view that nothing in Article 2.1(c) requires that an investigating 
authority, in considering the relevant subsidy programme at issue in its specificity analysis,  must 
in all instances make a finding that the programme explicitly set s forth both elements of the 
subsid y at issue. Particularly where the subsidy proceeds from a legal framework that is expressed 
in written instruments, it in our view suffice s that the authority identifies the subsidy programme 
by describing the legal framework pursuant to which the financial contribution is provided . 
Moreover, b ecause the subsidy programme at issue often may already have been identified and 
determined to exist in the pr ocess of ascertaining the existence of the subsidy, we do not accept  
Indonesia's suggestion that, in examining whether subsidies are de facto  specific, an investigating 
authority is required to make an explicit  finding of the existence of the relevant subs idy 
programme "before" proceeding to the consideration of the factors provided for in Article 2.1(c).313  
7.165.   Turning to the USDOC's determinations in the underlying investigation, as noted above, we 
do not consider Indonesia's arguments challenging the USDOC's findings concerning the existence 
of each of the subsidies in our analysis of its claims under 2.1(c) .  
7.166.   Indonesia does not dispute that the stumpage programme and the log export ban 
emanated from written instruments. Indonesia also does not dispute that th e sale of APP/SMG's 
debt was made pursuant to written instruments, but argues that the USDOC's findings rested on 
an alleged violation of these instruments.  
7.167.   In our view, with respect to each of the three subsidies at issue, the USDOC  identified and 
determi ned each of the relevant subsidy programmes consistently with Article 2.1(c). It did so in 
the process of determining the existence of each of the three subsidies at issue.  
7.168.   As we have described in the section of this Report addressing Indonesia's claims un der 
Article 14(d) concerning the provision of standing timber,  the USDOC found that the GOI provided 
standing timber to pulp and paper producers through the granting of licence s to harvest timber 
from forest land owned by the GOI, in exchange for stumpage fees. The GOI granted these 
licences and collected the respective fees pursuant to certain laws and regulations .314 The USDOC 
                                                
312 Panel Report, US – Anti-Dumping and Countervailing Duties (China) , para. 9.26. The Appellate Body 
agreed with the panel. (Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , 
paras.  377-378).  
313 Indonesia's response to Panel que stion No. 85. As we have noted above, para. 7.147 , in US – 
Countervailing Measures (China) , the Appellate Body stated that, because Article  2.1 assumes the existence of 
a subsidy, and focuses on the question of whether that sub sidy is specific, "[i]t stands to reason … that the 
relevant 'subsidy programme', under which the subsidy at issue is granted, often may already have been 
identified and determined to exist in the process of ascertaining the existence of the subsidy at iss ue under 
Article  1.1." (Appellate Body Report, US – Countervailing Measures (China) , para. 4.144).  
314 For instance, the procedures for obtaining the HTI licen ces were promulgated in Minister of Forestry 
Regulation No. P19/Menhut -II/2007 and associated A mendment No. P11/Menhut -II/2008 (GOI Initial 
Questionnaire Response , (Exhibit US -32), p.  9, discussed in USDOC Verification of GOI Questionnaire  
Response , (Exhibit US -35 (BCI) ), p. 2); to obtain annual logging permits after receiving the HTI licen ce, a 
compan y had to obtain approval of a Working Plan of Forest Utilization Document, as stipulated by the Minister 
of Forestry Regulation No.  P.62/Menhut -II/2008) (GOI Initial Questionnaire Response , (Exhibit  US-32), WT/DS491/R  
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  found that this measure constituted a financial contribution in the form of the provision of goods 
by the government  and that it con ferred a benefit to paper producers .315 Based on the information 
provided by the GOI, the USDOC found that the beneficiaries of the granting of harvesting licences 
were five industries in Indonesia, including the paper industry, out of a larger number of ind ustries 
existing in that country (23 categories) . On this basis , the USDOC concluded that the provision of 
stumpage  was specific because it was limited to a group of industries .316  
7.169.   With respect to the log export ban, as we have described in the section of t his Report 
addressing Indonesia's claims under Article 14(d), the USDOC found that, by means of the log 
export ban  (which, in the CFS investigation, it had found was established pursuant to Joint Decree 
No. 1132/Kpts -II/2001 and No. 292/MPP/Kep/10/2001 ), the GOI entrusted or directed forest 
companies to provide goods (i.e. logs and chipwood) to pulp and paper producing companies.317 
The USDOC determined that the prohibition on log and chipwood exports constituted a financial 
contribution  and that it conferred  a benefit  to paper producers . The USDOC then found that the log 
export ban was de facto  specific because the industries receiving the subsidies from the operation 
of the ban were limited in number.318 
7.170.   It is clear to us that in its specificity analysis with respect to both the stumpage 
programme and the log export ban, the USDOC relied on the subsidy programme it had defined – 
if somewhat implicitly – in its consideration of the existence of the subsidy, that this programme 
was manifested in writing, and that  the USDOC found that th e programme provided for the 
provision of a financial contribution in the form of the provision of a good (in the case of the export 
ban, through entrustment and direction). In our view, the USDOC's findings satisfied the obligation  
to identify the subsidy programme at issue as a preliminary step in considering whether that 
programme was used by a limited number of certain enterprises or industries.  
7.171.   In the case of the debt buy -back, as we have described in the section of this Report  
addressing Indonesia's claims under Article 12.7,  the USDOC's determination, relying on facts 
available, that Orleans was affiliated to APP/SMG was one of the findings underlying its conclusion 
that the sale of APP/SMG's debt constituted a financial contr ibution in the form of debt 
forgiveness.319 The USDOC identified the particular action attributed to the GOI that was found to 
constitute a subsidy, i.e. the sale of APP/SMG's debt to Orleans , and the written instruments that 
constituted the framework pursua nt to which IBRA conducted the sale. The USDOC also found that 
a benefit was provided to APP/SMG equal to the difference between the value of the outstanding 
debt and the amount Orleans paid for it.320 The USDOC then found that, because the debt was sold 
to an APP/SMG affiliate, in violation of the GOI's own prohibition against selling debt to affiliated 
companies, th e sale was company -specific .321 
7.172.   Indonesia argues that the specificity determination was based on the USDOC's mistaken 
conclusion that the relevant  law had been violated. T he USDOC's findings concerning the existence 
of the financial contribution and benefit, which in turn were the basis for the USDOC's finding of 
specificity, were based not only on the USDOC's reliance  on facts available under Artic le 12.7 of 
the SCM Agreement, but also on a number of written documents emanating from the GOI and 
IBRA.322 These documents established the scheme pursuant to which the subsidy was provided, 
                                                                                                                                                  
pp. 11-12) and; the reference prices used in the calculation of the PSDH stumpage fees during 2008 were set 
forth in Minister of Trade No. 08/M -DAG/PER2/2007 (GOI Initial Questionnaire Response , (Exhibit US -32), 
p. 14), discussed in USDOC Verification of GOI Questionnaire  Response , (Exhibit US -35 (BCI) ), p. 8. 
315 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 6 -7 and 11.  
316 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 7.  
317 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 12 -13. As indicated above, 
para. 7.26, the USDOC relied largely on its findings in the CFS investigation in determining that the log export 
ban constituted a financial contribution.  In the CFS investigation, concerning the same ban that is at issue 
here, the USD OC found that the log export ban was originally imposed in 1985 and lifted in the late 1990s. 
While log exports were briefly permitted from 1998 to 2001, the GOI reimposed the ban on log and chipwood 
exports in October 2001, pursuant to the Joint Decree No . 1132/Kpts -II/2001 and No.  292/MPP/Kep/10/2001.  
(CFS USDOC Issues and Decision Memorandum, (Exhibit US -43), pp. 27 -28). 
318 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 13.  
319 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 5. 
320 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 20.  
321 USDOC Issues and Decision Memorandum, (Exhibit US -31), p. 20.  
322 For instance, the bidding documents and the sales agreement for the APP/SMG debt sale, including 
the provisions pertaining to the proh ibition on a debtor (and its affiliates) buying back its own debt. ( USDOC 
Issues and Decision Memorandum, (Exhibit US -31), pp. 17-20). WT/DS491/R  
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  albeit on the basis of a violation of the terms of the instruments at issue. We note Indonesia's 
argument that the sale of APP/SMG 's debt to Orleans was a one-time occurrence of alleged 
violation of the law and, therefore, it did not constitute a systematic series of actions pursuant to 
which financial contributions that confer a benefit are provided to certain enterprises.323 
Indonesia 's argument suggests that a subsidy provided to only one recipient requires some kind of 
systemic application in order to be found specific.  In other words, a subsidy programme only exists 
if it provides for a subsidy granted to more than one recipient . We are not persuaded by 
Indonesia's argument in this regard. In our view,  a one -off subsidy to a company may be 
considered to be pursuant to a programme. Moreover , a subsidy that is granted to a  specific 
enterprise, either pursuant to a written instrument or by means of a single governmental action is, 
by definition, specific324; in any event, it can in such cases certainly be concluded that the 
programme was used by a limited number of enterprises .  
7.173.   In sum, in our view, the USDOC identified the three subsid y programmes at issue for 
purposes of its specificity analysis under Article 2.1(c) in the context of describing the measures 
that it found to constitute the respective subsidies . 
7.174.   For the foregoi ng reasons, we conclude that Indonesia has failed to establish that the 
USDOC's de facto  specificity determinations in connection with the provision of standing timber, 
the log export ban , and the debt buy -back are inconsistent with Article 2.1(c) of the S CM 
Agreement.  
7.5.4.4   Whether the USDOC's determination of de facto  specificity in connection with 
the debt buy -back is inconsistent with the chapeau  of Article 2.1 of the SCM Agreement  
7.175.   Indonesia's second claim  refers to an alleged failure by the USDOC to identif y the 
"jurisdiction allegedly providing a benefit".325 However, the arguments raised by Indonesia in 
support of its claim under the chapeau  of Article 2.1 refer to an alleged omission by the USDOC to 
properly identify the granting authority in connection wit h the debt buy -back subsidy.326 
7.176.   In this respect, Indonesia challenges the USDOC's determination that the GOI was the 
entity that provided the debt buy -back subsidy. Indonesia argues that the USDOC 's finding rests 
on an unsupported conclusion, based on two li nes from a single newspaper article, that the GOI 
knowingly and deliberate ly violated Indonesia n law, which in its view is hardly sufficient support 
for a specificity finding.327 Indonesia initially argued that the USDOC was required to identify the 
governme nt entity that allegedly forgave debt.328 Indonesia revised its position to argue that, 
because the USDOC found that it was the action of an individual breaking the law that conferred a 
benefit on APP/SMG, the USDOC was required, under the chapeau  of Article  2.1, to identify the 
individual or individuals acting on behalf of the GOI who violated the law.329  
7.177.   The United States submits that Indonesia's arguments in fact pertain to the existence of 
the subsidy and the USDOC's use of facts available in its determina tion of the existence of the 
subsidy . The United States submits that the chapeau  of Article 2.1 does not require an 
investigating  authority to identify  the jurisdiction of the granting authority in an explicit manner or 
in any specific form, as long as it is discernible from the determination. The United States submits 
that, contrary to Indonesia's assertions, the granting authority was discernible from the 
determination, i.e. " the GOI's sale of APP/SMG's debt to Orleans constituted a financial 
contribution , in the form of debt forgiveness."330 The United States argues that, although not 
required to do so, the USDOC also identified the particular agency within Indonesia that provided 
                                                
323 Indonesia's first written submission, para. 83.  
324 The chapeau  of Article 2.1 provides that a subsidy is specific where  access to the subsidy is limited to 
"certain enterprises". This term includes a single company or a firm. ( Appellate Body Report , US – 
Anti-Dumping and Countervailing Duties (China) , para. 373).  
325 Indonesia's first written submission, para. 3.  
326 Indonesia 's first written submission, paras. 94 -95; response to Panel question No. 30; and second 
written submission, para. 49.  
327 Indonesia's second written submission, para. 49; opening statement at the second meeting of the 
Panel, para. 34.  
328 Indonesia's first wr itten submission, paras. 93 -95. 
329 Indonesia's response to Panel question No. 30; second written submission, para. 49.  
330 United States' first written submission, para. 221 (referring to USDOC Issues and Decision 
Memorandum, (Exhibit US -31), p. 20).  WT/DS491/R  
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  the financial contribution, IBRA. The United States submits that Indonesia ci tes no basis in the 
SCM Agreement for the proposition that the USDOC should have identified the individual or 
individuals who knowingly violated Indonesian law.331  
7.178.   It is clear to us that, i n the investigation at issue, the USDOC identified the granting 
authority (the Indonesian national government, through IBRA) and the jurisdiction at issue (the 
whole of Indonesia).332 Thus, the determinations identified the government entity that effectively 
provided the financial contribution, IBRA.  
7.179.   Indonesia submits that t he USDOC should have identified the individual or individuals who 
violated Indonesian law by allowing an affiliate of APP/SMG to buy back its debt. We recall, 
however, that the purpose of the specificity analysis under Article 2 is to determine whether acc ess 
to a subsidy is limited to certain enterprises or industries. The identity of the individual or 
individuals involved is not immediately relevant to this question333, and Indonesia cites no legal 
basis, in Article  2.1 of the SCM Agreement or elsewhere, fo r its contention in this regard. 
Indonesia's argument appears to rest on the fact that the individual or individuals concerned 
allegedly acted in violation of Indonesian law. We consider, however, that this does not suffice to 
make their alleged actions no t attributable to the GOI in the context of this dispute; it is well 
established under international law that an action or conduct of a government official or entity is 
attributable to the State even where that action or conduct is contrary to national law .334 
7.180.   For the foregoing reasons, we conclude that Indonesia has failed to establish that the 
USDOC failed to properly identify the granting authority of the debt buy -back subsidy , or the 
jurisdiction of that granting authority,  and, as a consequence, that the  USDOC's de facto  specificity 
determination is inconsistent with the chapeau  of Article 2.1 of the SCM Agreement.  
7.5.4.5   Indonesia's allegations concerning the USDOC's determination that the debt 
buy-back was a company -specific subsidy  
7.181.   Even though Indonesia's cla ims focus on the alleged failure of the USDOC to identify the 
subsidy programme at issue and the granting authority, I ndonesia  also makes certain allegations 
that pertain to the USDOC's determination that the sale of APP/SMG 's debt  to Orleans was 
                                                
331 United  States' second written submission, para. 110.  
332 USDOC Issues and Decision Memorandum, (Exhibit US -31), pp. 5 -6 and 17 -20. 
333 We find support for this proposition in the Appellate Body's statement in US – Large Civil Aircraft (2nd 
complaint) , that:  
While th e scope and operation of the granting authority is relevant to the question of whether 
such an access limitation with respect to a particular class of recipients  exists, it is important to 
keep in mind that it is not the purpose of a specificity analysis t o determine whether the 
authorities involved in granting the subsidies constitute a single subsidy grantor or several 
grantors . 
(Appellate Body Report, US – Large Civil Aircraft (2nd complaint) , para. 756 (emphasis original) ) 
334 See Articles 4 and 7 of the International Law Commission's (ILC) Articles on Responsibility for 
Internationally Wrongful Acts. In particular, Article 7 provides that:  
Article 7. Excess of authority or contravention of instructions  
The conduct of an organ of a State or of a person or  entity empowered to exercise elements of 
the governmental authority shall be considered an act of the State under international law if the 
organ, person or entity acts in that capacity, even if it exceeds its authority or contravenes 
instructions.  
In the  Commentary on Article 7, the ILC indicates that:  
(1) Article 7 deals with the important question of unauthorized or ultra vires  acts of State organs 
or entities. It makes it clear that the conduct of a State organ or an entity empowered to 
exercise eleme nts of the governmental authority, acting in its official capacity, is attributable to 
the State even if the organ or entity acted in excess of authority or contrary to instructions.  
(2) The State cannot take refuge behind the notion that, according to the  provisions of its 
internal law or to instructions which may have been given to its organs or agents, their actions or 
omissions ought not to have occurred or ought to have taken a different form. This is so even 
where the organ or entity in question has o vertly committed unlawful acts under the cover of its 
official status or has manifestly exceeded its competence.  
(International Law Commission, Responsibility of States for Internationally Wrongful Acts. Responsibility of 
States for Internationally Wrongfu l Acts; text adopted by the ILC at its fifty -third session, in 2001, and 
submitted to the United Nations General Assembly as a part of the ILC's report covering the work of that 
session)  WT/DS491/R  
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  company -specific , in the context  of its claims under both Article 2.1(c) and t he chapeau  of 
Article  2.1. 
7.182.   First, Indonesia argues, in the context of its claim under the chapeau  of Article 2.1, that 
the World Bank Report and the newspaper articles the USDOC relied up on as evidence in reaching 
the conclusion that Orleans was affiliated with APP/SMG suggest that IBRA generally allowed other 
companies to buy back the debt of their related companies.335 Indonesia maintains that, if 
newspaper reports are sufficiently credibl e to support a finding that the GOI violated its own law, 
then they should also be sufficient evidence to refute the USDOC's finding that the APP/SMG sale 
was the only instance in which the GOI allowed a company to buy back its own debt through an 
affiliat e.336 Indonesia adds that the World Bank Report , which it argues the USDOC  relied upon , 
was not discussing sales under the PPAS, but was discussing sales of small loans, and there were 
some 300,000 non -performing loans  that were sold by IBRA . Indonesia also argues that the 
"speculation" in the World Bank Report concerning affiliates repurchasing debt does not relate 
specifically to APP/SMG, given that the report pre -dates by more than a month the announcement 
of the sale of APP /SMG's  assets.337  
7.183.   Second,  Indones ia submits, in the context of its Article 2.1(c) claim, that the APP/SMG 's 
debt sold to Orleans "consisted of multiple companies " – the various APP/SMG entities – which 
Indonesia asserts means the debt  buy-back could not have been a company -specific subsid y.338 
7.184.   The United States considers that Indonesia's argument concerning the World Bank Report 
and newspaper articles has nothing to do with whether the determination of specificity was 
consistent with Article 2.1, but merely rehashes aspects of Indonesia's cl aim under Article 12.7. 
Moreover, t he United States submits that  the fact that some of the evidence before the USDOC 
speaks in general terms about companies buying their own debt through the PPAS does not 
undermine the USDOC's finding that the subsidy aris ing from the APP/SMG sale was de facto  
company -specific, particularly as only the specific company debtor was "eligible to receive that 
same subsidy ".339 In addition, the United States submits that APP/SMG constituted  a single 
company, regardless of the fact  that it comprised multiple entities .340 
7.185.   Indonesia 's allegation concerning the World Bank Report  was mentioned for the first time 
in its oral statement at the first meeting  and developed in its second written submission, and its 
allegation that the debt sold  to Orleans  comprised the debt of various APP/SMG entities  was raised 
for the first time in its responses to Panel questions following the first meeting of the Panel . We 
share the United States' concern  that Indonesia has raised a number of new allegations  – including 
the ones in respect of the debt buy -back at issue here – at a late stage of these proceedings.341 
Indonesia's presentation of its case has evolved significantly during the course of the proceedings , 
which has made the Panel's task of assessing t hese claims  all the more difficult. Notwithstanding 
our concerns  in this regard , with respect to the allegations at issue here, we consider that the 
United States was afforded the opportunity to address these arguments in a manner that we 
consider respecte d the United States' due process rights. We also note that the relevant factual 
evidence pertaining to these new arguments of Indonesia was placed before the Panel at the 
outset of the proceedings.  
                                                
335 Indonesia has made contradictory statements as to whether, in its view, the USDOC based its 
conclusion on affiliation on a single newspaper report or based it on a series of newspaper articles and the 
World Bank Report.  
336 Indonesia's opening statement at the first meeting of the Panel, para. 57; second written 
submission , para. 49.  
337 Indonesia's second written submission, paras. 50 -51. 
338 Indonesia's response to Panel question No s. 29 and 84. As support for its argument , Indonesia refers 
to the list of companies in Part Two of GOI First Supplemental Questionnaire Response,  (Exhibit US -34 (BCI)), 
exhibit 24, pp. 4 -5, and to Exhibit 33 to Part Two of the GOI First Supplemental Questionnaire Response,  
(Exhibit IDN -41 (BCI)).  
339 United States' response to Panel question No. 31 (quoting Appellate Body Report, US – 
Countervailing Measures (China) , para. 4.140).  
340 United States' second written submission, paras. 102  and 107-109. 
341 The United States points out that paragraph 6 of the Panel's Working Procedures provides that 
"[b]efore the first substantive meeting of the Panel with th e parties, each party shall submit a written 
submission in which it presents the facts of the case and its arguments". The United States reads this 
paragraph as requiring that any argument necessary to sustain the complaining party's prima facie  case of a 
breach be presented in its first written submission. (United States' comments on Indonesia's response to Panel 
question No. 86).  WT/DS491/R  
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  7.186.   A more fundamental concern is whether these new allegation s are within our terms of 
reference. We recall in this respect that Article 6.2 of the DSU provides that a panel request "shall 
… identify the specific measures at issue and provide a brief summary of the legal basis of the 
complaint sufficient to present the problem clearly". Consistency with Article 6.2 must be 
determined on the basis of an objective examination of the panel request as a whole, as it existed 
at the time of filing, and on the basis of the language used therein342, that is "'on the face' of t he 
panel request".343 
7.187.   Paragraph 1(c)(i) of Indonesia's panel request sets forth a claim under Article 2.1 with 
respect to the debt buy -back alleging that the:  
USDOC did not identify whether the entity allegedly providing the purported subsidy 
was the nationa l, regional or local government, and therefore, failed to properly 
examine whether the purported subsidy was "specific to an enterprise … within the 
jurisdiction of the granting authority".344  
7.188.   Paragraph 1(c)(ii) of Indonesia's panel request sets forth a cla im under Article 2.1(c) 
alleging that the:  
USDOC improperly failed to demonstrate that Indonesia's alleged debt forgiveness 
constituted a subsidy program specific to an enterprise or industry or group of 
enterprises or industries. USDOC did not cite to evi dence establishing the existence of 
a plan or scheme sufficient to constitute a "subsidy programme."345 
7.189.   Indonesia contends that this language is broad enough to allow it to challenge the 
USDOC's determination that the debt buy -back subsidy was company -specif ic. Indonesia notes 
that it expressly challenged, under Article 2.1(c) of the SCM Agreement, the fact that the "USDOC 
improperly failed to demonstrate that Indonesia's alleged debt forgiveness constituted a subsidy 
program specific to an enterprise or indu stry or group of enterprises or industries." In Indonesia's  
view, the next sentence, referring to the USDOC's alleged failure to cite evidence establishing the 
existence of a subsidy programme, is not dependent on, and does not limit the preceding 
sentence . Rather, it sets forth a separate and additional claim under Article 2.1(c).346  
7.190.   The United States considers that Indonesia's panel request is not broad enough to cover 
Indonesia's challenge to the USDOC's finding that the debt buy -back subsidy was de facto  
company -specific. For the United States, Indonesia's panel request focuses on the USDOC's 
identification of the granting authority and the subsidy programme, and not on any other aspects 
of the specificity analysis . Thus, Indonesia's arguments purporting to challenge the USDOC's 
analysis or evidentiary basis for finding the debt buy -back de facto  company -specific do not go to 
the matters that were presented in Indonesia's panel request and, consequently, are outside the 
Panel's terms of reference.347  
7.191.   In our  view, paragraph 1(c)(i) of Indonesia's panel request is properly understood as 
setting forth a claim under the chapeau  of Article 2.1 that is limited to the issue of the USDOC's 
identification of the jurisdiction of the granting authority, to the exclusio n of other aspects of the 
USDOC's determination of the company -specific nature of the debt buy -back subsidy.  Nothing in 
the text of that paragraph can be read as suggesting that Indonesia also takes issue with the 
USDOC's determination that the debt buy -back subsidy was limited to APP/SMG . Rather, this 
paragraph clearly focuses on the USDOC 's alleged failure to identify whether the entity providing 
the subsidy was the national, regional , or local government. Therefore, Indonesia's allegations in 
the context  of its claims under the chapeau  of Article 2.1 that the APP/SMG sale did not constitute 
                                                
342 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 641 (referring to 
Appellate Body Reports, US – Carbon Steel , para. 127; US – Oil Country Tubular Goods Sunset Reviews , 
paras.  164 and 169; US – Continued Zeroing , para. 161; and US – Zeroing (Japan) (Article 21.5 – Japan) , 
para. 108).  
343 Appellate Body Report, US – Continued Zeroing , para. 161 (quot ing Appellate Body Report, US – 
Carbon Steel , para. 127).  
344 Indonesia's panel request, para. 1(c)(i).  
345 Indonesia's panel request, para. 1(c)(ii).  
346 Indonesia's response to Panel question No. 86; comments on the United States' response to Panel 
question No . 86. 
347 United States' response to Panel question No. 31; second written submission, paras. 107 -109. WT/DS491/R  
BCI deleted, as indicated [[***]] 
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  a company -specific subsidy in light of evidence that IBRA allowed other companies to buy back 
their own debt do not pertain to claims that are within the Panel's terms  of reference.348 
7.192.   As for Indonesia's claim under Article 2.1(c), we read paragraph 1(c)(ii) of the panel 
request as setting forth a claim under Article 2.1(c) that is limited to the issue of the USDOC's 
alleged failure to establish the existence of the subsi dy programme. We refer in this regard in 
particular  to the use of the term "subsidy program" (or "subsidy programme") in both the first and 
the second sentence of paragraph 1(c)(ii) of the panel request, which in our view makes clear that 
Indonesia intende d to set forth a claim with respect to the identification of the subsidy 
programme, and not a broader, more general, claim encompassing additional aspects of the 
USDOC's specificity determination. For this reason, we do not accept that the first sentence o f 
paragraph 1(c)(ii) of Indonesia's panel request sets forth a claim which is distinct from the claim 
set forth under the second sentence of the same paragraph. Thus, we read paragraph 1(c)(ii) of 
Indonesia's panel request as setting forth a claim under Ar ticle 2.1(c) that is circumscribed in 
scope by the second sentence. This being the case, Indonesia's allegation that the debt buy-back 
could not have been a company -specific subsidy because APP/SMG's debt comprised the debt of 
multiple companies does not r elate to a claim that is within our terms of reference.  
7.193.   Nonetheless, despite the fact that Indonesia's new allegations are not properly before us, 
we address these allegations in case they become relevant in the event of any implementation of 
the DSB rulin gs. With respect to Indonesia's allegations in the context of its claims under the 
chapeau  of Article 2.1 , Indonesia's suggestion  that the World Bank Report could  not support the 
USDOC's finding of affiliation because  it pre -dates the announcement of the s ale of APP/SMG's 
debt has nothing to do with the USDOC's determination that the debt buy -back was de facto  
specific or with the disciplines in Article 2.1 of the SCM Agreement. Rather, it pertains to the 
USDOC's use of facts available in finding affiliatio n, a matter governed by Article 12.7, and which 
Indonesia challenges under this provision. Similarly, we reject Indonesia's argument to the effect 
that the evidence relied upon by the USDOC suggests that the subsidy was generally available. 
First, we recal l that the USDOC's finding of affiliation between APP/SMG and Orleans was based on 
an adverse inference . In our view, th e evidence before the USDOC was such that a reasonable and 
unbiased authority could have concluded that the subsidy at issue was limited  to APP/SMG; it is 
not at all clear that the documents in fact support the proposition that the subsidy at issue was 
generally available.349 In particular, the World Bank Report merely states that " some  IBRA sales 
allegedly allowed debtors to buy back their loans at a steep discount through third parties, against 
its rules, raising further concerns about transparency".350 
7.194.   Moreover, with respect to Indonesia's allegation in the cont ext of its claims under 
Article  2.1(c), we note that Indonesia's argument indirec tly challenges the USDOC's determination 
that the various APP/SMG companies were a single producer/exporter for purpose of its 
investigation, and the USDOC's definition of the financial contribution at issue. Indonesia does not, 
however, make any claims un der the provisions of the SCM Agreement governing those issues.351 
Moreover, we note that APP/SMG's debt was sold as a single asset.352 This fact alone would have 
justified the USDOC treating APP/SMG as a single company for purposes of its specificity analysis  
under Article 2.1(c).  
                                                
