AUSTRALIA – ANTI-DUMPING MEASURES ON A4 COPY PAPER REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 4 December 2019
Document codes: WT/DS529/R
Complainant: Indonesia
Respondent: Australia
Third parties: Canada, China, EU, Egypt, India, Israel, Japan, South Korea, Russia, Singapore, Thailand, Ukraine, U.S., Vietnam
Dispute stage: Panel
Agreements cited: Art. 2.2, 2.2.1.1  Anti-dumpingArt. VI:1  GATT 1994Art. 9.3  Anti-dumpingArt. VI:2  GATT 1994

AUSTRALIA – ANTI-DUMPING MEASURES ON A4 COPY PAPER
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Interim Review 4
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 First integrated executive summary of the arguments of Indonesia 9
Annex B-2 First integrated executive summary of the arguments of Australia 21
Annex B-3 Second integrated executive summary of the arguments of Indonesia 36
Annex B-4 Second integrated executive summary of the arguments of Australia 48
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of China 64
Annex C-2 Integrated executive summary of the arguments of the European Union 67
Annex C-3 Integrated executive summary of the arguments of Japan 72
Annex C-4 Integrated executive summary of the arguments of the Republic of Korea 77
Annex C-5 Integrated executive summary of the arguments of the Russian Federation 82
Annex C-6 Integrated executive summary of the arguments of Thailand 87
Annex C-7 Integrated executive summary of the arguments of the United States 89

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Canada – Dairy
(Article 21.5 – New Zealand
and US II)
Appellate Body Report, Canada – Measures Affecting the Importation of Milk
and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the
DSU by New Zealand and the United States , ,
, adopted 17 January 2003, DSR 2003:I, p. 213
China – Broiler Products Panel Report, China − Anti-Dumping and Countervailing Duty Measures on
Broiler Products from t he United States , and Add.1, adopted
25 September 2013, DSR 2013:IV, p. 1041
China – Broiler Products
(Article 21.5 – US)
Panel Report, China − Anti-Dumping and Countervailing Duty Measures on
Broiler Products from the United States – Recourse to Article 21.5 of the DSU
by the United States, WT/DS427/RW and Add.1, adopted 28 February 2018
EC – Hormones Appellate Body Report, European Communities – 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 – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti -Dumping
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R,
adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on
Certain Iron or Steel Fasteners from China, WT/DS397/R and Corr.1, adopted
28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R,
DSR 2011:VIII, p. 4289
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998,
DSR 1998:V, p. 2031
EC – Tube or Pipe Fittings Appellate Bo dy 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
EEC – Cotton Yarn GATT Panel Report, European Economic Community – Imposition of
Anti-Dumping Duties on Imports of Cotton Yarn from Brazil, ADP/137, adopted
30 October 1995, BISD 42S/17
EU – Biodiesel (Argentina) Appellate Body Report, European Union – Anti-Dumping Measures on Biodiesel
from Argentina , WT/DS473/AB/R and Add .1, adopted 26 October 2016,
DSR 2016:VI, p. 2871
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 modified by
Appellate Body Report WT/DS473/AB/R, DSR 2016:VI, p. 3077
EU – Fatty Alcohols
(Indonesia)
Panel Report, European Union – Anti-Dumping Measures on Imports of Certain
Fatty Alcohols from Indonesia, WT/DS442/R and Add.1, adopted 29 September
2017, as modified by Appellate Body Report WT/DS442/AB/R, DSR 2017:VI,
p. 2765
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
India – Agricultural Products Panel Report, India – Measures Concerning the Importation of Certain
Agricultural Products , WT/DS430/R and Add.1, adopted 19 June 2015, as
modified by Appellate Body Report WT/DS430/AB/R, DSR 2015:V, p. 2663
India – Solar Cells Appellate Body Report, India – Certain Measures Relating to Solar Cells and
Solar Modules, WT/DS456/AB/R and Add.1, adopted 14 October 2016,
DSR 2016:IV, p. 1827
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
Thailand – H-Beams Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections
of Iron or Non -Alloy Steel and H -Beams from Poland, WT/DS122/R, adopted
5 April 2001, as modified by Appellate Body Report WT/DS122/AB/R,
DSR 2001:VII, p. 2741
Ukraine – Ammonium
Nitrate
Appellate Body Report, Ukraine – Anti-Dumping Measures on Ammonium
Nitrate, WT/DS493/AB/R and Add.1, adopted 30 September 2019
Ukraine – Ammonium
Nitrate
Panel Report, Ukraine – Anti-Dumping Measures on Ammonium Nitrate ,
WT/DS493/R, Add.1 and Corr.1, adopted 30 September 2019, as upheld by
Appellate Body Report WT/DS493/AB/R
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 – 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

Short Title Full Case Title and Citation
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and
Sale of Clove Cigarettes , WT/DS406/AB/R, adopted 24 April 2012,
DSR 2012:XI, p. 5751
US – Coated Paper
(Indonesia)
Panel Report, United States – Anti-Dumping and Countervailing Measures on
Certain Coated Paper from Indonesia , WT/DS491/R and Add.1,
adopted 22 January 2018
US – COOL Appellate Body Repor ts, United States – Certain Country of Origin Labelling
(COOL) Requirements , WT/DS384/AB/R / WT/DS386/AB/R, adopted
23 July 2012, DSR 2012:V, p. 2449
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 – 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 – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
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 – Hot-Rolled Steel Panel Report, United States – Anti-Dumping Measures on Certain Hot -Rolled
Steel Products from Japan, WT/DS184/R, adopted 23 August 2001 modified by
Appellate Body Report WT/DS184/AB/R, DSR 2001:X, p. 4769
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat fr om New Zealand and Australia ,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX,
p. 4051
US – Offset Act (Byrd
Amendment)
Appellate Body Report, United States – Continued Dumping and Subsidy Offset
Act of 2000 , WT/DS217/AB/R, WT/DS234/AB/R, adopted 27 January 2003,
DSR 2003:I, p. 375
US – Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry
from China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p. 1909
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, DSR 2015:III, p. 1341
US – Softwood Lumber V Panel Report, United States – Final Dumping Determination on Softwood
Lumber from Canada, WT/DS264/R, adopted 31 August 2004, as modified by
Appellate Body Report WT/DS264/AB/R, DSR 2004:V, p. 1937
US – Softwood Lumber VI
(Article 21.5 – Canada)
Appellate Body Report, United States – Investigation of the International Trade
Commission in Softwood Lumber from 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 – Stainless Steel
(Mexico)
Appellate Body Report, United States – Final Anti -Dumping Measures on
Stainless Steel from Mexico , WT/DS344/AB/R, adopted 20 May 2008,
DSR 2008:II, p. 513
US – Upland Cotton
(Article 21.5 – Brazil)
Appellate Body Report, United States – Subsidies on Upland Cotton –
Recourse to Article 21.5 of the DSU by Brazil, WT/DS267/AB/RW, adopted
20 June 2008, DSR 2008:III, p. 809
US – Upland Cotton
(Article 21.5 – Brazil)
Panel Report, United States – Subsidies on Upland Cotton – Recourse to
Article 21.5 of the DSU by Brazil, WT/DS267/RW and Corr.1, adopted
20 June 2008, as modified by Appellate Body Report WT/DS267/AB/RW,
DSR 2008:III, p. 997
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 (EC) Appellate Body Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R, adopted 9 May
2006, and Corr.1, DSR 2006:II, p. 417
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing and
Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p. 3

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short Title Title
IDN-1 Statement of
Essential Facts
Statement of Essential Facts No. 341 alleged dumping of A4 copy
paper exported from the Federative Republic of Brazil, the
People's Republic of China, the Republic of Indonesia, and the
Kingdom of Thailand and alleged subsidization of A4 copy paper
exported from the People's Republic of China and the Republic of
Indonesia (December 2016)
IDN-3 Anti-Dumping
Notice No. 2017/39
A4 copy paper exported from the Federative Republic of Brazil, the
People's Republic of China, the Republic of Indonesia, and the
Kingdom of Thailand, findings in relation to a dumping investigation,
Public notice under Subsections 269TG(1) and (2) of the Customs
Act 1901, Anti -Dumping Notice No. 2017/39 (18 April 2017,
published 19 April 2017)
IDN-4 Final Report Report No. 341, alleged dumping of A4 copy paper exported from the
Federative Republic of Brazil, the People's Republic of China, the
Republic of Indonesia, and the Kingdom of Thailand and alleged
subsidization of A4 copy paper exported from the People's Republic of
China and the Republic of Indonesia (17 March 2017, published
19 April 2017)
IDN-5 Submission of the
Government of
Indonesia
(20 February 2017)
Submission of the Government of Indonesia to the Anti -Dumping
Commission No. 196 (20 February 2017)
IDN-9 Indah Kiat's
Verification Report
Indah Kiat Pulp and Paper TBK's Verification Report (August 2016)
IDN-10 Pindo Deli's
Verification Report
Pindo Deli Pulp and Paper Mills' Verification Report (August 2016)
IDN-15 Sinar Mas Group's submission (29 December 2016)
IDN-18 Australia Senate Economics Legislation Committee, Customs
Amendment (Anti-Dumping) Bill (June 2011)
IDN-28 (BCI) Attachment G-6 to Indah Kiat's questionnaire response
AUS-4 Extracts of
Customs
(International
Obligations)
Regulation 2015
Extracts of Customs (International Obligations) Regulat ion 2015,
Compilation No. 3 (20 December 2015)
AUS-26 (BCI) RISI, hardwood pulp prices in Asia by source (2010-2015)
AUS-27A (BCI) Hawkins Wright, hardwood pulp prices in China by source
(December 2002-August 2016)
AUS-27B (BCI) Hawkins Wright, hardwood pulp prices in South Korea by source
(December 2002-August 2016)

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994
ADC Australian Anti-Dumping Commission
BCI business confidential information
CTMS cost to make and sell
CIF costs, insurance, and freight
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EC European Community
FOB free on board
GAAP generally accepted accounting principles
GATT 1994 General Agreement on Tariffs and Trade 1994
Indah Kiat PT Indah Kiat Pulp and Paper Tbk
NME non-market economy
Pindo Deli PT Pindo Deli Pulp and Paper Mills
SCM Agreement Agreement on Subsidies and Countervailing Measures
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969,
1155 UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization

1 INTRODUCTION
1.1 Complaint by Indonesia
On 1 September 2017, Indonesia requested consultations with Australia pursuant to Article 4
of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) ,
Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), and Article 17 of
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
(Anti-Dumping Agreement) with respect to the measures and claims set out below.1
Consultations were held on 31 October 2017.
1.2 Panel establishment and composition
On 14 March 2018, Indonesia requested the establishment of a panel pursuant to Article 6 of
the DSU with standard terms of reference.2 At its meeting on 27 April 2018, the Dispute Settlement
Body (DSB) established a panel pursuant to the request of Indonesia in document WT/DS529/6, in
accordance with Article 6 of the DSU.3
The Panel's terms of reference are the following:
To examine, in the light of the re levant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Indonesia in document
WT/DS529/6 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
On 12 July 2018, the parties agreed that the panel would be composed as follows:
Chairperson: Mr Hugo Perezcano Díaz

Members: Mr Marco Tulio Molina Tejeda
 Ms Tomoko Ota

Canada, China, Egypt, the European Union, India, Israel, Japan, the Republic of Korea, the
Russian Federation, Singapore, Thailand, Ukraine, the United States, and Viet Nam notified their
interest in participating in the Panel proceedings as third parties.
1.3 Panel proceedings
1.3.1 General
After consultat ion with the parties, on 5 October 2018, the Panel adopted its Working
Procedures5, Additional Working Procedures on Business Confidential Information (BCI) 6, and the
partial timetable.7 The Panel, in consultation with the parties, subsequently revised the timetable on
26 February 2019 and 2 June 2019, and revised the timetable again on 18 July 2019.8 Pursuant to
the Working Procedures, these documents were circulated to the DSB in the course of this
proceeding.
The Panel held a first substantive meeting wi th the parties on 18 and 19 December 2018 .
A session with the third parties took place on 19 December 2018. The Panel held a second substantive
meeting with the parties on 14 and 15 May 2019. On 24 July 2019, the Panel issued the descriptive

1 Request for consultations by Indonesia, WT/DS529/1 (Indonesia's consultations request).
2 Request for the establishment of a panel by Indonesia, WT/DS529/6 (Indonesia's panel request).
3 DSB, Minutes of Meeting held on 27 April 2018, WT/DSB/M/412.
4 Constitution note of the Panel, WT/DS529/7.
5 Working Procedures of the Panel, WT/DS529/9.
6 Additional Working Procedures on Business Confidential Information, WT/DS529/10.
7 Timetable for the Panel proceedings, WT/DS529/8.
8 Revised timetable for the Panel proceedings, WT/DS529/8/Add.1; Revised timetable for the Panel
proceedings, WT/DS529/8/Add.2.

part of its Report to the parties. The Panel issued its Interim Report to the parties on
23 September 2019. The Panel issued its Final Report to the parties on 11 November 2019.
1.3.2 Requests for enhanced third-party rights
At the organizational meeting held on 21 September 2018, Australia requested additional rights
for third parties in this proceeding. Australia confirmed its request in writing on 15 October 2018 .
On 3 October 2018, China submitted a request for enhanced third-party rights. The Panel gave an
opportunity to third parties to comment on Australia's and China's requests, and a subsequent
opportunity to the parties to provide comments. On 16 October 2018, Canada, the European Union,
Japan, the Republic of Korea, the Russian Federation, and the United States submitted comments.
In its comments, the Russian Federation requested additional third -party rights similar to those
indicated in China's request. Indonesia objected to the requests for additional third-party rights while
Australia generally supported China's request for enhanced third-party rights. The Panel issued the
decision on 29 November 2018, in which it denied the granting of additional participatory rights.9
Subsequently, a t the third -party session, which took place on 19 December 2018, the
European Union request ed that the third parties be allowed to observe the second substantive
meeting of the Panel with the parties. The request was submitted in writing on 11 January 2019.
Indonesia objected to the European U nion's request; Australia supported the request. The Panel
denied the request in its decision issued on 24 April 2019.10
Pursuant to the Working Procedures, the decisions of the Panel were circulated to the DSB in
the course of the proceeding.
1.3.3 Amicus curiae submission
On 23 January 2019, the Panel received an amicus curiae submission from the Environmental
Investigation Agency and Kaoem Telapak , dated 22 January 2019 and addressed to the Chairman
of the Panel in these proceedings. In the communication of 28 January 2019, the Panel forwarded
the amicus curiae submission to the parties inviting them to provide comments on the acceptability
and content of the submission. Indonesia provided comments on 15 February 2019; Australia
submitted its comments on 15 February 2019 and on 1 March 2019 as part of its second written
submission.
2 FACTUAL ASPECTS
2.1 The measures at issue
This dispute concerns Australia's measures imposing anti-dumping duties on certain exporters
of A4 copy paper from Indonesia, namely PT Indah Kiat Pulp and Paper Tbk (Indah Kiat) and PT Pindo
Deli Pulp and Paper Mills (Pindo Deli) . Indonesia challenges the anti-dumping duties on Indah Kiat
and Pindo Deli, as set forth in Anti-Dumping Notice No. 2017/39 dated 18 April 2017 and issued by
the Assistant Minister for Industry, Innovation , and Science and Parliamentary Secretary to the
Minister for Industry, Innovation, and Science accepting the recommendations and the reasons for
the recommendations set out by the Commissioner of the Australian Anti -Dumping Commission
(ADC) in Report No. 341 (hereinafter, the Final Report ) dated 17 March 2018 and posted to the
public record on the website of the Commission on 19 April 2017.11 Under these measures, Australia
imposed anti -dumping duties on certain exporters of A4 copy paper from Indonesia at the rate
of 35.4% for Indah Kiat and at the rate of 38.6% for Pindo Deli.12

9 Decision of the Panel concerning the requests for enhanced third-party rights, WT/DS529/12.
10 Decision of the Panel concerning the European Union's request for third parties to observe the
second substantive meeting of the Panel, WT/DS529/13.
11 Anti-Dumping Notice No. 2017/39, (Exhibit IDN-3). Indonesia explains that the Anti-Dumping
Commission's complete findings are set forth in the Final Report, (Exhibit IDN-4) and Statement of Essential
Facts, (Exhibit IDN-1). (Indonesia's first written submission, para. 14 and fn 9; see also Indonesia's panel
request, section A).
12 Indonesia's first written submission, paras. 15-16.

2.2 Other factual aspects
On 9 March 2018, following the recommendation from the Anti -Dumping Review Panel, the
anti-dumping duty rate for Indah Kiat was reduced from 35.4% to 30% and the anti-dumping duty
rate for Pindo Deli was reduced from 38.6% to 33%, applicable from the date of publication of the
Anti-Dumping Notice No. 2017/39 (19 April 2017).13 The parties agree that, despite these changes,
the aspects of Anti -Dumping Notice No. 2017/39 and the Final Report that are challenged by
Indonesia remain in effect.14
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
Indonesia requests that the Panel find that Aust ralia's measures are inconsistent with
Australia's obligations under the Anti-Dumping Agreement and GATT 1994, namely:
a. Article 2.2 of the Anti-Dumping Agreement because Australia disregarded the Indonesian
producers' domestic sales prices and calculated a constructed normal value based on a
finding of a "particular market situation ", which rested on an incorrect interpretation of
that term.
b. Article 2.2 of the Anti-Dumping Agreement because Australia disregarded the Indonesian
producers' domestic sales prices based on an incorrect interpretation of Article 2.2 of the
Anti-Dumping Agreement and calculated a constructed normal value even though a proper
comparison of domestic prices to export prices was possible.
c. Articles 2.2 and 2.2.1.1 of the Anti -Dumping Agreement because in constructing the
normal value for the Indonesian producers under investigation, Australia did not calculate
the cost of production for A4 copy paper on the basis of the records kept by those
producers even though the records were in accordance with generally accepted accounting
principles and reasonably reflected the actual cost of production of A4 copy paper, and
because Australia therefore failed to properly calculate the cost of production and properly
construct the normal value for those producers.
d. Article 2.2 of the Anti -Dumping Agreement because Australia failed to construct the
normal value for the Indonesian producers under investigation on the basis of the cost of
production of A4 copy paper in the country of origin, i.e. Indonesia.
e. Chapeau of Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994
because having calculated the dumping margin for the Indonesian producers inconsistently
with Article 2 of the Anti-Dumping Agreement, Australia collected anti-dumping duties in
excess of the actual dumping margin, if any, of the Indonesian producers.15
Indonesia further requests, pursuant to the second sentence of Article 19.1 of the DSU, that
the Panel "make use of its discreti on to suggest ways in which Australia should implement the
recommendations and rulings of the DSB to bring its measures into conformity with the
Anti-Dumping Agreement and GATT 1994".16 Indonesia considers that the measures at issue should
be withdrawn.
Australia requests that the Panel reject Indonesia's claims in this dispute in their entirety.

13 Australia's first written submission, paras. 87-88; responses to Panel questions Nos. 1(a) and (b)
following the first meeting of the Panel; and Indonesia's responses to Panel questions Nos. 1(a) and (b)
following the first meeting of the Panel.
14 Indonesia's response to Panel question No. 1(c) following the first meeting of the Panel, p. 6;
Australia's response to Panel question No. 1(c) following the first meeting of the Panel, paras. 5-7.
15 Indonesia's first written submission, paras. 178-183.
16 Indonesia's first written submission, para. 185.

4 ARGUMENTS OF THE PARTIES
The arguments of the parties are reflected in their integrated executive summaries, provided
to the Panel in accordance with paragraph 24 of the Working Procedures adopted by the Panel (see
Annexes B-1, B-2, B-3, and B-4).
5 ARGUMENTS OF THE THIRD PARTIES
The arguments of China, the European Union, Japan, the Republic o f Korea, the
Russian Federation, Thailand, and the United States are reflected in their integrated executive
summaries, provided in accordance with paragraph 27 of the Working Procedures adopted by the
Panel (see Annexes C-1, C-2, C-3, C-4, C-5, C-6, and C-7). Canada, Egypt, India, Israel, Singapore,
Ukraine, and Viet Nam did not submit written or oral arguments to the Panel.
6 INTERIM REVIEW
On 7 October 2019, Australia submitted written requests for the review of precise aspects of
the Interim Report while Indonesia indicated that it does not seek interim review. Neither party
requested an interim review meeting. On 10 October 2019 , Indonesia submitted comments on
Australia's requests for review. Our discussion and disposition of th ose requests are set out i n
Annex A-1.
7 FINDINGS
7.1 General principles regarding treaty interpretation, the applicable standard of review,
and burden of proof
7.1.1 Treaty interpretation
Article 3.2 of the DSU provides that the WTO 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. The principles codified in Articles 31 and 32 of the Vienna Convention are
generally accepted as such customary rules.
7.1.2 Standard of review
Article 11 of the DSU 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 agreements.
In addition, Article 17.6 of the Anti -Dumping Agreement sets forth the special standard of review
applicable to disputes under the Anti-Dumping Agreement:
(i) in its assessment of the facts of the matter, th e panel shall determine 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 panel 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.
Thus, Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement together establish
the standard of review we will apply with respect to both the factual and the legal aspects of the

present dispute. The Appellate Body has explained that when a panel is reviewing an investigating
authority's determination, the "objective assessment" standard in Article 11 of the DSU requires a
panel to review whether the authority has provided a reasoned and adequate explanation as
to (a) how the evidence on th e record supported its factual findings; and (b) how those factual
findings support the overall determination.17 In reviewing an investigating authority's determination,
a panel should not conduct 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 investigation 18 and must take into account all such evidence
submitted by the parties to the dispute. 19 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".20
In the context of Article 17.6(i) of the Anti -Dumping Agreement, the Appellate Body has
clarified that while the text of this provision is couched in terms of an obligation on a panel, in effect
it defines when an investigating authority can be considered to have acted inconsistently with the
Anti-Dumping Agreement in the c ourse of its "establishment" and "evaluation" of the relevant
facts.21 Therefore, a panel must assess if the establishment of the facts by the investigating authority
was proper and if the evaluation of those facts by that authority was unbiased and objecti ve.22
If these broad standards have not been met, a panel must hold the investigating
authority's establishment or evaluation of the facts to be inconsistent with the
Anti-Dumping Agreement.23
7.1.3 Burden of proof
The general principles applicable to the allocati on of the burden of proof in WTO dispute
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert
and prove its claim. 24 Therefore, as the complaining party in this proceeding, Indonesia bears the
burden of demonstrating that the challenged aspects of the measures at issue are inconsistent with
the Anti-Dumping Agreement and the GATT 1994. The Appellate Body has stated that a complaining
party will satisfy its burden when it establishes a prima facie case, namely a c ase which, in the
absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule
in favour of the complaining party.25 Finally, it is generally for each party asserting a fact to provide
proof thereof.26
7.2 Whether the Ant i-Dumping Commission's decision to disregard Indonesian
producers' domestic sales as the basis for normal value was inconsistent with Article 2.2
of the Anti-Dumping Agreement
7.2.1 Introduction
Indonesia claims that the ADC's determination of the normal value of A4 copy paper produced
by Indah Kiat and Pindo Deli is inconsistent with Article 2.2 of the Anti-Dumping Agreement. In its
dumping determination, the ADC used a constructed value, rather than domestic market sales, to
determine the normal value. The ADC' s disregard of domestic market sales was premised on the
finding that the market situation in the Indonesian A4 copy paper market was such that sales in that
market were not suitable for use in determining the normal value.27

17 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS, para. 186; US – Lamb,
para. 103.
18 Article 17.5(ii) of the Anti-Dumping Agreement requires a panel to examine the matter based on the
facts made available to the authorities.
19 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 187.
20 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.
21 Appellate Body Report, US – Hot-Rolled Steel, para. 56.
22 Appellate Body Report, US – Hot-Rolled Steel, para. 56.
23 Appellate Body Report, US – Hot-Rolled Steel, para. 56.
24 Appellate Body Report, US – Wool Shirts and Blouses, DSR 1997:1, p. 337.
25 Appellate Body Report, EC – Hormones, paras. 98 and 104.
26 Appellate Body Report, US – Wool Shirts and Blouses, DSR 1997:1, p. 337.
27 Final Report, (Exhibit IDN-4), section 6.5, p. 36.

