UNITED STATES – ANTI-DUMPING AND COUNTERVAILING MEASURES ON CERTAIN COATED PAPER FROM INDONESIA REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 6 December 2017
Document codes: WT/DS491/R
Complainant: Indonesia
Respondent: U.S.
Third parties: EU, China, Turkey, South Korea, Canada, India, Brazil
Dispute stage: Panel
Agreements cited: Art. 2, 12, 14, 2.1, 2.1(c), 14(d), 12.7  Subsidies and Countervailing Measures (SCM)Art. 3.5, 3.7  Anti-dumpingArt. 15.7, 15.8  Subsidies and Countervailing Measures (SCM)Art. 3.8, 1  Anti-dumpingArt. 10  Subsidies and Countervailing Measures (SCM)Art. VI  GATT 1994Art. 15.5  Subsidies and Countervailing Measures (SCM)

UNITED STATES – ANTI-DUMPING AND COUNTERVAILING MEASURES
ON CERTAIN COATED PAPER FROM INDONESIA
REPORT OF THE PANEL
BCI deleted, as indicated [[***]]

BCI deleted, as indicated [[***]]

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures of the Panel concerning Business Confidential
Information
A-7
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 First integrated executive summary of Indonesia B-2
Annex B-2 First integrated executive summary of the United States B-17
Annex B-3 Second integrated executive summary of Indonesia B-33
Annex B-4 Second integrated executive summary of the United States B-48
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of Brazil C-2
Annex C-2 Integrated executive summary of Canada C-5
Annex C-3 Integrated executive summary of the European Union C-8
Annex C-4 Integrated executive summary of Turkey C-12
ANNEX D
PROCEDURAL RULINGS OF THE PANEL
Contents Page
Annex D-1 Decision of the Panel concerning Canada's request for enhanced third -party
rights
D-2
Annex D-2 Decision of the Panel concerning the European Union's request regarding BCI D-5
ANNEX E
INTERIM REVIEW
Contents Page
Annex E-1 Interim Review E-2

BCI deleted, as indicated [[***]]

CASES CITED IN THIS REPORT
Short title Full case title and citation
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft,
, adopted 20 August 1999, DSR 1999:III, p. 1161
China – GOES Appellate Body Report, China – Countervailing and Anti-Dumping Duties on
Grain Oriented Flat-Rolled Electrical Steel from the United States,
, adopted 16 November 2012, DSR 2012:XII, p. 6251
China – GOES Panel Report, China – Countervailing and Anti-Dumping Duties on Grain
Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/R
and Add.1, adopted 16 November 2012, upheld by Appellate Body Report
WT/DS414/AB/R, DSR 2012:XII, p. 6369
China – HP-SSST (Japan) /
China – HP-SSST (EU)
Appellate Body Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes ("HP-SSST") from the European Union,
WT/DS454/AB/R and Add.1 / WT/DS460/AB/R and Add.1, adopted
28 October 2015
China – HP-SSST (Japan) /
China – HP-SSST (EU)
Panel Reports, China – Measures Imposing Anti-Dumping Duties on High-
Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance
Stainless Steel Seamless Tubes ("HP-SSST") from the European Union,
WT/DS454/R and Add.1 / WT/DS460/R, Add.1 and Corr.1, adopted
28 October 2015, as modified by Appellate Body Reports WT/DS454/AB/R /

Dominican Republic – Import
and Sale of Cigarettes
Appellate Body Report, Dominican Republic – Measures Affecting the
Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted
19 May 2005, DSR 2005:XV, p. 7367
EC – Chicken Cuts Appellate Body Report, European Communities – Customs Classification of
Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted
27 September 2005, and Corr.1, DSR 2005:XIX, p. 9157
EC – Countervailing Measures
on DRAM Chips
Panel Report, European Communities – Countervailing Measures on Dynamic
Random Access Memory Chips from Korea, WT/DS299/R, adopted
3 August 2005, DSR 2005:XVIII, p. 8671
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products
(Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998,
DSR 1998:I, p. 135
EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed
Salmon from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1,
DSR 2008:I, p. 3
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on
Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R,
adopted 18 August 2003, DSR 2003:VI, p. 2613
EC and certain member States
– Large Civil Aircraft
Appellate Body Report, European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted
1 June 2011, DSR 2011:I, p. 7
EC and certain member States
– Large Civil Aircraft
Panel Report, European Communities and Certain Member States – Measures
Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as
modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685
Egypt – Steel Rebar Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from
Turkey, WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, p. 2667
EU – Biodiesel (Argentina) Panel Report, European Union – Anti-Dumping Measures on Biodiesel from
Argentina, WT/DS473/R and Add.1, adopted 26 October 2016, as modified
by Appellate Body Report WT/DS473/AB/R
EU – Footwear (China) Panel Report, European Union – Anti-Dumping Measures on Certain Footwear
from China, WT/DS405/R, adopted 22 February 2012, DSR 2012:IX, p. 4585
Japan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996,
DSR 1996:I, p. 97

BCI deleted, as indicated [[***]]

Short title Full case title and citation
Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access
Memories from Korea, WT/DS336/R, adopted 17 December 2007, as
modified by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, p. 2805
Mexico – Anti-Dumping
Measures on Rice
Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef
and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted
20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Corn Syrup Panel Report, Mexico – Anti-Dumping Investigation of High Fructose Corn
Syrup (HFCS) from the United States, WT/DS132/R, adopted
24 February 2000, and Corr.1, DSR 2000:III, p. 1345
Mexico – Corn Syrup
(Article 21.5 – US)
Appellate Body Report, Mexico – Anti-Dumping Investigation of High
Fructose Corn Syrup (HFCS) from the United States – Recourse to
Article 21.5 of the DSU by the United States, WT/DS132/AB/RW, adopted
21 November 2001, DSR 2001:XIII, p. 6675
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes
and Sections of Iron or Non-Alloy Steel and H-Beams from Poland,
WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 2701
US – Anti-Dumping and
Countervailing Duties (China)
Appellate Body Report, United States – Definitive Anti-Dumping and
Countervailing Duties on Certain Products from China, WT/DS379/AB/R,
adopted 25 March 2011, DSR 2011:V, p. 2869
US – Anti-Dumping and
Countervailing Duties (China)
Panel Report, United States – Definitive Anti-Dumping and Countervailing
Duties on Certain Products from China, WT/DS379/R, adopted
25 March 2011, as modified by Appellate Body Report WT/DS379/AB/R,
DSR 2011:VI, p. 3143
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany,
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX,
p. 3779
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain
Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted
19 December 2014, DSR 2014:V, p. 1727
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application
of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009,
DSR 2009:III, p. 1291
US – Countervailing Duty
Investigation on DRAMS
Appellate Body Report, United States – Countervailing Duty Investigation on
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea,
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Countervailing Duty
Investigation on DRAMS
Panel Report, United States – Countervailing Duty Investigation on Dynamic
Random Access Memory Semiconductors (DRAMS) from Korea,
WT/DS296/R, adopted 20 July 2005, as modified by Appellate Body Report
WT/DS296/AB/R, DSR 2005:XVII, p. 8243
US – Countervailing Measures
(China)
Appellate Body Report, United States – Countervailing Duty Measures on
Certain Products from China, WT/DS437/AB/R, adopted 16 January 2015
US – Countervailing Measures
(China)
Panel Report, United States – Countervailing Duty Measures on Certain
Products from China, WT/DS437/R and Add.1, adopted 16 January 2015, as
modified by Appellate Body Report WT/DS437/AB/R
US – Export Restraints Panel Report, United States – Measures Treating Exports Restraints as
Subsidies, WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 2001:XI,
p. 5767
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border
Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted
20 April 2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted
23 August 2001, DSR 2001:X, p. 4697
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX,
p. 4051
US – Large Civil Aircraft (2nd
complaint)
Appellate Body Report, United States – Measures Affecting Trade in Large
Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012,
DSR 2012:I, p. 7