348 Although these arguments logically pertain to the scope of the subsidy programme, Indonesia makes 
these arguments regarding the World Bank Report in the section concerning its claim under the chapeau of 
Article 2.1.  
349 This is not to say that an analysis of specificity must limit itself to the subsidy that was found to 
exist. On the contrary, the investigating authority may have to consider whether other fi nancial contributions 
may have been granted as part of the same subsidy programme, so as to render non -specific the subsidy that 
is the subject of the complaint. (Appellate Body Report, US – Large Civil Aircraft (2nd complaint) , 
paras.  748-753).  
350 Petition ers' General Factual Information Submission, (Exhibit US -40), exhibit 24, p.  13. (emphasis 
added)  
351 We recall that the evaluation of whether a subsidy is specific assumes that the subsidy at issue 
already exists and focuses rather on whether access to that  subsidy is limited to certain enterprises.  
352 In particular, we note that the "terms of reference" prepared by IBRA for the APP/SMG 's debt sale 
state that "[t]he current Strategic Asset Portfolio of [IBRA] is made up of 1 (one) asset, namely the APP Group 
launched on 8 December 2003, which comprises  […]" (a list of five APP/SMG companies and their subsidiaries 
follows). ( Part Two of GOI First Supplemental Questionnaire Response , (Exhibit US -34 (BCI)), exhibit 24, 
pp. 4-5). The fact that the debt was compris ed of the debts of various APP/SMG companies or affiliates does 
not, in our view, detract from the unitary nature of the debt sale.  WT/DS491/R  
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  7.5.4.6    Overall conclusion concerning Indonesia's claims under Article 2.1(c) of the 
SCM Agreement and the chapeau  of Article 2.1 of the SCM Agreement  
7.195.   In light of the foregoing, we find that Indonesia has failed to establish that the USDOC 
acted inconsistently with Article 2.1(c) of the SCM Agreement by failing to determine or identify 
the relevant subsidy programmes in connection with the provision of standing timber, the log 
export ban, or the debt forgiveness.  
7.196.   In addition, we find that In donesia has failed to establish that the USDOC acted 
inconsistently with the chapeau  of Article 2.1 of the SCM Agreement by failing to identify the 
granting authority that forgave debt in favour of APP/SMG, or the jurisdiction of that granting 
authority.  
7.6  "As applied" claims concerning the USITC's threat of injury determination  
7.6.1   Introduction  
7.197.   The USITC conducted an investigation into whether the US domestic industry was injured 
by reason of subsidized and dumped imports of certain coated paper from China and Indonesia. 
For purposes of its analysis, the USITC cumulated subject imports from these two Members.353 The 
USITC considered data for a POI consisting of three full calendar years, from 2007 to 2009, as well 
as the first six months of 2009 and 2010 ("interim " 2009 and 2010). Chinese and Indonesian 
producers of the subject product participated in the investigation through their corporate affiliates 
Asia Pulp and Paper, Ltd. (China) and Asia Pulp and Paper, Ltd. (Indonesia) (APP ).354 The USITC 
defined the domesti c industry as the US producers and converters of certain coated paper.355  
7.198.   The USITC determined that the US domestic industry was threatened with material injury 
by reason of dumped and subsidized imports from China and Indonesia .356, 357 In reaching this 
determ ination, the USITC determined that dumped and subsidized imports were likely to increase  
significantly,  that they were likely to have adverse effects on  domestic prices, and that they were 
likely to have a negative impact on the condition of the domestic i ndustry, including  market share 
and sales , in the imminent future . The USITC found that there was a likely causal relationship 
between the subject imports and the imminent adverse impact on the domestic industry, and that 
                                                
353 USITC Final Determination, (Exhibit US -1), pp. 15 -17. 
354 USITC Final Determination, (Exhibit US -1), p. 3. We note that "APP " in the USITC investigation refers 
to both the Indonesian and Chinese corporate entities affiliated with the APP/SMG group. It is therefore not the 
same entity as "APP/SMG" in the USDOC investigation.  The USITC indicated that, in 2009, the large majority of 
subject merchandise was produced and exported by Chinese and Indonesian producers under the corporate 
umbrella of APP. ( Ibid. p. 24) . 
355 USITC Final Determination, (Exhibit US -1), p. 13.  
356 USITC Final Determination, (Exhibit US -1), pp. 1 and 39 . Five Com missioners determined that the 
domestic industry was threatened with injury. One of the Commissioners made an affirmative determination of 
present injury. (USITC Final Determination, (Exhibit US -1), pp. 41 -47). In our findings, we consider the views 
of the  majority as being those of the USITC . 
357 The parties have submitted to the Panel the public version of the USITC Final Determination as 
Exhibit s IDN-18 and US -1. The version of the determination submitted by Indonesia contains the views of the 
USITC  but do es not contain the Staff Report (which compiles the data the USITC relied upon and is an integral 
part of the USITC's Report) contained in Part s I to VII or the appendixes to the determination. Since the exhibit 
submitted by the United States (Exhibit US -1) is the complete version of the USITC Report, and Indonesia has 
also referred to the US version of the USITC Final Determination in its submissions to the Panel, in this Report 
we refer to the exhibit submitted by the United States. In addition, the Panel  requested that the United States 
provide the confidential version of the USITC's final determination, which contains confidential data redacted 
from the public version. In response, the United States stated that due to confidentiality concerns, it was not  in 
a position to submit the confidential version of the determination to the Panel. (United States' response to 
Panel question No. 68). In addition, only the public versions of several exhibits, in particular those containing 
submissions made by intereste d parties to the USITC, were provided to the Panel by the parties. The Panel 
requested that the parties submit the confidential versions of these exhibits; for most documents, the parties 
indicated that they were not in a position to do so. That is the cas e, for instance, for APP Pre -hearing Brief to 
USITC, (Exhibit IDN -45) and APP Final Comments to USITC,  (Exhibit US -105).  We base our analysis on the 
record evidence that was submitted to the Panel; in any event, Indonesia has not made any specific 
represen tations that suggest to us that information contained in the confidential version of relevant documents 
is germane to our resolution of Indonesia's claims.  WT/DS491/R  
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  other factors would not render ins ignificant the likely effects of subject imports as found by the 
USITC .358 
7.199.   Indonesia claims that the USITC's threat of injury determination is inconsistent with:  
a. Article  3.5 of the Anti -Dumping Agreement and Article 15.5 of the SCM Agreement 
because the USIT C attributed to subject imports adverse effects attributable to "other 
factors" causing injury to the domestic industry at the same time as subject imports;  
b. Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the SCM Agreement 
because the USITC b ased certain of its findings in its threat of injury determination on 
conjecture and remote possibility; and  
c. Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM Agreement 
because the USITC failed to exercise "special care" in the underlyi ng investigation.  
7.200.   The United States requests that the Panel reject Indonesia's claims.359 
7.6.2   Claims under Article 3.5 of the Anti -Dumping Agreement and Article 15.5 of the 
SCM Agreement (non -attribution)  
7.6.2.1   Introduction  
7.201.   Indonesia claims that the USITC's threat of injury determination is inconsistent with 
Articles  3.5 of the Anti -Dumping Agreement and 15.5 of the SCM Agreement. We understand 
Indonesia to argue that the USITC attributed to the subject imports likely adverse effects of three 
other known factors that w ould injure the domestic industry in the future at the same time as 
subject imports: (a) declining US demand for coated paper; (b) imports from non -investigated 
countries ("non -subject imports"); and (c) the expiration of the "black liquor" tax credit, an 
alternative fuel tax credit that certain US producers received in 2009.360  
7.202.   Indonesia submits that the USITC failed to properly separate and distinguish the adverse 
effects attributable to each of the three "other factors" in its threat of injury determinati on. 
Indonesia argues that Articles 3.5 and 15.5 contain three requirements: (a) non -attribution; (b) a 
concrete examination of "other factors" using economic models or constructs; and (c) isolation of 
factors other than subject imports causing injury.361 Indonesia argues that the USITC acted 
inconsistently with each of these requirements. In Indonesia's view, the USITC found a threat of 
injury not based on subject imports, but because of these other factors, among other causes. The 
USITC attributed the effect s of these other factors to subject imports, in violation of  Article 3.5 of 
the Anti -Dumping Agreement and Article 15.5 of the SCM Agreement.362 Indonesia argues that the 
only reasonable conclusion from the evidence before the USITC and the USITC's finding t hat no 
present  injury existed was that the projected decline in demand, expiration of the black liquor tax 
credit, and non -subject imports were likely to cause injury to the domestic industry such as to 
render insignificant the contribution of subject impo rts to the imminent injury threatening the 
domestic industry.363 
7.203.   The United States submits that the USITC's non -attribution analysis complied with 
Articles  3.5 and 15.5. The United States argues that the USITC properly separated and 
distinguished the effects  of other factors from the injury threatened by subject imports by first 
                                                
358 USITC Final Determination, (Exhibit US -1). 
359 United States' second written submission, para. 113.  
360 Indonesia's first written submission, para. 4.  
361 Indonesia's first written submission, para. 99; second written submission, para. 53. In response to a 
question from the Panel as to whether it considers "non -attribution" and "isolation of other factors" to be 
distinct concepts, Indonesia explained that, in its view, the principle of non -attribution prohibits the 
investigating authority from attributing injury or threat of injury caused by other factors to subject imports, 
and the principle of "isolation o f other factors" requires for the investigating authority to identify what factors 
other than subject imports exist in the market that may be affecting the domestic industry's performance. 
(Indonesia's response to Panel question No. 44).  
362 Indonesia's seco nd written submission, para. 63.  
363 Indonesia's response to Panel question No. 92(a).  WT/DS491/R  
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  demonstrating a strong causal link between subject imports and the threat of injury, and then 
explaining that other factors did not detract from this link and by demonstrating that su bject 
imports would have injurious effects independent of those factors.364  
7.6.2.2   Legal standard under Article 3.5 of the Ant i-Dumping Agreement and 
Article  15.5 of the SCM Agreement  
7.204.   The text of Article 3.5 of the Anti -Dumping Agreement and that of Article 15.5 o f the SCM 
Agreement are largely identical. Article 3.5 of the Anti -Dumping Agreement provides that:  
It must be demonstrated that the dumped imports are, through the effects of 
dumping, as set forth in paragraphs  2 and  4, causing injury within the meaning o f this 
Agreement.  The demonstration of a causal relationship between the dumped imports 
and the injury to the domestic industry shall be based on an examination of all 
relevant evidence before the authorities . The authorities shall also examine any known 
factors other than the dumped imports which at the same time are injuring the 
domestic industry, and the injuries caused by these other factors must not be 
attributed to the dumped imports. Factors which may be relevant in this respect 
include,  inter alia, the volume and prices of imports not sold at dumping prices, 
contraction in demand or changes in the patterns of consumption, trade restrictive 
practices of and competition between the foreign and domestic producers, 
developments in technology and the expo rt performance and productivity of the 
domestic industry.365 
Article 15.5 of the SCM Agreement provides as follows:  
 
It must be demonstrated that the subsidized imports are, through the effects[*] of 
subsidies, causing injury within the meaning of this Agree ment.  The demonstration of 
a causal relationship between the subsidized imports and the injury to the domestic 
industry shall be based on an examination of all relevant evidence before the 
authorities. The authorities shall also examine any known factors o ther than the 
subsidized imports which at the same time are injuring the domestic industry, and the 
injuries caused by these other factors must not be attributed to the subsidized 
imports.  Factors which may be relevant in this respect include, inter alia , the volumes 
and prices of non -subsidized imports of the product in question, contraction in 
demand or changes in the patterns of consumption, trade restrictive practices of and 
competition between the foreign and domestic producers, developments in technol ogy 
and the export performance and productivity of the domestic industry.366 
 [*fn original]47 As set forth in paragraphs 2 and 4.  
7.205.   Thus, the first two sentences of both Articles impose on the investigating authority an 
obligation to demonstrate a causal link  between the dumped or subsidized imports and the injury 
to the domestic industry.367 The last two sentences require that the investigating authority not 
attribute to dumped or subsidized imports injury caused by other "known" factors, i.e. the 
"non-attribut ion" requirement. Indonesia's claims are limited to this non -attribution requirement.  
7.206.   In this respect, Articles 3.5 and 15.5 require that an investigating authority examine any 
factor: ( a) "other than dumped  or subsidized  imports"; (b) that is  "known" to t he authority; and 
(c) that is injuring the domestic industry at the same time as dumped or subsidized imports.368 
The investigating authority must ensure that it does not attribute to subject imports the injury 
caused by any such "other factor"; i n the conte xt of a finding of threat of injury, we understand 
this obligation to encompass non -attribution of injury by other known factors threatening to cause  
injury to the domestic industry. Indonesia disaggregates the non -attribution requirement into 
                                                
364 United States' first written submission, paras. 294 -297; opening statement at the second meeting of 
the Panel, para. 54.  
365 Emphasis added.  
366 Emphasis added.  
367 We recall in this regard that "injury" as used in these Articles means, inter alia , threat of material 
injury to a domestic industry. (Anti -Dumping Agreement, fn 9; and SCM Agreement, fn 45).  
368 Appellate Body Report, EC – Tube or Pipe Fittings , para. 175.  WT/DS491/R  
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  three separa te requirements : (a) non -attribution; (b) concrete examination of "other factors" 
using economic models or constructs; and (c) isolation of factors other than subject imports 
causing injury. However, this disaggregation of the non -attribution requirement is without support 
in the text of Articles 3.5 and 15.5 and in prior WTO decisions. Rather, a n appropriate assessment 
of the injurious effects of "other factors" "involve[s] separating and distinguishing the injurious 
effects of the other factors from th e injurious effects  of the dumped [or subsidized] imports".369 
This requires a satisfactory explanation of the nature and extent of the injurious effects of the 
other factors, as distinguished from those of the dumped (or subsidized ) imports.370  
7.207.   The Anti -Dumping  and SCM Agreements do not specify how the non -attribution analysis is 
to be undertaken – they do not prescribe any methods or approaches by which an investigating 
authority may avoid attributing injuries caused by factors other than dumped or subsidized 
imports.371 Consequently, provided that it does not attribute the injuries of other factors to 
dumped or subsidized imports, an investigating authority "is free to choose the methodology it will 
use in examining the 'causal relationship' between dumped [or su bsidized] imports and injury".372 
Consistent with the applicable standard of review, prior panels have taken the view that it is 
appropriate "to undertake a careful and in depth scrutiny" of a non -attribution determination in 
order to evaluate whether the ex planations given by the investigating authority are "such 
reasonable conclusions as could be reached by an unbiased and objective investigating authority in 
light of the facts and arguments before it and the explanations given".373 
7.208.   In this respect, we note t hat an integral part of Indonesia's argument concerning an 
alleged obligation to conduct a "concrete" examination of the likely future effects of "other 
factors", is its view that an investigating authority's examination of other factors must be 
quantitati ve and rely on economic models or constructs. Indonesia argues that the USITC did not 
examine the "other factors" in concrete terms but rather merely listed these factors, without 
applying any concrete economic constructs or models, which Indonesia asserts  is required by 
Articles 3.5 and 15.5.374 Indonesia initially argued that an investigating authority is required to use 
a quantitative analysis in all cases. Later, Indonesia acknowledged that in certain cases, a 
qualitative analysis might suffice, depending  on the facts, but maintained that in any event, the 
investigating authority's non -attribution analysis in a threat determination must be as rigorous as 
its non -attribution analysis with respect to present injury. Indonesia asserts that in the present 
case, the USITC's non -attribution analysis in the threat context was less "concrete" and "rigorous" 
than its analysis of whether subject imports caused present injury to the domestic industry.375  
7.209.   As we have just noted, Articles 3.5 and 15.5 set forth no limits or guidelines as to the 
methodology an investigating authority may use for purposes of a non -attribution analysis. 
Indonesia proffers no basis in the text of these provisions or in prior decisions for its assertion that 
authorities are required, in certain  situations, to rely on quantitative methods, economic constructs 
or models in their assessment of the injury caused by other factors. In fact, the very panel report 
cited by Indonesia as support for its argument, while expressing the view that using eleme ntary 
economic constructs or models would be desirable, recognizes that investigating authorities are 
not required to do so:  
                                                
369 Appellat e Body Report, US – Hot-Rolled Steel , para.  223. 
370 Appellate  Body Report, US – Hot-Rolled Steel , para.  226. 
371 Appellate Body Report, US – Hot-Rolled Steel , para. 224.  
372 Appellate Body Report, EC – Tube or Pipe Fitting s, para. 189.  
373 See, e.g. Panel Report,  EU – Footwear (China) , para. 7.483.  
374 Indonesia's first written submission, paras. 111 -113 (quoting Panel Report, EC – Countervailing 
Measures on DRAM Chips , para.  7.405).  
375 Indonesia's first written submission, para. 114; opening statement at the first m eeting of the Panel, 
para. 61; response to Panel question No. 43(b); and second written submission, paras. 57 -58. Indonesia 
asserts that the USITC used less precise measurements in its threat of injury analysis than in its present injury 
analysis. Indonesi a argues that the latter contains "a volume analysis consisting of precise measurements of 
the volume of subject imports, non -subject imports, domestic industry shipments, and market share", "a 
pricing analysis based on four pricing products", and "an impa ct analysis that is based on several trade and 
financial performance indicators" while the former "appl[ies] less precise, amorphous standards phrased in 
general terms like 'increasing volumes of low -priced imports,' 'will take sales from current suppliers  such as the 
domestic industry,' and 'will gain additional U.S. market share in the imminent future'". (Indonesia's second 
written submission, para. 58 (fns omitted); Indonesia made similar assertions in its opening statement at the 
first meeting of the Pa nel, para. 62). As noted below, para. 7.326 , Indonesia also argues that the fact that the 
USITC allegedly conducted a more concrete and rigorous present injury analysis than threat of injury analysis 
is inconsis tent with Articles 3.8 and 15.8.  WT/DS491/R  
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  It is clear that Article 15.5 does not impose any particular methodology when 
conducting the causation analysis set forth therein,  provided that an investigating 
authority does not attribute the injuries of other causal factors to subsidized imports. 
The Appellate Body has not provided guidance as to how an investigating authority 
should examine other known factors in order to make s ure that the non -attribution 
requirement is fulfilled. In our view, it does not suffice for an investigating authority 
merely to "check the box". An investigating authority must do more than simply list 
other known factors, and then dismiss their role with  bare qualitative assertions, such 
as "the factor did not contribute in any significant way to the injury", or "the factor did 
not break the causal link between subsidized imports and material injury." In our 
view, an investigating authority must make a be tter effort to quantify the impact of 
other known factors, relative to subsidized imports, preferably using elementary 
economic constructs or models.  At the very least, the non -attribution language of 
Article 15.5 requires from an investigating authority a  satisfactory explanation of the 
nature and extent of the injurious effects of the other factors, as distinguished from 
the injurious effects of the subsidized imports .[*]376 
[*fn original]282 Appellate Body report, US – Hot-Rolled Steel , para. 226.  
7.210.   We agree  with this view. While it might, depending on the record information before the 
investigating authority and the circumstances of the investigation at issue, be useful or desirable 
for an investigating authority to undertake a quantitative assessment of the  impact of other 
factors, there is no requirement that it do so: an adequately reasoned explanation of the 
qualitative effects of other factors based on the evidence before it will suffice.377 Indonesia's 
position – including its suggestion that if an author ity relied on a quantitative analysis in its 
analysis of whether imports caused present material injury, it must do the same in its threat 
analysis and its non -attribution analysis with respect to threat of injury – also disregards the fact 
that threat of injury determinations are by definition based on projections, and that quantifying the 
injurious effects of other factors may be difficult or even impossible in such circumstances.378 
Indonesia has also advanced no support for its proposition that, in determ ining consistency with 
the non -attribution requirement, a panel should compare the non -attribution analysis performed 
by the authority in its threat of injury determination with the authority's analysis in the present 
injury context. Nothing in the text of  these provisions suggests that such a comparative approach 
is required. The legal sufficiency of an authority's non -attribution analysis in a threat of injury 
context must be assessed with regard to that determination itself and the explanations provided 
by the authority in reaching it.  
7.211.   In light of the above, the principal issue to be addressed in considering Indonesia's 
non-attribution claims is whether the USITC ensured, in its threat of injury determination, that it 
did not attribute to dumped and subs idized imports from Indonesia and China any (future) injury 
likely to be caused by alleged "other factors". In addressing this issue, insofar as Indonesia's 
arguments raise questions in this regard, we will consider  whether the USITC provided a 
satisfactor y explanation of the nature and extent of the likely injurious effects of the other factors, 
as distinguished from the likely injurious effects of the subsidized imports, and whether the 
USITC's explanations allow us to determine that the conclusions it re ached are such reasonable 
conclusions as could be reached by an unbiased and objective investigating authority in light of the 
facts and arguments before the USITC.  
                                                
376 Panel Report, EC – Countervailing Measures on DRAM Chips , para. 7.405. (emphasis added)  
377 See also Panel Report, US – Countervailing Duty Investigation on DRAMS , para. 7.360: "there is no 
obligation under Article 15.5 to quantify the amount of injury caused by alleged subsidies and non -subject 
imports, respectively".  
378 In this respect, we agree with the United States that while data concerning  subject imports and 
industry performance during the POI can be collected and ana lysed by the i nvestigating authority in analys ing 
both present injury and threat of injury :  
[D]ata on the future volumes and price effects of subject imports obviously cannot exist. ADA 
Article 3.7 and SCMA Article 15.7 recognize this difference between a nalysis of the past (for 
which data are available) and of the future (for which they are not), providing, for instance, that 
investigating authorities should consider "the likelihood  of substantially increased importation," 
based on trends during the perio d of investigation and the capacity of subject exporters.  
(United States' second written submission, para. 129 (emphasis original))  WT/DS491/R  
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  7.212.   In our analysis, we first consider two general arguments that Indonesia makes with 
respect  to the USITC's non -attribution analysis before considering Indonesia's specific allegations 
with respect to each of the alleged "other factors". Before doing so, however, we first briefly 
summarize the relevant aspects of the USITC's determination.  
7.6.2.3   The US ITC's consideration of the three alleged "other factors"  
7.213.   The USITC's non -attribution analysis, as it pertains to its threat of injury determination, is 
contained in its analysis of the future impact of subject imports on the domestic industry. The 
USITC di d, however, also discuss the decline in demand  (during the POI or projected) , the black 
liquor tax credit, and non -subject imports in the sections of its determination concerning the 
volume – present and future – of subject imports, the price effects – present and future – of 
subject imports and in the section of its determination in which it considered the impact – also 
present and future – of subject imports on the domestic industry.  
7.214.   With respect to the volume  of subject imports during the POI , the USI TC noted that as 
apparent US consumption of coated paper declined by 21.3% from 2007 to 2009, subject imports 
were the only source of increased volume; domestic industry and non -subject import volumes 
declined during that period.379  
7.215.   With respect to  the future volume of subject import s, the USITC recalled that even though 
US demand had declined from 2007 to 2009, the volume and market share of subject imports had 
increased.380 It also stated that although US demand was "expected to remain depressed in the 
near fut ure", subject producers would likely target orders that arise, consistent with their 
behavio ur in aggressively seeking to gain sales and market share during the POI.381 
7.216.   With respect to price effects during the POI , the USITC found that subject imports 
depres sed domestic prices at least to some extent for part of the POI, but stopped short of finding 
significant price depression by reason of subject imports because other factors – the decline in 
demand and the black liquor tax credit – "likely also contributed  importantly to lower prices" and it 
was unable to gauge whether significant price effects were attributable to subject imports.382 With 
respect to price suppression, t he USITC observed that although the domestic industry's ratio of 
cost of goods sold (COGS)  to net sales had risen from 2007 to 2009, "other factors", in particular 
the effects of the black liquor tax credit, undermined the ratio as a reliable indicator that the 
industry was experiencing a growing cost/price squeeze.383 The USITC added that even i f the 
industry did experience a cost/price squeeze, "factors other than subject imports may have 
prevented domestic producers from raising prices, including the accelerating fall in demand from 
2007 to 2009".384 On this basis, the USITC found no evidence tha t subject imports had prevented 
price increases which otherwise would have occurred to a significant degree during the POI.385 
7.217.   With respect to future price effects , the USITC noted that "U.S. demand for certain coated 
paper [was] projected to decline moderat ely over the next two years", and considered that any 
increase in subject import volumes would therefore not be absorbed by increased demand.386 The 
USITC also found that the "other factors" that it had identified as having negative effects on 
domestic price s during the POI, i.e. the decline in demand and the black liquor tax credit, "[would] 
                                                