Indonesia claims the ADC's determination is inconsistent with Article 2.2 of the
Anti-Dumping Agreement because the situation found was not a "particular market situation" within
the meaning of Article 2.2 of the Anti -Dumping Agreement. Separately, Indonesia argues that the
ADC acted inconsistently with Article 2.2 by disregarding domestic market sales on this basis, even
though a proper price comparison was possible. According to Indonesia, the ADC failed to examine
the issue of whether domestic market sal es "permit a proper comparison" and, thus, improperly
disregarded domestic market sales solely on the basis of finding a "particular market situation"
existed. Indonesia further argues that because the basis of the ADC's "particular market situation"
finding was distorted input costs, which Indonesia asserts affect both domestic and export prices,
the ADC could not possibly find that the disregarded domestic market sales did "not permit a proper
comparison", as required by Article 2.2.
In the sections that follow, we address each of these closely interrelated arguments in turn,
after briefly summarizing the relevant facts.28
7.2.2 The Anti-Dumping Commission's determination to disregard domestic sales as the
basis for normal value
In the course of the ADC's invest igation, Paper Australia Pty Ltd (Australian Paper) claimed
that a particular market situation existed in the Indonesian market and, as a result, domestic sales
of A4 copy paper in Indonesia were "not suitable for determining normal values" under Australia n
legislation.29 The applicant alleged that A4 copy paper prices in Indonesia were artificially low due
to the influence of the Government of Indonesia on raw material inputs and subsidies provided
during the investigation period.30
The ADC found that a market situation in the Indonesian A4 copy paper market existed such
that sales in that market were not suitable for use in determining normal value under Australian
legislation.31 On this basis, the ADC disregarded the domestic sales of Indah Kiat and Pindo De li in
determining the normal value. The ADC's assessment of the alleged market situation in Indonesia
for A4 copy paper is set out in section A2.9 ("Market situation in the Indonesian paper market") of
Appendix 2 ("Particular market situation findings") of its report and runs for 23 pages.32 Section A2.2
("Findings") of Appendix 2 states in full in respect of Indonesia:
The Commission has found that:

…

There is a market situation in the Indonesian A4 copy paper market:

The [Government of Indonesia] exerts significant influence over the Indonesian timber
and pulp industries through various programs and policies including those relating to
provision of land for plantations and an export ban on logs. The Commission considers
that these progra ms and policies have rendered Indonesian domestic A4 copy paper
prices unsuitable for determining normal values.33
Section A2.4 ("Framework for assessing market situation claims") of Appendix 2 states, in
relevant part:
The Act does not prescribe what is required to reach a finding of market situation
however it is clear that a market situation will arise when there is some factor or factors

28 Indonesia presents these arguments as two separate claims that the ADC's determination to disregard
domestic market sales as the basis for the normal value was inconsistent with Article 2.2 of the
Anti-Dumping Agreement. As these arguments relate to the same provision, i.e. Article 2.2 of the
Anti-Dumping Agreement, and are closely interrelated, we examine them as such.
29 Final Report, (Exhibit IDN-4), section 6.5, p. 36.
30 Final Report, (Exhibit IDN-4), section 6.5, p. 36.
31 Final Report, (Exhibit IDN-4), section 6.5, p. 36.
32 Final Report, (Exhibit IDN-4), section A2.9, pp. 165-188.
33 Final Report, (Exhibit IDN-4), section A2.2, p. 146.

impacting the relevant market in the country of export generally with the effect that
sales in that market are not suitable for use in determining normal value.
In considering whether sales are not suitable for use in determining a normal value
under [Australian legislation] because of the situation in the market of the country of
export the Commission may have regard to factors such as:
• whether the prices are artificially low; or
• whether there are other conditions in the market that render sales in that
market not suitable for use in determining prices under [Australian legislation].
Government influence on prices or input costs could be one cause of artificially low
pricing. Such government influence could come from any level of government.
In assessing whether a market situation exists due to government influence, the
Commission will assess whether government involvement in the domestic market has
materially distorted market conditions. If market conditions have been materially
distorted then domestic prices may be artificially low or not substantially the same as
they would be in a competitive market.
Prices may also be artificially low or lower than they would otherwise be due to
government influence on the costs of inputs. The Commission looks at the effect of any
such influence on market conditions and the extent to which domestic p rices can no
longer be said to prevail in a normal competitive market. Government influence on costs
will disqualify the associated sales if those costs are shown to affect domestic prices.
The Manual provides further guidance on the circumstances in which the Commission
will find that a market situation exists.34
Section A2.9.1 ("Conclusions and findings") of Appendix 2 states, in its entirety:
The Commission concludes that there is a market situation in the Indonesian A4 copy
paper market such that the domestic price for Indonesian A4 copy paper is not suitable
for the determination of normal values under [Australian legislation]. Findings in support
of this conclusion include:
• The [] involvement [of the Government of Indonesia] in forestry and pulp
industries through its support for the development of timber plantations and
its prohibition on the export of timber logs has directly resulted in the distortion
of the domestic price for A4 copy paper; and
• The domestic price of Indonesian A4 copy paper is signif icantly below
comparable regional benchmarks.35
In the course of the investigation, the Government of Indonesia argued the ADC had no basis
to make a "particular market situation" finding, citing a lack of evidence in relation to the alleged
oversupply of timber or pulp in the Indonesian market.36 The Government of Indonesia also disputed
the relevance of various government policies identified by the ADC, which the Government of
Indonesia considered insufficient to support the ADC's conclusion that such polic ies artificially
lowered the price of inputs.37 Indonesian producers in turn argued that the ADC had no evidence to
show that the alleged distortions impacted domestic and export prices differently, thereby resulting
in domestic prices being distorted and unsuitable for comparison with export prices.38 In support of
this line of argument, the Government of Indonesia made a submission to the ADC asserting that

34 Final Report, (Exhibit IDN-4), section A2.4, pp. 147-148.
35 Final Report, (Exhibit IDN-4), section A2.9.1, p. 165.
36 Submission of the Government of Indonesia (20 February 2017), (Exhibit IDN-5), p. 5.
37 Submission of the Government of Indonesia (20 February 2017), (Exhibit IDN-5), p. 5.
38 Sinar Mas Group's submission (29 December 2016), (Exhibit IDN-15), p. 2. We note that Sinar Mas
Group includes three exporters under investigation: Indah Kiat, Pindo Deli and PT Pabrik Kertas Tjiwi Kimia.

the nature of the A4 copy paper process is such that, even if input prices for hardwood timber were
distorted, the same inputs were used to manufacture A4 copy paper sold to the Indonesian domestic
market and the A4 copy paper exported to the Australian market.39
The ADC responded to the above arguments in its report. The ADC considered that the
distortions in the Indonesian forestry industry were demonstrated in the ADC's log pricing
assessment and the extent of Indonesia's pulp exports.40 The ADC indicated that it considered that
the distorted supply of timber would have an effect on downstream transaction s, notwithstanding
whether those transactions take place in competitive markets.41 Citing the provision of land and the
log export ban, the ADC noted that it quantified the distortion in the Indonesian log market and was
satisfied that the significant disto rtions found in that assessment impacted the pulp and paper
industries such that domestic sales of A4 copy paper were unsuitable for use in determining normal
value.42 The ADC further responded that a comparative examination of effects on domestic and
export prices would be contrary to the legislative scheme, pursuant to which normal values, export
prices, and comparison of these are determined under separate sections of Australian legislation. 43
We understand from the ADC's explanation that the decrease in p ulp prices and consequently
A4 copy paper prices arose from the distortions the ADC found to exist in the Indonesian log market.
7.2.3 Whether the Anti-Dumping Commission's determination of a situation in the market
for A4 copy paper was inconsistent with Article 2.2 of the Anti-Dumping Agreement
7.2.3.1 Introduction
Indonesia maintains that, in disregarding domestic market sales, the ADC relied on a situation
with certain features that do not constitute a "particular market situation" within the meaning of
Article 2.2 of the Anti-Dumping Agreement. In particular, Indonesia argues that the situation relied
upon by the ADC cannot qualify as a "particular market situation" because the proper interpretation
of that expression necessarily excludes (a) situations where input costs are distorted; (b) situations
not having an exclusively unilateral impact on domestic market sales; and (c) situations arising from
government action. Indonesia argues that each of these features disqualifies the situation at issue
from constituting a "particular market situation" consistent with Article 2.2 of the
Anti-Dumping Agreement.
While Indonesia disputes the underlying factual findings made by the ADC in reaching its
market situation determination, Indonesia does not challenge the ADC's establishment and
evaluation of the facts except insof ar as the ADC's factual findings were guided by an allegedly
erroneous understanding of the meaning of the term "particular market situation". 44 Thus,
Indonesia's claim turns on the legal interpretation of the term "particular market situation" rather
than the factual findings underlying the ADC's determination with respect to the situation found to
exist on the domestic market for A4 copy paper in Indonesia.
With this understanding, we first turn to consider the merits of the interpretative arguments
Indonesia has advanced in support of its view that the term "particular market situation", as used
in Article 2.2 of the Anti -Dumping Agreement, necessarily excludes the three situations de scribed
above.
7.2.3.2 "Particular market situation" is an undefined term in the
Anti-Dumping Agreement
Article 2.2 of the Anti-Dumping Agreement states:
When there are no sales of the like product in the ordinary course of trade in the
domestic market of the ex porting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting

39 Submission of the Government of Indonesia (20 February 2017), (Exhibit IDN-5), p. 4.
40 Final Report, (Exhibit IDN-4), section A2.9.6.6, p. 184.
41 Final Report, (Exhibit IDN-4), section A2.9.6.6, p. 184.
42 Final Report, (Exhibit IDN-4), section A2.9.6.8, p. 185.
43 Final Report, (Exhibit IDN-4), section A2.9.6.1, pp. 177-179.
44 Indonesia's opening statement at the first meeting of the Panel, para. 9; responses to Panel
questions Nos. 3 and 34 following the first meeting of the Panel, pp. 8-9.

country2, such sales do not permit a proper comparison, the margin of dumping shall
be determined by comparison with a comparable price of the like product when exported
to an appropriate third country, provided that this price is representative, or with the
cost of production in the country of origin plus a reasonable amount for administrative,
selling and general costs and for profits.
2 Sales of the like product destined for consumption in the domestic market of the exporting country
shall normally be considered a sufficient quantity for the determination of the normal value if such
sales constitute 5 per cent or more of the sales of the product under consideration to the importing
Member, provided that a lower ratio should be acceptable where the evidence demonstrates that
domestic sales at such lower ratio are nonetheless of sufficient magnitude to provide for a proper
comparison.
No panel or Appellate Body report has previously interpreted the phrase "particular market
situation" as it appears in Article 2.2 of the Anti -Dumping Agreement. A GATT panel did interpret
this phrase in a dispute regarding Article 2:4 of the Tokyo Round Anti -Dumping Code in the case
EEC – Cotton Yarn.45 The GATT panel rejected Brazil's claim that the European Community (EC)
should have discarded domestic market prices because they did not permit a proper comparison due
to a "particular market situation" arising from frozen exchange rates imposed to control high
inflation. The GATT panel specifically emphasized that the existence of a "particular market situation"
alone was not sufficient to discard domestic sales:
In the Panel's view, the wordi ng of Article 2:4 made it clear that the test for having
[recourse to constructed value] was not whether or not a "particular market situation"
existed per se. A "particular market situation" was only relevant insofar as it had the
effect of rendering the sales themselves unfit to permit a proper comparison. … Even
assuming arguendo that an exchange rate was relevant under Article 2:4, it would be
necessary, in the Panel's view, to establish that it affects the domestic sales themselves
in such a way that they would not permit a proper comparison.46
Both parties have set forth their understanding of the ordinary meaning of the phrase
"particular market situation" in context and in light of the object and purpose of the
Anti-Dumping Agreement. Indonesia argues that the provision relates to an "exceptional set of
circumstances affecting comparability of domestic market prices in such a way as to affect them
unilaterally and, thus, prevent them from being compared to export prices".47 Australia, by contrast,
argues that the proper interpretation of the term "particular market situation" is any condition, state
or combination of circumstances in respect of the buying and selling of the like product in the market
of the exporting country that is distinguishable and not general.48 Indonesia argues that Australia's
interpretation would expand the circumstances for disregarding domestic market sales in the
determination of normal value far beyond what was intended in the Anti -Dumping Agreement.49
Australia claims that Indonesia seeks to promote a more restrictive interpretation of core terms in
the Anti-Dumping Agreement than is warranted.50 Australia argues that the ordinary meaning of the
term "particular market situation" is broad51, and emphasizes that Article 2.2 makes the application

45 Article 2:4 of the Tokyo Round Anti-Dumping Code stated:
When there are no sales of the like product in the ordinary course of trade in the domestic
market of the exporting country or when, because of the particular market situation, such sales
do not permit a proper comparison, the margin of dumping shall be determined by comparison
with a comparable price of the like product when exported to any third country which may be the
highest such export price but should be a representative price, or with the cost of production in
the country of origin plus a reasonable amount for administrative, selling and any other costs
and for profits. As a general rule, the addition for profit shall not exceed the profit normally
realized on sales of products of the same general category in the domestic market of the country
of origin.
46 GATT Panel Report, EEC – Cotton Yarn, adopted 30 October 1995, paras. 478-479.
(underlining original)
47 Indonesia's first written submission, para. 72.
48 Australia's first written submission, paras. 106 and 112.
49 Indonesia's first written submission, para. 72; second written submission, paras. 9-11.
50 Australia's first written submission, para. 95.
51 Australia's first written submission, para. 106.

of alternative means of determining the normal value mandatory if one of the three conditions
therein is satisfied, including the condition that incorporates the "particular market situation".52
We begin by observing that a "situation" is a "state of affairs" or a "set of circumstances".53
This term is qualified by the terms "particular" and "market" functioning as adjectives in Article 2.2
of the Anti-Dumping Agreement. The situation in question must arise in, or relate to the "market"54,
and the market situation must be a "particular" one. It follows from the qualifier "particular" that
the market sit uation must be "distinct, individual, single, specific".55 Thus, a fact-specific and
case-by-case analysis of the particular market situation is necessarily called for. In addition, w e
agree with the observation of the GATT panel in EEC – Cotton Yarn that a "particular market
situation" is only relevant insofar as it has the effect of rendering domestic sales unfit to permit a
proper comparison.56 The phrase "particular market situation" does not lend itself to a definition that
foresees all the varied situations that an investigating authority may encounter that would fail to
permit a "proper comparison". In our view, the drafters' choice to use such a phrase should be
treated as a deliberate one. Consequently, while the expression "particular market s ituation" is
constrained by the qualif iers "particular" and "market ", it nevertheless cannot be interpreted in a
way that comprehensively identifies the circumstances or affairs constituting the situation that an
investigating authority may have to consider.
There is no dispute between the parties that the underlying circumstances in this case concern
or relate to the market for A4 copy paper. However, they disagree as to what makes a situation
particular. Indonesia argues that the circumstances must be exceptional and, moreover, affect "the
comparability of domestic market prices in such a way as to affect them unilaterally and, thus,
prevent them from being compared to export prices".57 Australia argues that the circumstances must
be distinguishable and not general.58 In our view, the market situation must be distinct, individual,
single, specific but that does not necessarily make it unusual or out of the ordinary —
i.e. exceptional.59

52 Australia's first written submission, para. 101.
53 Oxford Dictionaries online, definition of "situation"
http://www.oed.com/view/Entry/180520?redirectedFrom=situation (accessed 16 September 2019).
54 Oxford Dictionaries online, definition of "market"
https://www.oed.com/view/Entry/114178?rskey=Cd0jFA&result=1#eid (accessed
16 September 2019):
"market, n."
II. Trade, business, and other extended uses.
 4. a. The action or business of buying and selling; a commercial transaction, a purchase or sale;
a (good or bad) bargain. Now hist. and Sc.
 6. A geographical area of commercial activity; the potential demand for a commodity or service
provided by such an area. Now also: the potential demand for a commodity or service within a
demographic group; the commercial activity of such a group in total. Frequently with the area or
group specified. See also home market n.
7. a. Sale as controlled by demand; esp. the demand for a commodity, product, etc. Now
also concr.: those people who form the demand for a particular product, commodity, or service.
Also fig.
8. a. The arena in which commercial dealings in a particular commodity or product are
conducted; the trade in a particular commodity or product. on (also in) the market: offered for
sale. to put (something) on the market: to offer for sale. Also fig. Frequently with commodity or
product specified (either attributive or with in); for common collocations,
as art, land, money, property market: see the first element. See also stock-market n.
 b. The state of trade in a commodity or product at a particular time or in a particular
context; esp. the condition of trade with respect to demand. Also with commodity or product
specified (see sense 8a).
55 Oxford Dictionaries online, definition of "particular"
http://www.oed.com/view/Entry/138260?rskey=Ssayz3&result=1&isAdvanced=false (accessed
16 September 2019).
56 GATT Panel Report, EEC – Cotton Yarn, adopted 30 October 1995, paras. 478-479.
57 Indonesia's first written submission, para. 72.
58 Australia's first written submission, paras. 97-112.
59 We note that the phrase "particular market situation", as used in the English version of Article 2.2 of
the Anti-Dumping Agreement, is further qualified by the definite article "the"; the phrase "situación especial del
Mercado" as used in the Spanish version of Article 2.2 of the Anti-Dumping Agreement, is further qualified by
the indefinite Article "una"; and in the French version of Article 2.2 of the Anti-Dumping Agreement, the phrase
"situation particulière du marché" is qualified by the definite Article "la". The parties agree that whether the

In the following subsections, we address three specific arguments of Indonesia in respect of
the interpretation of the phrase "particular market situation".
7.2.3.3 Situations that distort input costs
We first address Indonesia's contention that a correct interpretation of "particular market
situation" necessarily excl udes situations that distort input costs, specifically situations that lower
input costs. We observe that Indonesia makes two arguments in this respect. The first relates to the
alleged incapability of low input costs to prevent a proper comparison.60 The second relates to silence
in the negotiating history of the "particular market situation" condition in contrast to historical
discussions around the issue of "input dumping".61 We address these arguments in turn.
Indonesia argues that "a 'particular market situation' must render domestic prices unfit for
comparison to export prices". Moreover, according to Indonesia, "[w]hen low priced inputs are used
to produce merchandise for domestic sales and export [sales] in the exact manner prices remain
comparable".62 Indonesia reasons that its interpretation of "particular market situation" takes
account of the context provided by the proximity of the phrase "not permit a proper comparison".63
On this basis, Indonesia asks the Panel to rule on the "specific issue of wh ether a low-price input
used identically to produce merchandise for the domestic and export markets can constitute a
'particular market situation'". 64 In this respect, Indonesia asserts that "a 'particular market
situation' … must be capable of preventing a proper comparison of domestic to export prices" .65 A
situation of a low -priced input identically used in the production for export and domestic sales
categorically does not have this capability, according to Indonesia. 66 Indonesia asserts that in this
situation the price of domestic sales and exports would be equally affected.67 Accordingly, Indonesia
argues that the prevention of a proper comparison cannot arise "because of" this type of situation.68
Australia submits that Indonesia's interpre tation conflates the condition "particular market
situation" with the condition "not permit a proper comparison" such that part of the analysis of
whether "such sales do not permit a proper comparison" becomes an integral part of the "particular
market situation" analysis.69
In our assessment, the phrases "particular market situation" and "permit a proper
comparison" function together to establish a condition for disregarding domestic market sales as the
basis for normal value. Specifically, that domestic sales "do not permit a proper comparison" must
be "because of the particular market situation". If domestic sales do permit a proper comparison,
then they cannot be disregarded as the basis for normal value, regardless of the existence of the
particular market situation and its effects, whatever those may be. We find no functional purpose is
served by incorporating into the meaning of "particular market situation" part of the function that
will necessarily be served by the terms "because of" and "not permit a proper comparison".
Accordingly, we find that "capable of preventing a proper comparison" is not a necessary qualification
for a situation to constitute the "particular market situation". Indeed, incorporating such a meaning
into the term "particular mar ket situation" would alter the functioning of this provision. Thus, we
find that the term "particular market situation" does not require or contemplate an analysis relating
to the capability of causing domestic sales to not permit a proper comparison in the abstract. Rather,

article is definite or indefinite should be assigned no particular significance for purposes of interpreting the
phrase "particular market situation" in this dispute. Likewise, we do not find it necessary to draw any
conclusions from the use of the definite or indefinite articles before the phrase "particular market situation" for
the purposes of this dispute. (Indonesia's response to Panel question No. 25 following the second meeting of
the Panel, paras. 66-67; Australia's response to Panel question No. 25 following the second meeting of the
Panel, paras. 124-126).
60 Indonesia's first written submission, paras. 73-78.
61 Indonesia's first written submission, paras. 58-71.
62 Indonesia's first written submission, para. 77.
63 Indonesia's opening statement at the second meeting of the panel, paras. 3 and 24.
64 Indonesia's responses to Panel question No. 2(b) following the first meeting of the Panel, p. 8.
65 Indonesia's responses to Panel question No. 2(a) following the first meeting of the Panel, p. 7.
(emphasis original)
66 Indonesia's responses to Panel question No. 2(a) following the first meeting of the Panel, p. 7;
second written submission, paras. 18-19.
67 Indonesia's second written submission, paras. 15-16.
68 Indonesia's second written submission, para. 18.
69 Australia's second written submission, para. 51.

the terms "because of" and "not permit a proper comparison" in Article 2.2 already properly and
adequately fulfil this function.
Turning to the specific issue posited by Indonesia of a low -priced input used identically to
produce mercha ndise for the domestic and export markets 70, we are again unpersuaded that a
categorical disqualification from constituting the "particular market situation" can be sustained as a
matter of interpretation. We understand that Indonesia is arguing that a situation that equally affects
the cost of producing merchandise for sale in domestic and export markets will necessarily equally
affect the sales prices in both markets and will, therefore, permit a proper comparison between
domestic market sales and export s ales. First, we find no legitimate interpretative basis for
incorporating this proposed meaning into the term "particular market situation", particularly where
such considerations are more appropriately examined in relation to the terms "because of" and
"permit a proper comparison" as suggested by the above analysis. Second, we do not accept as a
given that an equal impact on cost of merchandise produced for domestic and export markets would
necessarily affect sales prices in both markets equally such that a proper comparison between
domestic sales and export sales would not be prevented. We consider that these assertions are not
appropriate elements for an interpretation of the term "particular market situation", but rather are
better suited to an analysis of whether domestic sales do not permit a proper comparison because
of a particular market situation identified by an investigating authority. We will return to these points
in our examination of Indonesia's arguments relating to the meaning of the term "permit a proper
comparison".
Indonesia argues that the negotiating history of the 1967 Anti-Dumping Code and subsequent
negotiations that maintained the term "particular market situation" as it now appears in Article 2.2
of the Anti-Dumping Agreement confirm that the "particular market situation" provision cannot be
used to address distor tions in the cost of inputs. 71 Indonesia contrasts the discussion that was
generated by the issue of "input dumping" with the silence in the negotiating history in connection
with the "particular market situation" provision. 72 Indonesia cites the 1984 paper of the Ad -Hoc
Group on Implementation of the Anti-Dumping Code ("Draft Recommendation Concerning Treatment
of the Practice Known as Input Dumping") as demonstrating that input cost issues have generated
active discussions without resulting in any agreement to regulate "input dumping". 73 In contrast,
Indonesia refers to silence in the negotiating history regarding the inclusion of the phrase "particular
market situation" in the 1967 Anti -Dumping Code and continued silence in subsequent negotiating
history whe n use of the phrase was continued. 74 Indonesia argues that if the terms "particular
market situation" had been intended to apply to situations of low-priced inputs, their inclusion in the
1967 Anti-Dumping Code and in subsequent anti-dumping agreements would have generated a more
active discussion as could be observed when the issue of "input dumping" was discussed.75
Australia argues that "input dumping" is not at issue in this case, and in any event the "Draft
Recommendation Concerning Treatment of the Practice Known as Input Dumping" cited by Indonesia
was never adopted by the Committee on Anti-Dumping Practices.76 In regard to negotiating history,
Australia argues there is no basis in the rules of treaty interpretation to claim that "silence in the
negotiating history" supports a narrow interpretation of "particular market situation".77
We note that under the customary rules of interpretation, preparatory work, including
negotiating history and certain other materials, are supplementary means of interpretation and have
relevance only to confirm the meaning reached by the interpreter, or to determine the meaning
when the ordinary meaning, context and object and purpose of a particular provision give rise to an
interpretation that is ambiguous or obscure or leads to a result that is absurd or unreasonable.78 We

70 We note that Australia denies that this description accurately characterizes the situation the ADC
found to exist in respect of the A4 copy paper market in Indonesia. For purposes of testing Indonesia's
interpretive legal theory in connection with this aspect of Indonesia's claim, it is not necessary for us to resolve
this factual issue.
71 Indonesia's first written submission, paras. 58-71.
72 Indonesia's first written submission, paras. 68-71.
73 Indonesia's first written submission, para. 69 (referring to Draft Recommendation Concerning
Treatment of the Practice Known as Input Dumping, ADP/W/83/Rev.2).
74 Indonesia's first written submission, paras. 59-68.
75 Indonesia's first written submission, paras. 68-71.
76 Australia's first written submission, para. 160.
77 Australia's first written submission, para. 159.
78 Articles 31 and 32 of the Vienna Convention.