BCI deleted, as indicated [[***]]

Short title Full case title and citation
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on
Imports of Circular Welded Carbon Quality Line Pipe from Korea,
WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, p. 1403
US – Oil Country Tubular
Goods Sunset Reviews
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping
Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R,
adopted 17 December 2004, DSR 2004:VII, p. 3257
US – Shrimp II (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp
from Viet Nam, WT/DS429/R and Add.1, adopted 22 April 2015, upheld by
Appellate Body Report WT/DS429/AB/R
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada,
WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, p. 571
US – Softwood Lumber IV Panel Report, United States – Final Countervailing Duty Determination with
Respect to Certain Softwood Lumber from Canada, WT/DS257/R and Corr.1,
adopted 17 February 2004, as modified by Appellate Body Report
WT/DS257/AB/R, DSR 2004:II, p. 641
US – Softwood Lumber VI Panel Report, United States – Investigation of the International Trade
Commission in Softwood Lumber from Canada, WT/DS277/R, adopted
26 April 2004, DSR 2004:VI, p. 2485
US – Softwood Lumber VI
(Article 21.5 – Canada)
Appellate Body Report, United States – Investigation of the 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 – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1, DSR 1997:I, p. 323
US – Zeroing (Japan)
(Article 21.5 – Japan)
Appellate Body Report, United States – Measures Relating to Zeroing and
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan,
WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441

BCI deleted, as indicated [[***]]

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short Title Description/Long title
IDN-1 Anti-Dumping Duty Order Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from Indonesia: Antidumping Duty
Order, United States Federal Register , Vol. 75, No. 221,
(17 November 2010)
IDN-2 Countervailing Duty Order Certain Coated Paper S uitable for High -Quality Print Graphics
Using Sheet -Fed Presses from Indonesia: Countervailing Duty
Order, United States Federal Register , Vol. 75, No. 221
(17 November 2010)
IDN-
3/US-66
Initiation of Anti -Dumping
Investigations
Certain Coated Paper Suita ble for High -Quality Print Graphics
Using Sheet -Fed Presses from Indonesia and the People's
Republic of China: Initiation of Antidumping Duty Investigations,
United States Federal Register , Vol. 74 No. 201
(20 October 2009)
IDN-
4/US-65
Initiation of Coun tervailing
Duty Investigation
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from Indonesia: Initiation of
Countervailing Duty Investigation, United States Federal Register,
Vol. 74 No. 201 (20 October 2009)
IDN-
5/US-48
Preliminary Countervailing
Duty Determination
Certain Coated Paper from Indonesia: Preliminary Affirmative
Countervailing Duty Determination and Alignment of Final
Countervailing Duty Determination with Final Antidumping Duty
Determination, United Sta tes Federal Register , Vol. 75, No. 45
(9 March 2010)
IDN-
6/US-47
Final Countervailing Duty
Determination
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from Indonesia: Final Affirmative
Countervailing Duty Determinat ion, United States Federal
Register, Vol. 75, No. 186 (27 September 2010)
IDN-
7/US-67
Final Anti -Dumping
Determination
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet-Fed Presses from Indonesia: Final Determination of
Sales at Le ss than Fair Value, United States Federal Register ,
Vol. 75, No. 186 (27 September 2010)
IDN-8 USITC Notice of Preliminary
Determination
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from China and Indonesia:
Determinations, United States Federal Register , Vol. 74, No. 224
(23 November 2009)
IDN-
9/US-70
USITC Notice of Final
Determination
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from China and Indonesia:
Determinations, United States Federal Register , Vol. 75, No. 221
(17 November 2010)
IDN-10 Excerpt from USDOC Issues
and Decision Memorandum,
pp. 1-20 and 48-56
Issues and Decision Memorandum for High -Quality Print Graphics
Using Sheet -Fed Presses from Indonesia: Final Af firmative
Countervailing Duty Determination (20 September 2010),
pp. 1-20 and 48-56
IDN-12 Excerpt from CFS USDOC
Issues and Decision
Memorandum, pp. 1, 27-28
and 40-46
Issues and Decision Memorandum for the Final Affirmative
Countervailing Duty Determination: Coated Free Sheet Paper from
Indonesia (17 October 2007), pp. 1, 27-28 and 40-46
IDN-13 Regulation of Minister of Trade
of the Republic of Indonesia,
No. 20/M-DAG/PER/5/2008
Regulation of Minister of Trade of the Republic of Indonesia,
No. 20/M-DAG/PER/5/2008, concerning provision for export of
forestry industry products (29 May 2008)
IDN-14 Excerpt from Part Two of GOI
First Supplemen tal Questionnaire
Response, pp. 22-38
Part Two of the Government of Indonesia's First Supplemental
Questionnaire Res ponse (22 Febru ary 2010) , questions 55 -60,
pp. 22-38
IDN-15 GOI Third Supplemental
Questionnaire Response
Government of Indonesia's Third Supplemental Questionnaire
Response (27 May 2010)
IDN-16 GOI Fourth and Fifth
Supplemental Questionnaire
Response
Government of Indonesia's Fourth and Fifth Supplemental
Questionnaires Response (22 June 2010)
IDN-18 Excerpt from USITC Final
Determination, pp. 3 -39 and
C-3-C-7
USITC, Certain Coated Paper Suitable for High -Quality Print
Graphics Using Sheet-Fed Presses from China and Indonesia, Final
Determination, Publication 4192 (November 2010), pp. 3-39 and
C-3-C-7