379 USITC Final Determination, (Exhibit US -1), pp. 26 -27. 
380 USITC Final Determination, (Exhibit US -1), p. 27.  
381 USITC Final D etermination, (Exhibit US -1), p. 29.  
382 USITC Final Determination, (Exhibit US -1), p. 33:  
[D]emand for certain coated paper was significantly depressed, with apparent U.S. consumption 
dropping by 14.7 percent from 2008 to 2009.  The black liquor tax credit s purred greater pulp 
production by domestic producers in 2009, contributing to lower prices for fiber/pulp which is a 
key input to production of coated paper. We find that the failure of domestic prices to rebound 
significantly in interim 2010 even after su bject imports largely ceased in March 2010 indicates 
the important role that factors other than subject imports played in the market.  Accordingly, 
although we find some evidence of price depression by subject imports, we do not find that 
cumulated subject imports from China and Indonesia significantly depressed prices of the 
domestic like product in the U.S. market.  (fns omitted)  
383 USITC Final Determination, (Exhibit US -1), p. 33.  
384 USITC Final Determination, (Exhibit US -1), p. 33.  
385 USITC Final Determinati on, (Exhibit US -1), p. 33.  
386 USITC Final Determination, (Exhibit US -1), p. 34.  WT/DS491/R  
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  not play the same role in the imminent future", and consequently that subject imports would be a 
"key driver" affecting prices.387 Overall, with respect to the future pric e effects of likely future 
imports, the USITC concluded that increased quantities of subject imports, priced aggressively, 
would put pressure on domestic producers to lower prices "in a market recovering from severely 
depressed demand". On this basis it co ncluded that subject imports were likely to cause significant 
price depression or suppression in the imminent future.388 
7.218.   In its analysis of the impact of subject imports during the POI , the USITC recalled that 
from 2007 to 2009, US consumption fell by 21.3% and noted that "most indicators of domestic 
industry performance declined" during that period.389 The USITC described the domestic industry's 
situation as having improved in interim 2010 compared to interim 2009. It also noted that over 
the period 2007 -2009,  the market shares of the domestic industry and subject imports had 
increased at the expense of non -subject imports, whose market share fell by 9.3 percentage 
points.390 Overall, the USITC did not find a sufficient causal nexus such that it could determine t hat 
subject imports were having a significant adverse impact on the domestic industry.  The USITC 
noted that the deterioration "in almost all of the domestic industry's performance indicators 
between 2007 and 2009 coincided with the economic downturn and a sharp decline in demand for 
CCP". It also noted that domestic producers had a significant revenue stream from the black liquor 
tax credit in 2009, which encouraged them to produce greater volumes of pulp, and may have 
insulated them to some degree from coa ted paper price declines in 2009.391 
7.219.   In its analysis of the likely impact of subject imports in the imminent future , the USITC 
first found that the industry was vulnerable to material injury, given the downward trend in most 
of its performance indicators dur ing the POI; in this context it also considered that the black liquor 
tax credit, which expired in 2009 , would not be a mitigating factor to injury in the future, as it had 
been during the latter part of the POI:  
Even in light of an overall decline in app arent U.S. consumption during the period of 
investigation, the downward trends in virtually all of the domestic industry's 
performance indicators during the period examined weigh heavily in our consideration 
of the impact of subject imports in the imminent  future. … We recognize that the 
domestic industry's financial indicators may have been worse in 2009 if not for the 
revenue it received from the black liquor tax credit. As discussed, this tax credit 
expired in 2009, and therefore any benefit that the dom estic industry received from it 
in 2009 will not continue into the imminent future. Even as demand recovered 
somewhat in interim 2010, and a large majority of subject imports left the market, 
the domestic industry's COGS/sales ratio continued to increase a s its number of 
production workers and operating margins continued to decline. Accordingly, we find 
that the industry is vulnerable to material injury.392 
7.220.   The USITC considered that as a result of the declining trends and given its vulnerable 
state, the domes tic industry would "likely continue to experience even lower employment levels, 
net sales, operating income, and profitability as increasing volumes of low -priced subject imports 
enter the U.S. market and compete with the domestic like product".393 The USITC  considered that, 
given the projected decline in US consumption, the US market would not be able to accommodate 
growth in subject imports without material injury to the domestic industry and, in this context, 
future volumes of subject imports would not be in response to growing demand, but would take 
sales from current suppliers, including the domestic industry. The USITC concluded that, given 
                                                
387 USITC Final Determination, (Exhibit US -1), p. 34:  
Domestic consumption is likely to decline only modestly from 2010 to 2011. Although sluggish 
demand will likely restrain pric e recovery to some degree, there are no projections of a sharp 
falloff in consumption  similar to the one in 2009. In addition , the "black liquor" tax credit expired 
in 2009 and is not likely to be renewed. Without the prominence of these other market force s, 
we anticipate that a key driver of domestic market prices will be the significant volumes of 
subject imports.  
388 USITC Final Determination, (Exhibit US -1), p. 35.  
389 USITC Final Determination, (Exhibit US -1), p. 35.  
390 USITC Final Determination, (Exhibit U S-1), p. 36.  
391 USITC Final Determination, (Exhibit US -1), p. 37. The USITC also described a certain lack of 
temporal correlation between movements in import volumes and the situation of the domestic industry.  
392 USITC Final Determination, (Exhibit US -1), p.  38 
393 USITC Final Determination, (Exhibit US -1), p. 38.  WT/DS491/R  
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  that the domestic industry was already in a weakened state, unless anti -dumping duty and 
countervailing duty orders  were issued, material injury by reason of subject imports would occur, 
and found that there was a "likely causal relationship between the subject imports and an 
imminent adverse impact on the domestic industry".394  
7.221.   In its non-attribution analysis  properly speaking, t he USITC considered whether there were 
other factors, i.e. the reduced levels of domestic consumption and non -subject imports, that would 
likely have an imminent impact on the domestic industry. It concluded that the modest decline in 
demand pro jected for 2010 -2012 would not "render insignificant" the causal link between 
projected subject imports and the likely imminent injury:  
As noted, U.S. consumption of CCP is projected to decline modestly from 2010 to 
2011. Although a lower level of consumpt ion is likely to limit the domestic industry's 
sales opportunities and restrain potential price increases to some degree, the decline 
is not of a magnitude that would render insignificant the likely effects of subject 
imports that we have described above.395 
7.222.   The USITC also found that non -subject imports were not an "other factor" that rendered 
insignificant the likely effects of subject imports as a cause of imminent injury to the domestic 
industry.396  
7.223.   Our analysis below focuses on the explanations contained i n this non -attribution analysis 
with respect to the threat of injury to the domestic industry, while also taking into account the 
USITC's discussion of other factors elsewhere in its determination.  
7.6.2.4   The USITC 's re-statement of the legal standard under US la w  
7.224.   Indonesia argues that a statement of the USITC in the section of its determination 
discussing the relevant "legal standards" under US law – to the effect that the USITC "need not 
isolate the injury caused by other factors from that caused by unfairly tr aded imports" – makes it 
clear that the USITC acted inconsistently with what Indonesia argues is the requirement to 
"isolate" the threat of injury resulting from other factors.397 The Unit ed States submits that 
Articles  3.5 and 15.5 contain no "isolation" re quirement distinct from the need to "distinguish" 
injury caused by other factors, that the statement of the USITC on which Indonesia focuses was 
part of the USITC's re -statement of applicable US law, and that the USITC did in fact "separate 
and distinguish " (i.e. effectively "isolate") the effects of other factors.398  
7.225.   The USITC statement referred to by Indonesia appears in the following discussion of 
applicable US law:  
The legislative history explains that the Commission must examine factors other than 
subject imports to ensure that it is not attributing injury from other factors to the 
subject imports, thereby inflating an otherwise tangential cause of injury into one that 
satisfies the statutory material injury threshold. In performing its examination, 
                                                
394 USITC Final Determination, (Exhibit US -1), p. 38 . That t he USITC attached significant weight to the 
vulnerability of the domestic industry in reaching this conclusion  is also evident from the USITC' s statement 
(ibid. p. 38) that " the downward trends in virtually all of the domestic industry's performance indicators during 
the period examined weigh heavily in our consideration of the impact of subject imports in the imminent 
future " and from the USITC 's final conclusion in its threat of injury analysis : 
[G]iven the vulnerability of the domestic industry, together with the likelihood that cumulated 
subject imports will increase significantly in the imminent future at prices that will likely undersell 
the domestic like product and depress or suppress domestic prices to a significant degree, 
material injury by reason of subject imports will occur absent issuance of antidumping duty and 
countervailing duty orders against subject imports. We therefore conclu de that the domestic CCP 
industry is threatened with material injury by reason of cumulated subject imports from China 
and Indonesia.   
(Ibid. p. 39) 
395 USITC Final Determination, (Exhibit US -1), pp. 38 -39. 
396 USITC Final Determination, (Exhibit US -1), p. 39.  
397 Indonesia's first written submission, paras. 118 -121 (quoting Excerpt from USITC Final 
Determination, pp. 3 -39 and C -3-C-7, (Exhibit IDN -18), p. 18).  
398 United States' first written submission, fn 630.  WT/DS491/R  
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  however, the Commission need not isolate the injury caused by other factors from 
injury caused by unfairly traded imports . Nor does the "by reason of" standard require 
that unfairly traded imports be the "principal" cause of injury or contemplate that 
injury from unfairly traded imports be weighed against other factors, such as 
nonsubject imports, which may be contributing to overall injury to an industry. It is 
clear that the existence of injury caused by other factors does not compel a negative 
determination . 
Assessment of whether material injury to the domestic industry is "by reason of" 
subject imports "does not require the Commission to address the causation issue in 
any particular way" as long as "the injury to the domestic industry can reasonably be 
attributed to the subject imports" and the Commission "ensure{s} that it is not 
attributing injury from other sources to the subject imports." Indeed, the Federal 
Circuit has examined and affirmed various Commission methodologies and has 
disavowed "rigid adher ence to a specific formula.399 
7.226.   Although informative of the USITC's understanding of US law, we do not consider this 
statement of US law to be determinative of the consistency of the USITC's determination with 
Articles 3.5 and 15 .5. The consistency of the USI TC's non -attribution analysis with these provisions 
is to be determined with regard to whether, in its determination, the USITC properly ensured that 
it did not attribute to dumped and subsidized imports injury caused by other factors.400  
7.6.2.5   The USITC's findin g of vulnerability  
7.227.   Indonesia takes issue with the fact that, having found that the decline in demand, along 
with the expiration of the black liquor tax credit, rendered the domestic industry vulnerable401, the 
USITC went on to find that subject imports threa tened to injure the domestic industry in the 
imminent future. Indonesia considers that if the domestic industry was rendered vulnerable by 
other factors, then the investigating authority cannot find threat of injury caused by subject 
imports.  Indonesia als o notes that the vulnerable condition of the US domestic industry weighed 
heavily in the USITC's affirmative threat of injury analysis.402 Indonesia argues that rather than 
finding that the domestic industry's vulnerability made it more likely that subject i mports 
threatened injury, the USITC should have analysed the impact of the subject imports on the 
domestic industry during the POI in isolation, isolating out the other factors and, based on that 
                                                
399 USITC Final Determination, (Exhibit US -1), pp. 18 -19. (emphasis added; fns omitted)  
400 In addition, we are reluctant to read the USITC's statement that, under US law, it "need not isolate 
the injury caused by other factors from injury caused by unfair imports" as demonstrating that the USITC did 
not consid er it necessary to "separate and distinguish" the injurious effects of different causal factors. 
Indonesia relies on the Appellate Body Report in US – Hot-Rolled Steel  for the proposition that Articles 3.5 and 
15.5 require the investigating authority to "i solate" injury caused by other factors.  (Indonesia's first written 
submission, paras. 118 -119 (referring to Appellate Body Report, US – Hot-Rolled Steel , para. 226)). However, 
the Appellate Body's views were more nuanced:  
The United States contends that th e panel in United States – Atlantic Salmon Anti -Dumping 
Duties  correctly stated that there is no need to "isolate" the injurious effects of the other factors 
from the injurious effects of the dumped imports. We are not certain what the panel, in that 
dispu te, intended to imply through the use of the word "isolation". Nevertheless, we agree with 
the United States that the different causal factors operating on a domestic industry may interact, 
and their effects may well be inter -related, such that they produc e a combined  effect on the 
domestic industry. We recognize, therefore, that it may not be easy, as a practical matter, to 
separate and distinguish the injurious effects of different causal factors. However, although this 
process may not be easy, this is pr ecisely what is envisaged by the non -attribution language. If 
the injurious effects of the dumped imports and the other known factors remain lumped together 
and indistinguishable, there is simply no means of knowing whether injury ascribed to dumped 
import s was, in reality, caused by other factors. Article 3.5, therefore, requires investigating 
authorities to undertake the process of assessing appropriately, and separating and 
distinguishing, the injurious effects of dumped imports from those of other known  causal factors.  
(Appellate Body Report, US – Hot-Rolled Steel , para. 228  (emphasis original) ) 
In our view, in this passage the Appellate Body clearly distinguished the requirement to "separate and 
distinguish" the effects of other factors from a putative requirement to "isolate" those factors, and found the 
former was required, while the latter was not.  
401 In its submission s, Indonesia sometimes refers to the economic downturn and the decline in demand 
as being the cause of the US industry's vulnerability; at other times, it refers to the decline in demand and the 
expiration of the black liquor tax credit.  
402 Indonesia's first written submission, paras. 109 and 116; response to Panel question No. 92(a).  WT/DS491/R  
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  analysis, determined whether a threat of injury was likely i n view of the condition of the industry 
unaffected by such other factors.403  
7.228.   The United States argues that the USITC's assessment of vulnerability was based on the 
domestic industry's condition at the end of the POI, based on trends in its performance indic ators 
during the POI . It was not, as Indonesia asserts, based exclusively on events at the end of the 
POI, i.e. the expiration of the black liquor tax credit and declining demand.404 In fact, the 
United  States contends , these two elements, moderately declini ng demand and the expiration of 
the black liquor tax credit, were changes in circumstances from those during the earlier part of the 
POI which underlay the USITC's conclusion that the likely significant increase in subject imports 
would be a key driver of domestic prices in the imminent future, and would likely depress prices to 
a significant degree.405 In addition, the United States argues that the USITC cited the declining 
demand and expiration of the black liquor tax credit in assessing the "vulnerability"  of the 
domestic industry as part of establishing the baseline condition of the domestic industry for 
purposes of the threat analysis, including the non -attribution analysis, that followed. Hence, the 
United States submits, the USITC's "vulnerability" anal ysis was not part of its non -attribution 
analysis, but was rather a prelude to that threat analysis.406 
7.229.   The United States further argues that past panels have recognized that an investigating 
authority's finding that an industry is vulnerable to material inj ury would reduce the magnitude of 
the change in circumstances necessary to cause the industry to experience material injury in the 
imminent future.407 The United States argues that Indonesia's argument would create a Catch -22 
situation: Indonesia's theory su ggests that a finding of vulnerability stemming from considerations 
other than subject imports would preclude attribution of any subsequent future injury to subject 
imports and therefore preclude a finding of threat of injury; but where a domestic industry  was not 
shown to be vulnerable, subject imports could not threaten the industry. The result would be that 
investigating authorities could not make findings of threat of material injury, a proposition that 
would render Articles 3.7 and 3.8 of the Anti -Dump ing Agreement and Articles 15.7 and 15.8 of 
the SCM Agreement inutile.408  
7.230.   We understand Indonesia to argue that the USITC improperly attributed to subject imports 
the injury caused by the expiration of the black liquor tax credit and the decline in demand  
because it relied on its finding of vulnerability in its evaluation of the likely future impact of subject 
imports, without giving due consideration to the fact the domestic industry's vulnerability had been 
caused by these other factors, and not by subject  imports.409  
7.231.   We note that panels in several prior disputes have considered it appropriate, and even 
necessary, for investigating authorities to first consider the present state of the domestic industry, 
before considering whether it is threatened with injur y by reason of subject imports. In particular, 
the panel in Egypt – Steel Rebar  explained that:  
Solely as a matter of logic, it would seem necessary, in order to assess the likelihood 
that a particular change in circumstances would cause an industry to beg in 
experiencing present material injury, to know about the condition of the domestic 
industry at the outset. For example, if an industry is increasing its production, sales, 
employment, etc., and is earning a record level of profits, even if dumped imports  are 
increasing rapidly, presumably it would be more difficult for an investigating authority 
                                                
403 Indonesia's second written submission, para. 62; respo nse to Panel question No. 41.  
404 United States' second written submission, para. 115.  
405 United States' first written submission, paras. 296 -299. 
406 United States' first written submission, para. 293.  
407 United States' opening statement at the first meeting of  the Panel, para. 52 (referring to Panel 
Reports, Egypt – Steel Rebar , para. 7.91; and Mexico – Corn Syrup , para. 7.140); second written submission, 
para. 114 (referring to Panel Report, Egypt – Steel Rebar , para. 7.91).  
408 United States' opening statement at the first meeting of the Panel, para. 53; second written 
submission, paras. 119 -120; and opening statement at the second meeting of the Panel, para. 36.  
409 Indonesia's opening statement at the first meeting of the Panel, para. 60; second written 
submissi on, para. 54.   WT/DS491/R  
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  to conclude that it is threatened with imminent injury than if its production, sales, 
employment, profits and other indicators are low and/or declining.410 
7.232.   Recently , the panel in EU – Biodiesel (Argentina)  observed that the concept of injury is not 
limited to a situation in which the condition of a "healthy" domestic industry worsens over the 
course of the POI, but also covers circumstances in which a domestic indust ry already in a difficult 
situation at the beginning of the POI sees its situation deteriorate:  
[W]hether an industry is in good or poor condition at the outset of the period 
examined is not determinative of whether dumped imports caused material injury. … 
the concept of injury under Article 3 of the Anti -Dumping Agreement is not limited to 
the situation in which a healthy industry is injured by dumped imports. Rather, the 
notion of "injury", in our view, calls for an inquiry into whether the situation of the 
industry deteriorated  during the period considered. Our view is supported by the fact 
that Article 3.5 itself envisages the possibility of more than one factor causing 
injury.411 
7.233.   We agree with the understanding of the panel  in EU – Biodiesel (Argentina) . In our view, 
the same considerations apply in the context of a threat analysis. The fact that other factors may 
have contributed to rendering the domestic industry "vulnerable" – i.e. more susceptible to future 
injury – does not, in our view, preclude an investigating authority from finding a causal link 
between subject imports and a threat of future injury to the domestic industry. Thus, to the extent 
that Indonesia is suggesting that the fact that the domestic industry's vulnerable condition was 
caused b y factors other than dumped or subsidized imports requires the authority not to attribute 
future injury to subject imports or precludes a finding of threat of injury, we consider that there is 
no basis in Articles 3 and 15 for this suggestion. We reject th e view that, if a domestic industry is 
found to be vulnerable to future injury for reasons other than the effect of subject imports during 
the POI, then it cannot be found to be threatened with injury by future subject imports. That said, 
where other facto rs contributed to the vulnerability of a domestic industry, we would expect that 
the likely future impact of such other factors would be considered and addressed by the 
investigating authority, so as to ensure that any likely future injury resulting from t hese other 
factors is not attributed to the subject imports.  
7.234.   In the present case, on the basis of its consideration of various factors, the USITC found 
that the domestic industry was vulnerable at the end of the POI.412 The USITC reached this 
conclusion in its consideration of the question of threat of injury, having already determined that  
there was no present material inju ry by reason of subject imports  during the POI. In the course of 
reaching the latter conclusion, the USITC determined that the deteriora tion in the domestic 
industry's condition coincided with an economic downturn and a sharp decline in demand for 
coated paper.413 On this basis, and in light of the fact that when subject imports largely left the 
market in interim 2010 due to the pendency of the investigation, many of the domestic industry's 
performance indicators did not improve, the USITC "[did] not find a sufficient causal nexus 
necessary to make a determination that the subject imports [were] having a significant adverse 
impact on the dome stic industry".414 However, notwithstanding declining demand, the downward 
trends in virtually all of the domestic industry 's performance indicators during the period weighed 
heavily in the consideration of the impact of subject imports in the imminent futur e as part of the 
USITC's conclusion that the industry was vulnerable to material injury.415 
                                                
410 Panel Report, Egypt – Steel Rebar , para. 7.91. See also Panel Report, Mexico – Corn Syrup , 
para. 7.131:  
[T]he text of the AD Agreement requires consideration of the Article 3.4 factors in a threat 
determination. Article 3.7 sets out addit ional factors that must be considered in a threat case, 
but does not eliminate the obligation to consider the impact of dumped imports on the domestic 
industry in accordance with the requirements of Article 3.4.  
411 Panel Report, EU – Biodiesel (Argentina) , para. 7.469. (fn omitted; emphasis original)  
412 USITC Final Determination, (Exhibit US -1), p. 38.  
413 USITC Final Determination, (Exhibit US -1), p. 37.  
414 USITC Final Determination, (Exhibit US -1), p. 38. The USITC had found that there were "some 
evidence that  the imports depressed domestic prices, but the record [did] not establish that the effects of 
subject imports on domestic prices were significant". (Ibid . p. 37).  
415 USITC Final Determination , (Exhibit US -1), p. 38.  WT/DS491/R  
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  7.235.   The USITC considered that this vulnerability made the domestic industry more susceptible 
to future injury caused by increased subject imports.416 Contrary to Indonesia' s suggestion, the 
USITC did not find that the expiration of the black liquor tax credit contributed to rendering the 
domestic industry vulnerable. Rather, the USITC observed that the situation of the domestic 
industry might have been worse at the end of th e POI, but for the revenues from this tax credit.417 
In our view, that the decline in demand during the POI may have contributed to the domestic 
industry's vulnerability did not, in and of itself, preclude the USITC from finding that industry 
vulnerable, or from concluding that subject imports would, in the imminent future, cause material 
injury to the domestic industry.  
7.236.   Finally, we note that Indonesia maintains that the United States wrongly presumes that 
the USITC did not err in considering whether subject  imports threatened to cause injury taking into 
account the condition of the domestic industry at a single point in time, the end of the POI. 
Indonesia contends that nothing in Articles 3.7 and 15.7 requires an investigating authority to 
consider a single point in time in assessing the domestic industry's condition and whether there is 
a threat of injury. According to Indonesia, these provisions require an investigating authority to 
consider the totality of what happened during the entire POI and to identif y clear and foreseeable 
changes in circumstances that would cause subject imports to injure the domestic industry.418 We 
see nothing in the text of these provisions that would support Indonesia's position.  
7.237.   We now turn to the USITC's consideration of the thre e alleged "other factors" which 
negatively affected the domestic industry during the POI in the context of its non -attribution 
analysis in finding threat of material injury.  
7.6.2.6   Projected decline in demand  
7.238.   Indonesia argues that the USITC should have found tha t the projected decline in demand 
broke the causal link between subject imports and the threat of injury  to the domestic industry , 
particularly given that the declining US demand led to the domestic industry's vulnerability, which 
in turn was a basis of th e USITC's threat of injury determination. Indonesia also argues that the 
USITC's consideration of the decline in demand as an "other factor" consists of a single conclusory 
sentence  (quoted in para graph  7.241  below) and lacks analysis, such that it is impossible to 
evaluate whether it is reasonable.419 
7.239.   The United States maintains that the USITC demonstrated that subject imports would have 
adverse effects on the domestic industry independent of the projected decline  in demand: the 
USITC explained that the likely increase in the volume of subject imports, coupled with 
underselling by those imports, would cause material injury to the domestic industry in the 
imminent future given its vulnerable condition. The United St ates submits that the USITC 
explained that the projected moderate decline in demand would likely exacerbate the adverse 
impact of subject imports on the domestic industry, as in view of moderately declining demand, 
the market could not accommodate the like ly increase in subject import volumes without injury to 
the domestic industry, and this increase would take sales from current suppliers, including 
domestic producers.420 The United States adds that the USITC explained in its findings that the 
                                                
416 USITC Final Determination , (Exhibit US -1), p. 38: " Given that the industry is already in a weakened 
state, we conclude that, unless antidumping duty and countervailing duty orders are issued, significant 
volumes of dumped and subsidized imports will gain additional U.S. market share in the imm inent future and 
material injury by reason of subject imports will occur" (emphasis added). The USITC also considered that, in 
light of the projected  moderate decline in demand, future growth in import volumes would not be in response 
to growing demand, bu t would take sales from current suppliers such as the domestic industry. (Ibid .). 
417 USITC Final Determination , (Exhibit US -1), fn 249. As we have noted above, the USITC also 
considered that the black liquor tax credit contributed to lowering domestic price s during the POI. This was one 
of the considerations that led the USITC not to find that subject imports significantly depressed domestic prices 
during the POI, notwithstanding some evidence of price depression by subject imports during the POI. (Ibid. 
p. 33). 
418 Indonesia's response to Panel question No. 92(c).  
419 Indonesia's first written submission, paras. 109 and 116.  
420 United States' first written submission, para. 300; opening statement at the first meeting of the 
Panel, para. 55.  WT/DS491/R  
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  projected decl ine in demand was not of such a magnitude as to render insignificant the likely 
injurious effects of subject imports or to obscure their contribution to these injurious effects.421 
7.240.   We recall that an investigating authority may consider the state of the domes tic industry at 
the end of the POI as the starting point of its threat of injury analysis notwithstanding the fact that 
the state of the domestic industry may in part result from the effect of factors other than subject 
imports. For this reason, the fact t hat the decline in demand during the POI negatively affected the 
domestic industry did not preclude the USITC from concluding that subject imports would cause 
injury to the domestic industry in the imminent future. Thus, our analysis focuses on the USITC's  
consideration of the likely impact, in the imminent future, of the projected  decline in demand.  
7.241.   The USITC concluded that the "modest" decline in demand projected for 2010 -2012 (3.3% 
for 2011 and 2.5% for 2012)422 would not render insignificant the likely e ffects of subject imports 
on the domestic industry:  
As noted, U.S. consumption of CCP is projected to decline modestly from 2010 to 
2011. Although a lower level of consumption is likely to limit the domestic industry's 
sales opportunities and restrain pote ntial price increases to some degree, the decline 
is not of a magnitude that would render insignificant the likely effects of subject 
imports that we have described above.423 
7.242.   In addition, we recall that, in finding that subject imports threatened injury in t he 
imminent future, the USITC had observed that, given the projecte d decline in US consumption, the 
US market would not be able to accommodate growth in subject imports without material injury to 
the domestic industry because in this context, future subjec t imports would not be in response to 
growing demand, but would tak e sales from current suppliers, including the domestic industry.424  
7.243.   The USITC also discussed the decline in demand during the POI in its consideration of the 
price effects of subject imports  and of the impact of such imports during the POI. Concerning price 
effects, the USITC described the decline in demand during the POI as a factor that contributed to 
lowering prices during the POI.425 In its consideration of the impact of subject imports, th e USITC 
noted that US demand had declined by 21.3% from 2007 to 2009.426 The USITC also cited the 
economic downturn and the "sharp decline in demand" as an "other factor" contributing to injuring 
the domestic industry, that led it, inter alia , to conclude th at there was an insufficient causal nexus 
between the subject imports  and the adverse impact on  the domestic industry.  The domestic 
industry's resulting "weakened state" was an important consideration in the USITC's conclusion 
                                                