do not consider that the meaning of the phrase "particular market situation" is ambiguous or obscure
or that it leads to a result that is absurd or unreasonable. Therefore, it is not necessary to resort to
supplementary materials in order to confirm or determine the meaning of the phrase "particular
market situation". In any event, we note that the "Draft Recommendation Concerning Treatment of
the Practice Known as Input Dumping" defined the issue it was ad dressing as "where materials or
components that are used in manufacturing an exported product are purchased at … dumped or
below cost prices". We find the issue addressed by the paper, i.e. below cost or dumped inputs for
exported product, is distinctly di fferent from the situation at issue in this dispute, i.e. a situation
that decreases input cost of the product under consideration in an anti -dumping investigation.
Furthermore, the paper does not address the meaning of "particular market situation" , and t he
silence surrounding the inclusion of the phrase does not allow us to draw any conclusions as to the
meaning of it.
In the light of the above examination, we find that Indonesia has failed to demonstrate that
a situation of a low-priced input used identically to produce merchandise for the domestic and export
markets is necessarily disqualified from constituting a "particular market situation" within the
meaning of Article 2.2 of the Anti -Dumping Agreement. Accordingly, the mere fact that the
ADC's finding of a "particular market situation" was based, in part, on the existence of low input
prices does not render that finding inconsistent with Article 2.2 of the Anti-Dumping Agreement.
7.2.3.4 Situations not having an exclusively unilateral impact on domestic market sales
We next address Indonesia's submission that a correct interpretation of "particular market
situation" necessarily excludes situations not having an exclusively unilateral impact on domestic
market sales.
Indonesia argues that the phrase "particular market situation" is correctly interpreted to mean
"an exceptional set of circumstances affecting comparability of domestic market prices in such a way
as to affect them unilaterally and, thus, prevent them from being compared to export prices" .79
Indonesia finds support for this interpretation in the understanding that "market" connotes that the
situation is "taking place in a geographic region"80, and that "market" is used in the singular rather
than the plural, suggesting that the situation relates to the domestic market only. 81 In
Indonesia's understanding, a particular market situation, correctly interpreted, must have an "effect
[that] is one-sided and on the domestic market".82 In Indonesia's view, a situation that affects the
domestic market significantly, but export markets less so cannot be a "particular market situation"
because the impact on prices must be exclusively unilateral. 83 Indonesia argues that the other two
bases in Article 2.2 of the Anti -Dumping Agreement for disregarding domestic s ales (i.e. sales
outside of the ordinary course of trade and low volume sales) both concern circumstances affecting
sales in the domestic market, and neither situation relates to circumstances that also affect export
prices.84 Indonesia considers that an exclusively unilateral effect is a common element of these other
two bases for disregarding domestic sales, and Indonesia argues that this supports the argument
that the "particular market situation" should also be interpreted to exclude situations that do n ot
have an exclusively unilateral effect on domestic prices.85
Australia argues that the ordinary meaning of "particular market situation" does not
incorporate the concept of "unilateral" or anything like it. 86 According to Australia, Indonesia
erroneously asserts that the other conditions in Article 2.2 could not "also affect export prices", are
"one-sided" and are "[only] on the domestic market". 87 Australia claims that it is quite possible for
there to be export sales that are, in whole or in part, not in the ordinary course of trade or exhibit
"low volume".88 Australia argues that examination of the existence of each of the conditions focuses
on the domestic market exclusively, with no requirement to consid er whether export sales are

79 Indonesia's first written submission, para. 72.
80 Indonesia's first written submission, para. 37.
81 Indonesia's first written submission, para. 38.
82 Indonesia's first written submission, para. 40.
83 Indonesia's response to Panel question No. 5 following the first meeting of the Panel, p. 11.
84 Indonesia's first written submission, paras. 39-40.
85 Indonesia's first written submission, para. 40.
86 Australia's first written submission, para. 158.
87 Australia's first written submission, paras. 166-167.
88 Australia's first written submission, paras. 164-166.

similarly affected.89 Australia submits, in terms of context, that a "particular market situation" is a
condition co-located with two other conditions that comprise specific circumstances in respect of
sales of the like product i n the market of the exporting country. 90 Australia maintains that the
existence of a particular market situation is unaltered by whether it affects prices in the domestic
market exclusively, affects prices in the domestic market and export market differentl y, or affects
prices in the domestic market and export market identically. 91 Australia considers the impact on
export prices to be irrelevant to the determination of particular market situation, which Australia
argues is focused instead on whether a situation causes "such sales" (i.e. domestic market sales) to
"not permit a proper comparison".
We consider that the text of Article 2.2 confirms that this provision, including the "particular
market situation", is focused on the domestic market. Article 2.2, in relevant part, reads:
When there are no sales of the like product in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting country,
such sales do not permit a proper comparison …92
The word "market" in "the particular market situation" refers to the domestic market because
the term "such sales" refers to domestic market sales that may be rendered unfit to permit a proper
comparison, as we will explain further below. In our view, however, it does not follow that a situation
arising in the domestic market of the exporting country that affects domestic sales in such a way
that does not permit a proper comparison cannot be considered to constitute "the particular market
situation" simply because it also affects export sales. We do not consider the presence of some effect
on export sales automatically forecloses the possibility that the effect on domestic sales will,
nevertheless, be such that a proper comparison is not permitted. As we will discuss in relation to
Indonesia's argument in respect of the interpretation of "permit a proper comparison" , the "proper
comparison" language allows for an assessment of the relative effect upon domestic and export sales
of the "particular market situation". Incorporating the requirement of an exclusively unilateral effect
into the phrase "particular market situation", as Indonesia suggests, would, in our view, deprive the
"permit a proper comparison" language of its intended function.
We note that Article 2.2 uses the term "sales" three times. The first use of the term is in the
phrase "no sales of the like product in the ordinary course of trade in the domestic market of the
exporting country". The second time the word is used, it also refers to " the sales in the domestic
market". It follows therefore that the third use of the term "sales" in the phrase "such sales" equally
refers to the sales in the domestic market. This conc lusion is supported by the structure of the
sentence in Article 2.2. The main clause of Article 2.2 is conditionally operative, and two subordinate
clauses set forth the conditions for the main clause being operative. The main clause can be
simplified as follows: The margin of dumping shall be determined by comparison with the comparable
price of the like product when exported to an appropriate third country or with the cost of production
in the country of origin.93 The subordinate clauses modify the verb "shall be determined". The first
subordinate clause tells us that the main clause is operative when there are no sales of the like
product in the ordinary course of trade in the domestic market of the exporting country. The qualifier
"such" in the phrase "such sales" in the second subordinate clause makes clear that the reference is
to "sales of the like product in the ordinary course of trade in the domestic market of the exporting
country" mentioned in the first subordinate clause. The second subordinate clause pertains to when
sales of the like product in the ordinary course of trade in the domestic market of the exporting
country are present but do not permit a proper comparison of the domestic sales price with the
export price for one of the two reasons: (i) because of the particular market situation, or (ii) because

89 Australia's first written submission, paras. 166-167.
90 Australia's first written submission, paras. 102-103; see also paras. 141-142 (Australia arguing that
"particular market situation" and sales outside the ordinary course of trade are "both situations [that] relate to
determining whether the domestic price is suitable to use as the basis for the 'normal value'" and that similar
factors are relevant for determining whether domestic sales "permit a proper comparison"); response to Panel
questions Nos. 22 and 23 following the second meeting of the Panel, paras. 118-120.
91 Australia's response to Panel question No. 6 following the first meeting of the Panel, paras. 25-26.
92 Emphasis added; fn omitted.
93 The full text of the main clause is: "the margin of dumping shall be determined by comparison with a
comparable price of the like product when exported to an appropriate third country, provided that this price is
representative, or with the cost of production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits".

of their low volume in the domestic market of the exporting country. This confirms also that the
word "market" in "the particular market situation" refers to the "market of the exporting country",
i.e. the domestic market, as we stated above.
We are also not persuaded that the other bases for disregarding domestic market sales as a
basis for normal value support Indonesia's suggested interpretation. First, in our view, none of the
underlying phenomena appear to be inherently restricted to impact domestic sales exclusively. High
production costs during a period could result in all domestic sales being below cost and therefore
outside the ordinary course of trade making the "no sales in the ordinary course of trade" provision
applicable despite the fact that export sales may also be affected. Second, the "low volume of sales
in the domestic market" condition in the first instance is measured in relation to the volume of export
sales such that the phenomenon of low volume of sales in the domestic market may well arise as a
consequence of a relatively high volume of sales in the export market. The language of Article 2.2
focuses on domestic market sales simply for the reason that the provision is concerned with whether
the domestic market sales are an appropriate basis for determining normal value, not because the
effects of the underlying phenomena are necessarily exclusively unilateral in nature.
In the light of the above examination, w e find that Indonesia has failed to demonstrate that
a domestic market situation that does not impact domestic sales unilaterally (i.e. that also, in some
way, impacts export sales) cannot constitute the "particular market situation", within the meaning
of Article 2.2. To this extent, there is no legal basis to support Indonesia's claim that the
ADC's "particular market situation" finding was inconsistent with Article 2.2 because it rests on a
factual finding concerning a situation that allegedly did not exclusively affect domestic sales.
7.2.3.5 Situations arising from government action
We next address Indonesia's argument that a situation arising from government action is
necessarily disqualified from constituting the "particular market situation" within the mean ing of
Article 2.2 of the Anti-Dumping Agreement.
Indonesia argues that it is impermissible to interpret the terms "particular market situation"
in a way that interjects the Anti -Dumping Agreement "into the sphere of regulating government
behaviour which is expressly regulated in the [Agreement on Subsidies and Countervailing Measures
(SCM Agreement)]".94 Indonesia further argues that Australia's action amounted to "specific action
against a subsidy" and that the prohibition of such action under Article 32.1 of the SCM Agreement
should be read as context to limit the scope of the term "particular market situation" to exclude
situations arising from government action.95
Australia agrees that, in accordance with customary rules of treaty interpretation, the
provisions of the SCM Agreement may be relevant context to the interpretation of the
Anti-Dumping Agreement.96 Australia argues, however, that Article 32.1 of the SCM Agreement does
not support Indonesia's argument because it does not pr eclude specific action against dumping
where the constituent elements of dumping are found, irrespective of whether the dumping arises
from a subsidy. 97 According to Australia, footnote 56 of the SCM Agreement clarifies this
understanding of Article 32.1 of the SCM Agreement, and the Appellate Body in US – Offset Act
(Byrd Amendment) has confirmed this interpretation.98
We understand footnote 56 of the SCM Agreement and Article 18.1 of the
Anti-Dumping Agreement to provide that Article 32.1 of the SCM Agreeme nt does not prevent
application of anti-dumping duties to a situation where, in addition to fulfilment of the other required
elements under the Anti-Dumping Agreement, the export price is found to be less than normal value,
even if the reason for the difference can be traced to a subsidy. Article 32.1 of the SCM Agreement
reads:

94 Indonesia's first written submission, para. 46.
95 Indonesia's response to Panel question No. 10(d) after the first meeting of the Panel, p. 15.
96 Australis's second written submission, para. 126.
97 Australia's second written submission, paras. 128-133.
98 Australia's second written submission, paras. 128-138 (referring to Appellate Body Report,
US – Offset Act (Byrd Amendment)), para. 262.

No specific action against a subsidy of another Member can be taken except in
accordance with the provisions of GATT 1994, as interpreted by this Agreement.
Footnote 56, clarifying Article 32.1 of the SCM Agreement, reads:
This is not intended to preclude action under other relevant provisions of GATT 1994,
as appropriate.
Article 18.1 of the Anti-Dumping Agreement reads:
No specific action against dumping of exports from another Member can be taken except
in accordance with the provisions of GATT 1994, as interpreted by this Agreement.
The GATT 1994 and the Anti -Dumping Agreement authorize specific action against dumping
of exports where the requisite elements are satisfied, irrespec tive of whether the exports at issue
also benefit from a subsidy. This action does not constitute specific action against a subsidy under
Article 32.1 of the SCM Agreement because the authority to take the specific action derives from the
satisfaction of the requisite elements for specific action against dumping of exports. The converse
analysis is equally applicable in relation to specific action against a subsidy and in connection with
Article 18.1 of the Anti -Dumping Agreement, irrespective of whether th e subsidy benefits exports
that may also be dumped. In this way, Article 32.1 of the SCM Agreement and Article 18.1 of the
Anti-Dumping Agreement are interpreted harmoniously with each other. This understanding is
confirmed by the clarification provided in footnote 56 of the SCM Agreement (and the corresponding
footnote 24 of the Anti-Dumping Agreement). Specific action against dumping of exports constitutes
"action under other relevant provisions of GATT 1994, as appropriate" in the meaning of footnote 56
of the SCM Agreement. Therefore, Article 32.1 of the SCM Agreement is not intended to preclude
such action.
In our view, this understanding is consistent with the reasoning offered by the Appellate Body
in US – Offset Act (Byrd Amendment):
[A]ction is specific to dumping (or a subsidy) when it may be taken only when the
constituent elements of dumping (or a subsidy) are present[.] … Footnotes 24 and 56
are clarifications of the main provisions, added to avoid ambiguity; they confirm what
is implicit in Article 18.1 of the Anti -Dumping Agreement and in Article 32.1 of the
SCM Agreement, namely, that an action that is not "specific" within the meaning of
Article 18.1 of the Anti-Dumping Agreement and of Article 32.1 of the SCM Agreement,
but is nevertheless related to dumping or subsidization, is not prohibited by Article 18.1
of the Anti-Dumping Agreement or Article 32.1 of the SCM Agreement.99
As an initial point, we note that, to the extent Indonesia suggests that a "particular market
situation" finding could constitute a "specific action" within the meaning of Article 32.1 of the
SCM Agreement such that Article 32.1 acts to constrain the scope of situations that can be examined
under this provision of Article 2.2 of the Anti -Dumping A greement100, we disagree because a
"particular market situation" finding is not an action. Rather, such a finding is merely one element
in a determination of whether the criteria in the Anti -Dumping Agreement for imposing an
anti-dumping measure are satisfied. A finding of "particular market situation" on its own and in
isolation does not entail any consequences that could be characterized as an action against a
subsidy.101
In light of the above Appellate Body interpretation of Article 32.1 of the SCM Agreement, an
anti-dumping measure taken in accordance with the Anti-Dumping Agreement and Article VI of the
GATT 1994 would not be precluded by the operation of Article 32.1 of the SCM Agreement. Our task
here is to determine whether Indonesia has demonst rated that the challenged measures are
inconsistent with Article 2.2 of the Anti-Dumping Agreement. If the answer is affirmative, this may

99 Appellate Body Report, US – Offset Act (Byrd Amendment), para. 262.
100 Indonesia's response to Panel question No. 10(d) following the first meeting of the Panel, pp. 15-16.
101 We recall that Indonesia's panel request and our terms of reference do not include a claim under
Article 32.1 of the SCM Agreement. We therefore refrain from considering Indonesia's arguments that the
challenged measures are inconsistent with Article 32.1 of the SCM Agreement. (Indonesia's response to Panel
question No. 10(d) following the first meeting of the Panel, pp. 15-16).

have implications in relation to Article 32.1 of the SCM Agreement, but Article 32.1 of the
SCM Agreement does not as sist us in making the relevant determination before us in respect of
Article 2.2 of the Anti -Dumping Agreement. We are not persuaded , therefore, by
Indonesia's argument that Article 32.1 of the SCM Agreement supports interpreting the term
"particular marke t situation" to exclude situations that arise from circumstances that include
government action that could be characterized as a subsidy if it were examined under the
SCM Agreement. For greater clarity, we are not here finding that the question of whether a situation
at issue that constitutes a subsidy under the SCM Agreement is relevant or irrelevant to the
necessarily fact-specific and case-by-case analysis of whether a set of circumstances constitutes a
particular market situation.
Indonesia also argues that there is a general principle that under the GATT 1994 and the
Anti-Dumping Agreement the anti-dumping remedy is not concerned with government action, except
where specific provisions expressly define an exception to this general principle.102 Indonesia argues
that Article VI:5 of the GATT 1994 ("same situation of dumping or export subsidization"), the second
Ad Note to Articles VI:2 and VI:3 of the GATT 1994 ("multiple currency practices"), the second
Ad Note to Article VI:1 of the GATT 1994 ("all domestic prices fixed by the State"), and Article 2.7
of the Anti-Dumping Agreement (referring to the second Ad Note to Article VI:1 of the GATT 1994)
are narrow and clearly defined express exceptions from the general principle that the Anti-Dumping
Agreement is not concerned with government action. 103 In support of its position, Indonesia cites
the following reasoning of the panel in EU – Biodiesel (Argentina) in regards to the provision on
multiple currency practices104:
We therefore see no reason to extrapolate from this provision that the concept of
"dumping" is generally intended to cover any distortion arising out of government action
or circumstances such as those surrounding Argentina's export tax system and its
impact on soybean prices as an input material for biodiesel.105
Australia counters that the panel in EU – Biodiesel (Argentina) was responding to the
EU argument that the second Ad Note to Articles VI:2 and VI:3 of the GATT 1994 ("multiple currency
practices") was relevant to the second condition of Article 2.2.1.1 ("reasonably reflect the costs
associated with the production and sale"), and not in relation to th e meaning of "particular market
situation".106 Australia argues that t he term "particular market situation" does not include any
language indicating that the situation must be independent of any government intervention. 107
Australia further argues that government action is not exclusively covered by the SCM Agreement,
and that government intervention that results in market distortion can render the domestic price not
suitable to determine the normal value and preclude a proper comparison. 108 Australia argues that
the examples given by the second Ad Note to Article VI:1 of the GATT 1994 and Article 2.7 of the
Anti-Dumping Agreement demonstrate that government actions are relevant to the determination
of dumping consistent with the Anti-Dumping Agreement.109 Australia also argues that the possibility
of "double remedies" arising as demonstrated in US – Anti-Dumping and Countervailing Duties
(China) and in connection with the situation described in Article VI:5 of the GATT 1994
("same situation of dumping or export subsidization"), is directly contrary to Indonesia's argument
that the effects of subsidies cannot be remedied under the Anti-Dumping Agreement.110
We are not persuaded of the existence of the general principle that Indonesia proposes. We
note that the proposed general principle that anti -dumping measures otherwise available in
accordance with the provisions of the GATT 1994 and the Anti-Dumping Agreement are nevertheless
precluded where the difference, or part of the difference, between export price and normal value
can be traced to government action is not found explicitly expressed in any text of the
Anti-Dumping Agreement or the SCM Agreement. In light of our prior analysis in connection with
the express provisions of Article 18.1 of the Anti -Dumping Agreement and Article 32.1 of the
SCM Agreement and their clarifying footnotes, we find it implausible that such a general principle

102 Indonesia's response to Panel question No. 10(a) following the first meeting of the Panel, pp. 13-14.
103 Indonesia's response to Panel question No. 10(b) following the first meeting of the Panel, p. 14.
104 Indonesia's response to Panel question No. 10(b) following the first meeting of the Panel, p. 14.
105 Panel Report, EU – Biodiesel (Argentina), para. 7.240.
106 Australia's second written submission, paras. 144-145.
107 Australia's second written submission, para. 143.
108 Australia's first written submission, paras. 161 and 135-139.
109 Australia's first written submission, paras. 135-139.
110 Australia's response to Panel question No. 26 following the first meeting of the Panel, paras. 64-67.

with preclusive effect on the scope of application of the Anti-Dumping Agreement would exist without
an express basis in the text of either the Anti-Dumping Agreement or the SCM Agreement. Moreover,
we find support in the text of Article VI:5 of the GATT 1994 for a contrary inference that is consistent
with our prior analysis. Article VI:5 of the GATT 1994 provides:
No product of the territory of any contracting party imported into the territory of any
other contracting party shall be subject to both anti-dumping and countervailing duties
to compensate for the same situation of dumping or export subsidization.
We are not convinced by Indonesia's assertion that the existence of the proposed general
principle can be inferred from the understanding that Article VI:5 constitutes an express exception
to the general principle. We find that the text of Article VI:5 of the GATT 1994 does not support this
claim. The provision does not contain any language to authorize application of anti -dumping duties
to the situation of a price difference that constitutes dumping that arises from the situation of an
export subsidy. Rather, Article VI:5 prohibits the "double remedy" of applying anti -dumping duties
and countervailing duties to remedy twice the situation where an export subsidy creates a difference
between export price and normal value that constitutes dumping. Article VI:5 does not authorize the
imposition of anti -dumping duties that would otherwise be precluded by operation of
Indonesia's proposed general principle. Instead, Article VI:5 creates a prohibition of "double
remedies" to address a specific situation that arises only on the basis of an implicit assumption that
anti-dumping duties could have been applied by reason of the price difference that constitutes
dumping despite the fact that the same situation is also understood to constitute export
subsidization. In other words, Article VI:5 represents a narrow exception to the general principle
that anti-dumping duties and countervailing duties may be applied whenever the criteria set forth in
the GATT 1994, the Anti-Dumping Agreement, and the SCM Agreement are satisfied. This contradicts
Indonesia's argument that Article VI:5 represents an express authorization and exception to a more
general rule that dumping arising from government action cannot be addressed by the provisions of
the Anti-Dumping Agreement. At the same time, we do not take the view whether government action
that affects the market for the domestic like product can be addressed by treating government action
as a sufficient condition for finding that a "particular market situation" exists. As we concluded in
our above examination of "particular market situation", a fact-specific and case-by-case analysis of
the particular market situation is necessarily called for.
Our reasoning is consistent with the Appellate Body's findings in US – Anti-Dumping and
Countervailing Duties (China) where it was found that "double remedies" may also arise in
connection with countervailing domestic subsidies and simultaneous application of a non -market
economy (NME) methodology.111 We find nothing in the reasoning of the Appellate Body in that case
to suggest that the anti -dumping duties at issue in that dispute were precluded by reason of the
existence of a general principle that the Anti -Dumping Agreement does not afford a remedy in
circumstances where the difference betwe en export price and normal value can be traced to a
domestic subsidy. Rather, the anti -dumping duties were understood to be authorized under the
Anti-Dumping Agreement, and to the extent that the difference between export price and normal
value was attributable to the differential impact of the domestic subsidy on the export price and the
normal value, this amount was deducted pursuant to Article 19.3 of the SCM Agreement from the
"appropriate amount" that could be included in any countervailing duties applied to remedy the same
subsidy.112
In the light of the above examination, we find that Indonesia has failed to demonstrate that
a situation arising from government action in whole or in part is necessarily disqualified from
constituting the "particular market situation", within the meaning of Article 2.2 of the Anti-Dumping
Agreement. Accordingly, the mere fact that the ADC's finding of a "particular market situation" was
based, in part, on certain Indonesian government policies affecting the timber and pulpwood sector,
does not render that finding inconsistent with Article 2.2 of the Anti-Dumping Agreement.
7.2.3.6 Conclusion in respect of "particular market situation"
On the basis of the above findings, we determine that Indonesia has not demonstrated that
the ADC acted inconsistently with Australia's obligations under Article 2.2 of the
Anti-Dumping Agreement when it found that a "particular market situation" existed in the Indonesian

111 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 541.
112 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 582.

domestic market for A4 copy paper. Indonesia's arguments have not persuaded us that a domestic
market situation resulting in a lower cost for an input used to p roduce both exported and
domestically sold product is necessarily excluded from constituting "the particular market situation".
Nor are we persuaded that, as a general proposition, any situation which has or may have some
impact on export sales in addition to domestic market sales is necessarily excluded from constituting
"the particular market situation" because we consider that, in at least some cases, differences in the
impact on domestic and export sales could prevent a proper comparison. Finally, we ar e also not
persuaded that "the particular market situation" referenced in this provision necessarily excludes
any situation that arises from a subsidy or other governmental action.
7.2.4 Whether the Anti-Dumping Commission properly determined that domestic market
sales did "not permit a proper comparison"
7.2.4.1 Introduction
Indonesia asserts that, in disregarding domestic market sales, the ADC failed to make, or
properly make, a determination that the domestic market sales affected by the particular market
situation d id "not permit a proper comparison", as required by Article 2.2 of the
Anti-Dumping Agreement.113
The principal difference in the parties' interpretations of "permit a proper comparison" is that
under Australia's interpretation it is sufficient to determine that domestic sales are "not suitable" for
use as the basis for normal value 114, whereas under Indonesia's interpretation a comparison of
domestic and export prices is required. 115 In view of this difference of interpretation, the parties
dispute whether the ADC's determination to disregard domestic sales was inconsistent with
Article 2.2.
As with its arguments in connection with "particular market situation", Indonesia is not here
challenging the ADC's establishment and evaluation of the facts except insofar as the ADC's factual
findings were guided by an allegedly erroneous understanding of the meaning of the phrase "permit
a proper comparison". 116 Thus, Indonesia's argument turns in the first instance on the legal
interpretation of the phrase "permit a proper comparison".
We first examine whether Indonesia's interpretative arguments demonstrate that the phrase
"permit a proper comparison", as used in Article 2.2 of the Anti -Dumping Agreement, requires an
investigating authority to examine whether the particular market situation found to exist affects
export prices, in addition to domestic prices, in such a way that does not permit a proper comparison
between the export price and the domestic price. We then evaluate the merits of
Indonesia's argument th at in any case such a requirement arises in the circumstance where a
low-priced input is used identically to produce merchandise for domestic and export markets. Finally,
we apply the proper interpretation to the relevant facts to determine whether the
ADC's determination is inconsistent with Article 2.2 of the Anti-Dumping Agreement.
7.2.4.2 Requirement to account for effects on export prices by the particular market
situation when determining whether "a proper comparison" is permitted
We examine Indonesia's claim in respect of the interpretation of the phrase "permit a proper
comparison" within the meaning of Article 2.2 of the Anti-Dumping Agreement. Indonesia asks the
Panel to adopt an interpretation of "permit a proper comparison" which requires a consideratio n of
the effect on both domestic prices and export prices.117 The essential point of disagreement between
the parties is whether, in the circumstances of this case, domestic sales prices, found to be distorted,
will nevertheless permit a proper comparison wi th export prices and cannot, therefore, be