BCI deleted, as indicated [[***]]

Exhibit Short Title Description/Long title
IDN-20 Other Members' Laws on Tie
Voting
Canadian International Trade T ribunal Act (current to
21 June 2016), South African International Trade Administra tion
Act (22 January 2003), Turkish Regulation on the Prevention of
Unfair Competition in Imports (20 October 1999), and Argentinian
Presidential Decree No. 766/94 (12 May 1994)
IDN-24 USITC Continuation Notice Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from China and Indonesia:
Determinations, United States Federal Register , Vol. 81, No. 250
(29 December 2016)
IDN-25
(BCI)
Excerpt from APP/SMG Initial
Questionnaire Response, pp.
1, 25, 27, 29, and 30
PT. Pindo Deli Pulp and Paper Mills, PT. Pabrik Kertas Tjiwi Kimia,
Tbk, and PT. Indah Kiat Pulp & Paper Tbk's Initial Questionnaire
Response (29 December 2009), pp. 1, 25, 27, 29, and 30 (BCI)
IDN-27
(BCI)
Exhibit D -8 to APP/SMG
Questionnaire Response in
Anti-Dumping investigation
PT. Pabrik Kertas Tjiwi Kimia Tbk, PT. Pindo Deli Pulp, and Paper
Mills, Supplemental Section D Re sponse, exhibit D -8
(20 January 2010) (BCI)
IDN-28
(BCI)
Exhibit SD3 -9 to APP/SMG
Questionnaire Response in
Anti-Dumping investigation
PT. Pabrik Kertas Tjiwi Kimia Tbk, PT. Indah Kiat Pulp and Paper
Tbk, and PT. Pindo Deli Pulp and Paper Mills, Supplemental
Section D Response, exhibit SD3-9 (5 April 2010) (BCI)
IDN-30 Log Export Ban Joint Decree of the Minister of Forestry No. 1132/KPTS -II/2001
and the Min ister of Industry and Trade
No. 292/MPP/Kep/10/2001, Discontinuation of Log/Chip Raw
Material Exports (8 October 2001)
IDN-36 Excerpt from APP Pre -hearing
Brief to USITC, pp. 5 and 51
Pre-hearing Brief of APP-China and APP -Indonesia
(13 September 2010), pp. 5 and 51
IDN-37 Safeguard Tie Vote United States Code, Title 19, Section 1330
IDN-41
(BCI)
Exhibit 33 to Part Two of the
GOI First Supplemental
Questionnaire Response
Part Two of the Government of Indonesia's First Supplemental
Questionnaire Response, exhibit 33 (22 February 2010) (BCI)
IDN-45 APP Pre-hearing Brief to USITC Pre-hearing Brief of APP-China and APP -Indonesia
(13 September 2010)
IDN-47 ICJ Statute Statute of the International Court of Justice, Chapter XIV of the
United Nations Charter, San Francisco (1945)
IDN-51 Excerpt from U SITC Conference
Transcript, pp. 181-182
USITC, Investigations Nos. 701 -TA-470-471 and 731 -TA-1169-
1170 (Preliminary), Conference Tr anscript (14 October 2009),
pp. 181-182
IDN-52 Exhibit 28 to APP P re-hearing
Brief to USITC on RISI Data
Respondents' Pre-hearing Brief, exhibit 28 (13 September 2010)
(RISI Data)
US-1 USITC Final Determination USITC, Certain Coated Paper Suitable for High -Quality Print
Graphics Using Sheet-Fed Presses from China and Indonesia, Final
Determination, Publication 4192 (November 2010)
US-4 Excerpt from Petitioners
Post-hearing Brief to USITC
Petitioners' Post -hearing Brief to USITC, Responses to
Commissioner Questions, Commissioner Pinkert Question 3,
exhibit 1, p. 21 (4 October 2010)
US-12 19 U.S.C., Section 1677 United States Code, Title 19, Section 1677
US-26 Group on Anti -Dumping
Policies, Anti -Dumping Code
draft (August 1966)
Sub-Committee on Non -Tariff Barriers, Group on Anti -Dumping
Policies, Possible Elements to be Considered for Inclusion in an
Anti-Dumping Code, TN.64/NTB/W/13 (23 August 1966)
US-27 Anti-Dumping Code
(July 1967)
Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade, L/2812 (12 July 1967)
US-29 South Korea, Act on the
Investigation of Unfair
International Trade Practices
South Korea, Act on the Investigation of Unfair International
Trade Practices No. 6417 (3 February 2001)
US-30 Group on Anti -Dumping
Policies, Anti -Dumping Code
draft (December 1966)
Sub-Committee on Non -Tariff Barriers, Group on Anti -Dumping
Policies, Possible Elements to be Considered for Inclusion in an
Anti-Dumping Code, TN.64/NTB/W/14 (9 December 1966)
US-31 USDOC Issues and Decision
Memorandum
Issues and Decision Memorandum for the Final A ffirmative
Countervailing Duty Determination of Certain Coated Paper
Suitable for High -Quality Print Graphics Using Sheet -Fed Presses
from Indonesia (20 September 2010)
US-32 GOI Initial Questionnaire
Response
Government of Indonesia's Ini tial Questionnai re Response
(29 December 2009)
US-34
(BCI)
Part Two of GOI First
Supplemental Questionnaire
Response
Part Two of the Government of Indonesia's First Supplemental
Questionnaire Response (22 February 2010) (BCI)
US-35
(BCI)
USDOC Verification of GOI
Questionnaire Response
Verification of the Questionnaire Response Submitted by the
Government of Indonesia: Countervailing Duty Investigation of
Certain Coated Paper from Indonesia (3 August 2010) (BCI)

BCI deleted, as indicated [[***]]