421 United States' first  written submission, paras. 300 and 305.  
422 The figures are redacted from the public version of the USITC Final Determination, (Exhibit US -1), 
pp. 38 and II -12. However, the US demand projections data were provided to the Panel, Indonesia, and the 
third par ties in Excerpt from Petitioners Post -hearing Brief to USITC, a public document, ((Exhibit US -4), p. 1 
and exhibit 1  (RISI Paper Trader, July 2010 ), p. 21), and were discussed in the United States' first written 
submission ( inter alia , in paras. 229 and 24 3).  Indonesia does not challenge the USITC's reliance on these 
projections.  
423 USITC Final Determination, (Exhibit US -1), pp. 38 -39. 
424 USITC Final Determination, (Exhibit US -1), p. 38. The USITC stated that "Although apparent U.S. 
consumption recovered som ewhat in interim 2010 from its lowest levels in 2009, RISI projects a decline of 
[3.3] percent in apparent U.S. consumption from 2010 to 2011 and a further reduction of [2.5] percent in 
2012." As noted above (fn 422) the figures were redacted from the public version of the USITC Final 
Determination but were included in the Petitioners' Post -hearing Brief and provided to the Panel as Exhibit 
US-4. Moreover, in its analysis of the future price effects of subject i mports, the USITC considered that falling 
consumption and increased pulp production due to the black liquor tax credit, which had likely placed negative 
pressure on domestic prices during the POI, would not play the same role in the imminent future. The US ITC 
considered that:  
Domestic consumption is likely to decline only modestly from 2010 to 2011. Although sluggish 
demand will likely restrain price recovery to some degree, there are no projections of a sharp 
falloff in consumption similar to the one in 20 09. In addition, the "black liquor" tax credit expired 
in 2009 and is not likely to be renewed. Without the prominence of these other market forces, 
we anticipate that a key driver of domestic market prices will be the significant volumes of 
subject import s. We have described above how the subject imports led domestic prices 
downward in late 2008 and early 2009.  
(USITC Final Determination, (Exhibit US -1), p. 34)  
425 USITC Final Determination, (Exhibit US -1), p. 33.  
426 USITC Final Determination, (Exhibit US -1), e.g.  pp. 22 and C -6 (table C -3). WT/DS491/R  
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  that unless anti -dumping and countervailing duty orders were issued, subject imports would cause 
material injury to the domestic industry in the imminent future.427 
7.244.   The USITC's analysis of likely injury primarily hinges on its findings concerning the effects 
of the projected increase in  the volume of imports (due, in large part, to the projected increase in 
capacity in China) and its conclusion that they would undersell domestic coated paper.428 In 
reviewing the USITC's consideration of the future impact of the projected decline in demand,  we 
note in particular the USITC's characterization of the projected decline in demand as "modest". In 
this respect we note that while from 2007 to 2009, US coated paper consumption declined by 
21.3% ( -7.7% in 2007 -2008 and -14.7% in 2008 -2009)429, according  to the Resource Information 
Systems Inc. (RISI) data on which the USITC relied, it was projected to decline by 3.3% in 2011 
and 2.5% in 2012.430 The fact that a much larger decline in demand (21.3%) had not persuaded 
the U SITC to conclude that there was a c ausal link between subject imports and the injury to the 
domestic industry at the end of the POI does not in our view mean that it was precluded from 
finding threat of injury notwithstanding a projected decline of 5.8%.  We see no reason why the 
lesser magn itude of the projected decline, in the circumstances of the domestic industry projected 
for the imminent future, should necessarily have led the USITC to the same negative conclusion it 
reached with respect to causation of present material injury. In our v iew, the USITC's explanation  
regarding the likely future impact of the projected decline in demand, that it was "not of a 
magnitude that would render insignificant the likely effects of subject imports," is a reasonable one 
in light of the facts,  and one t hat could have been reached by an objective an d unbiased 
investigating authority. In light of the foregoing, we conclude that Indonesia has failed to establish 
that the USITC attributed to subject imports imminent injury that was likely to be caused by the  
projected decline in demand.  
7.6.2.7   Expiration of the "black liquor" tax credit  
7.245.   "Black liquor" is a by -product of paper pulp production. The tax credit at issue was an 
alternative fuel tax credit of USD 0.50 per gallon of "black liquor" that certain domestic in dustry 
producers received in 2009.431 The tax credit went into effect in late 2007 and expired at the end 
of 2009.432 Before the USITC, respondent parties contended that the tax credit allowed domestic 
producers to lower prices on certain coated paper in 2009433, whereas petitioners argued that the 
tax credit was not a factor in domestic producers' pricing decisions in 2009.434 
                                                
427 USITC Final Determination, (Exhibit US -1), p. 38.  
428 However, contrary to the United States' suggestion, the USITC's finding with respect to the effects of 
subject imports in the future is not entirely independent of the  projected decline in demand – the USITC makes 
the point that "the U.S. market cannot accommodate growth in subject imports without material injury to the 
U.S. industry" and that the increased import volumes will not be in response to a growing demand, but  will 
take sales from, inter alia , the domestic industry.  
429 USITC Final Determination, (Exhibit US -1), table C -3 on p. C -6. 
430 USITC Final Determination, (Exhibit US -1), p.  38; Excerpt from Petitioners Post -hearing Brief to 
USITC,  (Exhibit US -4), p. 1  and exhibit 1  (RISI Paper Trade, July 2010) , p. 21 ; and United States' first written 
submission, paras. 229 and 243.  
431 USITC Final Determination, (Exhibit US -1), pp. V -2 and VI -18-VI-20. The United States indicates that 
domestic producers qualified for the alte rnative fuel mixture credit because they used black liquor, a 
by-product of their wood pulping process, as an alternative fuel to power their paperboard mills.  
(United  States'  response to Panel question No. 46(a)).  
432 USITC Final Determination, (Exhibit US -1), p. 25. The final determination indicates that between 
USD 132 million and USD 2.1 billion in black liquor tax credit, albeit not all attributable to coated paper 
production, was reported by individual US producers as part of their  "operating income" or  "other income". 
(USITC Final Determination, (Exhibit US -1), fn 164).  
433 In its Pre -hearing Brief, APP referred to the black liquor tax credit as "a massive … subsidy, that 
created an enormous incentive for domestic producers to lower prices to buy the volu me that would earn them 
these tax credits". ( Excerpt from APP Pre -hearing Brief to USITC, pp. 24, 30, 36, 49 -53, and 72 , (Exhibit 
US-95), p. 24). See also APP Pre -hearing Brief to USITC , (Exhibit IDN -45) p. 3 where APP argues that 
"NewPage has repeatedly s tated that it passed through this tax credit in the form of lower prices to customers. 
The record confirms substantial pass -through of these credits. This change in 2009 had a major impact on 
domestic price levels, for both integrated and non -integrated pr oducers" and that " Intra-industry competition 
intensified in 2009 , as domestic producers increasingly began to compete fiercely for a larger share of a 
declining total market, so they could expand production to claim the lucrative 'black liquor' subsidies.  These 
credits and the ensuring [ sic] intra -industry competition seriously distorted the market in 2009, and drove 
down prices." (emphasis original). APP makes similar comments on p. 36 of the same document.  
434 USITC Final Determination, (Exhibit US -1), p. 25. WT/DS491/R  
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  7.246.   Although Indonesia's formulation of its argument has varied over the course of these 
proceedings435, we understand Indonesia to take the posi tion that the expiration of the black liquor 
tax credit was an "other factor" that would be causing injury to the domestic industry in the future, 
and that the USITC impermissibly attributed injury caused by the expiration of this tax credit to 
subject imp orts. Indonesia notes in this respect that the USITC found that the black liquor tax 
credit mitigated the effects of price depression by subject imports and benefited domestic 
producers' costs and production -related activities. Indonesia asserts that the U SITC considered the 
black liquor tax credit as one of the factors that broke the causal link between subject imports and 
the domestic industry's condition during the POI. Indonesia argues that the USITC failed to give 
any consideration or devote any of its  threat analysis to the fact that subject imports would likely 
respond differently in a market without the "subsidy" of the black liquor tax  credit .436 Indonesia 
also faults the USITC for failing to undertake a "concrete analysis" of this factor, based on 
economic constructs, as it had done in its present injury analysis.437 Indonesia also faults the 
USITC for examining the question of threat of injury in the context of a domestic industry that was 
vulnerable.438 
7.247.   The United States argues that having expired in 20 09, the black liquor tax credit was no 
longer an "other factor" for the investigating authority to "examine" pursuant to Articles 3.5 and 
15.5, and the USITC logically considered that the credit would have no effect – positive or 
negative439 – going forward.  The United States disputes Indonesia's assertion that the USITC 
found that the expiration of the black liquor tax credit was a source of domestic industry 
vulnerability. Rather, the USITC noted that the domestic industry's financial indicators in 2009 
might have been even worse than they were, but for the temporary black liquor tax credit 
payments in that year. The United States submits that the USITC considered the black liquor tax 
credit as a one -time event that might have obscured the full extent of the  domestic industry's 
vulnerability in 2009 and found that its non -renewal eliminated a factor that had contributed to 
lower domestic like product prices in 2009, thereby obscuring the contribution of subject imports 
to price depression in that year.440 The U nited States also submits that, in the investigation, 
Indonesian interested parties did not argue that the expiration of the black liquor tax credit would 
likely injure the domestic industry in the future.441  
7.248.   The USITC considered that black liquor tax credi t payments received by producers during 
the POI reduced their costs and improved their financial position in 2009. The USITC also 
mentioned the black liquor tax credit as a factor that obscured the contribution of subject imports 
to negative price effects during the POI and made it unclear whether the prices evidenced a 
negative trend, given that the tax credit contributed to reducing domestic producers' prices.442 In 
its threat of injury determination, the USITC noted that the tax credit expired at the end o f 2009; 
therefore any benefit that the domestic industry had received from it in 2009 would not continue 
into the imminent future.443 The USITC did not address the black liquor tax credit further and did 
not discuss it in considering non -attribution.  
                                                
435 Indonesia has argued that the USITC found that the black liquor tax credit was another factor that 
broke the causal link between subject imports and the condition of the domestic industry during the POI 
(Indonesia's response to Panel question No. 47) ; that the tax credit rendered the domestic industry vulnerable 
(Indonesia's first written submission, para. 114; response to Panel question No. 97); that its expiration 
rendered the domestic industry vulnerable (Indonesia's first written submission, paras . 109; response to Panel 
question Nos.  41 and 47; second written submission, paras. 55 -63); and that the USITC found that the 
expiration of the tax credit was a cause of likely future injury to the domestic industry because it contributed to 
the US industr y's vulnerability (Indonesia's first written submission, paras. 106, 108, and 109; response to 
Panel question No. 45(a)).  
436 Indonesia's second written submission, para. 55.  
437 Indonesia's opening statement at the first meeting of the Panel, para. 61.  
438 Indonesia's response to Panel question No. 47.  
439 The United States also submits that while the USITC "recognized that domestic producers received 
revenues from the black liquor tax credit in 2009, [it] never found that the black liquor tax credit yielded a net  
benefit to the domestic industry". (United States' response to Panel question No. 46(a) (referring to USITC 
Final Determination, (Exhibit US -1) fns 164 and 249)).  
440 United States' second written submission, paras. 117 and 125.  
441 United States' first writt en submission, para. 309; second written submission, para. 125.  
442 USITC Final Determination, (Exhibit US -1), p. 33.  
443 USITC Final Determination, (Exhibit US -1), p. 38. As noted above (fn 424) in its analysis of  the 
future price effects of subject imports, the USITC also considered that falling consumption and increased pulp 
production due to the black liquor tax credit, which had expired in 2009, had likely put negative pressure on WT/DS491/R  
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  7.249.   We reca ll that, rather than finding the black liquor tax credit to have been an "other factor" 
causing injury to the domestic industry, the USITC found that it mitigated the injury suffered by 
the domestic industry during the POI. Having noted that the black liquor tax credit had expired at 
the end of 2009, such that it would have no effect going forward, it is clear that the USITC 
regarded the black liquor tax credit as a one -time event (limited to year 2009), the expiry of which 
would have no impact on the domes tic industry in the future. In our view, an unbiased and 
objective investigating authority could have considered, as the USITC did, that the expiration of a 
tax credit which only benefited the domestic industry during one year of the POI was not an "other 
factor" threatening to cause injury to the domestic industry in the future.444 In other words, an 
unbiased and objective authority could, in the circumstances, have considered the absence  of a 
temporary, one -off, financial benefit that was no longer in effec t at the end of the POI as the 
"baseline" for its consideration of whether subject imports threatened material injury to the 
domestic industry. In our view, the USITC's treatment of the absence of the black liquor tax credit 
in the future is reasoned and a dequate.445, 446  
7.250.   For the foregoing reasons, we conclude that Indonesia has not established that the USITC 
acted inconsistently with Articles 3.5 and 15.5 with respect to  its treatment  of the expiration of the 
black liquor tax credit.  
7.6.2.8   Non-subject imports  
7.251.   The USITC  found that non -subject imports were not an "other factor" that rendered 
insignificant the likely effects of subject imports as a cause of imminent injury to the domestic 
industry. The USITC observed that non -subject imports lost market share to both subject imports 
and the domestic like product (except in interim 2010 when subject imports declined, and 
non-subject imports gained market share) and that they were generally priced higher than subject 
imports. The USITC concluded that in the future, subje ct imports would compete on price to regain 
the market share that they lost both to the domestic industry, and to non -subject imports in 
interim 2010.447 
                                                                                                                                                  
domestic prices during the POI , but would not play the same role in the imminent future. The USITC found that 
"[w]ithout the prominence of these other market forces … a key driver of domestic market prices will be the 
significant volumes of subject imports ". (USITC Final Determination,  (Exhibit US -1), p.  34). 
444 There is some disagreement between the parties as to whether the overall impact of the tax credit 
on the domestic industry was, during the period that it was in place, a positive one. We are, in our analysis, 
focusing on the impa ct of the tax credit during the POI as benefiting domestic producers and mitigating the 
downward trend in their financial condition and the absence of that positive impact on domestic producers in 
the future.   
445 As noted above, Indonesia also argues that t he USITC failed to give any consideration or devote any 
of its threat analysis to the fact that subject imports likely would respond differently in a market without the 
"subsidy". It is not clear to us whether this argument of Indonesia is a reference to t he USITC's analysis of 
future price effects of subject imports. In any event, we address the USITC's analysis concerning future price 
effects in the following section of this Report, concerning Indonesia's claims under Articles 3.7 and 15.7.  
446 In reaching this determination, we recall that  Indonesian interested parties did not argue during the 
investigation that the expiration of the black liquor tax credit would likely injure the domestic industry in the 
future. Thus, it is not clear to us that the expirat ion of the black liquor tax credit was a "known" other factor 
threatening injury to the domestic industry. Interested parties' arguments focused on the price -lowering effects 
of the tax credit during the POI, and to some extent the impact of its expiration  on the domestic industry's 
performance . (Indonesia's response to Panel question No. 47 (referring to Excerpt from APP Pre -hearing Brief 
to USITC, pp. 5 and 51 , (Exhibit IDN -36), p. 5)).  
447 USITC Final Determination, (Exhibits IDN -18/US -1), p. 39:  
The same [i.e. that they would not render insignificant the likely effects of subject imports]  is 
true for CCP imports from countries other than China and Indonesia. These nonsubject imports 
were sold in the U.S. market throughout the period examined, although from  2007 to 2009 their 
market share declined by 9.3 percentage points overall fr om 25.4 percent in 2007 to 
16.1 percent in 2009. The market share held by nonsubject imports was 18.4 percent in interim 
2009 and 24.5 percent in interim 2010. Although nonsubject  imports did gain market share in 
interim 2010 when subject imports left the market due to the pendency of the investigations, the 
domestic industry also gained 6.8 percentage points of market share from interim 2009 to 
interim 2010. Moreover, the availabl e data reflect that non -subject imports are generally priced 
higher than subject imports. Once the preliminary duties are lifted, subject imports will compete 
on price to regain the market share that they lost both to the domestic industry and to 
non-subje ct imports in interim 2010, which will in turn result in a more price -competitive U.S. 
market.  WT/DS491/R  
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  7.252.   Indonesia argues that the USITC's threat of injury determination is devoid of any analysis 
that accounts  for the fact that subject imports would not take market share exclusively from the 
domestic industry but, rather, were likely to gain market share from non -subject imports. 
Indonesia notes in this respect that the USITC found that during the POI, subject imports gained 
market share at the expense of non -subject imports and not the domestic industry. Indonesia 
argues that to the extent subject imports gained market share from non -subject imports in the 
future, this would reduce the likelihood of an adverse impact on the domestic industry.448 Thus, 
Indonesia's argument goes to the USITC's explanation for its finding that subject imports would, in 
the future, take market share from both the domestic industry and non -subject imports.  
7.253.   The United States argues tha t the USITC identified no injurious effects caused by non -
subject imports during the POI, and that Indonesia does not argue that non -subject imports would 
cause injury to the domestic industry, and therefore cannot establish that the USITC improperly 
attributed to subject imports injury likely to be caused by non-subject imports.449 The 
United  States also argues that there is no inconsistency between the USITC's findings concerning 
market shares during the POI and its finding that subject imports would take s ales from the 
domestic industry in the future.450  
7.254.   Indonesia does not argue that non -subject imports would in the future cause injury to the 
domestic industry.451 To the contrary, Indonesia's argument seems to be that non -subject imports 
would mitigate any inj urious effect of future subject imports by losing market share to those 
imports, rather than the domestic industry losing such market share.  Given that Indonesia does 
not allege that non -subject imports were an "other factor" threatening to cause injury to  the 
domestic industry452, we conclude that Indonesia has failed to establish a claim that the USITC 
failed to properly examine whether injury threatened by non -subject imports was attributed to the 
subject imports. Consequently, we conclude that Indonesia h as failed to make a prima facie  case 
of violation of the non -attribution obligation under Articles 3.5 and 15.5 with respect to the 
USITC's examination of non -subject imports, and we reject Indonesia's claim as it pertains to this 
alleged "other" factor.  
7.6.2.9   Overall conclusion concerning Indonesia's claims under Article 3.5  of the 
Anti-Dumping Agreement and Article 15.5 of the SCM Agreement  
7.255.   In light of the foregoing, we find that Indonesia has failed to establish that the USITC's 
threat of injury determination is inconsistent with Article 3.5 of the Anti -Dumping Agreement and 
Article 15.5 of the SCM Agreement because the USITC attributed to the subject imports adverse 
effects caused by other factors.  
7.6.3   Claims  under Article  3.7 of the Anti -Dumping Agreement and Article 15.7 of the 
SCM Agreement  (threat of injury)  
7.6.3.1   Introduction  
7.256.   Indonesia claims that the USITC's threat of injury determination is inconsistent with 
Article  3.7 of the Anti -Dumping Agreement and Article 15.7 of the SCM Agreement because the 
USITC based cer tain findings on conjecture and remote possibility.453 Specifically,  Indonesia 
challenges two intermediate findings that form part of the basis for the USITC's affirmative threat 
of injury determination : that subject imports would gain market share at the ex pense of the 
domestic industry; and that subject imports would have adverse price effects on domestic 
                                                
448 Indonesia's first written submission, paras. 110 and 117; response to Panel question No. 48(b).  
449 United States' first written submission, paras. 301 and 306 -308; second written submission, fn 218.  
450 United States' first written submission, paras. 301 and 306 -308. 
451 See Indonesia's response to Panel question No. 48 (b): "To the extent subject imports gaine d market 
share from nonsubject imports, this would reduce the likelihood of an adverse impact on the domestic 
industry."  This suggests that Indonesia's position is not that non -subject imports threatened injury,  i.e. were 
an "other known factor [threatening to cause] injury" but rather that they would mitigate an y injury caused by 
subject imports by losing market share to those imports.   
452 We also note that there is no indication in the record evidence submitted to the Panel that arguments 
were made before the USITC to the effect that non -subject imports were caus ing, or would in the future cause, 
injury to the domestic industry.  
453 Indonesia's first written submission, para. 4.  WT/DS491/R  
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  prices.454 For Indonesia, the USITC based these findings on conjecture or speculation regarding 
certain events which were not clearly foreseen and imminent , in viola tion of Article 3.7 and 
Article  15.7.455 
7.257.   The United States argues that the USITC based its threat of injury determination on facts 
and changes  in circumstances which were clearly foreseen and imminent and requests that the 
Panel reject Indonesia's c laims.456 
7.6.3.2   Legal standard under Article 3 .7 of the Anti -Dumping Agreement and Article  
15.7 of the SCM Agreement  
7.258.   Article 3.7 of the Anti -Dumping Agreement provides as follows:  
A determination of a threat of material injury shall be based on facts and not merel y 
on allegation, conjecture or remote possibility. The change in circumstances which 
would create a situation in which the dumping would cause injury must be clearly 
foreseen and imminent. [*] In making a determination regarding the existence of a 
threat of  material injury, the authorities should consider, inter alia , such factors as:  
(i) a significant rate of increase of dumped imports into the domestic market 
indicating the likelihood of substantially increased importation;  
(ii) sufficient freely disposabl e, or an imminent, substantial increase in, capacity 
of the exporter indicating the likelihood of substantially increased dumped 
exports to the importing Member's market, taking into account the availability 
of other export markets to absorb any additional  exports;  
(iii) whether imports are entering at prices that will have a significant 
depressing or suppressing effect on domestic prices, and would likely increase 
demand for further imports; and  
(iv) inventories of the product being investigated.  
No one of  these factors by itself can necessarily give decisive guidance but the totality 
of the factors considered must lead to the conclusion that further dumped exports are 
imminent and that, unless protective action is taken, material injury would occur.  
[fn or iginal]10 One example, though not an exclusive one, is that there is convincing reason to believe that 
there will be, in the near future, substantially increased importation of the product at dumped prices.  
7.259.   The text of Article 15.7 of the SCM Agreement lar gely parallel s that of Article 3.7 of the 
Anti-Dumping  Agreement , without footnote 10, and with the addition of a factor that the 
investigating authority should consider, namely the nature of the subsidy and the trade effects 
likely to arise therefrom (Article 15.7(i) ).457 
7.260.   Indonesia 's claims concern the first sentence of Article 3.7 of the A nti-Dumping  Agreement 
and Article 15.7 of the SCM Agreement, which require an investigating authority to base an 
affirmative threat of injury determination "on facts and n ot merely on allegation, conjecture or 
remote possibility". In addition, Indonesia refers to the second sentence of the provisions which 
                                                
454 Indonesia's first written submission, para. 124 (referring to Excerpt from USITC Final Determination, 
pp. 3-39 and C -3-C-7, (Exhibit IDN -18), pp. 38 -39). 
455 Indonesia first written submission, para. 124; opening statement at the first meeting of the Panel, 
para. 65; and second written submission, para. 64.  
456 United States' first written submission, para. 259.  
457 Prior panels have concluded th at decisions concerning Article 3.7 instru ct the understanding of 
Article  15.7 and vice versa. See, e.g. Panel Report, EC and certain member States – Large Civil Aircraft , 
para. 7.2159. Any differences between the two provisions are not pertinent to the is sues in this dispute.  WT/DS491/R  
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  provides that the change of circumstances, which would create a situation in which the dumping  or 
subsidy  would cause i njury, must be clearly foreseen and imminent.458 
7.261.   The Appellate Body has stated that Article 3.7 and Article 15.7 combine positive 
requirements – a determination of threat of injury must "be based on facts" and show how a 
"clearly foreseen and imminent" chang e in circumstances would lead to further subject imports 
causing injury in the near future – with an express prohibition of a determination based "merely on 
allegation, conjecture or remote possibility".459 A threat of injury determination thus requires that  
the determination of the investigating authority clearly disclose its inferences and explanations in 
order to ensure that any projections or assumptions made by it  regarding  likely future 
occurrences, are adequately explained and supported by positive evi dence on the record460, and 
show a high degree of likelihood that projected occurrences will occur.461 
7.262.   Article 3.7 and Article 15.7 make clear that certain, listed , factors relating to the likelihood 
of increased imports (based on the rate of increase of impor ts, the capacity of exporters, the 
availability of other export markets  and, under Article 15.7, the nature of the subsidy and the 
trade effects therefrom ), the effects of imports on future prices and likely future demand for 
imports, and inventories shoul d be considered in making a threat of injury determination .462 It is 
also understood that the Anti -Dumping Agreement and the SCM Agreement require consideration 
of the Article  3.4 and Article 15.4 factors in a threat of material injury determination. This is  in 
order to establish a background against which the investigating authority can evaluate whether 
imminent further subject imports will affect the industry's condition in such a manner that material 
injury would occur in the absence of protective action.463 In determining the existence of a threat 
of material injury, the investigating authorities will also necessarily have to make projections  
relating to the "occurrence of future events" since such future events "can never be definitively 
proven by facts ". Notwithstanding this intrinsic uncertainty, a "proper establishment" of facts in a 
determination of threat of material injury must be based on events that, although they have not 
yet occurred, must be "clearly foreseen and imminent", in accordan ce with Arti cle 3.7 and 
Article  15.7.464 
7.263.   In this respect,  Article 3.7 and Article 15.7  provide that " [t]he change in circumstances  
which would create a situation in which the  [dumping/ subsidy ] would cause injury must be clearly 
foreseen and imminent" . The change in circ umstances that would give rise to a situation in which 
injury would occur is not limited – it may encompass a single event, or a series of events, or 
developments in the situation of the industry, and/or concerning the dumped or subsidized 
imports, which l ead to the conclusion that injury which has not yet occurred can be predicted to 
occur imminently.465 
7.6.3.3   The USITC's finding that subject imports would gain market share at the 
expense of the domestic industr y 
7.264.   Indonesia challenges the USITC's conclusion that su bject imports would gain market share 
at the expense of the domestic industry in the imminent future. Indonesia, in particular, takes 
issue with the USITC's finding that " future volumes of subject imports [would] take sales from 
current suppliers such as t he domestic industry".466 This conclusion was preceded by the USITC's 
finding that the volume and market share of subject imports was likely to be significant in the 
                                                
458 Indonesia's first written submission, para. 122; opening statement at the first meeting of the Panel, 
para. 65; and second written submission, para. 64.  
459 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para.  96 (quoting 
Appellate Body Report, US – Lamb , para. 136). See also Appellate Body Report, Mexico – Corn S yrup 
(Article  21.5 – US), para. 85; and Panel Report, Japan – DRAMs (Korea) , para. 7.415.  
460 Appellate Body Report, US – Softwood Lumber VI (Article 21 .5 – Canada) , para. 96 (referring to 
Appellate Body Report, US – Lamb , para. 136). See also Appellate Body Report, Mexico – Corn Syrup 
(Article  21.5 – US), para. 85.  
461 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 109. 
462 Panel Report, Mexico – Corn Syrup , paras. 7.125 -7.126.  
463 See above, para . 7.231  and fn 410. 
464 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 85 ( referring to Appellate 
Body Report, US – Hot-Rolled Steel , fn 59 and para. 56).  
465 Panel Report, US – Softwood Lumber VI , para. 7.57.  
466 Indonesia 's first written submission, para. 124 (referring to Excerpt from USITC Final Determination, 
pp. 3-39 and C -3-C-7, (Exhibit IDN -18), p. 38); opening statement at the first meeting of the Panel, para. 65; 
and second written submission, para. 64.  WT/DS491/R  
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  imminent future. Indonesia also asserts that the USITC bas ed its finding of likely significa nt 
increase in subject import volume  on conjecture rather than facts.467 
7.265.   The USITC concluded that subject import volume was likely to be significant in the 
imminent  future, both in absolute terms and relative to consumption and production  in the 
United  State s, and that the increase in subject imports' market share was likely to be 
significant.468 The USITC based these conclusions on subject import trends during the POI and on 
certain projections it made about the imminent future. These findings are  part of the broader set 
of considerations that led the USITC to conclude that the domestic industry was threatened with 
material injury  by reason of subject imports . 
7.266.   In reaching its  finding of a likely increase in subject import volume , the USITC relied 
principally on the fact that subject imports increased substantially during the POI, despite a 
substantial decline in apparent US consumption , and on its  conclusion  that subject foreign 
producers had the ability and the incentive to further increase shipments to the U nited States in 
the imminent future. With respect to the former, the USITC first concluded that , during the POI , 
subject imports  from China and Indonesia  increased significantly, both on an absolute basis and 
relative to apparent US consumption and productio n.469 The USI TC noted that subject imports 
were present in substantial volumes and market share at the beginning of the POI and increased 
their presence in the US market during the period 2007 -2009.  It observed that during this period 
subject import volume increased by 3.8% and market share increased by 4.4 percentage points. 
Subject imports declined from 398,309 shorts tons in 2007 to 382,245 short tons in 2008, before 
increasing "sharply" to 413,593 short tons in 2009. The USITC also noted that, during the same 
period  (2007 -2009) , the ratio of subject imports to US production increased by 4.3 percentage 
points.470 The USITC observed that subject imports increased despite a substantial decline in 
apparent US  consumption.471 
7.267.   As noted above, i n addition, the USITC concluded that subject foreign producers had the 
ability to increase exports to the United States. The USITC concluded that the increase in 
production capacity in China between 2009 and 2011 would be substantial and that projected 
consumption growth in Chi na and in the rest of Asia would not be sufficient to absorb the new 
capacity .472  
7.268.   The USITC also concluded that subject  foreign producers had the incentive to increase 
exports to the United States. The USITC first found that these producers had a strong int erest in 
increasing s hipments to the US market. Th e USITC relied , inter alia , on an affidavit by an official of 
a domestic distributor (Unisource affidavit) which indicated  that one such producer, APP had 
planned to double shipments to the U nited States and was willing to lower its prices .473 The USITC 
also noted that, soon after APP lost its major US distributor  – Unisource Worldwide, Inc. 
                                                