113 Indonesia's first written submission, para. 115; opening statement at the first meeting of the Panel,
paras. 26-29.
114 Australia's first written submission, paras. 118-148; second written submission, paras. 80-93.
115 Indonesia's first written submission, paras. 80-122; second written submission, paras. 32-38.
116 Indonesia's opening statement at the first meeting of the Panel, para. 9; responses to Panel
questions Nos. 3 and 34 following the first meeting of the Panel, pp. 8-9.
117 Indonesia's second written submission, paras. 22 and 32-38.

disregarded as a basis for normal value. Australia disagrees that the distorted domestic sales prices
in question can be suitable for use as a basis for normal value.118
Indonesia argues that, even if a "particular market situation" has properly been found to exist,
Article 2.2 requires an investigating authority to use domestic sales prices as the normal value if
domestic sales of the like product in the ordinary course of trade permit a proper comparison with
the export price.119 Australia agrees with Indonesia that, before discarding domestic market sales
as a basis for determining normal value, it is necessary to determine that domestic market sales "do
not permit a proper comparison" because of the particular marke t situation.120 Thus, the parties
appear to agree that, in addition to a finding that the particular market situation exists, Article 2.2
also requires a distinct finding that the domestic sales "do not permit a proper comparison" because
of the particular market situation. We proceed to examine the content of that requirement.
Indonesia argues that the term "proper comparison" must be understood in respect of the
usual comparison described in Article 2.1 between prices of domestic market sales and export prices
to determine if dumping exists.121 Indonesia argues that while a particular market situation may be
capable of preventing proper price comparisons just like a low volume of sales may be, Article 2.2
requires the investigating authority in bot h scenarios to make an evidentiary finding. 122 Indonesia
asks the Panel to agree that Article 2.2 requires an evidentiary finding whether an individual
exporter's domestic prices can properly be compared to that individual exporter's export prices even
where it is demonstrated that the domestic prices have been affected by the particular market
situation.123 According to Indonesia, because the proper comparison is between the individual
producer's domestic and export prices, whether a proper comparison is permi tted cannot be
determined by examining only the domestic sales. 124 Indonesia notes the reasoning of the
Appellate Body that "dumping" and "margin of dumping" are exporter-specific concepts which arise
from the pricing behaviour of individual exporters and ca n be understood as "international price
discrimination".125 According to Indonesia, this reasoning supports the understanding that Article 2.2
requires examination of price comparability between domestic sales and export sales even in the
context of a particular market situation. Indonesia argues that the purpose of the dumping inquiry
is to determine whether international price discrimination is occurring 126, and therefore a proper
comparison is possible if the particular market situation equally affects domestic and export prices.
Indonesia asks the Panel to rule on the "specific issue of whether a low -price input used
identically to produce merchandise for domestic and export market prevents a proper
comparison".127 Indonesia finds support for its position on this point in the observation made by the
Appellate Body in US – Anti-dumping and Countervailing Duties (China) to the effect that, when
domestic subsidies are granted in market economies, "both the normal value and the export price
will be lowered as a result of the domestic subsidy, so that the dumping margin should not be

118 Australia's response to Panel question No. 19 following the first meeting of the Panel,
paras. 124-125.
119 Indonesia's first written submission, paras. 79, 81, 82, 102, 107, 115, and 122.
120 Australia's second written submission, paras. 19-20.
121 Indonesia's first written submission, para. 87.
122 Indonesia's response to Panel question No. 2(b) following the first meeting of the Panel, p. 8.
123 Indonesia's response to Panel question No. 3 following the first meeting of the Panel, p. 9.
124 Indonesia's response to Panel question No. 3 following the first meeting of the Panel, p. 9.
125 Indonesia's first written submission, paras. 90-100 (referring to Appellate Body Report,
US – Stainless Steel (Mexico), paras. 87, 88, 90, 91, 94, 95, and fn 208). Indonesia finds additional support
for the "pricing discrimination" understanding of dumping by reference to a WTO technical paper and an
Australian legislative report, and in the submissions of several members in 1966 during the Kennedy Round
negotiations when "particular market situation" was first included in the Anti-dumping Code. (Indonesia's
first written submission, para. 91 (referring to WTO, Technical information on anti-dumping,
https://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm (accessed on 22 August 2018) and Australia
Senate Economics Legislation Committee, Customs Amendment (Anti-Dumping) Bill (June 2011),
(Exhibit IDN-18), para. 2.4 and fns 1-2); second written submission, paras. 27-31 (referring to Comments by
the European Economic Community on Items I to V and IX to XIII, TN.64/NTB/W/12/Add.2 (24 June 1966);
Comments by Japan on Items I to V and IX to XI, and XIII, TN.64/NTB/W/12/Add.6 (1 July 1966); Comments
by the Government of Canada on Items I-V, IX-XI and XIII, TN.64/NTB/W/12/Add.3 (29 June 1966); and
Comments by the United States on Items I-V, TN.64/NTB/W/12/Add.5 (30 June 1966)).
126 Indonesia's first written submission, para. 106.
127 Indonesia's response to Panel question No. 2(b) following the first meeting of the Panel, p. 8;
response to Panel question No. 20 following the second meeting of the Panel, para. 38.

affected".128 Indonesia reasons that a low cost input identically used in production for export and
domestic sales will have the same effect on those sales as a 'domestic subsidy' would".129
Australia argues that the proper interpretation of the phrase "permit a proper comparison" is
to allow a suitable and accurate comparison to: (a) ascertain whether the product is to be considered
as being dumpe d, and (b) determine the margin of dumping. 130 Australia argues that the
Anti-Dumping Agreement does not explicitly identify the factors that will determine whether or not
using the domestic price as the basis for the "normal value" would allow an investigat ing authority
to conduct "a suitable and accurate comparison". 131 Australia argues that Article 2.7 of the
Anti-Dumping Agreement and the second Ad Note to Article VI:1 of the GATT 1994 (regarding
imports "from a country which has a complete or substantially complete monopoly of its trade and
where all domestic prices are fixed by the State") demonstrate that government intervention (both
in respect of the like product and in respect of inputs to the like product) can result in the domestic
price not being suitable to use as the basis for the normal value.132 Australia refers to the statement
of the Appellate Body in EC – Fasteners (China) that the second Ad Note to Article VI:1 "allows
investigating authorities to disregard domestic prices and costs of such an NME in the determination
of normal value and to resort to prices and costs in a market economy third country" .133 Australia
also argues that prices fixed in a manner incompatible with normal commercial practice or according
to criteria which are not those of the marketplace are not suitable to use as the basis for the normal
value, as recognized by the Appellate Body in US – Hot-Rolled Steel where the Appellate Body
considered a situation where the domestic sales were not in the "ordinary course of trade".134
Australia challenges Indonesia's reliance on certain statements of the Appellate Body in
US – Anti-Dumping and Countervailing Duties (China) in support of the proposition "that domestic
subsidies equally affect domestic and export price". 135 Australia argues that the
Appellate Body's actual reasoning in that case was that "domestic subsidies" could affect both
domestic and export prices such that "double remedies" (simultaneous application of anti -dumping
and countervailing duties to offset the subsidy and then again to offset the price effect of the subsidy)
could arise.136 Australia argues that these statements do not support Indonesia's argument s that
domestic and export prices are necessarily equally affected by a low input price.137 Australia argues
that the statements in the panel and Appellate Body reports in US – Anti-Dumping and Countervailing
Duties (China) relied upon by Indonesia for the p roposition that domestic subsidies affect both
domestic and export prices are inapposite because that dispute was not about Article 2 of
Anti-Dumping Agreement and did not involve a finding of "particular market situation".138
With respect to Articles 2.1 a nd 2.2 of the Anti -Dumping Agreement, we note that in
EC – Tube or Pipe Fittings, the Appellate Body stated as follows:
We begin our analysis with a review of the provisions that lead to the calculation of
constructed normal value. Article 2.1 of the Anti -Dumping Agreement identifies a
product as "dumped" where the product is introduced into the commerce of another
country at "less than its normal value". "Normal value" is understood by virtue of that
provision to be the "price, in the ordinary course of t rade, for the like product when
destined for consumption in the exporting country". Where the price of the product in
the home (exporting country) market is not "comparable" to the export price of the like
product, Article 2.2 provides alternative bases for deriving "normal value":

128 Indonesia's first written submission, paras. 120-121 (referring to Appellate Body Report,
US – Anti-Dumping and Countervailing Duties (China), fn 519).
129 Indonesia's first written submission, para. 121.
130 Australia's first written submission, paras. 130-132.
131 Australia's first written submission, para. 133.
132 Australia's first written submission, para. 136.
133 Australia's first written submission, para. 137 (referring to Appellate Body Report, EC – Fasteners
(China), para. 285). (emphasis added)
134 Australia's first written submission, paras. 140 and 141 (referring to Appellate Body Report,
US – Hot-Rolled Steel, paras. 140-141).
135 Australia's first written submission, para. 170; response to Panel question No. 4(c) following the
first meeting of the Panel, paras. 17-24 (referring to Indonesia's first written submission, para. 121).
136 Australia's response to Panel question No. 4(c) following the first meeting of the Panel, para. 19.
137 Australia's response to Panel question No. 4(c) following the first meeting of the Panel, para. 19.
138 Australia's first written submission, para. 170.

When there are no sales of the like product in the ordinary course of trade
in the domestic market of the exporting country or when, because of the
particular market situation or the low volume of the sales in the domestic
market of the exporting country 2, such sales do not permit a proper
comparison, the margin of dumping shall be determined by comparison
with a comparable price of the like product when exported to an appropriate
third country, provided that this price is representative, or with the cost of
production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits.
2 Sales of the like product destined for consumption in the domestic market of the
exporting cou ntry shall normally be considered a sufficient quantity for the
determination of the normal value if such sales constitute 5 per cent or more of the
sales of the product under consideration to the importing Member, provided that a
lower ratio should be acc eptable where the evidence demonstrates that domestic
sales at such lower ratio are nonetheless of sufficient magnitude to provide for a
proper comparison.
Article 2.2 makes clear that an alternative basis for deriving "normal value" must be
relied upon by an investigating authority where one of three conditions exists:
(a) there are no sales in the exporting country of the like product in the
ordinary course of trade; or
(b) sales in the exporting country's market do not "permit a proper
comparison" because of "the particular market situation"; or
(c) sales in the exporting country's market do not "permit a proper
comparison" because of their low volume.
Where one of these conditions exists, Article 2.2 further specifies two alternative bases
for the calculation of "normal value":
(a) third-country sales, that is, the comparable price of the like product when
exported to an "appropriate" third country, provided the price is
"representative"; or
(b) constructed normal value, that is, the sum of:
(i) the cost of production in the country of origin;
(ii) a "reasonable amount" for SG&A; and
(ii) a "reasonable amount" for profits.139
In respect of the first condition, there is an absence of the domestic price "when there are no
sales of the like product in the ordinary course of trade in the domestic market of the exporting
country". In US – Hot-Rolled Steel, the Appellate Body stated that "Article 2.1 requires investigating
authorities to exclude sales not made 'in the ordinary course of trade', from the calculation of normal
value, precisely to ensure that normal value is, indeed, the 'normal' price of the like product, in the
home market of the exporter".140 It follows that, when there are "no sales" in the "ordinary course
of trade", no domestic price would exist to be compared with.
The second condition contemplates a situation in which there are sales of the like product in
the ordinary course of trade in the domestic market of the exporting country but the volume of those
sales is low, such that they may not permit a proper comparison of the domestic price with the
export price.

139 Appellate Body Report, EC – Tube or Pipe Fittings, paras. 93-95.
140 Appellate Body Report, US – Hot-Rolled Steel, para. 140.

In respect of the low volume condition, footnote 2 of the Anti -Dumping Agreement provides
a useful and relevant clarification:
Sales of the like product destined for consumption in the domestic market of the
exporting country shall normally be considered a sufficient quantity for the
determination of the normal value if such sales con stitute 5 per cent or more of the
sales of the product under consideration to the importing Member, provided that a lower
ratio should be acceptable where the evidence demonstrates that domestic sales at such
lower ratio are nonetheless of sufficient magnitude to provide for a proper comparison.
Thus, the situation of a low volume of domestic market sales may prevent a proper
comparison between the domestic and the export price but, as provided for in footnote 2, it does
not necessarily do so. Specifically, under the terms of footnote 2, if domestic sales are at least 5%
of export sales, they shall normally not be considered to be low in volume within the meaning of
Article 2.2; and a volume of domestic sales less than 5% of export sales may also be acceptab le if
the sales are of "sufficient magnitude to provide for a proper comparison" . It follows that, when
there are low volume sales, a further enquiry may determine whether such low volume sales "permit
a proper comparison".
 Where a "particular market situ ation" is found to exist, the investigating authority must
examine whether "a proper comparison" of the domestic and the export price is permitted or not.
We consider that the "proper comparison" language calls for an assessment in respect of the
comparison of domestic and export prices.
The ordinary meaning of the term "proper" is "suitable for a specified or implicit purpose or
requirement; appropriate to the circumstances or conditions; … apt, fitting; correct, right ".141 The
term "comparison" can be understood as "the action, or an act, of comparing, or noting the
similarities and differences of two or more things ".142 The function of the "permit a proper
comparison" test is to determine whether th e domestic price can or cannot be used as a basis for
comparison with the export price to identify the existence of dumping. It is implied here in Article 2.2
that the words "a proper comparison" refer to the comparison between the domestic price and the
export price. Thus, the purpose of an investigating authority's examination under the second clause
of Article 2.2 of the Anti -Dumping Agreement is to determine whether domestic sales of the like
product in the ordinary course of trade do not permit a proper comparison between the export price
and the domestic sales price because of the particular market situation or the low volume.
While the proper comparison in Article 2.2 refers to the comparison between the domestic
and export prices, a purely numerical comparison between the two prices may not reveal anything
about whether the domestic price can be properly compared with the export price. Rather, it is
necessary to conduct a qualitative comparison of the domestic and export prices. The phrase
"because of the particular market situation" makes clear that the qualitative assessment of whether
the domestic and export prices can be properly compared should focus on how the particular market
situation affects that comparison. We therefore consider that the "proper comparison" language calls
for an assessment of the relative effect of the particular market situation on domestic and export
prices. We understand that , in certain circumstances, as a result o f this assessment, the
investigating authority may conclude that the particular market situation has no effect on the export
prices.
Turning to the assessment of whether "a proper comparison" is not permitted because of the
particular market situation, we note that the focus of the analysis is on whether the effect of the
particular market situation is such that a proper comparison between domestic sales prices and
export prices under examination is not permitted. In other words, the investigating authorit y must
examine the domestic sales in order to determine whether a proper comparison between the
two prices is permitted in spite of the effect of the particular market situation. The point is to
determine if there is a comparable domestic price (i.e. if th ere is "the comparable price, in the
ordinary course of trade, for the like product when destined for consumption in the exporting
country" in the sense of GATT 1994 Article VI:1(b) and Article 2.1 of the Anti-Dumping Agreement).

141 Oxford Dictionaries online, definition of "proper"
https://www.oed.com/view/Entry/152660?rskey=KTB4na&result=1#eid (accessed 17 September 2019).
142 Oxford Dictionaries online, definition of "comparison"
https://www.oed.com/view/Entry/37450?rskey=sdGRr4&result=1#eid (accessed 17 September 2019).

That determination is fact-specific and should be made on a case-by-case basis by the investigating
authority assessing the effect of particular market situation on the domestic price in relation to the
effect on the export price, if any. This relative assessment is necessary becau se, as we explain in
the following subsection, while a particular market situation may have an effect on both domestic
and export prices, it does not follow that the impact on domestic and export prices will be the same.
If the investigating authority finds that because of a particular market situation a proper comparison
of the domestic price and the export price is not permitted, it is required to give a reasoned and
adequate explanation of its conclusion.
7.2.4.3 Whether a proper comparison is necessarily permitted when a low-priced input is
used identically to produce merchandise for domestic and export market
We now turn to Indonesia's argument that, where a low-priced input is used identically to
produce merchandise for the domestic and the export market, a p roper comparison will be
permitted.143 Indonesia argues that the low -priced input affects domestic and export sales in the
same way. We recall that Indonesia finds support for its claim in the observation made by the
Appellate Body in US – Anti-dumping and C ountervailing Duties (China) to the effect that, when
domestic subsidies are granted in market economies, "both the normal value and the export price
will be lowered as a result of the domestic subsidy, so that the dumping margin should not be
affected".144
We believe there is a logical analogy between the domestic subsidies at issue in that case and
the low-priced input posited by Indonesia's argument. As Indonesia asserts, the Appellate Body
adopted the rationale that domestic subsidies having the effect of decreasing costs could result in
similarly decreased prices in the domestic and export markets. The Appellate Body found that under
the NME methodology at issue in that case (where domestic prices and costs were disregarded in
favour of market-based external values) a "double remedy" could arise as a consequence. However,
a close reading of the Appellate Body report in US – Anti-Dumping and Countervailing Duties (China)
does not fully justify Indonesia's categorical claim that domestic and export prices are necessarily
equally affected by domestic subsidies. In that case, the Appellate Body explained:
In principle, we agree with the statement by the Panel that double remedies would likely
result from the concurrent application of anti-dumping duties calculated on the basis of
an NME methodology and countervailing duties, but we are not convinced that double
remedies necessarily result in every instance of such concurrent application of duties.
This depends, rather, on whether and to what extent domestic subsidies have lowered
the export price of a product, and on whether the investigating authority has taken the
necessary corrective steps to adjust its m ethodology to take account of this factual
situation.145
Moreover, we asked the parties to respond to the following question:
Explain your agreement or disagreement with the following statement: "Faced with a
decrease in the cost of a significant input, a producer may decide to decrease some, all
or none of the prices at which their product is offered for sale in various markets.
The extent to which actual sales of the product can be made at the prices offered in the
various markets will depend significantly on the market conditions in those markets."
Both parties expressed their agreement or general agreement with the statement.146

143 We note that Australia has objected to this characterization of the situation the ADC found in respect
of the A4 copy paper market in Indonesia. For purposes of testing Indonesia's interpretive legal theory in
connection with Indonesia's argument, it is not yet necessary for us to resolve whether Australia's measure
matches this description. We will turn to that question in the following subsection.
144 Indonesia's first written submission, paras. 120-121 (quoting Appellate Body Report,
US – Anti-Dumping and Countervailing Duties (China), fn 519).
145 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 599.
(fn omitted; emphasis original)
146 Indonesia's response to Panel question No. 4 following the second meeting of the Panel;
Australia's response to Panel question No. 4 following the second meeting of the Panel.

In our view, how domestic prices and export prices of an individual exporter 147 are affected
notwithstanding an equal decrease in input costs is likely to depend significantly upon a number of
factors, including the prevailing conditions of competition in each market and the existing
relationship between price and cost. We consider that an exporter may find itself with differ ent
options in respect of how to take advantage of an input cost decrease depending on market
conditions in each market. This is similar to a situation when a cost increase occurs and the exporter
faces differing market conditions in domestic and export ma rkets such that the exporter is able to
pass on the cost increase to customers in one market but unable to do so in the other.
Accordingly, we are not persuaded that a low -priced input used identically to produce
merchandise for domestic and export markets will necessarily have the same effect on domestic
prices and export prices and therefore necessarily permit a proper comparison. Rather, we find that
whether the exporter's domestic sales permit a proper price comparison with the export price is a
question that can only be ascertained through an examination of relevant factual circumstances.
7.2.4.4 Whether the ADC should have examined if the domestic sales of A4 copy paper
permitted a proper comparison because of the particular market situation
The parties disagree with respect to whether the ADC's determination addressed the question
of whether the disregarded domestic market sales of Indah Kiat and Pindo Deli permitted or not
"a proper comparison", within the meaning of Article 2.2. Indonesia asserts that the ADC, having
found a "particular market situation" failed to examine whether, "because of" that situation, domestic
sales did "not permit a proper comparison" of the export price and the domestic price. 148 Australia
disputes this characterization, arguing tha t a determination that domestic prices are distorted and
therefore not suitable for use as normal value means that they do not permit a proper comparison.149
For the reasons explained below, we find that the ADC's determination was inconsistent with
Article 2.2.
 Indonesia asserts that the same hardwood fiber is used by Indah Kiat and Pindo Deli to
manufacture A4 copy paper sold both in the Indonesian domestic market and exported to
Australia.150 Indonesia notes that:
The Indonesian producers argued the Commiss ion had no evidence domestic prices
were distorted and unsuitable for comparison with export prices because the
Commission had no evidence the alleged distortions impacted differently domestic and
export prices.151
Indonesia contends that, beyond acknowledgi ng the argument had been made, the
Final Report does not address whether the situation in the domestic market actually made any
difference to the determination of the margin of dumping that would arise from a comparison
between each individual Indonesian exporter's domestic prices and its export prices.152 According to
Indonesia, "[t]he Commissioner 's report is confined to addressing the question of whether the
exporter's domestic prices are different from what they would have been in the absence of the
government policies".153
Australia argued that the appropriate analysis of whether "because of the particular market
situation … such sales do not permit a proper comparison" requires determining whether the
domestic sales are "suitable" for establishing a normal value that will provide a "reliable foundation"
that will "permit" a "proper comparison" with the export price. 154 According to Australia, because

147 We note that Article 6.10 of the Anti-Dumping Agreement requires that, as a rule, an investigating
authority shall determine an individual dumping margin for each exporter.
148 Indonesia's first written submission, para. 115.
149 Australia's first written submission, para. 4; closing statement at the first meeting of the Panel,
paras. 8-11.
150 Indonesia's first written submission, paras. 116-118.
151 Indonesia's first written submission, para. 116, (referring to Sinar Mas Group's submission
(29 December 2016), (Exhibit IDN-15), p. 2).
152 Indonesia's first written submission, para. 116.
153 Indonesia's first written submission, para. 116.
154 Australia's response to Panel question No. 4 following the second meeting of the Panel, para. 23;

Article 2.2 of the Anti -Dumping Agreement or Article VI of the GATT 1994 do not prescribe any
specific methodology for determining the unsuitability of domestic prices, an investigating authority
has discretion as to the choice of methodology as long as it evaluates the facts in an unbiased and
objective manner, and provides a reasoned and adequate explanati on support ing its
determination.155 Australia argued that the context provided by Article VI of the GATT 1994, the
second Ad Note to Article VI:1 of the GATT 1994, and Article s 2.1 and 2.7 of the
Anti-Dumping Agreement identify certain characteristics of uns uitability156, including whether the
domestic price has been fixed in a manner incompatible with normal commercial practice and/or
fixed according to criteria which are not those of the marketplace.157
Thus, according to Australia, in deciding whether the pri ce of A4 copy paper in Indonesia
would allow a suitable and accurate comparison to ascertain whether the A4 copy paper was to be
considered as being dumped and to determine the margin of dumping, it was relevant for the ADC to
consider whether: (a) the domestic price of A4 copy paper was affected by government intervention
that distorted costs and prices; and/or (b) the "particular market situation" meant that the domestic
price of A4 copy paper was fixed in a manner incompatible with normal commercial practice; and/or
(c) the "particular market situation" meant that the domestic price of A4 copy paper was fixed
according to criteria which were not those of the marketplace.158 Australia claims that this is exactly
what the ADC did, when it found that, because of the "particular market situation", Indonesian
domestic sales were not suitable for use in determining normal value.159 Australia identifies relevant
findings of the ADC to the effect that the policies of the Government of Indonesia have affected the
forestry sector and resulted in reduced logs prices; that these policies benefitted the Indonesian
pulp industry; that the cost of producing pulp was substantially less than a competitive benchmark;
that the pulp is the largest component for the production of A4 copy paper; that Indonesian A4 copy
paper producers benefitted from access to cheaper pulp; that Indonesian domestic A4 paper prices
are artificially low and below comparable regional benchmarks; that the Government's involvement
resulted in a distortion of the domestic price for A4 copy paper and that there was a market situation
in the Indonesian A4 copy paper market.160
Consistent with Australia's argumentation, which in our view largely equates the analyses of
"ordinary course of trade" and "permit a proper comparison", the ADC focused on whether the
domestic sales and domestic prices were suitable for use as the basis for normal value. We consider
that this approach fails to give meaning and effect to the phrase "permit a proper comparison". As
set forth in the Final Report, the ADC "found that: there is a market situation in the Indonesian
A4 copy paper market such that sales in that market are not suitable for use in d etermining a
price".161 The ADC further found "that there is a particular market situation in Indonesia such that
domestic selling prices are not suitable for determining normal value".162 We find a deficiency in the
ADC's examination in this case because it f ocused exclusively on the domestic sales and domestic
prices, without taking into account the export prices with which the domestic prices would be
compared. In particular, the examination does not address the question whether the domestic prices
could be properly compared with the export prices despite the effects of the particular market
situation.
We observe that the effect of the particular market situation on the Indonesian market for
A4 copy paper was solely through the decreased cost of purchasing (or making) pulp, which is an
important input.163 While we appreciate that the ADC's determination of market situation in respect
of A4 copy paper sold in Indonesia accounted for a variety of fact -specific circumstances, we find
that the salient aspect of the determination was that the price of A4 copy paper in Indonesia was