Exhibit Short Title Description/Long title
US-40 Petitioners' General Factual
Information Submission
Petitioner General Factual Information Submission (21 June 2010)
US-41 GOI Third Supplemental
Questionnaire
Third Supplemental Questionnaire to the Government of
Indonesia (29 April 2010)
US-42 GOI Fifth Supplemental
Questionnaire
Fifth Supplemental Questionnaire to the Government of Indonesia
(11 June 2010)
US-43 CFS USDOC Issues and
Decision Memorandum
Issues and Decision Memorandum for the Final Affirmative
Countervailing Duty Determination: Coated Free Sheet Paper from
Indonesia (17 October 2007)
US-44 GOI and APP/SMG Case Brief
to USDOC
Government of Indonesia and APP-Indonesia's Case Brief
(17 August 2010)
US-56 19 U.S.C., Section 1671d United States Code, Title 19, Section 1671d
US-60 19 U.S.C., Section 1673d United States Code, Title 19, Section 1673d
US-68 Final Countervailing Duty
Determination on Coated
Paper from China
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from the People's Republic of China:
Final Affirmative Countervailing Duty Determinati on,
United States Federal Register , Vol. 75, No. 186
(27 September 2010)
US-69 Final Anti -Dumping
Determination on Coated
Paper from China
Certain Coated Paper Suitable for High -Quality Print Graphics
Using Sheet -Fed Presses from the People's Republic of China:
Final Determination of Sales at Less Than Fair Value, United
States Federal Register, Vol. 75, No. 186 (27 September 2010)
US-74 CFS Final Countervailing Duty
Determination
Certain Coated Paper from Indonesia: Final Affirmative
Countervailing Duty Determination, United States Federal
Register, Vol. 72, No. 206 (25 October 2007)
US-76 Letter to GOI regarding
Verification
Letter dated 24 June 2010 from Barbara Tillman, USDOC, to the
GOI
US-77 GOI Verification Outline USDOC, Verification Outline (18 June 2010)
US-80 Petition Petitions for the Imposition of Antidumping and Countervailing
Duties on Certain Coated Paper from Indonesia and the People's
Republic of China (23 September 2009)
US-81 CFS Memorandum: Meeting
with an Independent Expert
Countervailing Duty Investigation of Coated Free Sheet Paper
from Indonesia: Memorandum to File Regarding Verification
Meeting with an Independent Expert (24 August 2007)
US-83
(BCI)
Exhibit 5S-4 to GOI Fourth and
Fifth Supplemental
Questionnaires Response
Government of Indonesia's Fourth and Fifth Supplemental
Questionnaires Response, exhibit 5S-4 (22 June 2010) (BCI)
US-84 Exhibit 1 to GOI Third
Supplemental Questionnaire
Response
Government of Indonesia's Third Supplemental Questionnaire
Response, exhibit 1 (29 April 2010)
US-87 GOI Letter to USDOC
Regarding IBRA
Letter dated 3 August 2010 from the Government of Indonesia to
the USDOC Regarding IBRA
US-91
(BCI)
APP/SMG Initial Questionnaire
Response
PT. Pindo Deli Pulp and Paper Mills, PT. Pabrik Kertas Tjiw i Kimia,
Tbk, and PT. Indah Kiat Pulp & Paper , Tbk's Initial Questionnaire
Response (29 December 2009) (BCI)
US-95 Excerpt from APP Pre -hearing
Brief to USITC, pp. 24, 30, 36,
49-53, and 72
Pre-hearing Brief APP -China and APP -Indonesia
(13 September 2010), pp. 24, 30, 36, 49-53, and 72
US-102 Monthly Import Statistics Certain Coated Paper: Monthly Import Statistics
US-104 APP Post -hearing Brief to
USITC
APP Post-hearing Brief to USITC (4 October 2010)
US-105 APP Final Comments to USITC APP Final Comments to USITC (21 October 2010)
US-107 Redacted excerpts of USITC
Final Determination and APP
Final Comments to USITC
Previously-Redacted Discussion of the Unisource Affidavit (Exhibit
US-2) in the Commission 's Determination (Exhibit US -1) and
APP's Final Comments (Exhibit US-105)
US-108 Excerpt from USITC
Conference Transcript, pp.
45-48 and 179-180
USITC, Investigations Nos. 701 -TA-470-471 and 731 -TA-1169-
1170 (Preliminary), Excerpt from Conference Transcript
(14 October 2009), pp. 45-48 and 179-180
US-110 18 U.S.C., Section 208 Acts affecting a personal financial interest, United States Code ,
Title 18, Section 208
US-118 Section 771(5A) of Tariff Act of
1930
Tariff Act of 1930, Section 771(5A) (2 July 2015)

BCI deleted, as indicated [[***]]

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
APP Asia Pulp and Paper, Ltd. (China) and Asia Pulp and Paper, Ltd. (Indonesia)
APP/SMG Asia Pulp and Paper/Sinar Mas Group
BCI Business Confidential Information
CCP Certain coated paper
CFS Coated free sheet paper
China People's Republic of China
COGS Cost of goods sold
DR Dana Reboisasi (rehabilitation) fee
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
Eagle Ridge Eagle Ridge Paper Co.
GATT 1994 General Agreement on Tariffs and Trade 1994
GOI Government of Indonesia
HTI Hutan Tanaman Industria
IBRA Indonesia Bank Restructuring Agency
IDR Indonesian Rupiah
Indah Kiat or IK PT. Indah Kiat Pulp & Paper, Tbk
ILC International Law Commission
Korea Republic of Korea
Orleans Orleans Offshore Investment Limited
POI Period of investigation1
PPAS Strategic Asset Sales Program
Pindo Deli or PD PT. Pindo Deli Pulp and Paper Mills
PSDH Provisi Sumberdaya Hutan
RISI Resource Information Systems Inc.
SCM Agreement Agreement on Subsidies and Countervailing Measures
SOE State-owned enterprise
Tjiwi Kimia or TK PT. Pabrik Kertas Tjiwi Kimia Tbk
Unisource Unisource Worldwide, Inc.
United States United States of America
USD United States dollar
USDOC US Department of Commerce
USITC US International Trade Commission
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155
UNTS 331; 8 International Legal Materials 679
WKS PT. Wirakarya Sakti
WTA World Trade Atlas
WTO World Trade Organization

1 For the POI considered by the USDOC, see fn 57; for the POI considered by the USITC, see
para. 7.197.

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1 INTRODUCTION
1.1 Complaint by Indonesia
1.1. On 13 March 2015, Indonesia requested consultations with the United States p ursuant to
Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
(DSU), Article 17 of the Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994 (Anti -Dumping Agreement), Article 3 0 of the Agreement on Subsidies and
Countervailing Measures (SCM Agreement), and Article XXII:1 of the General Agreement on Tariffs
and Trade 1994 (GATT 1994), with respect to:
a. the anti-dumping and countervailing duties imposed by the United States on impo rts of
certain coated paper (CCP) from Indonesia; and
b. Section 771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 of the
United States Code, Section 1677(11)(B).2
1.2. Consultations were held on 25 June 2015 but failed to resolve the dispute.
1.2 Panel establishment and composition
1.3. On 9 July 2015, Indonesia requested the establishment of a panel pursuant to Article 6 of the
DSU, with standard terms of reference. 3 On 20 August 2015, Indonesia submitted a new request
for the establishment of a pane l.4 At its meeting on 28 September 2015, the Dispute Settlement
Body (DSB) established a panel pursuant to the request of Indonesia in document WT/DS491/3, in
accordance with Article 6 of the DSU.5
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Indonesia in document
WT/DS491/3 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.6
1.5. On 25 January 2016, Indonesia requested the Director-General to determine the composition
of the Panel, pursuant to Article 8.7 of the DSU . On 4 February 2016, the Director -General
accordingly composed the Panel as follows:
Chairperson: Mr Hanspeter Tschäni

Members: Mr Martin Garcia
 Ms Enie Neri de Ross

1.6. Brazil, Canada, China, the European Union, India, Korea, and Turkey notified their interest in
participating in the Panel proceedings as third parties.