467 In the sections of its submissions concerning its claims under Articles 3.5 and 15.5 and under 
Articles  3.8 and 15.8, Ind onesia further elaborated on some of the arguments in support of its Articles 3.7 and 
15.7 claims. In this section, where relevant we take into account Indonesia's statements that concern its 
Articles 3.7 and 15.7 claims, irrespective of where in its submi ssions Indonesia made these arguments.  
468 USITC Final Determination, (Exhibit US -1), pp. 30 -31. 
469 USITC Final Determination, (Exhibit US -1), p. 27.  
470 USITC Final Determination, (Exhibit US -1), p. 26.  
471 USITC Final Determination, (Exhibit US -1), p. 30 and fn  230. The USITC noted that apparent US 
consumption had declined from 2.86 million short tons in 2007 to 2.64 million short tons in 2008, and to 
2.25 million short tons in 2009, for an overall decline of 21.3% between 2007 and 2009. The USITC also noted 
that subject imports declined sharply in interim 2010, both in absolute terms and relative to production and 
consumption, relative to interim 2009. Subject imports were 210,506 short tons in interim 2009 and 
85,033  short tons in interim 2010. On a monthly bas is, subject imports continued at elevated levels in January 
and February 2010 and then dropped precipitously in March 2010, the month in which the USDOC issued 
affirmative preliminary countervailing duty determinations. The USITC found that the decline in subject import 
volumes at the end of the POI was attributable to the pendency of these investigations and that, absent these 
investigations, the absolute and relative volumes of subject imports would likely have been greater in interim 
2010. ( USITC Final D etermination, (Exhibit US -1), p. 27). The USITC noted in this respect that the statutory 
provision governing the USITC's treatment of post -petition information provides that if any change in the 
volume of the subject merchandise since the filing of the pet ition in an investigation is related to the pendency 
of the investigation, the USITC may reduce the weight accorded to the data for the period after the filing of the 
petition. ( USITC Final Determination, (Exhibit US -1), fn 174).  
472 USITC Final Determinatio n, (Exhibit US -1), p. 28.  
473 USITC Final Determination, (Exhibit US -1), p. 29; Redacted excerpts of USITC Final Determination 
and APP Final Comments to USITC, (Exhibit US-107), pp. 1 -2. WT/DS491/R  
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  (Unisource ) – in 2009, APP established its own distributor in the US market – Eagle Ridge Paper 
Co. (Eagle Ridge ), which  the USITC found was for  the purpose of retaining and growing APP's 
presence in the US market .474 The USITC further considered that the US market was well 
understood by producers in China and Indonesia, and that it was  attractive to subject foreign 
producers  in terms of prices and other market characteristics .475 
7.269.   Moreover , the USITC also found that subject imports would cause adverse price effects – 
specifically, price underselling and price depression – in the imminent future.476  
7.270.   The USITC then assessed the lik ely impact of subject imports on the domestic industry. 
The USITC found that the domestic industry was vulnerable to material injury given the downward  
trend in virtually all of the domestic industry performance indicators during the POI.477 The USITC 
conclu ded that, given this vulnerable state, the domestic industry would likely continue to 
experience even poorer results, as increasing volumes of low -priced subject imports entered the 
US market and compete d with the domestic like product .478 The USITC added  that: 
Subject producers have already shown the ability and willingness to lower prices for 
subject merchandise that was already underselling the domestic like product in order 
to significantly increase their exports to the United States, even in a contractin g 
market. We believe that this behavior will continue in the imminent future, particularly  
in light of the significant new capacity in China, the establishment of Eagle Ridge in 
2009, and the attractiveness of the U .S. market.  
The U .S. market cannot accomm odate growth in subject imports without material 
injury to the U .S. industry. Although apparent U.S. consumption recovered somewhat 
in interim 2010 from its lowest levels in 2009, RISI projects a decline of  [3.3] percent 
in apparent U.S. consumption from 2 010 to 2011 and a further reduction  of [2.5479] 
percent in 2012. Accordingly, future volumes of subject imports will not be in 
response to growing U .S. demand for CCP, but will take sales from current suppliers 
such as the domestic industry.  
Given that the i ndustry is already in a weakened state, we conclude that, unless 
antidumping duty and countervailing duty orders are issued, significant volumes of 
dumped and subsidized imports will gain additional U .S. market share in the imminent 
future and material inj ury by reason of subject imports will occur.480  
                                                
474 USITC Final Determination, (Exhibit US -1), p. 29.  
475 The USITC found t hat prices were generally higher in the United States than in China or other 
markets in Asia. In the USITC's view, the fact that a large share of coated paper was supplied on a spot sales 
basis allowed purchasers to switch between suppliers with relative e ase. In addition, the USITC considered that 
the prevalence of private label products, in which merchants or retailers offer coated paper products under 
their own brands, provided a ready avenue for subject imports to expand their presence in the US market even 
without an advertising or distribution infrastructure. (USITC Final Determination, (Exhibit US -1), p. 29). 
Indonesia submits that the attractiveness of the US market could not be considered a factor that was going to 
change in the imminent future. We note that the attractiveness of the US market to subject producers was a 
factor that existed throughout the POI. However, the USITC did not conclude that this factor was going to 
change in the imminent future. Rather, the USITC concluded that there was no indication that subject 
producers would find the US market any less attractive in the imminent future than they did from 2007 to 2009 
when they increased their exports to the United States and their market share. ( USITC Final Determination, 
(Exhibit US -1), p. 29). 
476 USITC Final Determination, (Exhibit US -1), pp. 34 -35. 
477 The USITC indicated that, from 2007 to 2009, the domestic industry suffered double -digit percentage 
declines in production, shipments, capacity utilization, net sales, production workers, o perating income, and 
capital expenditures. ( USITC Final Determination, (Exhibit US -1), p. 38).  
478 USITC Final Determination, (Exhibit US -1), p. 38.  
479 This percentage, as well as the 3.3% projected decline in US consumption from 2010 to 2011 , are 
redacted fr om the public version of the USITC's determination . (USITC Final Determination, (Exhibit US -1), 
p. 38). However, as noted above, fn 422, the US demand projections data were provided to the Panel, 
Indonesia, and  the third parties in Excerpt from Petitioners Post -hearing Brief to USITC, a public document, 
((Exhibit US -4), p. 1 and exhibit 1  (RISI Paper Trade, July 2010) , p. 21), and were disc ussed in the 
United  States' first written submission ( inter alia , in para s. 229 and 243).  
480 USITC Final Determination, (Exhibit US -1), p. 38 (fns omitted). As discussed in the previous section 
of this Report, the USITC further considered that the effect of other factors in the imminent future would not 
render insignificant the likely effects of subject imports.  WT/DS491/R  
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  7.271.   We now turn to  the consideration of Indonesia's arguments in support of its claim that the 
USITC based its finding that subject imports would gain market share at the expense of the 
domestic industry on conjec ture or speculation.  
7.6.3.3.1   Market share trends during the POI  
7.272.   Although Indonesia frames its claims and its arguments as pertaining to the USITC's 
findings concerning  market share, we understand Indonesia to also tak e issue with the USITC's 
conclusion that futur e volumes of subject imports would not be in response to growing US 
demand, but would take sales from current suppliers, including  the domestic industry.481  
7.273.   Indonesia argues that the USITC's finding that subject imports would gain market share at 
the domest ic industry 's expense  was based on conjecture or speculation.  According to Indonesia, 
there was no basis on the record for the USITC to draw this conclusion because that situation – 
subject  imports taking market share from the domestic industry – did not o ccur during the POI ; 
Indonesia submits that during the POI  subject imports competed for market share with 
non-subject  imports, rather than with the domestic industry.482 In addition, Indonesia argues that, 
contrary to the United States' assertion, there was no correlation between increased subject 
imports and declining domestic industry  US shipments during the POI.483 
7.274.   Indonesia's central argument in support of its claim s is that the absence of an evident 
correlation between subject import and the domestic indus try's market share trends during the 
POI undermines the likelihood that subject imports would gain market share from the domestic 
industry in the imminent future.  
7.275.   The United States submits that the USITC  had ample evidentiary support  for its conclusion 
that subject imports would gain market share at the expense of the domestic industry . The 
United  States considers that Indonesia 's arguments are based on mistaken assumptions that 
trends during the POI, which influenced the USITC's negative present injury de termination, would 
continue in the imminent future. For the United States, Indonesia ignores the explanations 
provided by the USITC that clearly foreseen and imminent changes in circumstances made it likely 
that subject import volume would increase signifi cantly in the imminent future .484 The 
United  States further argues that the USITC's conclusion was based, inter alia , on the fact that the 
projected demand could not absorb such an increase, on volume trends during the period 
2007-2009 and on market share tr ends during the interim period.485  
7.276.   We start by noting that Indonesia's position suggests that a finding with respect to future 
events contri buting to an affirmative threat of injury determination could be considered to be 
based on conjecture  rather than fac ts if events that occurred during the POI do not clearly reflect 
the situation the investigating authority predicts would occur.  In other words , with respect to the 
issue before the Panel, if the market share and volume of subject import s, on the one hand,  and of 
the domestic industry , on the other, show no clear inverse correlation  during the POI, a 
determination that in the imminent future subject imports would gain market share at the expense 
of the domestic industry  would necessarily be based on conject ure rather than facts.  
                                                
481 Indonesia's first written submission, para. 129 (referring to Excerpt from USITC Final Determination, 
pp. 3-39 and C -3-C-7, (Exhibit IDN -18), p. 38).  
482 Indonesia submits that , during the period 2007 -2009, subject import s and the domestic industry 
gained market share from non -subject imports ; and, in the interim period, subject imports lost market share, 
while non -subject imports gained market share. (Indonesia's first written submission, para. 128. (referring to 
Excerpt from USITC Final Determination, pp. 3 -39 and C -3-C-7, (Exhibit IDN -18), pp. 22 -23)). 
483 Indonesia's opening statement at the first meeting of the Panel, para. 65 (referring to United States' 
first written submission, para. 263).   
484 The United States, in par ticular, refers to the USITC's conclusion that subject producers possessed 
both the ability and the incentive to increase their exports to the United States in the imminent future.  
(United States' first written submission, paras. 223, 261, and 284).  
485 United States' first written submission, para s. 267-271. The United States submits that Indonesia 
does not dispute that subject import volume was likely to increase significantly in the imminent future. 
(United  States' opening statement at the first meeting of  the Panel, para. 45; s econd written submission, 
para. 131). However, several of Indonesia's arguments, particularly those related to the USITC's determination 
of likely increase in subject producers' capacity, the establishment of Eagle Ridge and the Unis ource affidavit, 
challenge this very finding. (See, for instance, Indonesia's second written submission, para. 75).  WT/DS491/R  
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  7.277.   We do not agree.  In our view, projections about future events need not necessarily  reflect 
a continuation of trends that took place during the POI for a threat of injury determination to be 
based  on facts  as opposed to allegation, c onjecture or remote possibility . As noted above, an 
investigating authority is required to provide a reasoned and adequate explanation as to how 
evidence in the record supports its finding that a situation of injury w ould occur in the imminent 
future .486 While we would expect the authority to rely on facts from the present to support the 
projections it makes about the future and its resulting conclusions about the future, in our view 
events that took place during the POI provide  the background against which a n investigating 
authority  can evaluate the likely future events , but do not limit the scope of projections  that the 
authority may make concerning future events .487 Of course, the investigating authority would be 
expected to explain the change in circumstance s that will result in the future situation being 
different from the past.  
7.278.   With these considerations in mind, we proceed to examine the arguments put forward by 
Indonesia in support of its contention that the USITC's finding regarding the likely future mark et 
share of subject import was based on conjecture rather than facts.  
7.279.   We note that , as Indonesia asserts, the USITC observed that over the period 2007-2009, 
subject  imports and the domestic industry gained market share at the expense of non-subject  
imports , in a context of a significant decline in demand  of 21 .3%.488 While non-subject  
imports'  market share decreased from 25.4% in 2007 to 16.1% in 2009 ( -9.3 percentage 
points)489, subject import s' market share increased from 13.9% in 2007 to 18.3% in 2009 
(+4.4 percentage points)490 and the domestic industry 's market share increased from 60.7% in 
2007 to 65.5% in 2009 ( +4.8 percentage points).491 However, the USITC also noted that in the 
last part of the POI, i.e. in the interim period , when subject import s left the market due to the 
pendency of the investigations , both non-subject  imports ' and the domestic industry 's market 
share  increased .492 The volume of s ubject imports decreased from 210,506 short tons in interim 
2009 to 85,033 short tons in interim 2010493, and thei r market share declined by 12.9  percentage 
points  from interim 2009 to interim 2010  (from 19.7% to 6.8% ), while non-subject  imports ' and 
the domestic industry 's market share s increased by 6.1 percentage points (from 18.4% to 24.5%) 
and 6.8 percentage point s (from 61.9% to 68.7%), respectively .494 
7.280.   Indonesia submits that there was no correlation between subject import volumes and the 
decline in the domestic  industry's shipments , because the volume of the domestic industry's 
shipments declined  in each year of th e POI, including from 2007 to 2008, when the volume of 
subject imports also declined.495 According to Indonesia, if there were a correlation between 
subject import  volumes and domestic shipments, one would expect domestic shipments to have 
increased  during t he period  in which subject imports declined  (i.e. 2007-2008) .  
7.281.   Volume trends during the POI do not support Indonesia's allegation that subject import  
volumes and domestic  industry shipments were not correlated. The USITC noted that during the 
period 2007 -2009, in a context of significant decline of demand, subject imports were the only 
source  whose volume increased in the US market, as the volume of the domestic industry's US 
                                                
486 See para. 7.6 of this Report.  
487 In this regard, we share the view of the panel in US – Softwo od Lumber VI  that the consideration of 
the factors set out in Article 3.2 and Article 3.4 of the Anti -Dumping Agreemen t, and Article 15.2 and 
Article  15.4 of the SCM Agreement, in the context of a threat of injury analysis, "forms part of the background 
against which the investigating authorities can evaluate the effects of future dumped and/or subsidized 
imports". (Panel Report, US – Softwood Lumber VI , para. 7.111).  
488 Apparent US consumption declined from 2.86 million short tons in 2007 to 2.64 million sh ort tons in 
2008, and to 2.25 million short tons in 2009. Apparent US consumption was 1.07 million short tons in interim 
2009 and 1.25 million short tons in interim 2010. ( USITC Final Determination, (Exhibit US -1), pp. 22, 26, 36, 
and 44; fns 129 and 230; and table C -3). 
489 USITC Final Determination,(Exhibit US -1), pp. 23, 36, and 39; table IV -7, p. IV -12; and table C -3, 
p. C-6. 
490 USITC Final Determination,(Exhibit US -1), pp. 22 and 36; table IV -7, p. IV -12; and table C -3, p. C -6. 
491 USITC Final Determination ,(Exhibit US -1), pp. 22 and 36; table IV -7, p. IV -12; and table C -3, p. C -6. 
492 USITC Final Determination,(Exhibit US -1), p. 39.  
493 USITC Final Determination, (Exhibit US -1), p. 27 and table C -3. 
494 USITC Final Determination, (Exhibit US -1), pp. 22, 23, and 3 9, and table C -3. 
495 Indonesia's opening statement at the first meeting of the Panel, para. 70; second written 
submission, para. 72 (referring to Excerpt from USITC Final Determination, pp. 3 -39 and C -3-C-7, (Exhibit 
IDN-18), table C -3). WT/DS491/R  
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  shipments and of non-subject  imports declined over this period .496 Indonesia's argum ent focuses 
on the single year of the POI  in which subject imports decreased , without acknowledging the 
USITC's overall conclusion regarding the evolution of subject import volume over the entire POI.497 
As indicated above, despite the decrease in the first year of the POI, the USITC found that, during 
2007-2009, subject imports increased and that the increase was significant.498 In contrast, the 
domestic industry's shipment volume s decline d throughout this  period. We also note that, in the 
last part of the POI , namely interim 2010, when subject imports ' volume declined, the domestic 
industry's shipments and non-subject  import volume increased .  
7.282.   In light of the foregoing , in our view, the movements in market share throughout the POI, 
especially in the interim pe riod, do not support Indonesia's allegation that subject imports and the 
domestic  industry did not compete for market share during the POI, or that the changes in their 
respective market share s showed no correlation during the POI.  Nor do we read the USITC  
determination as reflecting a finding that subject imports competed only with non -subject imports 
for market share during the POI, as Indonesia suggests.499 The relative changes in volumes and 
market share s of the domestic industry, subject imports and non-subject  imports during the 
entirety of the POI  suggest, on the contrary, that these three groups of suppliers competed in the 
US market to a large extent.  Thus, in our view, this aspect of the USITC's findings is not 
contradicted by the evidence before it.  
7.283.   Indonesia submits that trends during the interim period are not indicative of how subject 
imports would compete for market share with the domestic industry if orders were not imposed 
because subject imports left the market due to the pendency of the inves tigations. According to 
Indonesia, this was not a market share gain in the traditional sense of competing for customers.500 
Indonesia, in addition, faults the USITC for finding that the removal of preliminary duties was a 
key change in circumstances justifyi ng the imposition of duties.501  
7.284.   In our view, Indonesia's arguments impl y that the decline in subject imports and their 
withdrawal from the US market as a result of the investigations should have been viewed as 
meaning that those imports would not compete wi th or take market share from the domestic like 
product and non -subject imports in the future if no duties were imposed.  We see no basis for such 
a conclusion.  More relevant than the reason underlying foreign suppliers' decision to participate, 
and when to participate, in the US market, is how the market responds to that participation. In the 
case at issue, the USITC observed that when subject imports exited the US market, the volumes 
and market shares of both the domestic industry and non -subject imports in creased. The fact that 
the decrease in the market share of subject imports in the last part of the POI coincided with a 
gain in market share by the domestic industry supports the USITC's finding that a likely increase in 
subject imports would come at the e xpense of current suppliers, including the domestic industry. 
Moreover, we do not understand the determination to be predicated on the lifting of provisional 
measures and the subsequent shifts  in volumes an d market shares as the relevant  change in 
circumst ances that would bring about an increase in subject imports. The USITC did take into 
account the effects of the preliminary duties in determining that s ubject imports would seek to 
regain lost sales in the future; however, the USITC's determination primari ly focuses on the fact 
that subject imports were already underselling the domestic industry during the POI and on the 
ability and incentive of subject producers (in light, notably, of the significant imminent increase in 
production capacity) to increase  their sales volumes to  the US market.  
7.285.   We further note that the USITC did not conclude that the likely subject import increase 
would take sales and market share exclusively from the domestic industry, as Indonesia 
                                                
496 USITC Final Deter mination, (Exhibit US -1), pp. 26 -27. The domestic industry's US shipments 
declined from 1,737,222 short tons in 2007, to 1,648,972 short tons in 2008 and 1,477,233 short tons in 
2009, and non -subject imports volume declined from 727,306 short tons in 2007,  to 611,626 short tons in 
2008 and 363,472 short tons in 2009. While subject imports volume declined from 398,309 short tons in 2007 
to 382,245 short tons in 2008, subject imports increased "sharply" to 413,593 short tons in 2009, for an 
overall increase o f 3.8% during the period 2007 -2009.  
497 USITC Final Determination, (Exhibit US -1), p. 27.  
498 USITC Final Determination, (Exhibit US -1), pp. 26 -27. See  also ibid. table C -3. 
499 Indonesia's opening statement at the first meeting of the Panel, para. 67.  
500 Indones ia's opening statement at the first meeting of the Panel, para. 67; second written 
submission, para. 68.  
501 Indonesia's opening statement at the second meeting of the Panel, para. 44.  WT/DS491/R  
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  suggests.502 Rather, the USITC found that subj ect imports would compete on price to regain the 
market share that they lost "both to the domestic industry and to non -subject imports" in interim 
2010 and would take sales "from current suppliers such as the domestic industry"503, which clearly 
refers to bo th the domestic industry and non -subject imports. This being the case, we also reject  
as inconsistent with the facts Indonesia's contention that the USITC did not address the fact that 
subject imports were likely to gain market share from non-subject  impor ts rather than the 
domestic industry and that the USITC's threat of injury determination is devoid of any analysis 
that accounts for the fact that subject imports would not have taken market share exclusively from 
the domestic industry.504 
7.286.   Indonesia also argues that the subject imports were not responsible for the decline in 
domestic industry  US sales volumes  during the POI.505 Indonesia submits that the USI TC found 
that declining consumption and the economic downturn  were responsible for that decline.506 In our 
view, however, it was appropriate for the USITC to take into account changes in subject import 
volumes, the domestic like product  sales, and non-subject  imports in the context of declining  US 
demand, in determining  the likely impact of subject imports volu me on the domestic industry . We 
note that t he USITC also took th e projected  decline in apparent US consumption into account in its 
conclusion that subject imports would gain market share at the expense of the domestic 
industry .507  
7.287.   Indonesia also submits tha t it was unreasonable for the USITC to conclude that subject 
imports would gain anything approaching the "twelve  percentage points " of market share that they 
lost in the interim period.508 Indonesia further submits  that the USITC failed to explain how subjec t 
imports ' marke t share could expand beyond the share that they held in 2009 ; Indonesia argues in 
this respect t hat the only support for the USITC's finding concerning the projected increase in 
market share  of subject imports was the attractiveness of the US market.509 We are not convinced 
by these arguments. In our view, the USITC provided a reasonable explanation for its conclusion 
that subject imports' market share would increase significantly in the imminent future. In 
particular, we note that , as indicat ed above, the USITC  principally based this conclusion  on (a) the 
increase in subject imports during the POI, and (b) its findings regarding the likely  increased 
production  capacity in China and subject producers' export intentions.  Indonesia does not  
challenge the former, and b elow, we uphold the latter.510 In our view, these two  sets of  findings 
provide a sufficient basis for the USITC's conclusion regarding the likely imminent increase in 
subject imports' market share .511 
                                                
502 Indonesia's first written submission, para. 128; response  to Panel ques tion No. 48(b).  
503 USITC Final Determination, (Exhibit US -1), pp. 38 -39. 
504 Indonesia's response to Panel question No. 48(b).  
505 See for instance Indonesia's opening statement at the second meeting of the Panel, para. 48.  
506 Indonesia's first written submissio n, para. 121 (referring to Excerpt from USITC Final Determination, 
pp. 3-39 and C -3-C-7, (Exhibit IDN -18), pp. 37 -38); response to Panel question No. 41;  and second written 
submission, para. 72 (referring to Excerpt from USITC Final Determination, pp. 3 -39 and C -3-C-7, (Exhibit 
IDN-18), p. 37). Indonesia also argues that there was no correlation between movements of subject import 
volumes and the condition of the domestic industry. (Indonesia's opening statement at the first meeting of the 
Panel, para. 70; second  written submission, paras. 64 and 72; and opening statement at the second meeting 
of the Panel, para. 47). These arguments pertain to the causal relationship between subject imports and the 
threat of injury to the domestic industry, and are not dire ctly relevant to our consideration of the USITC's 
findings concerning likely future increases in subject imports volumes and market share.  
507 USITC Final Determination, (Exhibit US -1), p. 38, quoted above para. 7.270 . 
508 Indonesi a's first written submission, para. 126 ( referring to Excerpt from USITC Final Determination, 
pp. 3-39 and C -3-C-7, (Exhibit IDN -18), p. 38).  
509 Indonesia's opening statement at the second meeting of the Panel, para. 52.   
510 See below, paras. 7.297  and 7.307 . 
511 In addition, contrary to Indonesia's suggestion, reading the determination as a whole suggests that 
the USITC's finding was not that subject imports would regain the 12.9 percentage points of m arket share lost 
in interim 2010, but rather that subject import volumes would increase significantly in the imminent future to 
levels higher than those recorded during the POI. (See for instance USITC Final Determination, (Exhibit US -1), 
pp. 27, 29, and 3 0-31). Moreover, we note that the USITC considered that the decrease in subject imports' 
volume in interim 2010 resulted from the investigations, and that absent these investigations, the volume of 
subject imports would likely have been greater in interim 2010. (USITC Final De termination, (Exhibit US -1), 
p. 27). Indonesia appears to agree that this decrease was caused by the pendency of the investigations. 
(Indonesia's opening statement at the first meeting of the Panel, para. 72; s econd written submission,  
para. 78). WT/DS491/R  
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  7.288.   For the foregoing  reasons , based on the explanations provided by the USITC in light of the 
evidence that was on the record, we find that Indonesia has not demonstrated that , in the context 
of its threat of injury analysis, the USITC based its conclusion  that future volumes of subject 
imports  would gain market share at the expense of the domestic industry by taking sales from the 
domestic producers in the imminent futur e on conjecture or remote possibility . 
7.6.3.3.2   The likely increase in production capacity in China  
7.289.   Indonesia argues that the USITC's f indings regarding new capacity in China were based on 
conjecture and do not support a determination of likely increase in subject imports. Indonesia 
makes this argument in reaction to the United States' argument that the USITC's finding 
concerning the like ly gains in market share by subject imports  was supported by an intermediate 
finding that subject imports would likely increase significantly, which in turn was supported by the 
fact that there w ould be substantial new capacity in China that was not projec ted to be absorbed 
by Chinese producers' home market and other markets in Asia.512  
7.290.   As indicated above, the USITC considered that subject producers had the ability to 
increase their shipments to the United States based , in particular, on the projected growth  of 
production capacity in China between 2009 and 2011.  
7.291.   Regarding new capacity in China, the USITC started by noting that the parties disagreed 
about the amount of new capacity coming on-line in China in 2011. The USITC noted that, based 
on estimates from  a paper industry consultancy ( EMGE & Co.) , the petitioners contended that 
projected capacity in China would increase by 2.9 million short tons by 2011, and that this 
increased capacity would not be absorbed by the Chinese home market or by other markets i n 
Asia. The USITC also observed that, based on questionnaire responses, respondents claimed that 
Chinese producers' increase in capacity in 2010 and 2011 would be lower , at 1.5 million  short 
tons, and that increases in capacity were necessary to keep up wi th increased demand in China 
and regional markets and were not intended for export to the US market.513 The USITC found that 
even this lower amount of increased capacity posited by the respondents was substantial , given 
that it was equivalent to approximatel y 75% of total 2009 US  consumption of over 2 million tons. 
The USITC also found that, even assuming that the additional Chinese capacity was being brought 
on-line with the intention of supplying the growing Chinese  home market, projected consumption 
growth  in China would not be sufficient to absorb the new Chinese capacity because, according to 
projections by another paper industry consultancy (RISI),  growth in Chinese production capacity 
from 2009 to 2011 would be "approximately double" the growth of Chine se consumption. The 
USITC also noted that, according to RISI projections, consumption growth in the rest of Asia would 
be "well below" the excess of projected Chinese capacity growth over projected Chinese 
consumption growth.514 
                                                