155 Australia's second written submission, para. 170.
156 Australia's first written submission, paras. 133-139.
157 Australia's first written submission, paras. 133-144, (referring to Appellate Body Report,
US – Hot-Rolled Steel, paras. 140-141); second written submission, paras. 171-176; and response to Panel
questions Nos. 22 and 23 following the second meeting of the Panel, paras. 112-120.
158 Australia's first written submission, paras. 133-143; second written submission, paras. 171-172; and
response to Panel questions Nos. 22 and 23 following the second meeting of the Panel, paras. 112-120.
159 Australia's first written submission, para. 144.
160 Australia's first written submission, para. 144.
161 Final Report, (Exhibit IDN-4), section 6.5, p. 36.
162 Final Report, (Exhibit IDN-4), section 6.9.1, p. 50.
163 Final Report, (Exhibit IDN-4), section A2.9.4, pp. 173-174.

affected by a decrease in the cost of pulp.164 Australia does not dispute that the same pulp was used
to produce A4 copy paper for sale in the domestic market and in the export market, and we find no
evidence in the record to the contrary.165
We find that Australia did not examine whether domestic sales permitted a proper comparison
between the domestic prices found to be affected by the decreased cost of pulp with the export
prices for which t he pulp cost was presumably equally decreased, despite assertions in the
underlying proceeding which called for such an examination. In reviewing the ADC's determination,
we are not to conduct a de novo review of the evidence, nor substitute our judgment for that of the
investigating authority. As such, we make no determination whether the domestic sales permitted a
proper comparison of the domestic prices and the export prices. Rather, we conclude that the
ADC was obligated to undertake the necessary addit ional examination to determine whether,
because of the particular market situation, the domestic sales of the individual exporters do not
permit a proper comparison of the domestic prices and the export prices.
7.2.4.5 Conclusion in respect of "permit a proper comparison"
On the basis of the above findings, we determine that the ADC's disregard of Indah Kiat's and
Pindo Deli's domestic sales (and consequently of their domestic prices) as the basis for normal value
was inconsistent with the requirement to examine w hether sales in the exporting country's market
do not "permit a proper comparison" because of "the particular market situation" in Article 2.2 of
the Anti-Dumping Agreement. Specifically, where a particular market situation was found to affect
domestic market sales prices solely as a result of a decreased cost for an input that was used
identically to produce merchandise for the domestic and export markets, the investigating authority
was obligated to assess the effect of the particular market situation on the domestic price in relation
to the effect on the export price when determining whether domestic prices permitted a proper
comparison with those export prices.
7.2.5 Conclusion
For the reasons elaborated above, we find that Indonesia has not establ ished that the ADC
acted inconsistently with Australia's obligations under Article 2.2 of the Anti -Dumping Agreement
when it found that a "particular market situation" existed in the Indonesian domestic market for
A4 copy paper. We further find that Austra lia's measure is inconsistent with Article 2.2,
first sentence, of the Anti -Dumping Agreement because the ADC disregarded domestic sales of
A4 copy paper of Indah Kiat and Pindo Deli as the basis for determining normal value without
properly determining that such sales did "not permit a proper comparison".
7.3 Whether the Anti -Dumping Commission's decision not to use the hardwood pulp
component of Indah Kiat's and Pindo Deli's records in constructing the normal value of
A4 copy paper is inconsistent with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement
7.3.1 Introduction
The core issue raised by Indonesia's claim is whether the ADC acted inconsistently with
Australia's obligations under Article 2.2.1.1, first sentence, of the Anti -Dumping Agreement and
Article 2.2 of the Anti -Dumping Agreement by disregarding Indah Kiat and Pindo Deli 's recorded
costs of hardwood pulp in constructing the normal value for those producers.166 We recall that after
having found a "particular market situation" to exist in the Indonesian A4 copy paper market, the
ADC proceeded to construct the normal value of A4 copy paper for Indonesian exporters.
In examining the relevant cost components of A4 copy paper, the ADC found that "the cost of
producing pulp was substantially less than a competitive benchmark"167 and that "the actual cost of

164 Final Report, (Exhibit IDN-4), section A2.9.1, p. 165.
165 Australia's response to Panel question No. 15 following the first meeting of the Panel, para. 103.
166 We understand Indonesia's claim under Article 2.2 of the Anti-Dumping Agreement to be
consequential to its claim under Article 2.2.1.1 since Indonesia does not rely on any separate and independent
arguments as the basis for its claim under Article 2.2.
167 The "competitive benchmark" is not described in the text of the Final Report. In response to the
Panel's request to clarify what competitive benchmark the authority was referring to when it stated that "the
cost of producing pulp was substantially less than a competitive benchmark", Australia has not referred the

pulp recorded by exporters in their records does not reasonably reflect a competitive market cost".168
On that basis, the ADC considered that the pulp component of Indonesian producers' and exporters'
records, including Indah Kiat and Pindo Deli, was "unsuitable for determining the cost to make
A4 copy paper for the purposes of constructing normal values".169
Indonesia argues that the ADC's rejection of the recorded hardwood pulp costs of Indah Kiat
and Pindo Deli is inconsistent with the first sentence of Article 2.2.1.1 because those records were
in accordance with generally accepted accounting principles (GAAP) in Indonesia and reasonably
reflected the cost associated with the production and sale of A4 copy paper in Indonesia.170 However,
Australia argues that the ADC was entitled to reject the relevant costs because, according to
Australia, the first sentence of Article 2.2.1.1 envisages that , where the circumstances are not
"normal and ordinary", an investigating authority is not required to calculate costs on the basis of
the exporter or producer's records even if the two conditions in Article 2.2.1.1 are satisfied. 171
Australia further argues that the ADC found circumstances with regard to Indah Kiat and Pindo Deli
to be not "normal and ordinary". 172 Indonesia contests Australia's characterization of the rationale
underlying the ADC's rejection of the hardwood pulp costs, arguing that it amounts to ex post facto
rationalization that should not be considered by the Panel. 173 According to Indonesia, the
investigating authority disregarded the recorded costs because it considered they did not reasonably
reflect the costs associated with the production and sale of A4 copy paper. In any event, Indonesia
maintains that the term "normally" found in the first sentence of Article 2.2.1.1 does not establish a
separate ground to disregard an exporter's records that reasonably reflect the costs of production
and sale of the product under consideration.174
In examining the parties' submissions, we address the factual question of whether the ADC
rejected recorded hardwood pulp costs because they did not reasonably reflect the costs associated
with the production and sale of A4 copy paper, as Indonesia argues, or whether the ADC disregarded
those costs on the basis of a different rationale. We address this question in the section that follows,
before turning to evaluate the merits of Indonesia's claims on the basis of our findings on the
rationale underlying the ADC's rejection of the hardwood pulp costs. However, before proceeding

Panel to the description of the competitive benchmark on the record of the investigation. However, Australia
has clarified that the investigating authority was referring to "a number of regional benchmarks for hardwood
pulp", which were purchased from RISI and Hawkins Wright. According to Australia, the data sets included:
domestic prices in Japan, domestic prices in China, prices for hardwood pulp exported from Indonesia to East
Asia, prices for hardwood pulp exported from South America to China, prices for hardwood pulp exported from
Indonesia to Korea. Australia further clarified that, in establishing whether the exporters' records reflected
"competitive market costs", additional comparisons were undertaken between the pulp benchmark (used later
as a substitute for recorded pulp costs) and the exporters' recorded pulp costs. In response to the same
question from the Panel, Indonesia stated that it believes "the benchmark to which Australia is referring is RISI
and Hawkins Wright". (Australia's response to Panel question No. 27 following the first meeting of the Panel,
paras. 199-200; Indonesia's response to Panel question No. 27 following the first meeting of the Panel, p. 22).
The Final Report mentions RISI and Hawkins Wright data, and Australia later clarified its answer by referring
the Panel to the RISI and Hawkins Wright data exhibited with its second written submission.
(Australia's response to Panel question No. 7 following the second meeting of the Panel, paras. 43-44 (referring
to RISI, hardwood pulp prices in Asia by source (2010-2015), (Exhibit AUS-26 (BCI)), Hawkins Wright,
hardwood pulp prices in China by source (December 2002-August 2016), (Exhibit AUS-27A (BCI)), Hawkins
Wright, hardwood pulp prices in South Korea by source (December 2002-August 2016), (Exhibit AUS-27B
(BCI)))). The parties therefore share the understanding that "the competitive benchmark" included out-of-
country benchmarks, and we have no reasons to consider otherwise.
168 Final Report, (Exhibit IDN-4), section 6.9.1, p. 51.
169 Final Report, (Exhibit IDN-4), section 6.9.1, p. 51.
170 Indonesia's first written submission, paras. 123-154.
171 Australia's first written submission, paras. 182-200; second written submission, paras. 197-203,
215, 221-223, and 226-234; response to Panel question No. 20(d) following the first meeting of the Panel,
paras. 144-158; and responses to Panel question No. 13 following the second meeting of the Panel,
paras. 66-81, and question No. 32, paras. 155-157.
172 Australia's first written submission, paras. 202-221; second written submission, paras. 204-225; and
response to Panel question No. 20(c) following the first meeting of the Panel, paras. 130-142.
173 Indonesia's second written submission, para. 72; response to Panel question No. 20(b) following the
first meeting of the Panel, pp. 20-21.
174 Indonesia's second written submission, paras. 56-71; response to Panel question No. 20(a) following
the first meeting of the Panel, pp. 19-20; and responses to Panel question No. 16 following the second meeting
of the Panel, paras. 30-36, and question No. 32, paras. 94-96.

with this analysis, we first address Australia's contention that Indonesia has conceded that the ADC
was not required to use Indah Kiat's recorded costs of pulp.175
According to Australia, Indonesia has conceded "that, rather than using the amounts in the
records of Indah Kiat for hardwood pulp, there were 'other bases Australia could have taken'" to
calculate the pulp costs when determining Ind ah Kiat's cost of production of A4 copy paper. 176 The
implication is that Indonesia accepts that the ADC did not have to use Indah Kiat's reported pulp
costs. Australia asserts that Indonesia made this admission when, in responding to certain Panel
questions, Indonesia explained that "it would have been less distortive for Australia to have replaced
the cost of woodchips" rather than the cost of pulp and that "[b]y replacing the cost of woodchips,
the allegedly distorted input in Indah Kiat's costs is being accounted for while all of Indah Kiat's other
costs, which are not affected by the 'particular market situation' remain the same".177
We understand Indonesia to have made the above statements in the context of its claim under
Article 2.2 concerning the ADC's selection of the substitute for pulp costs, after it had decided to
disregard Indah Kiat's recorded pulp costs. By making these statements, we do not find that
Indonesia accepted that the ADC was entitled to disregard Indah Kiat's reported costs of pulp under
the terms of Article 2.2.1.1.178 The factual and legal bases of these two claims are different: under
its Article 2.2.1.1 claim (which we examine in this section of our Report), Indonesia challenges the
ADC's rejection of Indah Kiat's and Pindo Deli's r ecorded pulp costs, whereas under its Article 2.2
claim, Indonesia challenges the substitute for pulp costs selected by the ADC after the recorded
costs were rejected. We note, furthermore, that Indonesia has clarified that "[t]he discussion
surrounding how Australia might have calculated a benchmark in a manner consistent with
Article 2.2 was in tended to explain to the Panel other bases Australia could have taken, but the
ultimate action Australia took, and its consistency with Australia's WTO obligations is ultimately what
is at issue" .179 We therefore conclude that Indonesia's has not conceded th at the ADC was not
required to use Indah Kiat's recorded costs of pulp.
7.3.2 The Anti -Dumping Commission's rationale for rejecting the hardwood pulp
component of Indah Kiat's and Pindo Deli's recorded costs
Indonesia initially considered that Australia relied on the second condition in Article 2.2.1.1,
first sentence, to reject the hardwood pulp component of Indah Kiat 's and Pindo Deli's recorded
costs.180 However, in responding to Indonesia's first written submission, Australia explained that the
ADC relied on a provision of Australia's domestic regulations in its decision to disregard Indah
Kiat's and Pindo Deli's recorded costs for hardwood pulp181 and that the provision at issue "does not
mirror the precise la nguage of the underlying treaty" but implements Australia's treaty
obligations.182 According to Australia, "[t]he [ADC's] application of subsection 43(2) [of the Customs
Regulation] was clearly consistent with discarding the amounts in the records kept by th e exporter
in circumstances that were outside the normal and ordinary". 183 Australia submits that "the [ADC]
found that the amounts for hardwood pulp in the records of Indah Kiat and Pindo Deli did not
'reasonably reflect competitive market costs' within [th e meaning of] subparagraph 43(2)(b)(ii)
because they reflected the 'particular market situation' ".184 Australia clarifies that the phrase
"competitive market costs" found in subsection 43(2) "facilitated the discarding of the distorted
hardwood pulp componen t … in circumstances that were outside the normal and ordinary

175 Australia's comments on Indonesia's responses to Panel questions Nos. 18 and 35 following the
second meeting of the Panel, paras. 83-85.
176 Australia's comments on Indonesia's responses to Panel questions Nos. 18 and 35 following the
second meeting of the Panel, para. 84 (referring to Indonesia's response to Panel question No. 30(b) following
the second meeting of the Panel, para. 93).
177 Indonesia's responses to Panel question No. 18 following the second meeting of the Panel, para. 37,
and question No. 35, para. 98; Australia's comments on Indonesia's responses to Panel questions Nos. 18
and 35 following the second meeting of the Panel, para. 83.
178 As we explain in section 7.4.4, we understand Indonesia's argument regarding the replacement of
Indah Kiat's woodchips costs to proceed on an arguendo basis. See fn 317 of this Report.
179 Indonesia's response to Panel question No. 30(b) following the second meeting of the Panel,
para. 93.
180 Indonesia's first written submission, paras. 123-154.
181 Australia's response to Panel question No. 20(c) following the first meeting of the Panel, para. 131.
182 Australia's second written submission, para. 210.
183 Australia's second written submission, para. 214. (underlining omitted)
184 Australia's second written submission, paras. 217-218.

circumstances envisaged by the word 'normally' in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement".185
Indonesia considers that Australia's characterization of the rationale underlying the
ADC's decision to reject the hardwood pulp costs is an " ex post defence" put forward by Australia
for the purpose of this dispute.186 According to Indonesia, the ADC's decision to reject the pulp costs
was "unmistakably made pursuant to the se cond condition of Article 2.2.1.1 of the
Anti-Dumping Agreement" because it was expressed in terms that are similar to the language of the
second condition in the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement. 187
Furthermore, Indonesia subm its that "Australia applied the phrase 'competitive market costs' to
mean the costs must, themselves, be reasonable" and draws a parallel between this aspect of the
ADC's rationale and the basis for the European Union's rejection of the raw material costs of
Argentinian biodiesel producers in EU – Biodiesel (Argentina).188 Indonesia also notes that, contrary
to Australia's submission, the ADC's decision to reject Indah Kiat's and Pindo Deli's recorded costs
could not have been based on the term "normally" in the first sentence of Article 2.2.1.1, because
the word "normally" does not appear in the ADC's determination.189
In its Final Report, the ADC explained its decision to reject the exporters' records as follows:
The Commissioner has found that there is a par ticular market situation in Indonesia
such that domestic selling prices are not suitable for determining normal value under
subsection 269TAC(1) and normal values must be constructed or determined on the
basis of third country sales. The Commission constru cted normal values under
subsection 269TAC(2)(c) and in accordance with sections 43, 44 and 45 of the Customs
(International Obligations) Regulation 2015 (the Regulations).
Subsection 43(2) of the Regulations provides that, if an exporter or producer of l ike
goods keeps records relating to the like goods which are in accordance with generally
accepted accounting principles in the country of export, and those records reasonably
reflect competitive market costs associated with the production or manufacture o f like
goods, then the cost of production or manufacture must be worked out using the
information in the exporter's records.
Neither the Act nor the Regulations prescribe a method for assessing whether an
exporter's records reasonably reflect competitive market costs associated with the
production or manufacture of like goods. When undertaking this assessment, the
Commission examines a number of factors, including whether the Government
influenced the prices of any major inputs.
Appendix 2 sets out the Commission 's findings in respect of a market situation in
Indonesia. The Commission found that the significant influence of the Government of
Indonesia (GOI) within the forestry and pulp industries has distorted prices in the paper
industry and the paper market in Indonesia.
In particular, the Commission found that the cost of producing pulp was substantially
less than a competitive benchmark. Consequently, the Commission considers that the
actual cost of pulp recorded by exporters in their records does not reasonably reflect a
competitive market cost . As pulp is proportionally the largest cost component for the
production of the goods and like goods, the Commissioner considers that the
exporter's records do not reasonab ly reflect competitive market costs associated with
the production or manufacture of like goods . Consequently, the Commission considers
that this renders this component of Indonesian producers ' and exporters ' records

185 Australia's first written submission, para. 258.
186 Indonesia's second written submission, para. 72.
187 Indonesia's response to Panel question No. 20(b) following the first meeting of the Panel, p. 21.
188 Indonesia's first written submission, para. 149; second written submission, paras. 69-71.
189 Indonesia's response to Panel question No. 20(b) following the first meeting of the Panel, p. 21.

unsuitable for determining the cost to make A4 copy paper for the purposes of
constructing normal values.190
Indonesia emphasizes the fact that the word "normally" does not appear in the
ADC's determination. However, we do not consider that it can be concluded, on this basis alone, that
the absence of this word or the words "normal and ordinary" 191 from the ADC's finding means that
its rationale was different to the one asserted by Australia. In this regard, we agree with Australia
that "[t]he question before the Panel is whether the Anti -Dumping Commission acted in a manner
consistent with Australia's obligations under the GATT 1994 and the Anti-Dumping Agreement, and
not whether it used the precise words and phrases contained in those treaties".192
Indonesia further argues that the Commission's deci sion to reject the exporters' recorded
costs "is unmistakably made pursuant to the second condition of Article 2.2.1.1 of the
Anti-Dumping Agreement which states, in part, 'reasonably reflect the costs associated with the
production and sale of the product under consideration'".193 Article 2.2.1.1 provides, in relevant part,
as follows:
For the purpose of paragraph 2, costs shall normally be calculated on the basis of
records kept by the exporter or producer under investigation, provided that such records
are in accordance with the generally accepted accounting principles of the exporting
country and reasonably reflect the costs associated with the production and sale of the
product under consideration.
We agree with Indonesia that there is a certain similarit y between the wording of the
second condition of Article 2.2.1.1, first sentence ("reasonably reflect the costs associated with the
production and sale of the product under consideration" ), and the language used by the ADC to
explain its finding. We note, however, that the basis of the ADC's determination is not focused on
whether the recorded costs reasonably reflect "costs associated with the production" of A4 copy
paper, but rather on whether those records reasonably reflect "competitive market costs associated
with the production". Thus, the textual similarity between the second condition in the first sentence
of Article 2.2.1.1 and the ADC's finding does not imply that the ADC rejected the exporters' records
because it considered they did not "reasonably reflect the costs associated with the production and
sale of the product under consideration" within the meaning of the second condition in the
first sentence of Article 2.2.1.1.
The ADC rejected Indah Kiat's and Pindo Deli's recorded cost of pulp in re liance on
subsection 43(2) of Australia's Customs (International Obligations) Regulations 2015.194 The text of
this provision 195 is different from the text of Article 2.2.1.1, first sentence. Subsection 43(2) is
differently structured; the term "normally" is absent and the term "competitive market costs" is used
instead of the word "costs".196 We note, moreover, that, following the issuance of the Statement of
Essential Facts, certain exporters contested the ADC's interpretation of subsection 43(2) (b)(ii)
arguing that it was inconsistent with the Appellate Body's interpretation of Article 2.2.1.1 of the

190 Final Report, (Exhibit IDN-4), section 6.9.1, pp. 50-51. (fns omitted; emphasis added)
191 In the course of this proceeding, Australia used the expressions "where the circumstances are not
normal and ordinary" and "circumstances that were outside the normal and ordinary" to explain the rationale
used by the ADC for the rejection of Indah Kiat's and Pindo Deli's costs. See, for example, Australia's first
written submission, paras. 200-201, 213, 219, and 258; second written submission, paras. 214-215, and 220.
192 Australia's second written submission, para. 207. (underlining omitted)
193 Indonesia's response to Panel question No. 20(b) following the first meeting of the Panel, p. 21.
194 Final Report, (Exhibit IDN-4), section 6.9.1, pp. 50-51.
195 Subsection 43(2) of Australia's Customs (International Obligations) Regulations 2015 reads:
(2) If:
(a) an exporter or producer of like goods keeps records relating to the like goods; and
(b) the records:
(i) are in accordance with generally accepted accounting principles in the country of export; and
(ii) reasonably reflect competitive market costs associated with the production or manufacture of
like goods;
the Minister must work out the amount by using the information set out in the records.
(Extracts of Customs (International Obligations) Regulation 2015, (Exhibit AUS-4), p. 47).
196 Australia has further explained that it "operates a dualist system" where "treaty obligations are given
effect via domestic laws and regulations, which may or may not mirror the precise language of the underlying
treaty". (Australia's response to Panel question No. 23 following the first meeting of the Panel, para. 167).