2 Request for consultations by Indonesia, WT/DS491/1.
3 Request for the establishment of a panel by Indonesia, WT/DS491/2.
4 Request for the establishment of a panel by Indonesia WT/DS491/3 (hereinafter Indonesia's panel
request).
5 DSB, Minutes of the meeting held on 28 September 2015, WT/DSB/M/368.
6 Constitution of the Panel, WT/DS491/4.

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1.3 Panel proceedings
1.3.1 General
1.7. After consultation with the parties, the Panel adopted its Working Procedures 7 and timetable
on 29 July 2016. The timetable was revised on 15 August 2016 and on 23 May 2017.
1.8. The Panel began its work on this dispute later t han it would have wished due to staff
constraints in the WTO Secretariat.8 The Panel held a first substantive meeting with the parties on
6-7 December 2016. A session with the third parties took place on 7 December 2016. The Panel
held a second substantive meeting with the parties on 28 -29 March 2017. On 23 May 2017, the
Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to
the parties on 24 August 2017. The Panel issued its Final Report to the parties on 6 October 2017.
1.3.2 Additional working procedures concerning BCI
1.9. On 11 July 2016, Indonesia requested the Panel to adopt additional working procedures
concerning Business Confidential Information (BCI). To that end, on 20 July 2016 the parties
submitted to the Panel a joint proposal for additional BCI procedures. After considering the parties'
proposal, the Panel adopted additional working procedures for t he protection of BCI on
29 July 2016.9
1.3.3 Request for a preliminary ruling
1.10. In its first written submission dated 12 September 201610, the United States requested that
the Panel make a preliminary ruling that certain arguments raised by Indonesia in its first written
submission are not within the Panel's terms of reference. 11 Indonesia responded to the
United States' re quest on 26 September 2016. 12 The parties further addressed each other's
arguments concerning the United States' request in their subsequent submissions and statements
to the Panel. 13 Third parties were also invited to comment on the United States' request i n their
third-party submissions but did not do so. 14 We address the United States' request in our findings
below.
1.3.4 Requests of a procedural nature by certain third parties
1.11. On 8 July 2016, Canada requested that the Panel grant it certain additional "passive"
third-party rights in these proceedings. The parties provided comments on Canada's request orally
at the organizational meeting and the United States provided additional written comments on
20 July 2016. By communication dated 3 November 2016, the Panel in formed the parties and the
third parties that it had denied Canada's request for enhanced third -party rights. The Panel's
decision is set out in Annex D-1.
1.12. In its third-party submission dated 26 September 2016, the European Union objected to the
additional BCI procedures adopted by the Panel for failing to provide for third-party access to BCI
submitted by the parties, and requested that third parties be given access to the exhibits
containing BCI submitted by the parties with their first written submission s. The parties provided
written comments on the European Union's request on 2 November 2016. On 4 November 2016,

7 Panel's Working Procedures, Annex A-1.
8 Communication from the Panel, WT/DS491/5.
9 Additional Working Procedures of the Panel concerning Business Confidential Information, Annex A-2.
10 On 16 September 2016, the United States submitted corrections to its first written submission. At the
request of the Panel, on 6 October 2016 the United States submitted a corrected, consolidated version of its
first written submission. In this Report, the Panel refers to the corrected, consolidated, version of the
United States' first written submission dated 6 October 2016.
11 United States' first written submission, paras. 33-40.
12 Indonesia's response to the United States' preliminary ruling request.
13 Indonesia's opening statement at the first meeting of the Panel, paras. 14-17; response to Panel
question Nos. 4 and 6; second written submission, paras. 11-16; and opening statement at the second
meeting of the Panel, paras. 4-7. United States' opening statement at the first meeting of the Panel,
paras. 6-8; response to Panel question Nos. 3, 5, and 7; second written submission, paras. 10-18; and opening
statement at the second meeting of the Panel, para. 3.
14 Panel communication to the parties and third parties dated 16 September 2016.

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the Panel informed the parties and the third parties that it considered it neither appropriate nor
necessary to grant the European Union's request. The Panel's decision is set out in Annex D-2.
2 FACTUAL ASPECTS AND MEASURES AT ISSUE
2.1. This dispute concerns two sets of measures of the United States.
2.2. First, Indonesia challenges the imposition by the United States of anti -dumping and
countervailing duties on imports of certain coated paper from Indonesia pursuant to anti -dumping
and countervailing duty orders published on 17 November 2010. 15 Specifically, Indonesia's "as
applied" claims concern certain aspects of the US Department of Commerce (USDOC)'s final
determination in its countervailing duty investigation on certain coated paper from Indonesia, as
well as the US International Trade Commission (USITC)'s final threat of injury determination
concerning subsidized and dumped imports from Indonesia and China.
2.3. Second, Indonesia challenges "as such", i.e. independently of its application in specific
instances, Section 771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 of the
United States Code, Section 1677(11)(B). 16 In particular, Indo nesia challenges "as such" the use
of this statutory provision in affirmative threat of injury determinations.
2.4. With respect to the first set of measures, on 23 September 2009, three companies and a
labour union filed a petition on behalf of the domestic in dustry in the United States for the
application of anti -dumping and countervailing duties on imports of certain coated paper from
Indonesia and China. 17 On 20 October 2009, the USDOC initiated parallel anti -dumping and
countervailing duty investigations on imports of certain coated paper from Indonesia and on
imports of the same product from China.18
2.5. In the countervailing duty investigation on coated paper from Indonesia, the USDOC selected
the Asia Pulp and Paper/Sinar Mas Group (APP/SMG) as the sole mandato ry respondent in the
investigation. 19 On 9 March 2010 the USDOC issued its preliminary countervailing duty
determination, in which it calculated a subsidy rate of 17.48% for APP/SMG, and assigned the
same rate to all other producers and exporters. 20 The USDOC issued its final determination on
27 September 2010. 21 In its final determination, the USDOC determined, inter alia , that three
Government of Indonesia (GOI) measures – the provision of standing timber, the log export ban,
and the debt forgiveness in favour of APP/SMG – constituted countervailable subsidies. The USDOC
calculated an overall net subsidy rate of 17.94% for APP/SMG, and assigned the same rate to all
other producers and exporters.22
2.6. The USITC published the notice of initiation of its prelimi nary injury investigation on
30 September 2009, and issued a preliminary affirmative determination on 23 November 2009. 23
It issued its final determination on 17 November 2010, finding that the US domestic industry was
threatened with material injury by reason o f imports of certain coated paper from China and