512 Indonesia's opening statement at the first meeting of the Panel, para. 74. Indonesia does not 
challenge the USITC's findings regarding the projected capacity of Indonesian producers.  
513 USITC Final Determination, (Exhibit US -1), p. 28. The act ual amount is redacted from the 
non-confidential version of the determination submitted to the Panel. (USITC Final Determination, (Exhibit 
US-1), p. 28). In its submissions to the Panel, the United States indicates that the new  Chinese capacity 
suggested b y respondents, and redacted from the USITC's non -confidential version of the  determination, 
amounted to 1.5  million short tons. Indonesia does not take issue with the amount the United States indicates.  
514 USITC Final Determination, (Exhibit US -1), p. 28 an d fn 181. The USITC noted that:  
RISI projects that capacity to produce coated woodfree and coated mechanical paper in China 
will grow from 7.2 million metric tons in 2009 to 9.0 million metric tons in 2011, or by 1.8 million 
metric tons. RISI projects tha t Chinese consumption of these products will grow from 5.4 million 
metric tons in 2009 to 6.3 million metric tons in 2011, or by 900,000 metric tons. The excess of 
capacity growth over consumption growth is 900,000 metric tons. Respondents' Prehearing Brie f 
at Ex. 28.  
Although the combination of the RISI categories of coated woodfree and coated mechanical 
paper is likely to be somewhat broader than the paper defined by Commerce's scope, we 
consider the data to be probative of the likely relative growth of C hina's capacity and 
consumption of in -scope products.  
Consumption growth in the rest of Asia is not projected to absorb the excess of Chinese capacity 
over consumption. Excluding Japan (which is projected to shed some capacity but increase its 
production),  RISI projects consumption growth from 2009 to 2011 to exceed capacity growth in 
the rest of Asia by 160,000 tons, well below the excess of projected Chinese capacity growth WT/DS491/R  
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  7.292.   Thus, it is clear from the de termination that the USITC relied, in its finding of likely 
increase in production capacity in China, on record evidence from two sources, i.e. the 1.5 million 
short tons increase in capacity projected by the respondents (which, we recall , the USITC 
consid ered would still be a substantial increase in production capacity), and RISI's projections on 
consumption growth in China and other Asian markets (which the USITC relied upon as an 
indicator of the magnitude of the increase in capacity and the ability of t hese markets to absorb 
it).  
7.293.   In this dispute, Indonesia submits that the USITC ignored actual data submitted by the 
Chinese exporters in their questionnaire responses, suggesting that the RISI data should not have 
been used over more precise questionnaire data. In this respect , Indonesia faults the USITC for 
relying on a "third party source" that the USITC admitted covered a broader array of products than 
those subject to the investigation .515 Indonesia refers the Panel to table VII-2 in the 
determination, wh ich contains Chinese producers' data for the POI, as well as their projections for 
2010 and 2011, regarding capacity, production , and shipments to China and third markets: the 
United States, the European Union, Asia and "all other markets". Indonesia submi ts that 
table VII-2 shows that Chinese producers had excess capacity in every year of the POI which, in its 
view, disproves the USITC's theory of likely increase of subject imports  to the U nited States, as it 
shows that Chinese producers were not fully uti lizing their existing capacity to export to the US 
market during the POI. We note, however, that according to the data submitted by the 
respondents, Chinese producers were operating at high capacity utilization levels during the 
POI.516 Indonesia also argues  that, despite the projected additional new capacity, Chinese 
producer s projected very little excess capacity in 2011 .517 We understand Indonesia's argument to 
be that, according to Chinese producers' sales projections, the additional production capacity 
would be absorbed such that they would not need, or have the ability, to significantly increase 
their sales to the US market. We understand Indonesia's arguments as suggesting that these 
projections constituted a more appropriate basis for assessing the abili ty of other markets to 
absorb additional Chinese production capacity than the RISI data on projected consumption 
growth in China and the rest of Asia and, therefore, that the USITC should have relied on this data 
in its analysis of the  likelihood of substa ntially increased Chinese exports to the US market .518 
7.294.   The USITC noted that RISI was a source that both petitioners and respondents relied upon 
as support  for their allegations throughout the underlying investigation.519 The RISI data the 
USITC considered as e vidence of the likely relative increase of capacity and consumption in China 
was relied upon by respondents in their arguments before the USITC520, and respondents 
characterized that source as "independent".521 APP even characterized the RISI data as "the best  
available for assessing consumption growth in Asia".522 Moreover, we note that the RISI 
information contains  data concerning projected increase s in production capacity in China and 
                                                                                                                                                  
over projected Chinese consumption growth of 900,000 metric tons. Respondents' Pre hearing 
Brief at Ex. 28.  
(USITC Final Determination, (Exhibit US -1), fn 181)  
515 Indonesia's opening statement at the second meeting of the Panel, paras. 41 and 52.  
516 According to the data contained in table VII -2 of the USITC Final Determination, Chinese p roducers 
were operating at the following capacity utilization rates during the POI: 90.7% in 2007; 92.5% in 2008; and 
95.9% in 2009.  
517 Indonesia's second written submission, para. 70; opening statement at the second meeting of the 
Panel, para. 41; and comm ents on the United States' response to Panel question No. 97(a).  
518 In addition, we note that the United States submits that  the RISI data was comprehensive, with 
capacity projections covering the entire Chinese industry and consumption projections covering  every major 
market in Asia, including China, whereas, by contrast, foreign producer questionnaire responses covered only a 
subset of the Chinese industry. (United States' response to Panel question No. 99, fn 183). Indonesia disagrees 
that the foreign pro ducer questionnaire responses before the USITC did not provide a complete coverage of the 
Chinese exporters to the United States. (Indonesia's comments on the United States' response to Panel 
question No.  97(a), fn 57).  
519 USITC Final Determination, (Exhibi t US-1), p. 28. APP referred to the RISI data in, for instance, APP 
Post-hearing Brief to USITC, (Exhibit US -104), p. 12, in which it referred to the "growth in apparent 
consumption within China and the rest of Asia as reflected in the RISI data" (referrin g to exhibit 28 to APP 
Pre-hearing Brief).  
520 USITC Final Determination, (Exhibit US -1), fn 181 (referring to exhibit 28 to APP Pre -hearing Brief). 
Thus it appears that exhibit 28 to APP Pre -hearing Brief  was actually submitted by APP to the USITC. Exhibi t 28 
to APP Pre -hearing Brief has been submitted in this dispute as Exhibit IDN-52. See also APP Pre -hearing Brief 
to USITC, (Exhibit IDN -45), pp. 136 and 139.  
521 APP Pre -hearing Brief to USITC, (Exhibit IDN -45), pp. 122, 134, and 136.  
522 APP Post -hearing Bri ef to USITC, (Exhibit US -104), p. 13.  WT/DS491/R  
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  consumption growth for the Chinese and Asian markets, whereas the data repor ted in table VII 
contains self -reported projections regarding capacity in China and sales in various markets. In our 
view, it was reasonable for the USITC to rely on data from an independent source such as RISI in 
considering whether other available market s could absorb Chinese exports , rather than relying 
exclusively on investigated producers' projections concerning their future sales,  as Indonesia 
apparently suggests it should have done.  This is  particularly the case here, where the independent 
source, RI SI, had been relied upon by respondents themselves in their submissions to the USITC , 
and respondents had characterized RISI as an independent source. In addition, we note that 
Article 3.7(ii) and Article 15.7(iii), which provide guidelines for the examina tion of new capacity in 
the context of the threat of injury analysis, provide that in examining this factor account should be 
taken of the availability of other export markets to absorb any additional exports. In light of this, it 
appears to us that the RI SI data was an appropriate basis for the analysis of additional capacity.  
7.295.   Indonesia faults the USITC for not having explained how  the overbroad RISI data was 
probative.523 The USITC did note that the scope of products covered by the RISI data was 
"somewhat b roader" than the product scope of the investigation. The USITC explained that 
although the combination of the RISI categories of coated woodfree and coated mechanical paper 
was likely to be somewhat broader  than the coated paper defined in the in vestigatio n, it 
considered the RISI data "to be probative of the likely relative growth of China's capacity and 
consumption of in -scope products".524 Thus, we do not understand the USITC to have relied on the 
exact figures  in the RISI data to predict the likelihood of  increased subject imports but, rather, to 
have used the RISI data as an indicator of the order of magnitude of the relative increase in new 
capacity in China in relation to consumption growth in China and other Asian markets .525 In light of 
the foregoing, e ven though it did not exactly match the investigated product, we do not consider it 
was improper for the USITC to have considered and relied on the RISI data. Indonesia also faults 
the USITC for having concluded that the Chinese industry would export all o f its excess in capacity 
to the United States during the period 2009 -2011.526 However, the USITC made no such finding.  
Nor do we read the USITC's discussion of this issue as reflecting an assumption that this would be 
the case.  Rather, as indicated above, th e USITC found that consumption growth in the rest of Asia 
would be well below the excess of projected Chinese capacity growth over projected Chinese 
consumption growth527 and, in light of this, concluded that subject producers had the ability to 
significantl y increase shipments to the United States. Nothing in this conclusion implies that the 
USITC considered that Chinese producers would export all production from excess capacity to the 
United States.  
7.296.   Indonesia also faults the USITC for not having undertaken an analysis of other markets to 
which the Chinese industry  might export . However, the USITC did consider whether there were 
other destinations, in addition to the Chinese producers' principal destination, i.e. their home 
market, that could absorb productio n from their projected new capacity. We recall that the USITC 
examined whether other Asian markets could absorb shipments from the additional capacity, and 
concluded that they could not. The USITC did not conduct a detailed analysis of projected demand 
in other markets. The USITC did, however, note that the European Union had initiated 
anti-dumping and countervailing duty investigations on coated paper from China in 2010, and 
considered that this might make the EU market less attractive to Chinese exports  in the imminent 
future .528 That the USITC focused on Asia and the EU as possible destinations for Chinese exports 
in the imminent future was in our view reasonable given the respondents' statements in the 
underlying investigation; in its submissions in the un derlying investigation, APP principally 
identified the Chinese market, other Asian markets, and the EU as the export markets of Chinese 
exports .529 Moreover, the USITC's analysis reflects the existing sales patterns of the Chinese 
                                                
523 Indonesia's opening statement at the second meeting of the Panel, fn 63.  
524 USITC Final Determination, (Exhibit US -1), fn 181.  
525 This is particularly clear from the USITC's statement that RISI projected that the growt h in capacity 
would be "approximately double the growth of Chinese consumption".  (USITC Final Determination, (Exhibit 
US-1), p. 28).  
526 Indonesia's opening statement at the first meeting of the Panel, paras. 68 and 71; second written 
submission, paras. 70 a nd 73.  
527 USITC Final Determination, (Exhibit US -1), p. 28. 
528 USITC Final Determination, (Exhibit US -1), fn 188.  
529 APP Pre -hearing Brief to USITC, (Exhibit IDN -45), p. 121, where APP states that "[t]here can be little 
dispute that China is the most importan t global market for subject coated paper suppliers. RISI flat out 
proclaims that the resurgence in the coated paper market will be driven by China". See also APP Post -hearing 
Brief to USITC, (Exhibit US -104), p. 13, where APP states that "[t]he Chinese ind ustry has explained  that these WT/DS491/R  
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  producers , covering 93% of Chinese export sales during the POI .530 Overall, we consider the 
USITC's analysis of other export markets was based on relevant facts, and not on speculati on.531 
7.297.   For the foregoing  reasons , based on the explanations given by the USITC in light of the 
evidence t hat was on the record, we find that Indonesia has not demonstrated that the USITC 
based its findings regarding the projected increase in production capacity in China on conjecture 
rather than on facts.  
7.6.3.3.3   The Unisource affidavit and the establishment of Eagle  Ridge  
7.298.   Indonesia takes issue with the USITC's reliance on the Unisource affidavit and the 
establishment of Eagle Ridge. Indonesia makes this argument in response to the United States'  
argument s that the USITC reasonably relied on the Unisource affidavit as  positive evidence of 
APP's intentions to significantly increase shipments to the US  market  and that the USITC properly 
found that APP established Eagle Ridge in furtherance of its goal of  doubling exports to the 
United  States .532 
7.299.   The USITC found that subjec t producers had a strong interest in increasing shipments to 
the United States.533 In reaching this conclusion, t he USITC relied, among other evidence , on the 
statements of a Unisource representative, reflected in the Unisource affidavit , concerning his 
interactions with APP . The USITC indicated that, a ccording to the affidavit , APP stated that it 
wanted to double its shipments to Unisource and that it was willing to lower its prices. In addition, 
the USITC noted  the fact that APP , after losing Unisource as a  distributor,  had established its own 
distributor for the US market, Eagle Ridge:  
Chinese producers have been motivated to increase subject exports for quite some 
time. In particular, we note the behavior of APP , whose affiliated companies accounted 
for [[ ]] of reported subject imports in 2009.  In late 2008, as U .S. CCP demand and 
the U .S. economy were falling into a deep recession, APP informed Unisource, a 
leading distributor of CCP in the United States, that "it was exporting 30,000 metric 
tons of CCP to  the United States each month and that it wanted to increase that 
volume to 60,000 metric tons per month". APP also stated that it wanted to double its 
shipments to Unisource immediately and that it was willing to lower its prices by 
between two and five p ercent for the increase in purchases, prices that were already 
15 percent below what domestic supplier NewPage was quoting at that time for its 
economy sheets. Moreover, soon after APP lost the Unisource account in 2009, it 
                                                                                                                                                  
additional tons will be spread across primarily the Chinese market, next to other Asian markets, and finally 
other emerging markets outside Asia"; and APP Pre -hearing Brief to USITC, (Exhibit IDN -45), pp. 123 -125, 
where APP r efers to Asia as "other export markets". In APP Post -hearing Brief to USITC, (Exhibit US -104), 
p. 12, APP states that "any increase in Chinese capacity will be absorbed entirely in Asian markets". In APP 
Pre-hearing Brief to USITC, (Exhibit IDN -45), p. 125 , APP refers to the EU market as another possible 
destination for its exports when it indicates that "the ongoing  EU trade case will not cause diversion of large 
volumes to the United States". See also table VII -2 of the USITC Final Determination, which re ports Chinese 
producers' shipments to China, the United States, the European Union, Asia, and "all other markets" during the 
POI. 
530 On the basis of the data contained in the USITC determination, it appears that the USITC considered 
markets accounting for t he vast majority of current Chinese sales. From table VII -2 and from figure II -1, p. 9, 
of the USITC Final Determination, it appears that in 2009, 61.5% of Chinese producers' sales were on the 
Chinese market, 9.3% on the US market, 7.6% on the EU market, 1 3.9% to other Asian markets, and 7.6% on 
"all other markets", the only market not considered by the USITC. In other words, the USITC considered 
markets accounting for approximately  93% of Chinese producers' sales in 2009.  
531 We also note that Indonesia argu es that the 2009 -2011 period identified by the USITC calls into 
question the imminence of the alleged increase. ( Indonesia's opening statement at the first meeting of the 
Panel, para. 68; second written submission, para. 69). Indonesia has not, however, de veloped its argument in 
this respect or explained why this period  is not "imminent" in light of the time -frame examined by the USITC 
(2011).  
532 Indonesia's opening statement at the second meeting of the Panel, paras. 37 -39 (referring to 
United  States' secon d written submission, paras. 112 -113). 
533 USITC Final Determination, (Exhibit US -1), p. 28.  WT/DS491/R  
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  made an investment to establish Eagle Ridge, an ecommerce U .S. distribution network 
for APP's products to retain and grow its U .S. market presence.534 
7.300.   The United States argues that the affidavit was made by Unisource's Vice President of 
Strategic Development and Sourcing  under penalty of p erjury and that its content was confirmed 
by other testimonies that were in the record.535 Indonesia alleged at the second meeting of the 
Panel that APP never expressed its intention to double exports to the US market and that the 
proper characterization of the Unisource affidavit is as a domestic industry allegation and not a 
statement by APP .536 However, in its last submission to the Panel, Indonesia indicated that it does 
not know "every statement ever made by an APP representative".537 In the same submission,  
Indonesia  argued  that there were other testimonies on the record that conflict with the statements 
in the Unisource affidavit .538 In view of these statements, we understand Indonesia to be taking 
the position that the content of the Unisource affidavit was untrue or inaccurate  and therefore that 
the USITC could not have relied on it in reaching its determination .  
7.301.   Indonesia also argues that the respondents never had an opportunity to rebut the 
Unisource affidavit. In this regard, Indonesia argues that the pe titioners filed the Unisource 
affidavit with their post-hearing brief, which is the final opportunity the USITC gives parties to 
submit new information. According to Indonesia, because the deadline for submitting post -hearing 
briefs for the domestic indust ry and respondents was the same, respondents were not able to 
rebut the information in the Unisource affidavit before the USITC.  The United States contends that 
APP had the opportunity to address the Unisource affidavit in its final comments to the USITC, filed 
after the post -hearing briefs, and that APP actually did so.539 Indonesia responds that, while final 
comments are permitted to address the accuracy, reliability or probative value of information on 
the record, the submission of evidence to counter the accuracy, reliability , or probative value of 
such information is not permitted at this stage of the USITC investigation.540  
7.302.   In addition, Indonesia argues that the establishment of Eagle Ridge does not constitute 
evidence of an increase of subject imports bu t, at most, of an attempt to recoup lost sales given 
APP's loss of business with Unisource and that, in fact, subject imports decreased after the 
establishment of Eagle Ridge.541  
7.303.   We recall that the question before us is whether the USITC ac ted inconsistentl y with 
Article  3.7 and Article 15.7 by basing its determination of the existence of threat of injury by 
reason of subject imports on conjecture rather than facts or evidence. We also recall that in a 
threat of injury analysis an investigating authority is permitted to make projections  about the 
future provided that they are based on facts or evidence. We recall that the Panel must not 
undertake  a de novo  review of the evidence nor substitute its judgement for that of the 
investigating authority .542 Given thes e considerations, and in light of the evidence in the record 
that has been presented by the parties to this dispute, we are of the view that, contrary to 
Indonesia's allegation, the USITC did not base its finding in relation to APP's interest in the US 
market and the establishment of Eagle Ridge merely on conjecture.  
7.304.   In our view, the USITC relied on record evidence in reaching its conclusion regarding APP's 
interest in increasing exports to the United States. This evidence comprised , inter alia , the 
stateme nts contained in the Unisource affidavit , to the effect that APP intended to increase its 
sales to Unisource and to the US market  in general , and the fact that , in response to losing its 
                                                
534 USITC Final Determination, (Exhibit US -1), pp. 28 -29; Redacted excerpts of USITC Final 
Determination and APP Final Comments to USITC, (Exhibit US -107), p. 1. (fns omitted)  
535 United States' response to Panel question No. 95.  
536 Indonesia's opening statement at the second meeting of the Panel, para. 39.  
537 Indonesia's comments on the United States' response to Panel question No. 95.  
538 Indonesia's comments on the United States' response to Panel question No. 95.  
539 United States' response to Panel question No. 95.  
540 In Indonesia's view, even if APP possessed emails and other information refuting what was said in 
the Unisource affidavit, it could not have submitted that inf ormation, nor could it have submitted its own 
affidavit challenging what was said in the Unisource affidavit. (Indonesia's response to Panel question No.  94). 
541 Indonesia's opening statement at the first meeting of the Panel, para. 66; second written 
submi ssion, para. 65; and opening statement at the second meeting of the Panel, paras. 38 and 52 . 
542 See above, para. 7.7. WT/DS491/R  
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  principal distributor in the US market (Unisource )543 in May 2009, APP established its own 
distribution network for the US market (Eagle Ridge) in October 2009 .544 This occurred at a time 
when subject imports were increasing their presence  in the US market.545 We consider that this 
evidence reasonably supported the USITC's conclu sion that subject producers had a strong interest 
in increasing shipments to the United States.  
7.305.   Although Indonesia argues that respondents never had an opportunity to rebut the 
Unisource affidavit, we note that in its final comments to the USITC in the und erlying 
investigation, APP refer red to the Unisource  affidavit but d id not challenge the validity of the 
statements contained therein .546 Even assuming new evidence could not be submitted after the 
filing of pre -hearing briefs , as Indonesia alleges547, it seem s clear that, at a minimum, APP could 
have challenged the veracity of the statements contained in the affidavit . In the absence of such 
an objection to the Unisource affidavit  during the investigation , we see no basis to conclude that 
the USITC erred in re lying on it  in reaching  its conclusion that Chinese producers had a strong 
interest in the US market.548 
7.306.   Regarding Eagle Ridge, Indonesia's central argument is that trends in subject imports 
before APP lost the Unisource account and after the establishment o f Eagle Ridge contradict any 
alleged intention on the part of APP to double its exports to the US market.549 As indicated above, 
while the Unisource affidavit refers to APP's alleged intention to double its exports to the US 
market, we do not read the USITC' s determination as suggesting that the determination of the 
                                                
543 Unisource changed suppliers from APP to New Page, a US producer. ( APP Pre -hearing Brief to USITC, 
(Exhibit I DN-45), p. 116). APP indicated that it "had no choice but to open [Eagle Ridge] as a way to attempt 
to recover from the Unisource loss".  
544 USITC Final Determination, (Exhibit US -1), pp. 29 and IV -2; Indonesia's response to Panel question 
No. 93; and United  States' response to Panel question No. 93.  Evidence on the record indicates that the first 
two Eagle Ridge Paper locations in the United States opened in October 2009, and that APP opened eight 
additional locations during the following three months.  (APP Pre-hearing Brief to USITC, (Exhibit IDN -45), 
p. 116; see also United States' response to Panel question No. 93).  
545 As indicated before, subject imports were at their peak in the period 2008 -2009.  
546 In its final comments APP stated that:  
Petitioners try to  rely on statements by large national distributors, but these statements – and 
more importantly, the actions by these distributors – contradict Petitioners' theory. Petitioners 
cite statement by Unisource, but leave out the important detail that Unisource was describing 
2007-2008, not 2009, and was describing small shifts in volume. In early 2009, Unisource 
switched from APP to NewPage. Subject imports cannot explain low NewPage pricing to 
Unisource, when APP had been eliminated as a supplier for non -price reasons.  
(APP Final Comments to USITC, (Exhibit US -105), pp. 16 -17; Redacted excerpts of USITC Final Determination 
and APP Final Comments to USITC , (Exhibit US -107), pp. 2 -3 (fn omitted))  
547 The parties differ on whether interested parties are allowed to s ubmit new evidence after the filing of 
the post -hearing briefs before the USITC. (Indonesia's response to Panel question No. 94; United States' 
comments to Indonesia response to Panel question No. 94). In the circumstances of this case, we need not 
decide this question.  
548 We further note that the United States argues  that the content of the Unisource affidavit was 
confirmed by other testimonies at the USITC's hearing : those of the same Unisource Vice President of Strategic 
Development and Sourcing (Mr Heder ick) and of APP's own witness (Mr Hunley). (United States'  response to 
Panel question No.  95 (referring to Excerpt from USITC Conference Transcript, pp. 45 -48 and 179 -180, (Exhibit 
US-108), pp. 47 and 180) ). Indonesia disagrees that the  testimony of APP's witness (Mr  Hunley) confirms the 
statements in the Unisource affidavit. In Indonesia's view, the testimony of APP's witness presented a 
conflicting version of the reasons why the relationship of APP with Unisource soured – Indonesia argues that it 
was a di sagreement over commercial terms and that APP wanted to initiate a price increase while Unisource 
wanted lower prices. (Indonesia's comments on the United States' response to question No. 95 (referring to 
Excerpt from USITC Conference Transcript, pp. 45 -48 and 179 -180, (Exhibit US -108), pp. 48 and 180 ; and 
Excerpt from USITC Conference Transcript, pp.  181-182, (Exhibit IDN -51), pp. 181-182)). In  our view, these 
testimonies neither directly confirm nor directly contradict the central element of the Unisource  affidavit on 
which the USITC relied, i.e. that in late 2008 , APP expressed its intention to double its sale s to Unisource and 
the US market and offered to lower its prices . In addition, the reasons why APP lost the Unisource account are 
not germane  to the  question of whether the USITC based its conclusion that subject producers had a strong 
interest in the US market on conjecture rather than facts. It is not in dispute that APP lost the Unisource 
account and, in response to that event, established Eagle Ri dge to at least maintain its share in the market. In 
any event, as noted above, APP could have challenged the veracity of the affidavit in its Final Comments to the 
USITC but did not do so.  
549 Indonesia argues that before losing Unisource as a customer, fro m 2008 to 2009 imports from China 
increased by 7% and imports from Indonesia increased by 15% – hardly doubling, and that after Eagle Ridge 
was established subject import volumes decreased. (Indonesia's opening statement at the second meeting of 
the Panel,  paras. 38 and 52).  WT/DS491/R  
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  threat of injury was based on a conclusion that APP would in fact d ouble its exports to the 
United  States. Rather, as we have indicated above, the USITC concluded  that subject producers 
had the ab ility and the incentive to increase significa ntly shipments to the US market .550 
7.307.   For the foregoing  reasons , based on the explanations given by the USITC in light of the 
evidence that was on the record  concerning the Unisource affidavit and the establishment of Eagle 
Ridge , we find that Indonesia has not demonstrated that the USITC based its conclusion regarding 
subject producers' interest in the US market merely on conjecture or speculation . 
7.308.   We now address Indonesia's allegation regarding the USITC's price ef fects analysis.  
7.6.3.4   The USITC's finding that subject imports would have adverse effects on 
domestic prices  
7.309.   Indonesia argues that the USITC's finding that subject imports would have adverse effects 
on domestic prices in the imminent future was based on conject ure or speculation regarding 
event s which were not clearly foreseen and imminent.551 The United States submits that, on the 
contrary, the USITC had sufficient factual evidence to conclude that the future significant increase  
in subject import volume, driven by the underselling by those imports found during the POI, would 
pressure domestic producers  to lower their prices, thereby depressing or suppressing them.552 
7.310.   In finding that subject imports were likely to have significant adverse effects on domestic 
produce rs' prices  in the imminent future by causing price depression , the USITC first noted that 
subject imports undersold domestically -produced coated paper to a significant degree throughout 
the POI, particularly in 2009 when demand was depressed .553 The average margin of underselling 
for all types of product was 12.3% in 2009 , when the volume of subject imports was at its peak.554 
Moreover, the USITC found that pricing trends , particularly from the first quarter of 2009 , together 
with the significant underselling b y subject imports, showed that subject imports depressed 
domestic prices "at least to some extent" for part of the POI.555 The USITC did not make a finding 
                                                