Anti-Dumping Agreement in EU – Biodiesel (Argentina) 197, which focused specifically on the
second condition. The ADC responded by pointing out that th e exporters' "interpretation of
subsection 43(2)(b)(ii) fails to account for the difference between the text of Article 2.2.1.1 and the
words of subsection 43(2)(b)(ii)". 198 This, supports the conclusion that the ADC engaged in an
analysis that was different from that required under the second condition of Article 2.2.1.1,
first sentence.199
Indonesia argues that "Australia applied the phrase 'competitive market costs' to mean the
costs must, themselves, be reasonable" and that this rationale is similar to the
European Union's "reasonableness test" found to be WTO -inconsistent in EU – Biodiesel
(Argentina).200 We note that in the anti-dumping investigation at issue in EU – Biodiesel (Argentina),
the EU authorities decided to disregard the recorded cost of soybeans to calculate the cost of
production of Argentinian biodiesel because those costs "were found to be artificially lower than the
international prices due to the distortion created by the Argentine export tax system". 201
The European Union argued that it was entitled to disregard those costs on this basis because the
second condition in Article 2.2.1.1 envisages that recorded costs could be rejected if they were not
reasonable.202 The panel, upheld by the Appellate Body, rejected the European Union's submissions,
finding that the second condition of Article 2.2.1.1, first sentence, does not permit the exclusion of
GAAP-consistent costs simply because they are not considered to be "reasonable" by the
investigating authority.203 However, the rationale of the ADC's rejection of the recorded costs is
different. The ADC's determination does not refer to the reasonableness of the costs as a criterion
for their rejection. Rather, the ADC grounded its rejection of the recorded costs on its finding that
the records did not reasonably reflect competitive market costs. We, therefore, find that Australia
did not use the phrase "competitive market costs" to mean the costs must, themselves, be
reasonable.
We note further that, in "assessing whethe r an exporter 's records reasonably reflect
competitive market costs associated with the production or manufacture of like goods", the
ADC explained that it examined "whether the Government influenced the prices of any major inputs".
In the subsequent paragraph, the ADC noted that, in its findings in respect of a market situation in
Indonesia in Appendix 2, it established that "the significant influence of the Government of Indonesia
(GOI) within the forestry and pulp industries has distorted prices in the paper industry and the paper
market in Indonesia". 204 It follows, that the rejection of pulp costs stemmed from the
ADC's determination of the "particular market situation". This is consistent with
Australia's explanation that the rejected pulp component of t he recorded costs reflected the
"particular market situation" in Indonesia's market.
The ADC went on to state: "[i]n particular, the Commission found that the cost of producing
pulp was substantially less than a competitive benchmark".205 In this context, the ultimate measure
of whether the pulp component of the expor ters' records was acceptable to the ADC was the
comparison of the exporters' pulp costs with the competitive market benchmark. Therefore, the
standard the ADC was applying to the records was something other than whether the records
reasonably reflected the costs incurred.
For these reasons, we disagree with Indonesia that the ADC disregarded the pulp component
of Indah Kiat's and Pindo Deli's record s because the records did not reasonably reflect the costs
associated with the production and sale of the product under consideration and we therefore find

197 Final Report, (Exhibit IDN-4), section 6.9.8.1.1, p. 60.
198 Final Report, (Exhibit IDN-4), section 6.9.8.1.1, p. 60.
199 Subsection 43(2) of Australia's Customs (International Obligations) Regulation 2015 is not
challenged in this dispute. Therefore, it is relevant for our consideration only insofar as it was applied by the
investigating authority as a basis for the rejection of the pulp component of Indah Kiat's and Pindo
Deli's records.
200 Indonesia's first written submission, para. 149; second written submission, paras. 69-71.
201 Panel Report, EU – Biodiesel (Argentina), para. 7.248.
202 Panel Report, EU – Biodiesel (Argentina), paras. 7.194-7.195.
203 Panel Report, EU – Biodiesel (Argentina), para. 7.242; Appellate Body Report, EU – Biodiesel
(Argentina), para. 6.56.
204 Final Report, (Exhibit IDN-4), section 6.9.1, p. 51.
205 Final Report, (Exhibit IDN-4), section 6.9.1, p. 51.

that Australia's explanation of the ADC's rationale for disregarding the pulp component of Indah
Kiat's and Pindo Deli's recorded costs does not constitute an ex post facto rationalization.
7.3.3 Whether the Anti-Dumping Commission rejected the hardwood pulp component of
Indah Kiat's and Pindo Deli's recorded costs inconsistently with Articles 2.2.1.1 and 2.2
of the Anti-Dumping Agreement
Indonesia argue s that Article 2.2.1.1 requires an investigating authority to use a
producer's actual costs unless they fail to meet one of the two express conditions: the records must
be in accordance with GAAP in the producer 's home country and must accurately reflect t he cost
incurred to produce the product under consideration. 206 Indonesia claims that Australia's rejection
of the hardwood pulp component of the records is in breach of this provision since the records of
Indah Kiat and Pindo Deli were in accordance with GAAP in Indonesia and reasonably reflected the
cost associated with the production and sale of A4 copy paper in Indonesia.207 In response, Australia
argues that the circumstances in respect of Indah Kiat 's and Pindo Deli 's pulp records were not
"normal and ordinary" since they reflected the particular market situation , and using those records
would render the use of a constructed normal value inutile. 208 In Australia's view, therefore, the
ADC rightly discarded the pulp component of the records in reliance on the term "normally", which
provides a separate ground to disregard exporters' records in Article 2.2.1.1, first sentence. 209
Australia submits that interpreting the first sentence of Article 2.2.1.1 in a way that requires that
the costs be calculated on the basis of records whenever the two conditions in Article 2.2.1.1 are
satisfied renders the word "normally" redundant.210 Indonesia disagrees with this interpretation and
argues that the only circumstances in which an authority is allowed to disregard the records is when
one of the two explicit conditions is not satisfied. 211 In Indonesia's view, even assuming that " the
word 'normally' means the Anti -Dumping Agreement allows an investigating autho rity to disregard
a producer's recorded costs when circumstances are not normal and ordinary, Australia 's decision
still is not consistent with Article 2.2.1.1".212 Indonesia submits that if the term "normally" provides
an additional exception for disregardi ng a producer's records, "that exception has limits and those
limits are not implicated by the facts of this dispute".213

206 Indonesia's first written submission, paras. 124 and 136 (referring to Appellate Body Report,
EU – Biodiesel (Argentina), para. 6.21).
207 Indonesia's first written submission, paras. 123-154.
208 Australia's first written submission, paras. 207-208. In this context, Australia argued, in relying on
the Appellate Body's statements in EU – Biodiesel (Argentina), that the purpose of determining a constructed
normal value is to establish an "appropriate proxy for the price of the like product in the ordinary course of
trade in the domestic market of the exporting country when the normal value cannot be determined on the
basis of domestic sales", and that "costs calculated pursuant to Article 2.2.1.1 … must be capable of generating
such a proxy". (Australia's first written submission, paras. 202 and 208, fn 216 (referring to Appellate Body
209 Australia's first written submission, paras. 204-208, 215-216, and 219 (underlining omitted);
second written submission, paras. 219-221; and response to Panel question No. 20(c) following the first
meeting of the Panel, paras. 130 and 137-142.
210 Australia's first written submission, paras. 187-192 (underlining omitted); second written
submission, para. 226; and response to Panel question No. 20(d) following the first meeting of the Panel,
para. 150.
211 Indonesia's response to Panel question No. 20(a) following the first meeting of the Panel, p. 20;
second written submission, paras. 56-60.
212 At the second meeting of the Panel, when we asked Indonesia whether "assuming for the sake of an
argument, that the presence of the term 'normally' in Article 2.2.1.1 of the Anti-Dumping Agreement allows an
investigating authority to disregard producers' recorded costs where the circumstances before an investigating
authority are not normal and ordinary and that the Australian Anti-Dumping Commission genuinely relied on
this ground in disregarding the pulp costs of Indah Kiat and Pindo Deli … the Australian Anti-Dumping
Commission's decision to disregard the pulp costs [was] consistent with Article 2.2.1.1 of the
Anti-Dumping Agreement", Indonesia responded "yes, it was" and made some additional clarifications.
(Indonesia's response to Panel question No. 16 at the second meeting of the Panel). Later, however, Indonesia
clarified in writing that even on the basis of such interpretation, it would still maintain that Australia's rejection
of the hardwood pulp component of the records was inconsistent. (Indonesia's response to Panel question
No. 16 following the second meeting of the Panel, para. 30; comments on Australia's response to Panel
question No. 32 following the second meeting of the Panel, para. 53). We therefore proceed to rely on the
most recent position of Indonesia elaborated in writing.
213 Indonesia's response to Panel question No. 16 following the second meeting of the Panel, para. 36.

The main legal question raised by the parties' submissions is whether the term "normally"
in the first sentence of Article 2.2.1.1 provides a separate basis to disregard an exporter's records,
and, if so, whether the ADC's decision to disregard the pulp component of the records was
inconsistent with relying on that legal basis. In order to answer this question, we believe we need
to exami ne how the first sentence of Article 2.2.1.1 is intended to operate. We recall that
Article 2.2.1.1, first sentence provides as follows:
For the purpose of paragraph 2, costs shall normally be calculated on the basis of
records kept by the exporter or producer under investigation, provided that such records
are in accordance with the generally accepted accounting principles of the exporting
country and reasonably reflect the costs associated with the production and sale of the
product under consideration.
The first sentence of Article 2.2.1.1 establishes that an investigating authority "shall
normally" use the records kept by the exporter as the basis for the calculation of costs of production,
when those records satisfy two conditions: first, they must be " in accordance with the generally
accepted accounting principles of the exporting country"; and second, they must "reasonably reflect
the costs associated with the production and sale of the product under consideration". It follows,
and it is undisputed by the parties, that the obligation to "normally" use the records kept by the
exporter, does not apply when either of the two conditions is not satisfied. In such a situation, an
investigating authority may use another source of data as the basis for the calc ulation of an
exporter's cost of production.
The term "normally" is defined as "under normal or ordinary conditions; as a rule, ordinarily";
"in a normal manner, in the usual way ".214 This term modifies the verb "shall be calculated" and,
thus, qualifies th e obligation on the investigating authority to follow certain behaviour, i.e. to
calculate the costs on the basis of an exporter's records. We agree with the panels in China – Broiler
Products and in EU – Biodiesel (Argentina) that the term "normally" suggests that the obligation to
use the records kept by an exporter to calculate the costs admits of derogation under certain
circumstances.215
In examining the function of the adverb "normally" in the sentence, we find persuasive
Australia's position that Indonesia's reading of Article 2.2.1.1, first sentence, as requiring that the
exporters' records must be used unless one (or both) of the conditions in the first sentence of
Article 2.2.1.1 are not satisfied would render the word "normally" redun dant.216 If
Indonesia's interpretation were to be accepted, the first sentence of Article 2.2.1.1 would have the
same meaning with or without the word "normally", which would be inconsistent with the principle
that "interpretation must give meaning and effect to all the terms of a treaty".217
We recall further Indonesia's argument that "[b]y including the word 'provided' the drafters
intentionally were conditioning application of the rule in Article 2.2.1.1 [] to the two conditions that
followed".218 Indonesia finds support for its argument in the panel's statement in China – Broiler
Products (Article 21.5 – US) that the "use of the term 'normally' in a legal obligation indicates a rule

214 Oxford Dictionaries online, definition of "normally",
https://www.oed.com/view/Entry/128277?redirectedFrom=normally (accessed 17 September 2019).
215 Panel Report, China – Broiler Products, para. 7.161 (referring to Appellate Body Report, US – Clove
Cigarettes, para. 273) (fns omitted); Panel Report, EU – Biodiesel (Argentina), para. 7.227. We note that the
Appellate Body has stated that:
Given the reference to "normally" in the first sentence of Article 2.2.1.1, we do not exclude that
there might be circumstances other than those in the two conditions set out in that sentence, in
which the obligation to base the calculation of costs on the records kept by the exporter or
producer under investigation does not apply.
(Appellate Body Report, Ukraine – Ammonium Nitrate, para. 6.87; see also Appellate Body Report,
EU – Biodiesel (Argentina), fn 120).
216 Australia's first written submission, paras. 187-192 (underlining omitted); second written
submission, paras. 197 (referring to Indonesia's response to Panel question No. 20 at the first meeting of the
Panel and response to Panel question No. 20(a) following the first meeting of the Panel, p. 20) and 226;
response to Panel question No. 20(d) following the first meeting of the Panel, para. 150.
217 Appellate Body Report, US – Gasoline, DSR 1996:I, p. 21.
218 Indonesia's second written submission, para. 59.

from which derogations are permitted subject to the conditions set out in the legal provision".219 We
note in this respect that the panel did not state that derogations are permitted only subject to the
conditions set out in the legal provision, nor did the panel engage in further analysis of the term
"normally". Therefore, we do not think the panel's statement supports Indonesia's argument.
Like Indonesia, China argues that the flexibility derived from the word "normally" must be
confined to the exceptions specified in Article 2.2.1.1, first sentence.220 China finds support for this
argument in the reasoning of the Appellate Body in US – Clove Cigarettes, where the Appellate Body
found that while the obligation was qualified with the adverb "normally", an importing Member could
depart from that obligation based on the explicit derogation provided for in paragraph 5.2 of the
Doha Ministerial Decision.221 China argues that the Appellate Body did not suggest that there were
other bases for derogation from the rule except for the one specified explicitly in the provision. 222
We note that the Appellate Body's reasoning was specific to Article 2.12 of the Agreement on
Technical Barriers to Trade and paragraph 5.2 of the Doha Ministerial Decision , which relate to the
timing of the publication of technical regulations 223 – a matter that is quite di fferent from the
obligation to use an exporter's records to calculate the costs. In our view, the meaning of the term
"normally" in Article 2.2.1.1, first sentence, must be ascertained in light of the specific context of
the Anti -Dumping Agreement. We cons ider that the context of the term "normally" found in
Article 2.2.1.1, first sentence, suggests that a different interpretation is appropriate.
We note the text of the Anti-Dumping Agreement contains five sentences that use the words
"provided that" and an obligation introduced by the verb "shall". However, we have identified that
only two of the five sentences use the word "normally" in addition to the words "provided that" 224,
whereas the other three sentences condition the respective obligations on t he circumstances
introduced by the words "provided that" without qualifying the obligations by the term "normally".225
In light of this context, we consider that the term "normally" in Article 2.2.1.1 was used by the
drafters deliberately to introduce a difference to the meaning of the sentence and cannot be reduced
to a mere reference to the conditions that follow the words "provided that", as argued by Indonesia.
Rather, the term "normally", in our view, indicates that even where an exporter's records satisfy the
two explicit conditions in Article 2.2.1.1, first sentence, there are circumstances in which the
authority may depart from its obligation to use those records – an obligation that is operative only
when the two explicit conditions are fulfilled.
While Australia argues that the presence of the word "normally" in Article 2.2.1.1,
first sentence, means that "where the circumstances are not normal and ordinary, the investigating
authority is not required to calculate costs on the basis of records kept by the exporter or producer
under investigation, even if the two conditions in Article 2.2.1.1 are satisfied "226, and Indonesia
disagrees with this proposition227, we do not believe that this dispute requires us to define precisely
under what circumstances an investigating authority would be allowed to depart from the obligation
to use the exporter's records on the basis of the term "normally".
As we already noted, the obligation to "normally" use the records kept by the exporter,
becomes operative when both explicit conditions are satisfied: the "records are in accordance with
the generally accepted accounting principles of the exporting country and reasonably reflect the
costs associated with the production and sales of the product under consideration". It follows that,
to rely on the flexibility provided by the term "normally", the investigating authority has to consider
whether the records satisfy the two explicit conditions and establish that, although the records are
in accordance with GAAP of the exporting country and reasonably reflect the costs associated with
the production and sale of the product under consideration, it nonetheless finds a compelling reason,

219 Indonesia's response to Panel question No. 20(a) following the first meeting of the Panel, p. 20
(referring to Panel Report, China – Broiler Products (Article 21.5 – US), para. 7.29).
220 China's third-party submission, para. 63.
221 China's third-party submission, para. 62 (referring to Appellate Body Report, US – Clove Cigarettes,
paras. 273 and 275).
222 China's third-party submission, para. 62.
223 Appellate Body Report, US – Clove Cigarettes, paras. 269-275.
224 Article 2.2.1.1 (first sentence), and footnote 2 of the Anti-Dumping Agreement.
225 Article 2.2, Article 2.2.1.1 (second sentence), and footnote 11 of the Anti-Dumping Agreement.
226 Australia's first written submission, para. 194. (underlining omitted)
227 Indonesia's second written submission, para. 61; response to Panel question No. 16 following the
second meeting of the Panel, paras. 30-36.

distinct from the two explicit conditions, to disregard them. If the investigating authority wer e
permitted to rely on the term "normally" to disregard the records without giving any consideration
to the two explicit conditions, this would render those conditions in Article 2.2.1.1, first sentence,
unnecessary. In such a case, the first sentence of Article 2.2.1.1 could simply read "[f]or the purpose
of paragraph 2, costs shall normally be calculated on the basis of the records kept by the exporter
or producer under investigation ".228 As Australia points out, the word "normally" has to be given
meaning and effect.229 By the same token, the two explicit conditions must also be given meaning
and effect. We conclude that in relying on "normally", the investigating authority should give
meaning to the whole of the obligation in Article 2.2.1.1, first sentence, and should therefore
examine whether the records satisfy the two explicit conditions and provide a satisfactory
explanation as to why, nonetheless, it finds compelling reasons to disregard them.
We find further support for the above understanding of the obligation in Article 2.2.1.1, first
sentence, in the reasoning of the panel in Ukraine – Ammonium Nitrate. In that dispute, Ukraine
relied on the term "normally" in the first sentence o f Article 2.2.1.1 to defend its investigating
authority's decision to disregard the producers' recorded gas costs because of the perceived
distortions in the Russian domestic market for gas. 230 The panel rejected Ukraine's submission,
finding that it was based on ex post facto rationalization, in part because the investigating authority
had not made a finding that both the first and second conditions of Article 2.2.1.1 were satisfied
before deciding to reject the recorded costs.231 In our view, this line of reasoning suggests that the
panel in Ukraine – Ammonium Nitrate similarly considered that, to the extent that the word
"normally" allows for the possibility of rejecting exporters' or producers ' recorded costs, the
investigating authority must give consideration to the whole of the obligation in the first sentence of
Article 2.2.1.1, including the two explicit conditions.
With these considerations in mind, we now turn to examine the ADC's determination to
establish whether the ADC properly relied on the flexi bility provided by the term "normally" in
disregarding the hardwood pulp component of Indah Kiat's and Pindo Deli's recorded costs. We note
that there is no specific finding in the Final Report regarding the consistency of Indah Kiat's and
Pindo Deli's recorded pulp costs with GAAP in Indonesia.232 The parties have also not pointed us to
any such explicit finding made by the ADC in the Final Report.
As regards the second condition, we note that Australia argues that "[t]he [ADC] did not
explicitly find that t he cost of hardwood pulp recorded by Indah Kiat and Pindo Deli did not
'reasonably reflect the costs associated with the production and sale of the product under
consideration', as stated in the second condition of Article 2.2.1.1".233 Australia also does not argue
that the ADC actually determined that the records of Indah Kiat and Pindo Deli "reasonably reflect
the costs associated with the production and sale of the product under consideration", and we do
not see any explicit finding to this effect in the Final Report.
Indonesia points out that, in respect of Indah Kiat, the ADC's verification team found that
"the pulp costs (as part of the raw material costs) recorded in Indah Kiat 's [cost to make and sell
(CTMS)] spreadsheet for A4 photocopy paper r eflect the actual costs incurred". 234 As far as Pindo
Deli is concerned, we note that "the verification team did not conduct an on-site verification of [its]
[CTMS] data". Nevertheless, the verification team compared this data to that of other exporters and
found it to be "comparable".235
These statements from the verification reports reveal that the ADC performed some analysis
that is potentially relevant to determining whether the second condition of Article 2.2.1.1, first
sentence, was satisfied. However, we do not understand these statements found in the verification

228 See also Indonesia's response to Panel question No. 32 following the second meeting of the Panel,
para. 96.
229 Australia's first written submission, paras. 189 and 192; second written submission, para. 202.
230 Panel Report, Ukraine – Ammonium Nitrate, paras. 7.72-7.75 and 7.79-7.80.
231 Panel Report, Ukraine – Ammonium Nitrate, para. 7.80.
232 Final Report, (Exhibit IDN-4), section 6.9, pp. 50-65.
233 Australia's second written submission, para. 211. (underlining omitted)
234 Indonesia's first written submission, para. 153 (referring to Indah Kiat's Verification Report,
(Exhibit IDN-9), section 4.3).
235 Indonesia's first written submission, para. 153; Pindo Deli's Verification Report, (Exhibit IDN-10),
section 4.1.

reports to constitute definitive findings of the ADC, but rather merely the ADC's initial exploration of
the completeness and accuracy of the cost data. The preliminary character of the content s of the
verification report s is confirmed by the titles of their final sections, including "Normal value –
Preliminary assessment" or " Preliminary Dumping Margin" and the statement on the first pages:
"[t]his report and the views or recommendations contai ned therein will be reviewed by the case
management team and may not reflect the final position of the Anti -Dumping Commission" .236
Furthermore, it is uncontested that in the investigation at issue, some of the recommendations made
by the verification teams were not followed by the ADC in its final determination. For example,
although the verification team was "satisfied" that the prices paid in domestic sales of A4 copy paper
are suitable for assessing the normal value237, the ADC ultimately decided to construct normal value.
Finally, we recall that the ADC explained that , when undertaking the assessment "whether
an exporter's records reasonably reflect competitive market costs associated with the production or
manufacture of like goods", "the [ADC] examines a number of factors, including whether the
Government influenced the prices of any major inputs".238 We note that the ADC's reasoning in the
Final Report leading to the rejection of Indah Kiat's and Pindo Deli's recorded pulp costs focused on
government-induced distortions in the pulp costs in the paper market in Indonesia. 239 The relevant
section of the Final Report does not contain any finding regarding the accuracy of the exporters'
records.240
Having carefully reviewed the Final Report of the ADC, we find that the ADC did not establish
that Indah Kiat's and Pindo Deli's records were GAAP-consistent and reasonably reflected costs
associated with the production and sale of A4 copy paper. The ADC rejected the pulp cost component
of their records for other reasons. Thus, the ADC, in its analysis, did not give effect to the whole of
the obligation in Article 2.2.1.1, first sentence, including the two explicit conditions. In light of our
above reasoning regarding the operation of the first sentence of Article 2.2.1.1, first sentence, the
ADC's reliance on the term "normally" was inconsistent with Australia's obligations under that
provision. Accordingly, we find that the ADC acted inconsistently with Australia's obligations under
Article 2.2.1.1 when it disregarded the recorded hardwood pulp costs of Indah Kiat and Pindo Deli
in the A4 copy paper investigation.
As noted in our introduction to these findings, Indonesia also claims that the ADC's decision
to disregard the recorded hardwood pulp costs of Indah Kiat and Pindo Deli is inconsistent with
Article 2.2 of the Anti-Dumping Agreement. Indonesia asks the Panel to make this finding "because
in constructing the normal value for the Indonesian producers under investigation, Australia did not
calculate the cost of production for A4 copy paper on the basis of the records kept by those producers
even though the records were in accordance with [GAAP] and reasonably reflected the actual cost
of production of A4 copy paper, and because Australia therefore failed to properly calculate the cost
of production and properly construct the normal value for those producers". 241 We have already
established above that the ADC acted inconsistently with Article 2.2.1.1 when it rejected the
hardwood pulp component of Indah Kiat's and Pindo Deli's records. As we understand it, Indonesia
has not provided any basis for its Article 2.2 claim that is separate and independent from its claim
under Article 2.2.1.1 of the Anti-Dumping Agreement and, in that sense, Indonesia's claim under
Article 2.2 is purely consequential. In this light, we do not believe it is necessary to make any findings
on Indonesia's claim for the purpose of resolving this dispute. Accordingly, we exercise judicial
economy and decline to rule on the merits of Indonesia's claim under Article 2.2 of the
Anti-Dumping Agreement.
7.3.4 Conclusion
We find that Australia's measure is inconsistent with Article 2.2.1.1, first sentence, of the
Anti-Dumping Agre ement because the ADC has not established that both the first and second
conditions in the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement were satisfied when

236 Indah Kiat's Verification Report, (Exhibit IDN-9), sections 7 and 8, and p. 1; Pindo Deli's Verification
Report, (Exhibit IDN-10), sections 7 and 8, and p. 1.
237 Indah Kiat's Verification Report, (Exhibit IDN-9), section 7; Pindo Deli's Verification Report,
(Exhibit IDN-10), section 7.
238 Final Report, (Exhibit IDN-4), section 6.9.1, p. 51.
239 Final Report, (Exhibit IDN-4), section 6.9.1, pp. 50-51.
240 Final Report, (Exhibit IDN-4), section 6.9.1, pp. 50-51.
241 Indonesia's first written submission, para. 181. (emphasis added)

rejecting the pulp component of Indah Kiat's and Pindo Deli's records on the basi s of the term
"normally" and therefore has failed to give effect to the whole of the obligation in that provision.
Because Indonesia's claim under Article 2.2 of the Anti -Dumping Agreement that the ADC
has not properly calculated the "cost of production" o f A4 copy paper for Indah Kiat and Pindo Deli
is based entirely on the ADC's rejection of the hardwood pulp component of their records , it is
consequential to its claim under Article 2.2.1.1, and we therefore decline to make any findings.
7.4 Whether the Anti -Dumping Commission constructed the "cost of production" of
A4 copy paper for Indah Kiat and Pindo Deli in a manner inconsistent with Article 2.2 of
the Anti-Dumping Agreement
7.4.1 Introduction
Indonesia submits th at the ADC acted inconsistently with Australia's obligations under
Article 2.2 of the Anti-Dumping Agreement by substituting the actual cost of hardwood pulp recorded
in Indah Kiat's and Pindo Deli's records with prices of exports of hardwood pulp made by Brazilian
and South American producers to China and Korea. 242 According to Indonesia, the use of
third-country export prices as a proxy for the actual costs of pulp of the Indonesian producers was
inconsistent with the requirement in Article 2.2 to calculate the "cost of production in the country of
origin".243 In particular, Indonesia maintains that the adjustments made to the export price
benchmarks used as a proxy for costs did not result in the ADC using the cost of production in
Indonesia to construct the normal value of A4 paper. 244 Moreover, Indonesia argues that the
benchmarks were not adjusted for different levels of profit to reflect the respective situations of
Indah Kiat and Pindo Deli. 245 Finally, Indonesia argues that the benchmarks were not appropriat e
for deriving the cost of pulp in Indonesia because they were based on unreliable indicative data,
which was misrepresented in the ADC's Final Report as "verified actual transaction prices". 246
Indonesia also argues that the ADC could have replaced the cost of woodchips rather than pulp costs
in constructing Indah Kiat's cost of production of A4 copy paper and that would result in a less
trade-distortive benchmark.247
Australia argues that the ADC acted consistently with Australia's obligations under Article 2.2
because there were no available domestic prices or import prices of pulp in Indonesia that could
have been used to substitute the actual costs of pulp. 248 Australia clarifies that the only available
domestic prices of pulp were confidential and therefore could not be used, and import prices of pulp
would likely be affected by the identified market distortions. 249 Australia argues that the ADC was
entitled to use the pulp benchmark to determine the full cost of pulp since the obligation to calculate
"cost of production in the country of origin", as used in Article 2.2 of the Anti-Dumping Agreement,
is broader than the obligation to use costs recorded in the records under Article 2.2.1.1.250 According