15 Indonesia's first written submission, paras. 1, 15, and 16 (referring to Anti-Dumping Duty Order,
(Exhibit IDN-1); and Countervailing Duty Order, (Exhibit IDN-2)).
16 Indonesia's first written submission, para. 5.
17 Petition, (Exhibit US-80).
18 Initiation of Anti-Dumping Duty Investigations, (Exhibits IDN-3/US-66 (exhibited twice)); Initiation of
Countervailing Duty Investigation, (Exhibits IDN-4/US-65 (exhibited twice)); and USITC Final Determination,
(Exhibit US-1), p. I-1.
19 The respondent APP/SMG companies were PT. Pabrik Kertas Tjiwi Kimia Tbk (Tjiwi Kimia or TK), PT.
Pindo Deli Pulp and Paper Mills (Pindo Deli or PD), and PT. Indah Kiat Pulp & Paper, Tbk (Indah Kiat or IK).
20 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice)).
21 Final Countervailing Duty Determination, (Exhibits IDN-6/US-47 (exhibited twice)). The accompanying
USDOC Issues and Decision Memorandum, (Exhibits IDN-10/US-31), is dated 20 September 2010. Indonesia's
exhibit contains excerpts of the Issues and Decision Memorandum whereas Exhibit US-31 includes the entire
document. For this reason, in our findings, we generally refer to the latter rather than to Exhibit IDN-10.
22 Final Countervailing Duty Determination, (Exhibits IDN-6/US-47 (exhibited twice)), p. 59211; USDOC
Issues and Decision Memorandum, (Exhibit US-31). On the same date, the USDOC issued its final
determinations in the parallel countervailing duty investigation on coated paper from China and anti-dumping
investigations on coated paper from Indonesia and from China. (Final Anti-Dumping Determination, (Exhibits
IDN-7/US-67 (exhibited twice)); Final Anti-Dumping Determination on Coated Paper from China, (Exhibit
US-69); and Final Countervailing Duty Determination on Coated Paper from China, (Exhibit US-68)).
23 USITC Notice of Preliminary Determination, (Exhibit IDN-8).

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Indonesia.24 On the same date, the USDOC issued anti -dumping and countervailing duty orders
imposing, inter alia, countervailing duties at a rate of 17.94% on imports from APP/SMG and "all
other" Indonesian producers/exporters.25
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATION
3.1. In the context of its "as applied" claims concerning the anti -dumping and countervailing
measures at issue, Indonesia requests that the Panel find:
a. With respect to the USDOC's subsidy determination, that26:
i. the USDOC's findings that the GOI provides standing timber for less than adequate
remuneration and that the GOI log export ban confers a benefit are inconsistent with
Article 14(d) of the SCM Agreement because the USDOC made a per se
determination of price distortion based solely on the predominant market share of
standing timber from public forests;
ii. the USDOC's finding, based on an adverse inference, that the GOI "knowingly
allowed an affiliate of a debtor to buy back its own debt in c ontravention of
Indonesian law" is inconsistent with Article 12.7 of the SCM Agreement;
iii. the USDOC's findings of specificity are inconsistent with Article 2.1(c) of the SCM
Agreement because the USDOC did not determine that the collection of stumpage
fees, the log export ban, or the alleged forgiveness of debt were part of a plan or
scheme intended to confer a benefit;
iv. the USDOC's finding of specificity in connection with the debt forgiveness is
inconsistent with Article 2.1 of the SCM Agreement because the USDOC "did not
identify the jurisdiction allegedly providing a benefit, thereby calling into question the
specificity analysis"27;
b. With respect to the USITC's threat of injury determination, that28:
i. the USITC's threat of injury determination is inconsistent with Article 3.5 of the
Anti-Dumping Agreement and Article 15.5 of the SCM Agreement because the USITC
attributed to the subject imports adverse effects caused by other factors;
ii. the USITC's threat of injury determination is inconsistent with Article 3.7 o f the
Anti-Dumping Agreement and Article 15.7 of the SCM Agreement because the USITC
based its threat findings on conjecture and remote possibility; and
iii. the USITC's threat of injury determination is inconsistent with Article 3.8 of the
Anti-Dumping Agreement and Article 15.8 of the SCM Agreement because the USITC
failed to exercise special care.

24 USITC Notice of Final Determination, (Exhibits IDN-9/US-70 (exhibited twice)); USITC Final
Determination, (Exhibits IDN-18/US-1). As indicated below, fn 357, Exhibit IDN-18 contains excerpts of the
determination whereas Exhibit US-1 includes the entire determination. For this reason, in our findings, we
generally refer to the latter.
25 Anti-Dumping Duty Order, (Exhibit IDN-1), p. 70206; Countervailing Duty Order, (Exhibit IDN-2),
p. 70207. The USITC instituted five-year ("sunset") reviews with respect to the anti-dumping and
countervailing duties on imports of certain coated paper from Indonesia and China on 1 October 2015. On
29 December 2016, the USITC published its determination that revocation of the duties would be likely to lead
to continuation or recurrence of material injury to an industry in the United States within a reasonably
foreseeable time. (USITC Continuation Notice, (Exhibit IDN-24), p. 96044).
26 Indonesia's first written submission, paras. 3 and 166; second written submission, paras. 2-5.
27 Indonesia initially also challenged the USDOC's findings of specificity with respect to the provision of
standing timber and the log export ban, arguing that they were inconsistent with Article 2.1 of the SCM
Agreement because the USDOC did not identify the jurisdiction allegedly providing a benefit. (Indonesia's first
written submission, para. 3). However, at the first meeting of the Panel, Indonesia informed the Panel that it
had decided not to pursue those claims. (Indonesia's opening statement at the first meeting of the Panel,
para. 56).
28 Indonesia's first written submission, paras. 4 and 166; second written submission, paras. 6-9.