550 Whereas Indonesia asserts that the volume of subject imports declined after Eagle Ridge was 
established (Indonesia's opening statement at the second meeting, paras. 38 and 52),  record evidence shows 
that subject imports increased in t he months following the establishment of Eagle Ridge. We recall that, the 
parties agree before this Panel, and record evidence submitted to the Panel shows, that APP lost the Unisource 
account in May 2009 and Eagle Ridge started operating in the United Sta tes in October 2009 ( Excerpt from 
USITC Conference Transcript, pp. 45 -48 and 179 -180, (Exhibit US -108), p.  179; Indonesia's response to Panel 
question No. 93; and United States' response to Panel question No. 93). The USITC noted that APP's loss of 
busines s with Unisource did not result in a substantial reduction in the volume of overall subject imports in 
2009 or the first two months of 2010. (USITC Final Determination, (Exhibit US -1), pp.  29-30 and fn 193). 
Moreover, subject imports volume was relatively stable from April 2009 – the month before APP's loss of the 
Unisource account – to October 2009 – when APP opened Eagle Ridge (33,084 short tons in April;  35,575 short 
tons in May; 32,972 short tons in June; 36,198 short tons in July; 36,698 short tons in August; 36,227 short 
tons in September; and 29,323 short tons in October). From October 2009 until January 2010, subject import 
volumes increased – from 29,323 short tons in October, to 31,542 short tons in November, and to 
33,099  short tons in December of  2009; in January 2010, subject imports were 34,326 short tons. From 
February 2010, subject imports started decreasing, and this decrease was accentuated from March 2010 when 
preliminary countervailing duties were applied: 29,837 short tons in February; 5, 365 short tons in March; 
6,318 short tons in April; 3,852 short tons in May; and 5,334 short tons in June. ( Monthly Import Statistics , 
(Exhibit US -102), p. 2).  
551 Indonesia's first written submission, paras. 124 -126. 
552 United States' first written submissio n, para. 273.  
553 USITC Final Determination, (Exhibit US-1), p. 34.  
554 USITC Final Determination, (Exhibit US-1), p. 31. The USITC collected pricing data for five products. 
The data showed that prices of cumulated imports undersold the domestic like product i n 48 out of 58 
quarterly comparisons by margins ranging from 1.5% to 25.2%.  
555 In this regard, the USITC considered , in particular, movements in the prices of the domestic product 
and of subject imports from China for  two types of coated paper over the POI (Product 1 – which accounted for 
the majority of the sales of Chinese subject imports for which prices were reported , and accounted for a 
significant quantity of sales of the domestic product – and Product 4 – for which reported prices represented a 
signif icant volume of subject imports from China). The USITC found that the prices of subject imports from 
China for Products 1 and 4 began to fall in the fourth quarter of 2008, when domestic prices for these products 
were rising (modestly, in the case of Produ ct 1), which led to an increase in the underselling margin s in the 
first quarter of 2009, as subject import prices continued to decline. For Product 1, domestic prices continued to 
decline in the second quarter of 2009 and the price of subject imports from  China levelled off; for Product 4, 
both domestic prices and the price of subject imports continued to decline in the second and third quarters of 
2009. The USITC considered that there was an indication that the drop in domestic prices starting in the first WT/DS491/R  
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  of significant price depression, however, because other factors that were occurring in the US 
market " likely also contributed importantly to lower prices" and thus the USITC concluded that it 
was unable "to gauge whether there [were]  significant effects attributable to subject imports" . The 
USITC did not find evidence that subject imports prevented price i ncreases which otherwise would 
have occurred to a significant degree (i.e. the USITC did not make a finding of "price suppression" 
by reason of subject imports).556 
7.311.   The USITC next considered the likely price effects of subject imports in the imminent 
future.  The USITC concluded that significant underselling would continue and was likely to be 
significant in the imminent future.557 In addition, the USITC found that subject imports were likely 
to have significant adverse effects on domestic producers' prices in t he imminent future. 
Specifically, the USITC found that subject imports were likely to put pressure on domestic 
producers to lower prices , i.e. subject imports would cause price depression in the imminent 
future. The USITC considered that the other factors that placed negative pressure on domestic 
prices during the POI, namely falling consumption and increased pulp production due to black 
liquor subsidies, would not play the same role in the imminent future.558 The USITC also noted that 
domestic producers' pri ces were relatively flat in interim 2010. The USITC found that any increase 
in subject imports would not be absorbed by an increase in US demand, because while in interim 
2010 demand was higher than in interim 2009, demand was nonetheless depressed compare d to 
its earlier levels and was projected to decline moderately over the next two years. In light of this, 
the USITC anticipated that a key driver of domestic market prices would be the significant volumes 
of subject imports. The US ITC also noted that subj ect imports led domestic prices downward in 
late 2008 and early 2009. The USITC further noted that the domestic product and subject imports 
had moderately high interchangeability and that price was an important consideration in 
purchasing decisions.559 The U SITC concluded that : 
[I]n the imminent future, the aggressive price competition and underselling by subject 
imports during the bulk of the period examined will continue, and the introduction of 
increased quantities of subject imports, priced aggressively i n an effort  to gain market 
share, will put pressure on domestic producers to lower prices  in a market recovering 
from severely depressed demand. As subject imports cause domestic sales volumes 
and prices to deteriorate, the domestic industry will likely  experience significant price 
depression or suppression.  
In sum, we conclude that subject imports are likely to have significant adverse effects 
on domestic producers' prices in the imminent future.560 
7.312.   Indonesia's central allegation is that the USITC' s conclusi on that subject imports would 
depress domestic prices in the imminent future was speculative because , despite significant 
underselling , the USITC did not reach that conclusion  with respect to the POI .  
                                                                                                                                                  
quarter of 2009 was not only subsequent to, but was in response to, the decline in subject import prices. It 
noted that domestic producers had testified that they lowered prices to compete with falling prices of s ubject 
imports from China, and that numer ous purchasers had confirmed that domestic producers lowered prices over 
the POI to meet the prices of subject imports. ( USITC Final Determination, (Exhibit US-1), pp. 32 -33). 
556 USITC Final Determination, (Exhibit US -1), p. 33.  
557 The USITC found that under selling by subject imports was likely to increase the attractiveness of 
those imports to domestic purchasers compared with domestic production, and that the underselling was likely 
to increase demand for further subject imports. ( USITC Final Determination,  (Exhibit US-1), p. 34).  
558 USITC Final Determination, (Exhibit US-1), p. 34.  
559 USITC Final Determination, (Exhibit US-1), p. 31.  
560 USITC Final Determination, (Exhibit US-1), p. 35 (emphasis added) . The USITC also relied on the 
following considerations: (a)  absent anti-dumping  or countervailing duty orders, the likely increasing and 
significant volumes of subject imports would need to enter the US market priced aggressively in an effort to 
regain market share lost in interim 2010; (b) subject producers had s ubstantial new capacity coming on -line in 
the imminent future that could not be absorbed by home market demand; (c) subject producers were likely to 
find the United States an attractive market; (d) Chinese producers had shown a willingness to cut their alr eady 
low prices further in order to greatly increase their shipments to an already depressed US market; (e) with the 
establishment of Eagle Ridge in 2009, subject producers would have added ability and incentive to increase 
shipments to the US market quick ly; and (f) given that many of the coated paper sales were on a spot basis, 
and purchasers had a history of quickly switching suppliers, subject imports would put pressure on domestic 
producers to lower prices in a market with depressed demand in order to compete for sales and prevent an 
accelerated erosion of their market share.  (USITC Final Determination, (Exhibit US-1), pp. 34 -35; Redacted 
excerpts of USITC Final Determination and APP Final Comments to USITC , (Exhibit US -107), p. 2).  WT/DS491/R  
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  7.313.   We see nothing in Article 3.7 and Article 15.7 that wo uld require an investigating  authority 
to have found negative price effects during the POI as a prerequisite for concluding that negative 
price effects will occur in the imminent future. Indeed, it is the essence of a threat determination 
that the situatio n existing during the POI is predicted to change such that there will be injury in 
the imminent future, if measures are not imposed.  The lack of present material injury caused by 
subject imports  may be a consequence of their volumes  during the POI , their p rice effects , their 
impact during the POI or the injurious effects of other factors . What is important in a 
determination of threat of injury is that the investigating authority adequately explains , based on 
the evidence before it, why the situation it pre dicts can be projected  to occur .  
7.314.   We recall that,  in the present case, the USITC found that subject imports had some 
negative effects on domestic prices during the POI. The USITC noted that subject imports 
depressed domestic prices "to some extent" for par t of the POI, particularly from the first quarter 
of 2009, which it found , inter alia , on the basis of a certain correlation in the pricing trends for 
subject imports and the domestic product.561 While  the USITC did not make a finding of significant 
price de pression by reason of subject imports because it found that, during the POI, factors other 
than subject imports, namely decreasing demand and the black liquor tax  credit , had likely placed 
negative pressure on domestic prices , the USITC went on to explain why these factors would not 
have the same consequences in the future . The USITC explained that the black liquor tax credit 
had ended in 2009 and that the decline in demand was expected to be less in the near future than 
it had been during the POI. In other  words, whereas the decline in demand and the black liquor 
tax credit were factors that affected the USITC's analysis of price effects in the context of present 
injury, in the context of its threat of injury analysis , the USITC had to predict how subject i mports 
would perform in a market where these  factors were not operating to lower prices. The USITC 
determined that these other factors would not play the same role in the imminent future  and that, 
absent these factors in the same magnitude as during the PO I, a "key driver" of domestic market 
prices would be the significant volumes of subject imports.  We find that the USITC's explanations, 
viewed in their totality, sufficiently support its conclusion with respect to the future price effects of 
subject import s.562  
7.315.   Indonesia also takes issue with the USITC's finding in the context of its threat analysis that 
subject imports would attempt to "regain market share lost in interim 2010" and would lower 
prices "aggressively" to do so.563 Indonesia considers that it was  speculative to conclude that "such 
a small  portion of the market" would drive prices in the remaining market.564 While the statements 
referred to by Indonesia are part of the considerations underlying  the USITC's conclusion of 
adverse price effects, as we h ave indicated above565, a more comprehensive reading of the 
determination shows that the USITC's central finding was not that subject imports would attempt 
to regain the market share lost in interim 2010 (i.e. 12.9 percentage points), but that subject 
import  volume would increase significantly in the imminent future to levels higher than those in 
the POI. The USITC took into account  the situation that existed during the POI, when subject 
imports increased significantly in absolute and relative terms, in a con text of substantial decline in 
demand, and concluded that subject producers would continue to increase their penetration of the 
US market despite sluggish apparent US consumption because they had both the ability and the 
incentive to increase shipments to the United States.566 Moreover , we note that the USITC's 
conclusion that significant volumes of subject imports  would be a "key driver" of domestic prices  
did not stem from the magnitude of subject imports' market share at any specific point in time 
during  the POI, but from the fact that the "other factors" that  it considered had  likely placed 
negative pressure on domestic prices during the POI were no longer present or would not be  as 
relevant  in the imminent future as they had been during the POI.567 Finally,  we consider that the 
                                                
561 USITC Final Determ ination, (Exhibit US -1), pp. 32-33. See also fn 555. 
562 For the same reasons, we disagree with Indonesia that the USITC speculated when it found that 
other factors would no longer obscure the adverse effects of subject imports on domestic prices, and that the 
USITC lacked any basis to make a projection about how subject imports would perform in a market where such 
other factors were not operating to lower prices. ( Indonesia's opening statement at the first meeting of the 
Panel, para. 69).  
563 USITC Final Determination, (Exhibit US -1), p. 34.  
564 Indonesia's first written submission, paras. 125 -129. 
565 See above, para. 7.287 . 
566 USITC Final Determination, (Exhibit US-1), pp. 27, 28 , and 34.  
567 It is not clear whether the "small portion" referred to by Indonesia refers to the market share that 
subject imports occupied in interim 2010 (6.8%), the market share lost from interim 2009 to interim 2010, or 
the levels that they would reach if they rega ined all the market share lost (19.7% if the first half of 2009 is the WT/DS491/R  
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  USITC's conclusion that subject imports would be "priced aggressively" in the imminent future was 
reasonable given the significant  price underselling determined to exist by the USITC throughout 
the POI.568 
7.316.   In light of the above, we cons ider that the USITC provided adequate explanations for its 
determination that subject imports would, in the imminent future, be a key driver of domestic 
prices and would cause significant price depression or suppression.  
7.317.   Finally, w e note that Indonesia initially challenge d what it regard ed as a US ITC's finding of 
likely price suppression, on the basis that the USITC made no finding of price suppression with 
respect to the POI.569 The United States has indicated that the USITC only made reference to 
"significa nt price depression or suppression " to couch its likely -price-effects finding in terms of the 
US statute , and that likely price suppression was not a basis for the USITC's final determination of 
threat of material injury.570 Indonesia did not, in subsequent submissions to the Panel, refer to the 
USITC's purported finding of price suppression. In any event, the United States' explanations are 
in line with our reading of the USITC's determination – although the determination concludes by 
stating that the domest ic industry would be likely experiencing significant price depression or 
suppression in the future, the preceding analysis focuses on price depression, and there is no 
suggestion in the determination that the US ITC considered or made a finding of likely future price 
suppression.  
7.318.   In sum, we find the USITC 's finding of future price effects of subject imports to be 
reasonable and adequate ly explained  in light of the evidence that was on the record. Indonesia has 
not presented any arguments or pointed to evide nce in the record that undermines the  
reasonableness of the se conclusions  so as to demonstrate that an unbiased investigating authority 
could not have reached the conclusions or made the determination at issue before us.  Therefore, 
we find that Indonesia h as not demonstrated that the USITC 's findings regarding the future price 
effects of subject imports were based on conjecture or speculation.  
7.6.3.5   Overall c onclusion concerning Indonesia's claims under Article 3.7 of the 
Anti-Dumping Agreement and Article 15.7  of the SCM Agreement  
7.319.   We conclude that Indonesia has failed to establish  that the USITC's findings that in the 
imminent future subject impor ts would gain market share at the expense of the domestic industry 
and would have adverse effects on US prices were b ased on conjecture and remote possibility . In 
light of the foregoing, we find that Indonesia has not demonstrated that, in reaching these 
findings, the USITC acted inconsistently with Article 3.7 of the Anti -Dumping Agreement and 
Article 15.7 of the SCM Ag reement.  
7.6.4   Claims under Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the 
SCM Agreement ("special care")  
7.6.4.1   Introduction  
7.320.   Indonesia claims that the USITC's threat of injury determination is inconsistent with 
Article  3.8 of the Anti -Dumping Agreem ent and Article 15.8 of the SCM Agreement because the 
USITC failed to exercise "special care".571 
7.321.   The United States requests that we reject Indonesia's claims.572 
                                                                                                                                                  
baseline, or 18.3% if the whole of 2009 is the baseline). In any event, Indonesia has not made a convincing 
argument that it would have been unreasonable for the  USITC to consider that import prices lowered to regain 
even a "small" portion of market share would have a negative impact on domestic prices.  
568 USITC Final Determination, (Exhibit US -1), pp. 34 -35. 
569 Indonesia's first written submission, para. 127.  
570 United States' first writte n submission, para. 285 (referring to USITC Final Determination, (Exhibit 
US-1), pp. 35 and 39). (emphasis added)  
571 Indonesia's first written submission, para. 130 ; second written submission, para. 76.  
572 United States' first written submission, para. 353 ; second written submission, para. 176. WT/DS491/R  
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  7.6.4.2   Legal standard under Article 3.8 of the Ant i-Dumping Agreement and 
Article  15.8 of the SCM Agreem ent 
7.322.   With respect to the relevant legal standard under Article 3.8 of the Anti -Dumping 
Agreement and Article 15.8 of the SCM Agreement, we refer to our interpretation of these 
provisions below in the section of this Report addressing Indonesia's "as such" c laims. As 
explained in that section, we understand these provisions to require an investigating authority to 
apply a heightened level of attention in considering whether the domestic industry is threatened 
with injury.573  
7.6.4.3   Whether the USITC's threat of injur y determination is inc onsistent with 
Article  3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM Agreement  
7.323.   Indonesia considers that arguments made under other Articles of the Anti -Dumping and 
SCM Agreements can also demonstrate a violation of Art icles 3.8 and 15.8 . Indonesia submits that 
the deficiencies it identified in the context of its claims under Articles 3.5 of the Anti -Dumping 
Agreement and 15.5 of the SCM Agreement and of its claims under Articles 3.7 of the 
Anti-Dumping Agreement and 15. 7 of the SCM Agreement equally and independently render the 
USITC's threat of injury determination inconsistent with Articles 3.8 and 15.8 .574  
7.324.   The United States argues that Indonesia's "as applied" claims under Articles 3.8 and 15.8 
are largely derivative o f, and indistinguishable from, its claims under Articles 3.5 of the 
Anti-Dumping Agreement and 15.5 of the SCM Agreement and its claims under Articles 3.7 of the 
Anti-Dumping Agreement and 15.7 of the SCM Agreement. Consequently, for the United States, as 
Indonesia fails to establish a prima facie  case of violation under the latter provisions, Indonesia 
also fails to establish a prima facie  case of violation under Articles 3.8 and 15.8.575  
7.325.   We have, in the preceding sections of this Report, found that Indones ia has failed to 
establish that the USITC's threat of injury determination is inconsistent with Articles 3.5 of the 
Anti-Dumping Agreement and 15.5 of the SCM Agreement or with Articles 3.7 of the Anti -Dumping 
Agreement and 15.7 of the SCM Agreement. In do ing so, we rejected Indonesia's arguments 
challenging aspects of the USITC's determination that Indonesia considered were inconsistent with 
these provisions. Indonesia has not presented any different or additional arguments in support of 
its contention tha t the same alleged inconsistencies are also, independently, inconsistent with the 
"special care" requirement in Articles 3.8 and 15.8. Thus, to the extent that Indonesia's claims 
under Articles 3.8 and 15.8 are premised on its claims of violation of the ot her provisions 
enumerated above, we find that Indonesia has failed to establish that the United States acted 
inconsistently with Articles 3.8 and 15.8.576 
7.326.   In addition, Indonesia argues that the USITC failed to exercise special care because of the 
cumulative effect of the alleged deficiencies it identified in its claims under the other provisions 
cited above. In essence, we understand Indonesia to assert that, cumulatively, the alleged 
deficiencies it identified in its other Article 3 and Article 15 claims res ulted in a more robust and 
rigorous or precise and thorough present injury analysis by the USITC than threat  of injury  
analysis, and that the USITC resolved the issues identified by Indonesia in its Article 3.5, 3.7, 
                                                
573 See below, para. 7.346 . 
574 Indonesia's first written submission, paras. 131 -132; response to Panel question No. 56 ; and second 
written submission, para. 76.  
575 United States ' first written submission, paras. 310 -311; opening statement at the first meeting of the 
Panel, para. 56; second written submission, paras. 147 -148 (referring to Panel Report, US – Softwood 
Lumber  VI, para. 7.34); and response to Panel question Nos. 56 an d 99. 
576 Our conclusion is consistent with the approach of  the panel in US – Softwood Lumber VI : 
While we do not consider that a violation of the special care obligation could  not be 
demonstrated in the absence of a violation of the more specific provision of the Agreements 
governing injury determinations, we believe such a demonstration would require additional or 
independent arguments concerning the asserted violation of the special care requirement beyond 
the arguments in support of the specific violation s[.]  
(Panel Report, US – Softwood Lumber VI , paras. 7.34 (bold original; italics added))  WT/DS491/R  
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  15.5, and 15.7 claims against the Indon esian exporters, and for these reasons act ed inconsistently 
with Articles  3.8 and 15.8.577 
7.327.   The United States argues that the Agreements require that an investigating authority 
resolve all issues before it based on an objective analysis of positive evidence, applying the 
relevant standards.578 The United States considers that there is no basis for suggesting that 
Articles 3.8 and 15.8 require an investigating authority to resolve some percentage of issues, or 
"key" issues, in favour of respondents instead of res olving each based on an analysis of the facts 
and application of the applicable legal standards.579  
7.328.   We agree that the Anti -Dumping and SCM Agreements require an investigating authority's 
threat of injury determination to be based on an objective analysis of  positive evidence and to be 
consistent with the relevant obligations under the applicable provisions  of Article 3 of the 
Anti-Dumping Agreement and Article 15 of the SCM Agreement, including Articles 3.5 and 15.5 
and 3.7 and 15.7. Hence, the consistency o f an investigating authority's threat of injury 
determination must be considered on its own terms, and not by comparison to the investigating 
authority's evaluation of the impact of dumped or subsidized imports on the domestic industry 
during the POI.580 Thus, Indonesia's view that Articles 3.8 and 15.8 require that, in a given 
investigation, the investigating authority's threat of injury analysis be at least as "robust" or 
"rigorous" as its analysis of the situation of the domestic industry during the POI is  without support 
in the text of the Agreements.581  
7.329.    Nor has Indonesia advanced any basis, in Articles 3.8 and 15.8 or any other applicable 
provision of the Agreements, for the proposition that Articles 3.8 and 15.8 require an investigating 
authority to reso lve some issues, or "key" issues, in favour of respondents. Again, the relevant 
question is whether the USITC resolved each "issue" consistently with its obligations under the 
provisions at issue. Consequently, whether the investigating authority resolved some, or all, of the 
relevant "issues" in favour of foreign producers/exporters, or in favour of domestic producers, is 
not a relevant consideration. An investigating authority may well resolve all the "issues" before it 
in favour of either the domestic pr oducers or in favour of foreign producers/exporters, so long as 
in doing so, it acts consistently with the provisions of the covered agreements. In the present 
case, we have found above that Indonesia has not established that the USITC's threat of injury 
determination is inconsistent with Articles 3.5 and 3.7 of the Anti -Dumping Agreement and with 
Articles 15.5 and 15.7 of the SCM Agreement.  
7.330.   On the basis of the foregoing, we find that Indonesia has failed to establish that the 
USITC's threat of injury deter mination is inconsistent with Article 3.8 of the Anti -Dumping 
Agreement and Article 15.8 of the SCM Agreement.  
                                                
577 Indonesia's first written submission, paras. 130 -132; opening statement at the first meeting of the 
Panel, para. 75; response to Panel question No. 56; and second w ritten submission, para. 76.  
578 United States' second written submission, para. 148.  
579 United States' second written submission, para. 148; response to Panel questions No. 99 and  103; 
and comments on Indonesia's response to Panel question No. 103.  
580 Indones ia's position is also problematic in that it assumes that an investigating authority will, in all 
instances, make a fully analysed determination regarding both present injury and threat of injury. However, 
while an investigating authority considering the q uestion of threat of injury would be expected to consider the 
present condition of the domestic industry in that context (see above, para. 7.231 ), we see no reason why that 
investigating authority would necessar ily be required to consider all aspects required for a present injury 
determination. An investigating authority could, for instance, conclude that the domestic industry is not 
presently injured and may therefore go on to consider the question of threat of material injury without 
addressing the question of causation or non -attribution in the context of present (non)injury.  
581 In paragraph 7.210  above, we reject a similar argument advanced by Indonesia to the effect  that, in 
assessing consistency with the non -attribution requirement under Article 3.5 of the Anti -Dumping Agreement 
and Article 15.5 of the SCM Agreement, a panel should compare the investigating authority's threat of injury 
analysis to its present injury  analysis and determine whether the former is as robust as the latter. In our 
findings above, we also note that present injury determinations require consideration of actual data for the 
POI, whereas threat of injury determinations by definition in additio n involve consideration of projections for an 
imminent future period.  WT/DS491/R  
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  7.7  "As such" claims alleging inconsistency of Section 771 (11)(B) of the US Tariff Act of 
1930 ("tie vote" provision) with Article 3.8 of the Ant i-Dumping Agreement and 
Article  15.8 of the SCM Agreement ("special care")  
7.7.1   Introduction  
7.331.   Indonesia challenges Section 771 (11)(B)  of the US Tariff Act of 1930 "as such" – i.e. 
independently of its application in specific instances – as it applies to threat of i njury 
determinations, asserting that this provision is inconsistent with the "special care" obligation under 
Articles 3.8 of the Anti -Dumping Agreement and 15.8 of the SCM Agreement in threat of injury 
determinations.582  
7.332.   The United States requests that we r eject Indonesia's claim.583 
7.333.    It is well established in WTO dispute settlement practice that a complaining party may 
challenge another Member' s measures of general and prospective application "as such", i.e. 
independently of their application in specific inst ances.584 Indonesia's claims concerning the "tie 
vote" provision are independent of its claims concerning the US measures on coated paper from 
Indonesia . The tie vote provision did not come into play in the coated paper investigation – all 
Commissioners cast  an affirmative vote (five found that the domestic industry was threatened with 
injury, one found that it had suffered present injury).  
7.334.   There is no substantial disagreement between the parties concerning the interpretation 
and operation of Section 771 (11)(B) of the US Tariff Act of 1930, as amended (codified at Title 19 
of the United States Code, Section 1677(11)(B) ). This provision of US law provides that if there is 
an evenly split vote between the USITC Commissioners on whether dumped or subsidized impor ts 
are causing injury (whether present injury, threat of injury, or material retardation) in an anti -
dumping or countervailing duty investigation, the USITC shall be considered to have made an 
affirmative determination:  
If the Commissioners voting on a det ermination by the Commission, including a 
determination under section 1675 of this title, are evenly divided as to whether the 
determination should be affirmative or negative, the Commission shall be deemed to 
have made an affirmative determination. For th e purpose of applying this paragraph 
when the issue before the Commission is to determine whether there is  
(A) material injury to an industry in the United States,  
(B) threat of material injury to such an industry, or  
(C) material retardation of the estab lishment of an industry in the United States,  
by reason of imports of the merchandise, an affirmative vote on any of the issues 
shall be treated as a vote that the determination should be affirmative.585  
7.335.   Moreover, we note that pursuant to this provision, a vote that any of the three "types" of 
injury (present material injury, threat of material injury, or material retardation) exists is 
considered to be an "affirmative" vote when compiling the votes of individual Commissioners. 
Indonesia's claim is , however,  limited to instances in which an equal number of Commissioners586 
cast an affirmative vote of "threat of injury" by reason of subject imports and cast  a negative vote 
(i.e. a vote finding no form of injury by reason of subject imports).587  
7.336.   Moreover, the part ies agree that, under US law, the imposition of anti -dumping or 
countervailing measures automatically follows affirmative determinations by both the USDOC (on 
                                                