242 Indonesia's first written submission, paras. 155, 164, and 166; second written submission, para. 75;
and opening statement at the second meeting of the Panel, para. 71.
243 Indonesia's first written submission, paras. 164 and 167; opening statement at the second meeting
of the Panel, para. 71.
244 Indonesia's first written submission, paras. 155 and 168; second written submission, paras. 74-75;
and response to Panel question No. 29 following the first meeting of the Panel, p. 24.
245 Indonesia's opening statement at the second meeting of the Panel, para. 71; responses to Panel
question No. 9 following the second meeting of the Panel, paras. 26 and question No. 30, paras. 91-93; and
comments on Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 54-57.
246 Indonesia's opening statement at the second meeting of the Panel, para. 70; responses to Panel
question No. 9 following the second meeting of the Panel, paras. 23-24 and question No. 29, paras. 88-89.
247 Indonesia's responses to Panel question No. 18 following the second meeting of the Panel, para. 37
and question No. 35, paras. 97-98.
248 Australia's first written submission, paras. 222-228 (referring to Final Report, (Exhibit IDN-4),
sections 6.9.2.2, A4.3, A4.3.1, A4.3.2, and A4.5.1, pp. 52, and 230-232).
249 Australia's first written submission, paras. 225-227.
250 Australia's response to Panel question No. 26 following the first meeting of the Panel, paras. 196-198
(referring to Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73); second written submission,
paras. 259-260, and fn 315 (referring to Appellate Body Reports, Canada – Dairy (Article 21.5 – New Zealand
and US II), para. 102; US – Carbon Steel (India), para. 4.352; US — Upland Cotton (Article 21.5 - Brazil),
paras. 426-428; and Panel Report, US – Upland Cotton (Article 21.5 – Brazil), para. 10.170); and responses to
Panel questions Nos. 14 and 15 following the second meeting of the Panel, paras. 82-100.

to Australia, although based on external sources, the pulp ben chmark used in the construction of
normal value was adjusted to ensure that it was suitable to arrive at the cost of production of A4 copy
paper in Indonesia.251 Australia submits that the ADC was not obliged to adjust the pulp benchmark
to reflect the level of profit252, and that the data used for the pulp benchmark was reliable.253
We begin by addressing the key threshold question that is raised by the parties' submissions,
namely, whether the ADC was entitled, under the terms of Article 2.2 of the
Anti-Dumping Agreement, to replace the actual costs of pulp of the Indonesian A4 copy paper
producers with a value derived from third-country export prices of pulp to China and Korea.
7.4.2 Whether the Anti-Dumping Commission was entitled to replace the recorded pulp
costs of Indah Kiat and Pindo Deli with adjusted third-country export prices of pulp
Article 2.2 of the Anti-Dumping Agreement provides:
When there are no sales of the like product in the ordinary course of trade in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting country,
such sales do not permit a proper comparison, the margin of dumping shall be
determined by comparison with a comparable price of the like product when exported
to an appropriate third country, provided that this price is representative, or with the
cost of production in the country of origin plus a reasonable amount for administrative,
selling and general costs and for profits.254
The expression "cost of production in the country of origin" in this provision has been
understood as "a reference to the price paid or to be paid to produce something within the country
of origin". 255 Normally, and as reflected in the o bligation set out in the first sentence of
Article 2.2.1.1, the cost of production in the country of origin should be calculated on the basis of
cost information from an exporter's own records. However, as explained by the Appellate Body in
EU – Biodiesel (Argentina):
In circumstances where the obligation in the first sentence of Article 2.2.1.1 to calculate
the costs on the basis of the records kept by the exporter or producer under
investigation does not apply, or where relevant information from the expor ter or
producer under investigation is not available, an investigating authority may have
recourse to alternative bases to calculate some or all such costs.256
We recall that the ADC did not use Indah Kiat's and Pindo Deli's pulp costs to calculate their
respective costs of production of A4 copy paper for the purpose of constructing normal value.
We have found in the previous section that in disregarding Indah Kiat's and Pindo Deli's costs, the
ADC acted inconsistently with the first sentence of Article 2.2.1.1. Accordingly, in the light of the
above Appellate Body statement from EU – Biodiesel (Argentina), with which we agree, there was
no legal basis for the ADC to have used third -country export prices of pulp as a proxy for Indah
Kiat's and Pindo Deli's pulp costs when constructing normal value of A4 copy paper under the terms
of Article 2.2. It follows that the ADC's use of Brazilian and South American export prices of pulp to
China and Korea as a starting point for the calculation of the costs of pulp in Indonesia was
inconsistent with Article 2.2.

251 Australia's first written submission, paras. 228-229 (referring to Final Report, (Exhibit IDN-4),
sections 6.9.2.2, A2.9.2.3, A4.1, A4.2, A4.3.3, A4.5.1, A4.5.2, pp. 52, 167, and 230-233), 232-240,
and 245-246; second written submission, paras. 235-260; and response to Panel question No. 11 following the
second meeting of the Panel, paras. 49-61.
252 Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 158-177; comments on Indonesia's responses to Panel questions Nos. 9, 10, 29 and 30 following the
second meeting of the Panel, paras. 60-61, and 130-148.
253 Australia's closing statement at the second meeting of the Panel, paras. 9-12; comments on
Indonesia's responses to Panel questions Nos. 9, 10, and 29 following the second meeting of the Panel,
paras. 53-58.
254 Fn omitted.
255 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.69.
256 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73. (fn omitted)

Having concluded that the ADC was not entitled, under Article 2.2, to use third -country
export prices of pulp as a basis for determining the cost of production of A4 copy paper in Indonesia,
we note that a panel has "the discretion to address only those arguments it deems necessary to
resolve a particular claim".257 In this particular case, we do not consider that we need to address all
of the arguments presented by Indonesia as to why the use of the pulp benchmark was inconsistent
with Article 2.2. However, to assist the parties in resolving their dispute, we find it useful to address
Indonesia's submissions concerning the absence of relevant profit adjustments to the pulp
benchmark and the ADC's decision not to re place woodchips costs instead of pulp costs for Indah
Kiat. We understand that Indonesia's arguments regarding these issues proceed by assuming
arguendo that even if the ADC were allowed to replace some of the exporters' costs in constructing
their cost of production of A4 copy paper in Indonesia, the ADC's use of the specific pulp benchmark
it selected was still inconsistent with the requirement to calculate the "cost of production" under
Article 2.2. For the purposes of our subsequent analysis, we therefore will similarly examine whether,
even assuming that the ADC was allowed to replace some of the exporters' costs by out-of-country
information, its use of the pulp benchmark was nonetheless inconsistent with Article 2.2. However,
before moving on to this analysis, we address Australia's contention that Indonesia has conceded in
this proceeding that the export pulp benchmark applied by the ADC was the proper amount to use
for the hardwood pulp component of the cost of production of A4 copy paper.
Australia argues Indonesia has conceded that the pulp benchmark was the proper amount
to use as a substitute for Indah Kiat's and Pindo Deli's pulp costs "because Indonesia has
acknowledged that the prevailing export price of hardwood pulp was the proper amount to use for
the hardwood pulp component of the 'cost of production'" and because "Australia has demonstrated
that the 'pulp benchmark' used by the Anti -Dumping Commission was virtually identical to that
prevailing export price".258 While it is true that Indonesia originally argued that Australia could have
used the export price of Indonesian pulp to derive the cost of pulp in Indonesia 259, the arguments
of Indonesia have evolved in the course of this proceeding. In response to the Panel's request to
confirm the understanding that "Indonesia seems to accept that the export price of Indonesian pulp
could have been used as a suitable amount for the pulp costs to arrive at the cost of production of
A4 copy paper in Indonesia" , Indonesia clarified that this understan ding is "not correct". 260
Therefore, we find that Indonesia has not conceded that the pulp benchmark was the proper amount
to use for the hardwood pulp component of Indah Kiat's and Pindo Deli's cost of production of
A4 copy paper.
7.4.3 Whether the absence of adjustments to the pulp benchmark for different levels of
profit is inconsistent with Article 2.2 of the Anti-Dumping Agreement
Indonesia argues that the pulp cost benchmark used to replace Indah Kiat's and Pindo Deli's
actual pulp costs was incorrect because it included profit amounts that did not reflect the specific
circumstances of each company, including "the fact that the Indonesian producers are integrated or
affiliated with pulp producers". 261 In particular, Indonesia maintains that, for Indah Kiat, the pulp
benchmark should not have included profit because it was an integrated company, while for Pindo
Deli, the profit component of the benchmark should have been removed or adjusted.262
Australia responds that subtracting an amount for profit from the pulp benchmark would
have meant that the cost of production of A4 copy paper derived for Indah Kiat and Pindo Deli would
not have reflected the full cost of production of A4 copy paper in Indonesia and would not have been
an "appropriate proxy for the price of the like product in the ordinary course of trade in the domestic
market of the exporting country when the normal value cannot be determined on the basis of

257 Appellate Body Reports, EC – Fasteners (China), para. 511; EC – Poultry, para. 135; and India –
Solar Cells, para. 5.15.
258 Australia's opening statement at the second meeting of the Panel, para. 101 (referring to
Indonesia's opening statement at the first meeting of the Panel, para. 49; Australia's closing statement at the
first meeting of the Panel, paras. 26-29; and second written submission, paras. 241-249).
259 Indonesia's opening statement at the first meeting of the Panel, para. 49.
260 Indonesia's response to Panel question No. 29 following the second meeting of the Panel, para. 88.
261 Indonesia's opening statement at the second meeting of the Panel, para. 71.
262 Indonesia's responses to Panel questions Nos. 30(a) and (b) following the second meeting of the
Panel, paras. 91-92; comments on Australia's response to Panel question No. 33 following the second meeting
of the Panel, paras. 55-57.

domestic sales".263 In Australia's view, the pulp benchmark was appropriate to use because of its
consistency with another exporter's costs of pulp, which were found not to be distorted.264 Moreover,
Australia points to the fact that neither the exporters, nor the Government of Indonesia requested
that the ADC deduct an amount for p rofit from the pulp benchmark in the course of the
investigation.265
After finding that "the actual cost of pulp recorded by exporters in their records [did] not
reasonably reflect a competitive market cost" 266, the ADC constructed the cost of production of
A4 copy paper for Indah Kiat and Pindo Deli using "a pulp cost benchmark that better reflects the
competitive market cost of pulp". 267 The ADC explained that the domestic prices of pulp of the
cooperative Indonesian exporters were considered to be affected by government influence and
therefore unsuitable 268; that it was not possible to use cost data from other Indonesian pulp
producers to replace the rejected costs of Indah Kiat and Pindo Deli because the only cost data
available to the ADC pertained to a different producer and was confidential269; and that appropriate
import price information was lacking, and would also likely have been affected by government
influence.270
The Final Report describes the benchmark as "consisting of quarterly import pulp prices into
China and Korea based on an average CIF price for bleached eucalyptus kraft wood originating from
Brazil and South America". 271 The data used to derive the benchmark prices was generated by
two paper industry consultants contracted by the ADC to provide pric e information - RISI and
Hawkins Wright.272
Indonesia has described the benchmark using various expressions including "the cost of
producing pulp in South America and Brazil" 273 and "a pulp price in Brazil and South America". 274
Australia objects to Indonesia's descriptions of the benchmark and considers them to be incorrect in
light of the ADC's description of the benchmark in the Final Report.275 We recall that the ADC did not
use the CIF price benchmark as the relevant cost proxy. Rather, the CIF price was the starting basis
for deriving the cost substitute. In the course of the investigation, the ADC made certain adjustments
to the CIF benchmark for Indah Kiat and Pindo Deli. These included adjustments that subtracted
relevant amounts of ocean freight and inland transport costs276, which we understand to have been
associated with the exports from Brazil and South America. As Indonesia has pointed out,
"[r]emoving ocean freight … results in a reference price FOB Brazil or South America as opposed to

263 Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 158-159 (referring to Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24, Panel Reports,
EU – Biodiesel (Argentina), para. 7.233; Thailand – H-Beams, para. 7.112; and US – Softwood Lumber V,
para. 7.278). Australia originally understood Indonesia to argue that, after making an adjustment for profit to
the pulp benchmark, the ADC should have used the cost of pulp reflected in Indah Kiat's records as the
hardwood pulp component of the cost of production of A4 copy paper for both Indah Kiat and Pindo Deli.
(Australia's response to Panel question No. 33 following the second meeting of the Panel, paras. 162-167).
However, Indonesia later clarified that this was not a correct reflection of its position. (Indonesia's comments
on Australia's response to Panel question No. 33 following the second meeting of the Panel, para. 54). In
examining the issue of the adjustment for profit, we will therefore refrain from addressing Australia's
arguments as to why Indah Kiat's and Pindo Deli's recorded costs were not suitable to use in the construction
of the cost of production of A4 copy paper.
264 Australia's response to Panel question No. 33 following the second meeting of the Panel, para. 161
(referring to Final Report, (Exhibit IDN-4), section 6.9.2.2, p. 52).
265 Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 168-175.
266 Final Report, (Exhibit IDN-4), section 6.9.1, p. 51.
267 Final Report, (Exhibit IDN-4), section A4.1, p. 230.
268 Final Report, (Exhibit IDN-4), section A4.3.1, p. 230.
269 Final Report, (Exhibit IDN-4), section A4.5.1, p. 232.
270 Final Report, (Exhibit IDN-4), section A4.3.2, pp. 230-231.
271 Final Report, (Exhibit IDN-4), sections A4.2 and A4.3.3, pp. 230-231.
272 Final Report, (Exhibit IDN-4), section A4.5.1, p. 232.
273 Indonesia's opening statement at the first meeting of the Panel, para. 49.
274 Indonesia's response to Panel question No. 28(a) following the first meeting of the Panel, p. 22.
275 Australia's second written submission, paras. 237-240.
276 Final Report, (Exhibit IDN-4), sections 6.9.8.1.3 and A4.4, pp. 62 and 231; Australia's first written
submission, paras. 238 and 240.

CIF China and Korea".277 Thus, when Indonesia refers to the "pulp price in Brazil and South America",
we understand it to refer to the already adjusted benchmark.
The ADC also made other adjustments to the pulp benchmark. In particular, it adjusted the
benchmarks used for Indah Kiat and Pindo Deli to reflect the verified proportion of pulp consumed
in the production of A4 copy paper.278 For Indah Kiat, which produced pulp itself and therefore used
wet pulp in its production process, the ADC converted the benchmark from a dry pulp price to a wet
pulp price.279 The ADC further deducted an amount for selling, general and administrative expenses
from Indah Kiat's pulp benchmark .280 It is not disputed that the ADC did not adjust the pulp
benchmark for profit to reflect the respective situations of Indah Kiat and Pindo Deli.281
Turning to Indonesia's submissions concerning the absence of an adjustment for profit, we
will first examine Indonesia's arguments regarding the ADC's analysis in relation to Indah Kiat and
will then turn to examine Indonesia's arguments in relation to Pindo Deli.
7.4.3.1 The adjustment for profit to the pulp benchmark for Indah Kiat
Indonesia contests the inclusion of profit in the pulp benchmark for Indah Kiat because it is
an integrated paper producer, and "the pro duction of pulp is merely an intermediate stage in [its]
paper production process". 282 Therefore, Indonesia submits that the ADC should have subtracted
profit from the "pulp benchmark" for Indah Kiat, and the failure to make this adjustment renders
the ADC's establishment of the facts not proper and not unbiased and objective pursuant to
Article 17.6(i) of the Anti-Dumping Agreement.283
On this basis, we proceed to examine the facts relating to the inclusion of profit in the pulp
benchmark that were before the investigating authority when it made the determination. In its
submissions, Indonesia has brought to our attention section 4.3, "Integrated processes", of the
Verification Report for Indah Kiat , which states that "[t]he verification team was able to ascert ain
that pulp is transferred to the photocopy paper manufacturing division at actual cost, and therefore,
the verification team is satisfied that the pulp costs (as part of the raw material costs) recorded in
Indah Kiat's CTMS spreadsheet for A4 photocopy paper reflect the actual costs incurred" .284 This
excerpt of the Verification Report confirms that the ADC had evidence before it that Indah
Kiat's process of production of A4 copy paper was integrated and that the transfer of pulp between
the manufacturing divisions of Indah Kiat was made without the inclusion of profit, at actual cost.
Australia explains that neither the exporters, nor the Government of Indonesia requested
that the ADC deduct an amount for profit from the pulp benchmark in the course of th e
investigation.285 According to Australia, such a request was necessary in order for the ADC to have

277 Indonesia's first written submission, para. 168.
278 Final Report, (Exhibit IDN-4), section 6.9.8.1.4, p. 62; Australia's first written submission,
paras. 236-237 and 240.
279 Final Report, (Exhibit IDN-4), sections 6.9.8.1.3, A4.4 and A4.5.1, pp. 61, and 231-232;
Australia's first written submission, para. 238; and Indonesia's first written submission, para. 168.
280 Final Report, (Exhibit IDN-4), section 6.9.8.1.3, p. 62; Australia's first written submission, paras. 238
and 240; and Indonesia's first written submission, para. 168. Although Australia argues that the ADC
subtracted the amount for selling, general and administrative expenses from Pindo Deli's benchmark, we have
not been able to identify that deduction in the text of the Final Report.
281 Indonesia's opening statement at the second meeting of the Panel, para. 71; responses to Panel
question No. 9 following the second meeting of the Panel, para. 26 and question No. 30, paras. 91-93;
Australia's response to Panel question No. 33 following the second meeting of the Panel, paras. 158-177.
282 Indonesia's response to Panel question No. 30(a) following the second meeting of the Panel,
para. 91.
283 Indonesia's response to Panel question No. 30(a) following the second meeting of the Panel,
para. 91; comments on Australia's response to Panel question No. 33 following the second meeting of the
Panel, para. 55.
284 Although Indonesia pointed to Indah Kiat's Verification Report in the context of discussing the
accuracy of the exporters' recorded costs, we consider it to be also relevant for the purposes of our
examination of this specific issue. (See Indonesia's first written submission, para. 153 (referring to
Indah Kiat's Verification Report, (Exhibit IDN-9), section 4.3)).
285 Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 168-175.

been required to make the adjustment. Australia finds support for its view in the following statement
made by the panel in US – Coated Paper (Indonesia)286:
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 information the investigating authority seeks so that it may base its
determination on positive evidence on the record.287
We note that the panel in US – Coated Paper (Indonesia) dealt with an issue that is different
from the one before us, namely, how an investigating authority should arrive at a benchmark for
the purpose of calculating the amount of a subsidy in terms of benefit under Article 14(d) of the
SCM Agreement. It is not clear to us that the considerations relating to the selection of a benchmark
under that provision should be the same as those guiding an investigating authority's determination
of the "cost of production in the country of origin" under Article 2.2 of the
Anti-Dumping Agreement.288 Having said that, we do not understand the above excerpt to limit the
analysis that an investigating authority must undertake for the purpose of establishing a subsidy
benchmark under Article 14(d) of the SCM Ag reement to issues raised in requests made by
interested parties, when the information supplied by the respondents and other positive evidence
on the record identify a specific need for an adjustment of the benchmark. In our view, that same
limitation cannot be found in Article 2.2 of the Anti-Dumping Agreement either. Rather, as we see
it, it follows from the obligation in Article 2.2 that it is incumbent on the investigating authority to
make all adaptations that are necessary, in the light of the facts be fore it, to arrive at the "cost of
production in the country of origin".289
We recall Australia's own explanation that the "adaptations [made to the pulp benchmark]
were in response to evidence obtained during the investigation as a result of the verificati on of
Indonesian exporters, and in response to submissions made by [Sinar Mas Group ] and the
Government of Indonesia during the investigation".290 In the circumstances where the record of the
investigation revealed that the transfer of pulp between the divisions of Indah Kiat happens at actual
cost, we do not consider relevant whether the request for the adjustment for profit was made by
interested parties or not. In any case, while a request for such an adjustment was not made in clear
and explicit terms, the exporters, in a submission in response to the Statement of Essential Facts,
complained to the ADC that:
[It had] used benchmark purchase prices of dry hardwood pulp in sheets, when the
hardwood pulp (LBKP) used by Indah Kiat is self-produced wet pulp which is obviously
of much lower cost. It is totally inappropriate to use a benchmark purchase price for dry
hardwood pulp in sheets when the hardwood pulp used by Indah Kiat in its A4 copy
paper production is self-produced wet pulp going directly into paper production.291
We find that, in the light of the outcome of the ADC's verification, the emphasized words can
be reasonably understood as pointing to the inappropriateness of using unadjusted purchase prices
for an integrated producer such as Indah Kiat.
Australia makes several additional arguments in response to Indonesia's challenge of the
absence of an adjustment for profit. First, Australia argues that subtracting an amount for profit
from the pulp benchmark "would have meant that the cost of production of A4 copy paper derived
for Indah Kiat and Pindo Deli would not have reflected the full cost of production of A4 copy paper
in Indonesia for Indah Kiat and Pindo Deli" and would not have been an "appropriate proxy for the

286 Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 172-173 (referring to Panel Report, US – Coated Paper (Indonesia), para. 7.36).
287 Panel Report, US – Coated Paper (Indonesia), para. 7.36.
288 We note that the panel and Appellate Body in Ukraine – Ammonium Nitrate held a similar view.
(Panel Report, Ukraine – Ammonium Nitrate, para. 7.102; Appellate Body Report, Ukraine – Ammonium
Nitrate, para. 6.118).
289 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73.
290 Australia's response to Panel question No. 33 following the second meeting of the Panel, para. 169.
291 Sinar Mas Group's submission (29 December 2016), (Exhibit IDN-15), p. 6. (bold type original;
italics added)

price of the like product in the ordinary course of trade in the domestic market of the exporting
country when the normal value cannot be determined on the basis of domestic sales". 292 Second,
Australia submits that the pulp benchmark was appropriate to use because of its consistency with
the costs of pulp of another exporter under investigation, PT Riau Andalan Kertas.293 Third, Australia
counters Indonesia's argument that "the production of pulp is merely an intermediate stage in the
paper production process"294 by arguing that Indonesian producers of A4 copy paper do not devote
all of their hardwood pulp to A4 copy paper production but also export pulp in significant quantities
and that the prevailing export price is a key factor in determining the volume of paper production.295
We note that the Final Report provides no explanation as to why the ADC did not subtract
profit from the pulp benchmark used as a substitute for Indah Kiat's recorded pulp costs or why the
adjustments had to be limited by the circumstances Australia refers to in the above three arguments.
In light of the absence of any such explanations, and given the facts on the record of the investigation
discussed above, we find that the ADC's failure to adjust the level of profit included in the pulp cost
benchmark used for Indah Kiat meant that the cost of production of A4 copy paper constructed for
Indah Kiat wa s inconsistent with Australia's obligations under Article 2.2 of the
Anti-Dumping Agreement.
7.4.3.2 The adjustment for profit to the pulp benchmark for Pindo Deli
We will now consider whether the replacement of Pindo Deli's pulp costs with the pulp
benchmark raises similar concerns. Indonesia asserts that "Australia did not remove profit from its
calculation [of the pulp benchmark] and, therefore, its establishment of the facts [] would not be
proper pursuant to Article 17.6(i)".296 Indonesia argues that "Pindo Deli obtains pulp from affiliated
parties, including Indah Kiat, and there is no evidence it did not do so in arm 's length transactions
in the ordinary course of trade" .297 On this basis, Indonesia submits that "using export prices that
include profit is not representative of Pindo Deli's cost of production in Indonesia" and that "Australia
should have used whatever benchmark it determined for Indah Kiat and made adjustments for
whatever mark-up Indah Kiat added to its cost for its sales to Pindo Deli".298 In clarifying its argument
at a later stage, Indonesia explained that "profit must be subtracted from the benchmark for Pindo
Deli's purchases in an amount that constitutes the actual mark-up Indah Kiat charged Pindo Deli".299
In Indonesia's view, "[d]oing anything else would not merely be removing the effects of the
'particular market situation', it would be distorting commercial reality".300
As the complaining party in this proceeding, Indonesia bears the initial burden of
demonstrating inconsistency of Australia's measure with Article 2.2 with regard to the adjustment
for profit to Pindo Deli's benchmark. 301 In other words, Indonesia must present a " prima facie
case … based on 'evidence and legal argument' … in relation to each of the elements of the claim".302
Importantly, "[t]he evidence and arguments underlying a prima facie case … must be sufficient to
identify the challenged measure and its basic import , identify the relevant WTO provision and
obligation contained therein, and explain the basis for the claimed inconsistency of the measure with
that provision ".303 In our view, the arguments presented by Indonesia in respect of the lack of
adjustment for profit to Pindo Deli's benchmark do not clearly explain the import of the challenged
aspect of the measure an d the basis for the claimed inconsistency of Australia's measure with

292 Australia's response to Panel question No. 33 following the second meeting of the Panel,
paras. 158-159 (referring to Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24, Panel Reports,
EU – Biodiesel (Argentina), para. 7.233; Thailand – H-Beams, para. 7.112; and US – Softwood Lumber V,
para. 7.278). (underlining omitted)
293 Australia's response to Panel question No. 33 following the second meeting of the Panel, para. 161.
294 Indonesia's response to Panel question No. 30(a) following the second meeting of the Panel, para. 91.
295 Australia's comments on Indonesia's responses to Panel questions Nos. 9 and 30 following the
second meeting of the Panel, paras. 134-139.
296 Indonesia's response to Panel question No. 9 following the second meeting of the Panel, para. 26.
297 Indonesia's response to Panel question No. 30 (b) following the second meeting of the Panel, para. 92.
298 Indonesia's response to Panel question No. 30 (b) following the second meeting of the Panel, para. 92.
299 Indonesia's comments on Australia's response to Panel question No. 33 following the second meeting
of the Panel, para. 57.
300 Indonesia's response to Panel question No. 30 (b) following the second meeting of the Panel, para. 92.
301 See Appellate Body Report, EC – Hormones, para. 98.
302 Appellate Body Report, US – Gambling, para. 140 (referring to Appellate Body Report, US – Wool
Shirts and Blouses, p. 16, DSR 1997:I, 323, at 336). (emphasis original)
303 Appellate Body Report, US – Gambling, para. 141.