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3.2. In the context of its "as such" claims , Indonesia requests that the Panel find that
Section 771(11)(B) of the Tariff Act of 1930, as amended, codified at Title 19 o f the United States
Code, Section 1677(11)(B), which deems a tie vote on threat of injury to be an affirmative threat
of injury determination, is "as such" inconsistent with Article 3.8 of the Anti -Dumping Agreement
and Article 15.8 of the SCM Agreement because it precludes the exercise of special care.29
3.3. Indonesia further requests, pursuant to Article 19.1 of the DSU, that the Panel recommend
the United States to bring its measures into conformity with the Anti -Dumping Agreement and the
SCM 2Agreement.30
3.4. The United States requests that the Panel reject Indonesia's claims in this dispute in their
entirety.31 Moreover, as noted above, the United States requests that the Panel find that certain
arguments raised by Indonesia are not within the Panel's terms of reference.
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the
Panel in accordance with paragraph 19 of the Working Procedures adopted by the Panel (see
Annexes B-1, B-2, B-3, and B-4).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Brazil, Canada, the European Union, and Turkey are reflected in their
executive summaries, provided in accordance with paragraph 20 of the Working Procedures
adopted by the Panel (see Annexes C -1, C -2, C -3, and C -4). Ch ina submitted responses to
questions from the Panel to the third parties but did not submit an executive summary of its
arguments to the Panel. India and Korea did not submit written or oral arguments to the Panel.
6 INTERIM REVIEW
6.1. On 24 August 2017, the Panel issued its Interim Report to the parties. On 6 September 2017,
the United States submitted a written request for the Panel to review specific aspects of the
Interim Report. On the same date, Indonesia informed the Panel that it had no comments on the
Interim Report. Neither party requested an interim review meeting. On 14 September 2017,
Indonesia submitted comments on certain of the United States' requests for review.
6.2. Annex E-1 sets out the requests made by the United States at the interim review stag e,
Indonesia's comments on the United States' requests, as well as the Panel's discussion and
disposition of those requests.
7 FINDINGS
7.1 Introduction
7.1. In addressing the complaint in this dispute, we first set out the relevant principles guiding our
review, including the relevant principles concerning treaty interpretation, the standard of review,
and the burden of proof in WTO dispute settlement proceedings. We then address the application
of Article 12.11 of the DSU concerning special and differential treatmen t, after which we examine
the request for a preliminary ruling submitted by the United States. Thereafter, we consider, in the
following order: (a) Indonesia's "as applied" claims concerning the USDOC's subsidy determination
on coated paper from Indonesia; (b) Indonesia's "as applied" claims concerning the USITC's threat
of injury determination on coated paper from China and Indonesia; and (c) Indonesia's "as such"
claims concerning US Section 771(11)(B) of the US Tariff Act of 1930 (the "tie vote" provision).

29 Indonesia's first written submission, paras. 5 and 166; second written submission, para. 10.
30 Indonesia's first written submission, para. 166; second written submission, para. 87. Although
Indonesia refers to the United States' measures also being inconsistent with the "GATT 1994" (Indonesia's first
written submission, para. 1) and requests that the Panel recommend that the United States bring its measures
into conformity with, inter alia, the GATT 1994. (Indonesia's first written submission, para. 166; second written
submission, para. 87). Indonesia does not make any specific claim under any provision of the GATT 1994.
31 United States' first written submission, para. 355.

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7.2 General principles regarding treaty interpretation, the applicable standard of
review, and burden of proof
7.2.1 Treaty interpretation
7.2. Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of
interpretation of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly
requires panels to interpret that Agreement's provisions in accordance with the customary rules of
interpretation of public international law. It is generally accepted that the principles codified in
Articles 31 and 32 of the Vienna Convention are such customary rules.32
7.2.2 Standard of review
7.3. Panels generally are bound by the standard of review set forth in Article 11 of the DSU, which
provides, in relevant part, that:
A panel should make an objective assessment of the matter before it, including an
objective assessment of the facts of the case and the applicability of and conformity
with the relevant covered agreements[.]
7.4. Further to Article 11 of the DSU, Article 17.6 of the Anti -Dumping Agreement sets forth a
specific standard of review applicable to disputes under the Anti-Dumping Agreement:
(i) in its assessment of the facts of the matter, the panel shall d etermine whether
the authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the pane l might have
reached a different conclusion, the evaluation shall not be overturned;
(ii) the panel shall interpret the relevant provisions of the Agreement in accordance
with customary rules of interpretation of public international law. Where the panel
finds that a relevant provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the authorities' measure to be in conformity with
the Agreement if it rests upon one of those permissible interpretations.
7.5. Thus, Artic le 11 of the DSU and Article 17.6 of the Anti -Dumping Agreement together
establish the standard of review we are to apply with respect to both the factual and the legal
aspects of the present dispute.
7.6. The "objective assessment" to be made by a panel revie wing an investigating authority's
determination is to be informed by an examination of whether the investigating authority has
provided a reasoned and adequate explanation as to: (a) how the evidence on the record
supported its factual findings; and (b) ho w those factual findings support ed its overall
determination. 33 Moreover, with respect to a "reasoned and adequate explanation", the
Appellate Body observed:
What is "adequate" will inevitably depend on the facts and circumstances of the case
and the partic ular claims made, but several general lines of inquiry are likely to be
relevant. The panel's scrutiny should test whether the reasoning of the authority is
coherent and internally consistent. The panel must undertake an in-depth examination
of whether the explanations given disclose how the investigating authority treated the
facts and evidence in the record and whether there was positive evidence before it to
support the inferences made and conclusions reached by it. The panel must examine
whether the exp lanations provided demonstrate that the investigating authority took
proper account of the complexities of the data before it, and that it explained why it
rejected or discounted alternative explanations and interpretations of the record

32 Appellate Body Report, Japan – Alcoholic Beverages II, p. 10.
33 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS, para. 186; US – Lamb,
para. 103.

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evidence. A panel must be open to the possibility that the explanations given by the
authority are not reasoned or adequate in the light of other plausible alternative
explanations, and must take care not to assume itself the role of initial trier of facts,
nor to be passiv e by "simply accept[ing] the conclusions of the competent
authorities".34
7.7. Therefore, it is clear that a panel should n either undertake a de novo review of the evidence
nor substitute its judgment for that of the investigating authority. A panel must limit its
examination to the evidence that was before the investigating authority during the course of the
investigation and must take into account all such evidence submitted by the parties to the
dispute.35 At the same time, a panel must not simply defer to the conclusions of the investigating
authority; a panel's examination of those conclusions must be "in -depth" and "critical and
searching".36
7.2.3 Burden of proof
7.8. The general principles applicable to the allocation of the burden of proof in WTO dispute
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert
and prove its claim. 37 Therefore, as the complaining party, Indonesia bears the burden of
demonstrating that the US measures it challenges are inconsis tent with the provi sions of the
covered agreements that it invokes. The Appellate Body has stated that a complaining party will
satisfy its burden when it establishes a prima facie case, namely, a case which, in the absence of
effective refutation by the defending party, req uires a panel, as a matter of law, to rule in favour
of the complaining party.38 It is generally for each party asserting a fact to provide proof thereof.39
7.3 Special and differential treatment
7.9. Article 12.11 of the DSU provides that:
Where one or more of the parties is a developing country Member, the panel's report
shall explicitly indicate the form in which account has been taken of relevant
provisions on differential and more -favourable treatment for developing country
Members that form part of the covered agreements which have been raised by the
developing country Member in the course of the dispute settlement procedures.
7.10. In the present dispute, Indonesia refers to Article 15 of the Anti -Dumping Agreement and
Article 27 of the SCM Agreement, which both prov ide special and differential treatment for
developing countries. However, Indonesia makes no claims of inconsistency with those provisions,
and, as indicated in our Report be low, Article 15 of the Anti-Dumping Agreement and Article 27 of
the SCM Agreement are not relevant to the interpretation and application of the provisions invoked
by Indonesia in its claims.40
7.4 Terms of reference – United States' request for a preliminary ruling
7.11. As indicated above 41, in its first written submission, the United States reque sted that the
Panel find that certain arguments raised by Indonesia in its first written submission are not within
the Panel's terms of reference. 42 The United States' objection concerns two series of arguments
advanced by Indonesia before the Panel.
7.12. First, the United States argues that in the context of its Article 14(d) claim concerning the
benefit calculation with respect to the log export ban, and its Article 2.1(c) claim regarding the