582 Indonesia's first written submission, paras. 3 and 133 -165.  
583 United States' first written submission, para. 353.  
584 See, e.g. Panel Report, US – Shrimp II (Viet Nam) , para. 7.94.  
585 19 U.S.C. , Section 1677 , (Exhibit US -12), Section 1677(11)(B) . 
586 The parties agree that in some instances, fewer than six Commissioners will participate in the vote. 
(United States' response to Panel question No. 100 (referring to 18 U.S.C. , Section 208 , (Exhibit US -110)) ). 
587 Indonesia's first written submission, para. 135.  WT/DS491/R  
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  the existence and a non -de minimis  amount of dumping and/or subsidization) and the USITC (on  
the existence of  injury, in any of its forms, by reason of subject imports). When both agencies 
have made an affirmative determination, the USDOC is required, under US law, to issue an 
anti-dumping or countervailing duty order imposing duties.588  
7.337.   We first addre ss our understa nding of the "special care" requirement in Articles 3.8 and 
15.8, before considering Indonesia's claim s of inconsistency of the US tie vote provision.  
7.7.2   Legal standard under Article 3.8 of the Anti -Dumping Agreement and Article 15.8 
of the SC M Agreement  
7.338.   Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM Agreement read as 
follows:  
With respect to cases where injury is threatened by [dumped/subsidized] imports, the 
application of [anti -dumping/countervailing] measures shall be  considered and 
decided with special care.  
7.339.   The parties disagree on the interpretation of Article 3.8 of the Anti -Dumping Agreement 
and Article 15.8 of the SCM Agreement, in terms of both the scope of application of the "special 
care" obligation, and the co ntent of that obligation.  
7.340.   Concerning the scope of application of Articles 3.8 and 15.8, Indonesia considers that the 
"special care" provision applies to all steps leading to the imposition of duties, and thus to both an 
investigating authority's considerat ion of the substantive requirements for the imposition of 
anti-dumping or countervailing measures and to the decision to apply duties that follows, including 
the decision -making or voting procedures pursuant to which that decision is made. In this respect,  
Indonesia argues that, pursuant to the principle of effective treaty interpretation ( effet utile ) and 
Article 31 (1) of the Vienna Convention, meaning must be given to both the terms "considered" and 
"decided" in Articles 3.8 and 15.8. In Indonesia's view,  if "considered" may refer to or even be 
limited to the USITC's substantive consideration of the requirements under the Agreements, the 
term "decided" unequivocally includes the way an investigating authority brings the question of 
applying or not applying  measures in threat of injury situations "to a resolution or conclusion", 
including the way in which the investigating authority resolves a tie vote in those situations.589 In 
addition, Indonesia considers that the use of the term "application" in Articles 3 .8 and 15.8 results 
in the "special care" obligation applying to all steps leading up to the actual imposition of the 
duties.590 Indonesia also argues that where the drafters wanted to refer to the final step of actually 
charging duties, they used the terms "impose", "imposition", "levying" or "collection" of duties, not 
the broader terms "application" of "measures".591 Indonesia contends that the Appellate Body 
Report in US – Line Pipe  does not stand for the general proposition that Members' internal -decision 
making processes are always within the discretion of Members.592  
7.341.   The United States, for its part, argues that the "special care" obligation in Articles  3.8 and 
15.8 applies to an investigating authority's substantive analysis, i.e. its consideration of thre at 
factors and other requirements concerning whether the domestic industry is threatened with injury 
by subject imports and its ultimate decision of whether such a threat exists.593 The special care 
obligation does not, in the United States' view, discipline  a Member's voting system or 
decision -making procedures.594 The United States finds support for its interpretation of Articles 3.8 
and 15.8 in the placement of these Articles as part of the provisions concerning the substantive 
requirements applicable to inj ury (including threat of injury) determinations, and argues that it is 
in the satisfaction of those obligations that investigating authorities exercise special care under 
                                                
588 United States' response to Panel question No. 102(a); 19 U.S.C. , Section 1671d,  (Exhibit US -56), 
Section  1671d(c)(2); and 19 U.S.C. , Section 1673d , (Exhibit US -60), Section 1673d(c)(2).  
589 Indonesia's opening statement at the first meeting of the Panel, para. 79; response to Panel question 
Nos. 58 and 59(c); and second written submission, para. 81.  
590 Indonesia's response to Panel question Nos. 59 (a),  (b), and (c).  
591 Indonesia's response t o Panel question No. 59(c).  
592 Indonesia's opening statement at the first meeting of the Panel, para. 80; response to Panel question 
No. 60; and second written submission, para. 83.  
593 United States' second written submission, paras. 155 -156. 
594 United States ' first written submission, para. 319.  WT/DS491/R  
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  Articles  3.8 and 15.8.595 The United States also finds support for its position in Arti cle 9 of the 
Anti-Dumping Agreement and Article 19 of the SCM Agreement, concerning the imposition of 
duties. The United States notes that these Articles provide that it is desirable – but not required – 
for the imposition of duties to be permissive and th at these Articles do not distinguish between 
cases involving present injury and those involving threat  of injury . The United States also argues 
that interpreting "application" in Articles 3.8 and 15.8 as referring to a decision on whether to 
impose measure s following a determination that the prerequisites for application have been met 
may prevent the automatic application of measures in cases involving threat of injury, contrary to 
the statement in Articles 9 and 19 that discretion is merely desirable.596 
7.342.   The United States further submits that where the Anti -Dumping and SCM Agreements 
discuss procedural matters, they do so explicitly, and nothing in the Anti -Dumping and SCM 
Agreements curbs Members' discretion regarding their framework for assigning responsibi lity for 
conducting injury investigations and for counting votes. The United States notes in this respect 
that the Appellate Body in US – Line Pipe  held that panels and the Appellate Body are "concerned 
only with the determination itself, which is a singul ar act for which a WTO Member may be 
accountable in WTO dispute settlement", and that a Member's internal decision -making process is 
entirely within the discretion of that Member.597 The United States also asserts that Indonesia's 
interpretation of Articles 3.8 and 15.8 would imply structural requirements for investigating 
authorities and would require intrusive examination of their decision -making process.598 Finally, 
the United States submits that the negotiating history of Articles 3.8 and 15.8 confirms that  the 
"special care" language evolved from text about the forecasted level of effect of dumped imports 
on the domestic industry, demonstrating that the concept of special care relates to the substantive 
standards used to assess whether a threat of injury ex ists.599 
7.343.   With respect to the scope of application of the "special care" provision, we note that 
Articles 3.8 and 15.8 refer to the "application " of measures, which shall be "considered and 
decided" with special care. The use of the term "application" , combin ed with the use of the term 
"decided"600, might, at first glance, suggest that the "special care" obligation concerns a Member's 
decision to apply duties  once it has determined that all the substantive requirements for doing  so 
have been met . We recall, howe ver, that the provisions of the covered agreements are to be 
interpreted in  accordance with the ordinary  meaning of their terms, read in  context  and in light of 
the object and purpose of the relevant agreements .601 Here, the context of both Articles 3.8 and 
15.8 strongly suggests  that they concern the substantive requirements  for an investigating 
authority's determination of whether the domestic industry is threatened with material injury by 
subject imports. In our view, Articles 3.7 and 15.7 , which  immediate ly precede Articles 3.8 and 
15.8, provide  the most relevant context for the ir interpretation. The fact that the two sets of 
provisions apply to determinations of threat of injury and the placement of Articles 3.8 and 15.8 
immediately following Articles 3.7 and 15.7 suggests that the "special care" requirement relates to 
the obligations set out in those preceding provisions.  In this respect, we agree with the 
                                                
595 United States' first written submission, paras. 322 and 327 -329 (quoting Panel Report, US – 
Softwood Lumber VI , paras. 7.33 -7.34); second written submission, paras. 150 and 158; and response to 
Panel question No. 58  (referring to Panel Report, US – Softwood Lumber VI , para. 7.34).  
596 United States' response to Panel question No. 59(a).  
597 United States' first written submission, paras. 312 -353; opening statement at the first meeting of the 
Panel, para. 58; and second w ritten submission, paras. 150 -151 (in both instances referring to Appellate Body 
Report, US – Line Pipe , para. 158).  
598 United States' second written submission, paras. 164 -165. 
599 United States' first written submission, para. 330; second written submission , paras. 159 -163 
(referring to Group on Anti -Dumping Policies, Anti -Dumping Code draft (August 1966), ( Exhibit US -26); 
Anti-Dumping Code (July 1967) , (Exhibit US -27); and Group on Anti -Dumping Policies, Anti -Dumping Code 
draft (December 1966), (Exhibit US -30)). 
600 In the Anti -Dumping and SCM Agreements, the concept of "application" generally refers to a 
Member's imposition of duties, not including their final collection. See, e.g. Articles 7.1, 10.1, 10.2, and 15 of 
the Anti -Dumping Agreement and the corresp onding provisions of the SCM Agreement. The ordinary meaning 
of the term "decided" suggests that it can be interpreted to refer to the overall conclusion reached, as a result 
of an investigating authority's "consideration" of a matter. The Shorter Oxford D ictionary, defines "decide" as, 
inter alia , "[s]ettle (a question, dispute, etc.) by finding in favour of one side; bring to a settlement, resolve" 
"[b]ring (a person) to a determination or resolution (against, in favour of, to do)", "[c]ome to a determina tion 
or resolution". ( Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, pp.  618-619). We also note that there is no notable difference between the English, the French, and the 
Spanish texts of Articles 3.8 and 15.8.  
601 Vienna Convention, Article 31(1).  WT/DS491/R  
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  United  States that the negotiating history of Articles 3.8 and 15.8 suggests that the "special care"  
requirement was originally linked to the nature of the information – predictions about the future – 
that authorities must rely on in making threat of injury determinations.602 The apparent reason for 
the inclusion of what became the "special care" requireme nt supports our understanding that the 
obligation applies to an investigating authority's consideration of the substantive requirements for 
a determination of threat of injury. In addition, Articles 3.8 and 15.8 form part of , respectively,  
Article 3 of the  Anti-Dumping Agreement and Article 15 of the SCM Agreement . The focus of these 
two Articles, both of which are entitled "Determination of Injury", is "on the substantive  obligations 
that a Member must fulfil in making an injury determination".603 The placem ent of the "special 
care" language in Articles 3 and 15 thus suggests that, in line with all the other provisions of those 
Articles, the "special care" provision concerns the substantive requirements for an investigating 
authority's determination of whethe r the domestic industry is threatened with material injury by 
subject imports.604 By contrast, disciplines on the procedural and evidentiary aspects of 
anti-dumping and countervailing duty investigations are found primarily in Article 6 of the 
Anti-Dumping A greement and Article 12 of the SCM Agreement, and the imposition and collection 
of duties is addressed in Article 9 of the Anti -Dumping Agreement and Article 19 of the SCM 
Agreement.  
7.344.   We find further support in  Article 6.9 of the Anti-Dumping Agreement and Article 12.8 of 
the SCM Agreement  for our view that Articles 3.8 and 15.8 concern an investigating authority's 
consideration of the substantive requirements for a determination of threat of injury. Articles 6.9 
and 12.8 impose a procedural obligation to disclose the "essential facts under consideration which 
form the basis for the decision whether to apply definitive measures ".605 This obligation applies  to 
the facts underlying a n authority's substantive  consideration of the existence of dumping or 
subsidizat ion, of injury , and of a causal link between the dumped or subsidized imports and the 
injury .606 The fact that Articles 6.9 and 12.8 are, like Articles 3.8 and 15.8, formulat ed in terms of 
the decision to apply anti -dumping or countervailing measures  even th ough they apply to 
substantive requirements lends support to our view that Articles 3.8 and 15.8 concern the 
substantive requirements applicable in determining whether a  threat of injury  exists .  
7.345.   In any event, even if  the special care requirement could app ly to something else than an 
investigating authority's consideration of the substantive requirements under Articles 3 and 15, we 
agree with the United States and the European Union607 that the Anti -Dumping and SCM 
Agreements generally do not discipline Membe rs' voting procedures or the manner in which 
decisions to apply duties are made. There is nothing in either the Anti -Dumping or SCM 
Agreements concerning the structure or responsibilities of the decision -making for investigations 
beyond the statement in fo otnote 3 of the Anti -Dumping Agreement that the term "authorities" 
                                                
602 Group on Anti -Dumping Policies, Anti -Dumping Code draft (August 1966), ( Exhibit US -26); 
Anti-Dumping Code (July 1967), (Exhibit US -27); and Group on Anti -Dumping Policies, Anti -Dumping Code 
draft (Decemb er 1966), (Exhibit US -30). 
603 Appellate Body Report, Thailand – H-Beams , para. 106. (emphasis original)  
604 Our understanding of Articles 3.8 and 15.8 is consistent with that of the panel in US – Softwood 
Lumber VI , which took the view that Articles 3.8 and 1 5.8 reinforce the fundam ental obligation under 
Articles  3.7 and 15.7 that an investigating authority base a threat of injury determination on facts and not 
allegation, conjecture, or remote possibility. The panel also was of the view that Articles 3.8 and 15.8 "apply 
during the process of investigation and determination of threat of material injury", that is, "in the 
establishment of whether the prerequisites for application of a measure exist", and not merely afterward when 
final decisions whether to apply  a measure are taken. (Panel Report, US – Softwood Lumber VI , para. 7.33). 
We note that in its report in the compliance proceedings in the same dispute, the Appellate Body included 
Articles 3.8 and 15.8 in a list of the substantive  provisions of Articles 3  and 15 informing the standard of review 
to be applied by a panel considering claims concerning these provisions and, in this context, referred to the 
above discussion of Articles 3.8 and 15.8 by the US – Softwood Lumber VI  panel. (Appellate Body Report, US – 
Softwood Lumber VI (Article 21.5 – Canada) , paras. 95 -96). See also Appellate Body Report, China – GOES , 
fn 213: "Articles 3.7 and 3.8 of the Anti-Dumping Agreement  and Articles 15.7 and 15.8 of the SCM Agreement  
set out the requirements regarding the determination of a threat of material injury".  
605 Article 6.9 of Anti -Dumping Agreement and Article 12.8 of the SCM Agreement read, in 
relevant part:  
The authorities shall, before a final determination is made, inform all interested parties of the 
essential  facts under consideration which form the basis for the decision whether to apply 
definitive measures .  
(emphasis added)  
606 See, e.g.  Appellate Body Report s, China – HP-SSST (Japan) / China – HP-SSST (EU) , para. 5.130.  
607 United States first written submissi on, paras. 320 -325; second written submission, para 153; and 
European Union's third-party response to Panel question No. 14.  WT/DS491/R  
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  used in the Agreement "shall be interpreted as meaning authorities at an appropriate senior level". 
Had the drafters intended for the Anti -Dumping and the SCM Agreements to subject to revie w the 
manner in which Members structure their investigating authorities and the manner in which 
decisions to apply duties are made, they would, we believe, have done so explicitly, particularly in 
view of the wide variety of ways in which Members have orga nized and structured their 
investigating authorities.608 We see no basis in the texts of the Anti -Dumping or SCM Agreements 
that would support Indonesia's argument that those Agreements impose procedural disciplines on 
how determinations are made.609  
7.346.    In ligh t of our conclusion concerning the scope of application of Articles 3.8 and 15.8, we 
do not consider it necessary to go on to consider further the meaning of the term "special care". 
Nonetheless, we make the following observations in this regard . First, th e ordinary meaning of the 
"special care" language implies an obligation on Members to apply a high degree of attention in 
threat of injury determinations.610 Second, we note that Indonesia refers to  the following as 
relevant context for the interpretation of  the term "special care" : (a) Articles 3.1 of the 
Anti-Dumping Agreement and 15.1 of the SCM Agreement requiring that an injury determination 
be based on an "objective examination" of "positive evidence"; (b) Article X:3(a) of the GATT 1994 
requiring that measures be administered in a "uniform, impartial and reasonable  manner";  (c) the 
principle of good faith as a "relevant rule of international law applicable in the relations between 
the parties" pursuant to Article 31(3)(c) of the Vienna Convention; (d) a general standard of 
even-handedness, which, Indonesia argues, underlies the WTO covered agreements; and  (e) 
Article 15 of the Anti -Dumping Agreement and Article 27 of the SCM Agreement, which set out 
special rules concerning developing country Members.611 With the exception of Article 3.1 of the 
Anti-Dumping Agreement and Article 15.1 of the SCM Agreement, we do not see, and Indonesia 
has not persuaded us of, the relevance for the interpretation of the special care requirement of the 
provisions and concepts that it refers to . As indicated above, in our view, Articles 3.7 and 15.7, 
which  immediately precede Articles 3.8 and 15.8 , provide the most relevant context for the 
interpretation of Articles 3.8 and 15.8 , and this context  suggest s that the "special care"  
requirement relates to the obligations set out in those preceding provisions.   
7.347.   Finally, w e note Indonesia's argument that the fact that the laws of certain other Members 
and the Statutes of the International Court of Justice provide for either an odd numb er of 
                                                
608 Members have adopted a variety of different structures for the administration of their trade remedy 
systems. In some systems, the  decision -maker is formally part of the government, while in others it is a 
separate, often quasi -judicial, body outside the formal government hierarchy. In some systems, there is a dual 
system in which one authority determines whether imports are dumped o r subsidized, and another determines 
whether the domestic industry is injured by such imports. The ultimate decision whether to impose measures 
may rest with one or the other of these authorities, or with a separate authority. We recall that in the US 
system, while the USITC makes determinations regarding injury, the USDOC makes determinations regarding 
dumping and subsidization and the imposition of measures; the latter is required under US law if the USDOC 
and the USITC both make affirmative determination s of, respectively, dumping or subsidization , and injury. In 
some systems, the investigation and evaluation of the substantive requirements for the imposition of measures 
(i.e. dumping, subsidy, injury, and causation) is undertaken by one authority, which recommends a 
determination to another authority, which makes the ultimate determination whether to apply measures, and 
may accept, reject, or modify the recommendation.  
609 We also note the Appellate Body's statement in US – Line Pipe  that the Agreement on Safeguards is 
not:  
[C]oncerned with how the competent authorities of WTO Members reach their determinations in 
applying safeguard measures. The Agreement on Safeguards  does not prescribe the internal 
decision -making process for making such a determination.  That is entirely up to WTO Members in 
the exercise of their sovereignty. We are concerned only with the determination itself, which is a 
singular act for which a WTO Member may be accountable in WTO dispute settlement. It is of no 
matter to us whether tha t singular act results from a decision by one, one hundred, or —as 
here—six individual decision -makers under the municipal law of that WTO Member. What matters 
to us is whether the determination, however it is decided domestically, meets the requirements 
of the Agreement on Safeguards . 
(Appellate Body Report, US – Line Pipe , para. 158)  
610 The Shorter Oxford Dictionary defines "care" as "[s]erious attention, heed; caution, pains; regard, 
inclination (to, for)" ( Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford University Press, 
2007), Vol.  1, p. 348) , and "special", (as an adjective), as "[e]xceptional in quality or degree; unusual; out of 
the ordinary". (Ibid. Vol. 2, p. 2942).  
611 Indonesia's first written submission, paras. 140 -153; respon se to Panel question No. 63(b); opening 
statement at the first meeting of the Panel, paras. 79, 82; and second written submission, para. 85.  (emphasis 
original)  WT/DS491/R  
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  decision -makers or for the presiding member to have a deciding vote are "circumstances 
surrounding the conclusion of a treaty" within the meaning of Article 32 of the Vienna Convention, 
which indicate that the special care requirement is generally pe rceived to entail a greater degree 
of diligence than that afforded by the US tie vote provision, thus showing that the provision is 
inconsistent with Articles 3.8 and 15.8.612 Indonesia fails to explain how other Members' 
procedures could properly be regarde d as circumstances surrounding the conclusion of the 
Anti-Dumping and SCM Agreement s in this regard, given that the conclusion of the se Agreement s 
preceded the adoption of at least some of those procedures ; legislation enacted subsequent to the 
conclusion of a treaty cannot be considered "circumstances of its conclusion".613 Nor has Indonesia 
explained how tie -break ing provisions in other Members' trade remedy legislation could have been 
of relevance to, informed, or impacted, the negotiation  of Articles 3.8 and 15.8, particularly as 
these Articles  apply only in threat of injury determinations, and on their face have nothing to do 
with voting procedures.614  
7.348.   In its first written submission, Indonesia also argued that these same laws constituted 
"subsequent pract ice" within the meaning of "Article 31(1)(b) (sic) " of the Vienna Convention.615 
Indonesia  later asserted, in its opening statement at the second meeting with the Panel , that it 
had not invoked Article 31 (3)(b) or sought to rely on the subsequent practice of  Members. In light 
of Indonesia's repudiation of its own argument, it is unnecessary to address this question. 
Nonetheless, we again note that there is no obvious connection between the tie-breaking 
provisions in other Members' legislation and the special care provision, and that Indonesia refers to 
the practice of only a handful of WTO Members. Thus, Indonesia in any event failed to 
demonstrate "a common, consistent, discernible pattern of acts or pronouncements" that "imply 
agreement  on the interpretation  of the relevant provision".616 Indonesia also refers to the fact that 
in safeguards cases, under US law, the US president (who determines whether a measure will be 
applied and if so what measure) may deem a tied vote by the USITC to be affirmative.617 However , 
Indonesia again fails explain the relevance of this decision -making procedure to  the interpretation 
of Articles  3.8 and 15.8.  
                                                
612 Indonesia's first written submission, paras. 160 -165 (referring to Other Members' Laws on Tie  
Voting , (Exhibit IDN -20); and ICJ Statute , (Exhibit IDN -47)); opening statement at the second meeting of the 
Panel, para. 62.  
613 In EC – Chicken Cuts , the Appellate Body upheld the panel's view that the ''circumstances of the 
conclusion should be ascertain ed over a period of time ending on the date of the conclusion of the WTO 
Agreement ''. (Appellate Body Report, EC – Chicken Cuts , para. 293 (emphasis added)). Canada's legislation 
appears to pre -date the entry into force of the Uruguay Round Agreements, whe reas Argentina, South Africa, 
and Turkey's legislation appear to post -date it. Of course, it may well be that these Members had similar 
legislation in place prior to the conclusion of the Uruguay Round, but we cannot assume this to be the case in 
the absen ce of evidence to this effect and Indonesia has not submitted evidence that would demonstrate that 
the laws were enacted prior to the conclusion of the Uruguay Round. Moreover, in the present  case, the 
language of Articles  3.8 and 15.8 originates in the Ke nnedy Round Anti -Dumping Code, and in our view, the 
laws would have to pre -date the conclusion of that agreement to qualify under Article 32 of the Vienna 
Convention in the manner argued by Indonesia.  
614 In addition, Indonesia invokes the practice of only f our Members, and fails to mention that at least 
one other Member, Korea, has a provision similar to the US tie vote provision. (South Korea, Act on the 
Investigation of Unfair International Trade Practices, (Exhibit US -29), Article 32  (referred to in Unite d States' 
first written submission, para. 343) ). 
615 Indonesia's first written submission, para. 161. Indonesia explained that:  
The Appellate Body has defined 'subsequent practice as a 'concordant, common and consistent' 
sequence of acts or pronouncements w hich is sufficient to establish a discernible pattern implying 
the agreement of the parties [to a treaty] regarding its interpretation', see Appellate Body 
Report, Japan – Alcoholic Beverages II , p.13. Indonesia can rely on laws enacted after the entry 
into force of the WTO agreements as an indication of how states perceive 'special care' to be 
correctly interpreted.  
(Ibid. fn 216)  
The language of the Appellate Body Report in Japan – Alcoholic Beverages  II cited by Indonesia 
concerns the use of subsequent practice under Article 31.3(b) of the Vienna  Convention, which provides that, 
in interpreting a treaty, "[t]here shall be taken into account, together with the context: … (b) any subsequent 
practice in the application of the treaty which establishes the ag reement of the parties regarding its 
interpretation".  
616 Appellate Body Reports, US – Gambling , para. 192; EC – Chicken Cuts , paras. 258 -259. (emphasis 
original)  
617 Indonesia's first written submission, para. 164; response to Panel question No . 60 (referring  to 
Safeguard Tie Vote,  (Exhibit IDN -37)).  WT/DS491/R  
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  7.7.3   Whether the US "tie vote" provision is inconsistent with Article 3.8 of the 
Anti-Dumping Agreement and Article 15.8 of the SCM A greement  
7.349.   Indonesia's argument that the US tie vote provision is inconsistent with Article 3.8 of the 
Anti-Dumping Agreement and Article 15.8 of the SCM Agreement is premised on its interpretation 
of the "special care" obligation. We have rejected Indonesia 's interpretation of Articles 3.8 and 
15.8, concluding that these provisions  establish no disciplines on Members' decision -making  
procedures in determining whether a domestic industry is threatened with injury and whether to 
apply measures. The US tie vote  provision is a procedural mechanism to establish an outcome 
based on the votes of individual Commissioners in the event of a tied vote on whether there is 
injury caused by subject imports. Consequently, we conclude that Indonesia has failed to establish 
the inconsistency  of the US tie vote provision with the special care requirement  under Articles  3.8 
and 15.8 . 
7.350.   Finally, we note that the parties also disagree as to the significance, for Indonesia's claims, 
of the fact that under US law618 the USDOC has no dis cretion not to issue an anti -dumping or 
countervailing duty order following affirmative determinations by the USDOC and the USITC. In 
particular, the parties disagree whether this means that under US law, an affirmative USITC 
decision constitutes a decisio n to apply duties.619 In light of our conclusions regarding the scope of 
application of Articles 3.8 and 15.8, we see no need to address the parties'  arguments in this 
respect.  
7.351.   In light of the foregoing, we find that Indonesia has f ailed to establish that 
Section  771(11)(B)  of the US Tariff Act of 1930, as amended (codified at Title 19 of the 
United  States Code, Section 1677(11)(B) ), as it applies to threat of injury determinations, is 
inconsistent with Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM 
Agreement and reject Indonesia's "as such" claims under these provisions.  
8  CONCLUSIONS  
8.1.  For the reasons set forth in this Report, the Panel concludes as follows:  
a. With respect to Indonesia's claims concerning the USDOC's subsidy determination:  
i. Indonesia has failed to establish that the USDOC ac ted inconsistently with 
Article  14(d) of the SCM Agreement by not using private  prices for standing timber in 
Indonesia as the basis for  establishing  the benchmark  for the provision of standing 
timber ; 
ii. Indonesia has failed to establish that the USDOC ac ted inconsistently with 
Article  14(d) of the SCM Agreement by not using private  prices for logs in Indonesia 
as the basis for establishing the benchmark  for the log export ban ;  
iii. Indonesia has failed to establ ish that the USDOC ac ted inconsistently with 
Article  12.7 of the SCM Agreement in its determination that Orleans was affiliated 
with APP/SMG;  
iv. Indonesia has failed to establish that the USDOC ac ted inconsistently with 
Article  2.1(c) of the SCM Agreement by  failing to determine or identify the relevant 
subsidy programmes in connection with the provision of standing timber, the log 
export  ban, or the debt forgiveness;  
v. Indonesia has failed to establish that the USDOC acted inconsistently with the 
chapeau  of Ar ticle 2.1 of the SCM Agreement by failing to identify the granting 
authority that forgave debt in favour of APP/SMG  or the jurisdiction of that granting 
authority.  
                                                
618 See above, para.  7.336 . 
619 United States' first written submission, paras. 319 and 333 -336; s econd written submission, 
para. 153; response to Panel question No. 102(a ); Indonesia's response to Panel question Nos. 59 (a), (b), and 
(c); and comments on the United States' response to Panel question No. 102(a).  WT/DS491/R  
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  b. With respect to Indonesia's claims concerning the USITC's threat of injury 
determination:  
i. Indonesia has failed to establish that the USITC's threat of injury determination is 
inconsistent with Article 3.5 of the Anti -Dumping Agreement and Article 15.5 of the 
SCM Agreement because the USITC attributed to the subject imports adverse effects 
caused by other factors;  
ii. Indonesia has failed to establish that the USITC's findings that in the imminent 
future subject imports would gain market share at the expense of the domestic 
industry and would have adverse effects on US prices are based on conjecture an d 
remote possibility, and there fore that the USITC 's threat of injury determination is 
inconsistent  with Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the 
SCM Agreement;  
iii. Indonesia has failed to establish that the USITC's threat of injury de termination is 
inconsistent with Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the 
SCM Agreement.  
c. With respect to Indonesia's "as such" claims concerning Section 771 (11)(B)  of the US 
Tariff Act of 1930 ( the "tie vote" provision) : 
i. Indonesia has failed to establish that Section 771 (11)(B)  of the US Tariff Act of 
1930, as amended (codified at Title 19 of the United States Code, 
Section  1677(11)(B) ), as it applies to threat of injury determination s, is inconsistent 
with Article  3.8 of the Anti -Dumping Agreement and Article 15.8 of the  SCM 
Agreement.  
8.2.  In light of these conclusions, the Panel makes no recommendation under Article 19.1 of the 
DSU. 
__________