Article 2.2 and, in that respect, are insufficient for Indonesia to establish its prima facie case
regarding this specific aspect of the claim.
Indonesia has argued both that the profit in the pulp benchmark for Pindo Deli must be
subtracted or removed and that it should have been adjusted. We have not been able to deduce
from Indonesia's arguments which specific kind of adjustment Indonesia considers the ADC had to
make. To the extent Indonesia argues that the profit needed to be removed from the pulp benchmark
for Pindo Deli, we find this argument to be in contradiction with Indonesia's own submission that
Pindo Deli obtains pulp from affiliated parties, and that there is no evidence it did not do so in
arm's length transactions.304 It follows from Indonesia's explanation that Pindo Deli's cost of pulp is
the price at which it obtains pulp from affiliated parties. If the pulp purchase transactions between
Pindo Deli and its affiliates took place in accordance with normal commercial practices, as Indonesia
claims, we fail to see why the price at which Pindo Deli obtained pulp would not be profitable for
Pindo Deli's suppliers. In other words, we are unable to see why the cost of pulp for Pindo Deli (price
it paid for pulp) would not include the profit component, and therefore why the profit component
would need to be removed from the substituted pulp benchmark. Furthermore, to the extent
Indonesia argues that the level of profit needed to be adjusted in the pulp benchmark for Pindo Deli,
we do not see why the adjustment should relate to the "mark-up Indah Kiat added to its cost for its
sales to Pindo Deli" in the circumstances where, as Indonesia itself explained, Pindo Deli buys pulp
from Ind ah Kiat and another company, Lontar. 305 Indonesia has not provided any explanation
regarding this point. We further note that Indonesia has not argued that the issue of profit
adjustment was brought to the ADC's attention by interested parties.
In the absence of a clear and convincing explanation from Indonesia as to why and how the
ADC had to make an adjustment for profit to Pindo Deli's benchmark, in light of the circumstances
of this specific investigation, we find that Indonesia has not established that the absence of an
adjustment for profit to the pulp benchmark used for Pindo Deli in the ADC's determin ation is
inconsistent with the requirement to calculate the "cost of production in the country of origin" under
Article 2.2 of the Anti-Dumping Agreement.
7.4.4 Whether the Anti-Dumping Commission acted inconsistently with Article 2.2 of the
Anti-Dumping Agreeme nt when it replaced Indah Kiat's pulp costs with the pulp
benchmark based on third-country export prices instead of replacing woodchips costs
Indonesia argues that Article 2.2 of the Anti-Dumping Agreement requires the investigating
authority to calculate the cost of production for the producer under investigation in Indonesia, and
that by choosing to replace the pulp costs rather than woodchips costs for Indah Kiat, Australia failed
to fulfil that requirement. 306 Indonesia argues that, even if the ADC neede d to replace distorted
costs, it should have replaced Indah Kiat's cost of woodchips (direct input into production of pulp)
rather than pulp costs themselves. 307 The substitution of Indah Kiat's cost of pulp, in Indonesia's
view, also resulted in the substitution of "other costs associated with manufacturing pulp, including
electricity, water etc. that were not affected by the 'particular market situation'".308 Indonesia points
out that the ADC had Indah Kiat's woodchips costs on the record of the investigation .309 According
to Indonesia, "[b]y replacing the cost of woodchips, the allegedly distorted input in Indah Kiat's costs
[would be] accounted for while all of Indah Kiat's other costs, which are not affected by the 'particular
market situation' [would] remain the same".310

304 Indonesia's response to Panel question No. 30 (b) following the second meeting of the Panel, para. 92.
305 Indonesia's first written submission, fn 70.
306 Indonesia's responses to Panel questions Nos. 18 and 35 following the second meeting of the Panel,
paras. 37, and 97-98.
307 Indonesia's responses to Panel question No. 18 following the second meeting of the Panel, para. 37
and question No. 35, para. 98.
308 Indonesia's response to Panel question No. 35 following the second meeting of the Panel, para. 98.
309 Indonesia's response to Panel question No. 18 following the second meeting of the Panel, para. 37
(referring to Attachment G6 to the Exporter's Questionnaire Response of Indah Kiat, (Exhibit IDN-28 (BCI))).
See also Indonesia's second written submission, para. 80.
310 Indonesia's response to Panel question No. 35 following the second meeting of the Panel, para. 98.

Australia acknowledges that the ADC had on its record the cost of woodchips used by Indah
Kiat in the production of pulp.311 However, Australia submits that it could only determine the value
and volume of pulpwood, which is an input into production of woodchips, for one month.312 Australia
argues that nothing in the Anti -Dumping Agreement or Article 2.2 required the ADC to replace
woodchips costs rather than pulp costs.313 Australia points out that, where costs are not calculated
on the basis of the records of the exporter or producer, Article 2.2 does not specify precisely what
evidence an authority may resort to.314 On this basis, Australia submits that it is irrelevant whether
the ADC could have replaced woodchips costs instead of pulp costs.315 Additionally, Australia argues
that the pricing data was available to construct the pulp benchmark.316
We note that, in challenging this specific aspect of the ADC's determination, i.e. the
ADC's choice to replace the cost of the main input into the production of A4 copy paper (pulp) rather
than the cost of the input into production of the main input (woodchips), Indonesia proceeds by
assuming arguendo that the ADC was allowed to replace Indah Kiat's recorded costs which were
affected by the distortion resulting from the "particular market situation".317 For the purposes of our
analysis, we will proceed to address the argument on the same basis. 318 We note further that
Indonesia has made this argument pursuant to Article 2.2 and not Article 2.2.1.1. So, we are n ot
asked to examine whether the ADC acted inconsistently with Article 2.2.1.1 by rejecting Indah
Kiat's recorded pulp costs instead of woodchips costs. Instead , we examine whether, taking into
account the specific circumstances of Indah Kiat, the external pulp benchmark that the ADC utilized
to replace Indah Kiat's cost of making pulp as a cost of making paper, was inconsistent with the
requirement to use the "cost of production in the country of origin" under Article 2.2.
We recall that in EU – Biodiesel (Argentina), the Appellate Body explained that under certain
circumstances the investigating authority may have recourse to information other than that
contained in the exporter's records to construct the cost of production but even in those
circumstances it remains bound by the obligation to derive the cost of production "in the country of
origin":
In circumstances where the obligation in the first sentence of Article 2.2.1.1 to calculate
the costs on the basis of the records kept by the exporter or producer under
investigation does not apply, or where relevant info rmation from the exporter or
producer under investigation is not available, an investigating authority may have
recourse to alternative bases to calculate some or all such costs. Yet, Article 2.2 does
not specify precisely to what evidence an authority may resort. This suggests that, in
such circumstances, the authority is not prohibited from relying on information other
than that contained in the records kept by the exporter or producer, including in-country
and out -of-country evidence. This, however, does not mean that an investigating
authority may simply substitute the costs from outside the country of origin for the "cost
of production in the country of origin". Indeed, Article 2.2 of the

311 Australia's opening statement at the second meeting of the Panel, paras. 53-54 (referring to
Attachment G6 to the Exporter's Questionnaire Response of Indah Kiat, (Exhibit IDN-28 (BCI))).
312 Australia's response to Panel question No. 19 following the second meeting of the Panel,
paras. 105-108.
313 Australia's response to Panel question No. 34 following the second meeting of the Panel, paras. 179
and 181.
314 Australia's response to Panel question No. 34 following the second meeting of the Panel,
paras. 182-184 (referring to Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73).
315 Australia's response to Panel question No. 34 following the second meeting of the Panel, para. 181.
316 Australia's response to Panel question No. 34 following the second meeting of the Panel, para. 180.
317 Indonesia argues that "[b]y replacing the cost of woodchips, the allegedly distorted input in Indah
Kiat's costs [would be] accounted for while all of Indah Kiat's other costs, which are not affected by the
'particular market situation' [would] remain the same". (Indonesia's response to Panel question No. 35
following the second meeting of the Panel, para. 98). We understand from this argument, that for the recorded
cost of woodchips to be replaced, that component of the records had to be rejected under Article 2.2.1.1. It
follows that, for the purposes of this argument, Indonesia has also assumed arguendo that the ADC could have
rejected the recorded woodchips costs of Indah Kiat instead of the cost of making pulp.
318 We note that because our reasoning proceeds on an arguendo basis, it is without prejudice to
whether Article 2.2.1.1, first sentence, allows the investigating authority to disregard the recorded costs where
those are found to be affected by the "particular market situation" or distorted, and whether Article 2.2 allows
the investigating authority to replace distorted costs in constructing "the cost of production in the country of
origin".

Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 make clear that the
determination is of the "cost of production […] in the country of origin". Thus, whatever
the information that it uses, an investigating authority has to ensure that such
information is used to arrive at the "cost of production in the co untry of origin".
Compliance with this obligation may require the investigating authority to adapt the
information that it collects.319
It follows from the above explanation, that where the investigating authority uses
information other than that contained i n the records kept by the exporter or producer to construct
the cost of production, it has to ensure that it adapts the information appropriately. Although we
agree with Australia that Article 2.2 does not specify precisely to what evidence an authority ma y
resort in constructing the cost of production, the words "in the country of origin" define the
parameters of the investigating authority's inquiry. 320 The investigating authority is required by
Article 2.2 to arrive at the "cost of production in the country of origin". By virtue of this requirement,
the investigating authority shall consider available alternatives for replacing recorded costs. In
particular, we consider that the investigating authority is obligated to, as much as possible, use
replacement information that conforms to the requirement to use "the cost of production in the
country of origin" for the exporter or producer under the investigation.
Turning to the specific circumstances of the investigation, we recall that in the course of its
analysis of the situation in A4 copy paper market in Indonesia, the ADC identified the source of the
distortion in the timber market:
[It] considered that the primary source of any distortion in the A4 copy paper market
would likely be within the Indonesian forestry sector because forestry and timber supply
have been a primary focus of [the] policies and programs [of the Government of
Indonesia].321
The ADC proceeded to quantify the distortion in the timber market (but not in the pulp or
paper market):
The Commi ssion quantified the distortion in the Indonesian log market (see
section A2.9.4.1 above) and is satisfied that the significant distortions found in that
assessment impact on the pulp and paper industries such that domestic sales of A4 copy
paper are unsui table for use in determining normal value under
subsection 269TAC(1).322
The ADC did not find , and Australia has not argued, that replacing Indah Kiat's cost of
woodchips rather than the cost of producing pulp would not have corrected the identified distortion.
Rather, with respect to the possibility of replacing woodchips costs, Australia stated that "[e] ven if
other potential methods were available to calculate the "cost of production [of A4 copy paper] in
[Indonesia]" in respect of Indah Kiat and Pindo Del i, nothing in the Anti-Dumping Agreement
required the use by the Anti -Dumping Commission of a particular methodology".323 As we have
already explained above, we disagree with Australia and consider that, assuming arguendo that
Article 2.2 allows the investigating authority to replace distorted costs in constructing "the cost of
production in the country of origin", this prov ision also requires the investigating authority to
consider available alternatives for replacing recorded costs so as to use the costs that are unaffected
by the distortion to the extent possible.
The circumstances of the investigation, in our view, called for the ADC to consider an
alternative to replacing Indah Kiat's cost of producing pulp with the pulp benchmark which replaces
all the costs used in producing pulp with external information. We note the ADC's above findings to
the effect that the source o f the distortions was in Indonesia's timber market. Although Australia
argued that the ADC was only able to determine the cost data for pulpwood (input into production
of woodchips) for one month, we do not find this relevant to deciding whether the cost of woodchips

319 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73. (fns omitted)
320 Appellate Body Report, Ukraine – Ammonium Nitrate, para. 6.83.
321 Final Report, (Exhibit IDN-4), section A2.9.2.4, p. 168.
322 Final Report, (Exhibit IDN-4), section A2.9.6.8, p. 185.
323 Australia's response to Panel question No. 34 following the second meeting of the Panel, para. 179.

(input into production of pulp) could have been replaced. In this respect, we recall that Indah Kiat
produces pulp itself and later transfer s it to the paper manufacturing division 324 and we note that
Indah Kiat's data relating to the value of woodchips consumed in the production of pulp was available
on the ADC's record for the whole investigation period.325 Furthermore, while Australia has argued
that pricing data was available for the pulp benchmark326, we note that the ADC's Final Report also
contains information about the Malaysian woodchips trade data, which Australia used to quantify the
distortions in the Indonesian log market. 327 In light of the evidence on the ADC's record and the
ADC's own findings regarding the source of the distortion, we fi nd that the ADC should have
considered using a replacement cost for woodchips in combination with Indah Kiat's other costs for
producing pulp which were not found to be affected by the distortion (labour, energy, etc.). If the
ADC had undertaken such analysis, it should have explained its choice of the final benchmark in light
of this alternative. The Final Report, however, contains no such explanation.
We are careful not to substitute our own judgment for that of the ADC as to what costs could
have been feasibly utilized on the basis of the information before it. However, we recall that pursuant
to the affirmative obligation under Article 2.2 to use the "cost of production in the country of origin",
it is incumbent upon the investigating authority to explore the alternative methodologies that would
allow it to arrive at "the cost of production in the country of origin" by utilizing those components of
the producer's costs that are unaffected by the distortion, assuming arguendo that Article 2.2 allows
for replacement of costs distorted by the effects of a particular market situation.
Given the facts on the record of the investigation, and in light of the absence of any
explanation from the ADC as to why it did not replace the cost of woodchips and utilize Indah
Kiat's other costs of producing pulp internally when constructing Indah Kiat's cost of production of
A4 copy paper, we find that the ADC acted inconsistently with Australia's obligations under Article 2.2
of the Anti-Dumping Agreement.
7.4.5 Conclusion
We find that Australia's measure is inconsistent with Article 2.2 of the
Anti-Dumping Agreement because, having improperly rejected the pulp component of Indah Kiat's
and Pindo Deli's records, the ADC had no basis to use Brazilian and South American export prices of
pulp to China and Korea for the calculation of Indah Kiat's and Pindo Deli's pulp costs when
constructing the cost of production of A4 copy paper in Indonesia.
We further find that Australia's measure is inconsistent with Article 2.2 of th e
Anti-Dumping Agreement because, despite having before it the evidence indicating that Indah Kiat
is an integrated producer and obtains pulp at its cost, the ADC failed to provide a reasoned and
adequate explanation as to why it did not subtract profit fr om the pulp benchmark used to replace
Indah Kiat's recorded pulp costs in constructing the cost of production of A4 copy paper for Indah
Kiat.
We find that Indonesia has not established that the ADC acted inconsistently with
Australia's obligations under Article 2.2 of the Anti-Dumping Agreement when it did not adjust the

324 Indah Kiat's Verification Report, (Exhibit IDN-9), section 4.3.
325 Attachment G6 to the Exporter's Questionnaire Response of Indah Kiat, (Exhibit IDN-28 (BCI)). While
the attachment contains the terms "Raw Material", the parties agreed that these words refer to woodchips.
(Indonesia's response to Panel question No. 18 following the second meeting of the Panel, para. 37;
Australia's opening statement at the second meeting of the Panel, paras. 53-54). As explained in
paragraphs 3.10-3.12 of Annex A-1, Exhibit IDN-28 (BCI) does not contain volume data for woodchips
consumed in the production of pulp by Indah Kiat in 2015. The ADC's record before us does not reflect that
such data would not have been available to the ADC. We further note that at the second meeting of the Panel
and in subsequent responses to Panel's questions and comments on Indonesia's responses, Australia had an
opportunity to explain why the ADC chose to replace the pulp costs rather than woodchips costs in constructing
Indah Kiat's cost of production of A4 copy paper. Notably, Australia has not argued that it did not replace the
woodchips costs because volume data for woodchips was lacking. Rather, Australia submitted that nothing in
the Anti-Dumping Agreement required the ADC to use a particular methodology in constructing the cost of
production of A4 copy paper for Indah Kiat and therefore it was not relevant whether the ADC could have
replaced the woodchips costs rather than the pulp costs. (Australia's response to Panel question No. 34
following the second meeting of the Panel, paras. 179-181).
326 Australia's response to Panel question No. 34 following the second meeting of the Panel, para. 180.
327 Final Report, (Exhibit IDN-4), section A2.9.4.1, pp. 174-175.

pulp benchmark used to replace Pindo Deli's recorded pulp costs for profit in constructing the cost
of production of A4 copy paper for Pindo Deli.
Finally, we find that Australia's measur e is inconsistent with Article 2.2 of the
Anti-Dumping Agreement because the ADC failed to provide a reasoned and adequate explanation
as to why it did not replace the cost of woodchips and utilize Indah Kiat's other costs of producing
pulp internally when constructing Indah Kiat's cost of production of A4 copy paper, assuming
arguendo that the ADC was allowed to replace distorted costs.
7.5 Whether Australia has calculated and imposed anti -dumping duties in excess of the
margins of dumping permitted by Article 2 of the Anti-Dumping Agreement and therefore
acted inconsistently with the chapeau of Article 9.3 of the Anti-Dumping Agreement and
Article VI:2 of the GATT 1994
Indonesia argues that Australia acted inconsistently with the chapeau of Article 9.3 of the
Anti-Dumping Agreement by calculating and imposing anti -dumping duties in excess of those
permitted by Article 2 of the Anti-Dumping Agreement as a result of its WTO-inconsistent calculation
of the normal value of A4 copy paper of Indah Kiat and Pindo Deli .328 We note that both parties
agree that Indonesia's claims under Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of
the GATT 1994 are dependent on our findings on the merits of Indonesia's claims concerning
consistency of the ADC's determination of normal value with Article 2 of the Anti -Dumping
Agreement.329 In response to the Panel 's question regarding whether a finding under Article 9.3
would still be necessary to resolve the dispute, if the Panel were to find an inconsistency under
Article 2.2 and/or 2.2.1.1 of the Anti-Dumping Agreement, Indonesia stated that "the Appellate Body
has determined in a number of disputes that a finding under Article 9.3 is required even when other
inconsistencies were found under Article 2".330 Having reviewed the findings of the Appellate Body
Indonesia has referred us to, we note that, in all those cases, the Appellate Body has made findings
under Article 9.3 in addition to the findings under Article 2 of the Anti-Dumping Agreement without
stating that a finding under Article 9.3 is required when a panel has found the challenged measures
to be inconsistent with Article 2.331
We recall that we have found ab ove that Australia acted inconsistently with its obligations
under Article 2.2.1.1 of the Anti-Dumping Agreement when the ADC disregarded the hardwood pulp
component of Indah Kiat and Pindo Deli in the construction of normal value. We have also found
that Australia acted inconsistently with Article 2.2 of the Anti-Dumping Agreement when the ADC:
(i) disregarded domestic sales of A4 copy paper of Indah Kiat and Pindo Deli as a basis for normal
value because of the existence of a "particular market situation" without properly examining whether
the domestic sales nonetheless "permitted a proper comparison"; and (ii) failed to construct "the
cost of production in the country of origin" for Indah Kiat and Pindo Deli by using a third -country
pulp cost benchmark wh en it was otherwise not entitled to, without making any adjustments for
profit as regards Indah Kiat and without considering the alternative of replacing Indah Kiat's
woodchips costs instead of pulp costs . Indonesia's claims under Article 9.3 of the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994 are contingent upon the findings we
have made in relation to Article 2.2.1.1 and 2.2, and, in that sense, they are consequential.
Accordingly, we do not believe that additional findings under Article 9.3 o f the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994 are necessary for the resolution of this
dispute. We therefore decide to exercise judicial economy and decline to rule on the merits of
Indonesia's claims under Article 9.3 of the Anti -Dumping Agreement and Article VI:2 of the
GATT 1994.

328 Indonesia's first written submission, paras. 170-177, fns 139 and 140; second written submission,
para. 81.
329 Australia's first written submission, para. 265; Indonesia's response to Panel question No. 31(a)
following the first meeting of the Panel, p. 24.
330 Indonesia's response to Panel question No. 31(b) following the first meeting of the Panel, pp. 24-25
(referring to Appellate Body Reports, EU – Biodiesel (Argentina), para. 7.5; US – Zeroing (EC), para. 263(a)(i);
and US – Zeroing (Japan), para. 190(c)).
331 Appellate Body Reports, EU – Biodiesel (Argentina), paras. 6.90-6.113, and 7.5; US – Zeroing (EC),
paras. 123-135, and 263(a)(i); and US – Zeroing (Japan), paras. 148-156, 166 and 190(c).

7.5.1 Conclusion
For the reasons elaborated above, we decline to make findings as to whether Australia has
acted inconsistently with the chapeau of Article 9.3 of the Anti-Dumping Agreement and Article VI:2
of the GATT 1994 by virtue of having calculated and imposed anti-dumping duties in excess of the
dumping margin as established under Article 2 of the Anti-Dumping Agreement.
8 CONCLUSIONS AND RECOMMENDATION
Regarding Australia's measure imposing anti-dumping duties on certain Indonesian exporters
of A4 copy paper, as set forth in Anti -Dumping Notice No. 2017/39 dated 18 April 2017 accepting
the recommendations and the reasons for the recommendations set out i n the Final Report, we
conclude:
a. Indonesia has not established that the ADC acted inconsistently with Australia's obligations
under Article 2.2 of the Anti-Dumping Agreement when it found that a "particular market
situation" existed in the Indonesian domestic market for A4 copy paper;
b. Australia's measure is inconsistent with Article 2.2, first sentence, of the
Anti-Dumping Agreement because the ADC disregarded domestic sales of A4 copy paper
of Indah Kiat and Pindo Deli as the basis for determining normal value without properly
determining that such sales did "not permit a proper comparison";
c. Australia's measure is inconsistent with Article 2.2.1.1, first sentence, of the
Anti-Dumping Agreement because the ADC has not established that both the first and
second conditions in the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement
are satisfied when rejecting the pulp component of Indah Kiat's and Pindo Deli's records
on the basis of the term "normally" and therefore has failed to give effect to the whole of
the obligation in that provision;
d. Australia's measure is inconsistent with Article 2.2 of the Anti -Dumping Agreement
because, having improperly rejected the pulp component of Indah Kiat's and Pindo Deli's
records, the ADC had no basis to use Bra zilian and South American export prices of pulp
to China and Korea for the calculation of Indah Kiat's and Pindo Deli's pulp costs when
constructing the cost of production of A4 copy paper in Indonesia; because, despite having
before it the evidence indicating that Indah Kiat is an integrated producer and obtains pulp
at its cost, the ADC failed to provide a reasoned and adequate explanation as to why it did
not subtract profit from the pulp benchmark used to replace Indah Kiat's recorded pulp
costs in constructing the cost of production of A4 copy paper for Indah Kiat; and because
the ADC failed to provide a reasoned and adequate explanation as to why it did not replace
the cost of woodchips and utilize Indah Kiat's other costs of producing pulp internally when
constructing Indah Kiat's cost of production of A4 copy paper, assuming arguendo that the
ADC were allowed to replace distorted costs; and
e. Indonesia has not established that the ADC acted inconsistently with Australia's obligations
under Article 2.2 of the Anti -Dumping Agreement when it did not adjust the pulp
benchmark used to replace Pindo Deli's recorded pulp costs for profit in constructing the
cost of production of A4 copy paper for Pindo Deli.
We decline to decide whether Australia's measure is also inconsistent with the requirement to
calculate the "cost of production in the country of origin" under Article 2.2 of the
Anti-Dumping Agreement because the ADC has disregarded the hardwood pulp component of Indah
Kiat's and Pindo Deli's records in constructing the cost of production of A4 copy paper in Indonesia
and whether Australia has acted inconsistently with Article 9.3 of the Anti-Dumping Agreement and
Article VI:2 of the GATT 1994 by virtue of having calculated and imposed anti-dumping duties in
excess of the dumping margin as established under Article 2 of the Anti-Dumping Agreement.
Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent that the measure at issue is inconsistent

with the Anti-Dumping Agreement, it has nullified or impaired benefits accruing to Indonesia under
that agreement.
Pursuant to Article 19.1 of the DSU, we recommend that Australia bring its measure into
conformity with its obligations under the Anti-Dumping Agreement.
Indonesia requests that the Panel exercise its discretion under the second sentence of
Article 19.1 of the DSU to "suggest ways in which Australia should implement the recommendations
and rulings of the DSB to bring its measures into conformity with the Anti-Dumping Agreement and
GATT 1994".332 Indonesia considers that the measures at issue should be withdrawn.333
We note that Article 19.1 of the DSU allows, but does not require, us to suggest ways in which
the Member concerned could implement the Panel's recommendations. Furthermore, under
Article 21.3 of the DSU, the implementation of DSB recommendations and rulings i s left, in the
first instance, to the discretion of the implementing Member. 334 We therefore deny
Indonesia's request.