34 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93 (referring to
Appellate Body Report, US – Lamb, para. 106). (emphasis original)
35 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, paras. 187-188.
36 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.
37 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
38 Appellate Body Report, EC – Hormones, para. 104.
39 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
40 See below, paras. 7.120 and 7.346.
41 See above, para. 1.10.
42 United States' first written submission, paras. 33-40.

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"subsidy programme" aspect of the specificity determination concerni ng that ban , Indonesia
advances arguments that are "tantamount" to claims under Article 1.1(a) of the SCM Agreement,
concerning the issue of financial contribution. 43 The United States refers, in particular, to
Indonesia's arguments, in support of its claims under Article 2.1(c) and Article 14(d) , that the log
export ban is a type of export restraint that cannot constitute a subsidy and that the log export
ban does not constitute government -entrusted or -directed provision of goods. The United States
submits that these arguments pertain to whether an export ban constitutes a financial contribution
within the meaning of Article 1.1(a), and therefore Indonesia's arguments are equivalent to claims
under that provision.
7.13. Second, the United States objects to certai n arguments that Indonesia makes in support of
its claims under Article 14(d), Article 2.1(c), and the chapeau of A rticle 2.1, which in the
United States' view in fact concern whether the USDOC 's determination set forth " in sufficient
detail the findings a nd conclusions reached on all issues of fact and law considered material", a
matter governed by Article 22.3 of the SCM Agreement. 44 The United States submits that, while
the relevant standard of review under Article 11 of the DSU and Article 17.6 of the An ti-Dumping
Agreement requires a reviewing panel to examine whether an investigating authority has provided
reasoned and adequate explanations of how the evidence supported its factual findings and how
those findings in turn support ed its determination, the question of the level of detail memorialized
in the public notice of an investigating authority's determination is a separate, substantive, inquiry
that properly falls under Article 22.3 of the SCM Agreement. In this case, the United States
argues, Indonesia's concern with the USDOC's use of certain words, phrases, or elements in its
explanations and the amount of space taken by them belongs properly to a claim under
Article 22.3 rather than under the provisions cited by Indonesia.45
7.14. The United States notes that Indonesia's panel request does not include claims under
Articles 1.1(a) or 22.3 of the SCM Agreement. Thus, citing Articles 6.2 and 7 of the DSU, the
United States submits that there is no jurisdictional basis for the Panel to address the merits of the
Indonesian arguments described above, and that these arguments are outside the Panel's terms of
reference.46
7.15. Initially, the United States requested a preliminary ruling , to the effect that the arguments
of Indonesia described above are not within the Pa nel's terms of reference . The United States
subsequently revised its request for a preliminary ruling .47 With respect to its objection that
certain arguments concerning the log export ban are tantamount to claims under Article 1.1(a),
the United States ultimately asks the Panel to issue a preliminary ruling in which it either: (a) finds
that Indonesia's "putative" Article 1.1(a) claims are outside the Panel's terms of reference; (b)
finds that Indonesia's Article 14(d) and Article 2.1(c) claims are in fact " financial contribution
claims", and therefore, outside the Panel's terms of reference; or (c) rejects Indonesia's financial
contribution arguments because there is no legal basis for the Panel to address the merits of
arguments on matters that are outside the Panel's terms of reference.48

43 United States' first written submission, paras. 37-38 and fns 43 and 47; opening statement at the
first meeting of the Panel, para. 7; response to Panel question Nos. 3, 5(a), and 5(c); and second written
submission, para. 10. The United States identifies the arguments at issue as those set forth in Indonesia's first
written submission, paras. 44-45 in support of its Article 14(d) claim, and para. 79 in support of its
Article 2.1(c) claim.
44 The United States refers, in particular, to Indonesia's arguments that the USDOC did not adequately
explain its decisions with respect to Article 14(d), did not make findings of specificity in accordance with
Article 2.1(c), and did not identify the relevant jurisdiction in accordance with the chapeau of Article 2.1. The
United States indicates that these arguments are set forth in Indonesia's first written submission, paras. 33-34
and 41-42 (concerning Indonesia's claim under Article 14(d) with respect to the provision of standing timber);
74, 78, 79, and 81 (concerning Indonesia's claims under Article 2.1(c) with respect to the three subsidies), and
95 (concerning Indonesia's claim under the chapeau of Article 2.1 with respect to the debt forgiveness).
(United States' first written submission, para. 39 and fn 51; response to Panel question No. 7(d)).
45 United States' first written submission, para. 40; response to Panel question No. 7(c).
46 United States' first written submission, paras. 35-36; response to Panel question No. 5(a).
47 United States' opening statement at the first meeting of the Panel, para. 6; response to Panel
question Nos. 3 and 5; and opening statement at the second meeting of the Panel, para. 3.
48 United States' second written submission, para. 18.

BCI deleted, as indicated [[***]]

7.16. With respect to its objection that certain arguments concerning the sufficiency of
explanations are tantamount to claims under Article 22.3, the United States asks the Panel to rule
that Indonesia's arguments are outside its terms of reference.49
7.17. Indonesia submits that the Panel should reject the United States' request. Indonesia argues
that it is not seeking findings under Articles 1.1(a) or 22.3 of the SCM Agreement. According to
Indonesia, the arguments to which the Unite d States objects regarding the log export ban support
its claim of violation under Article 14(d) concerning the issue of "benefit" and its claim under
Article 2.1(c) concerning the existence of a "subsidy programme". With respect to the second set
of argum ents, Indonesia argues that the fact that the United States may also have violated
Article 22.3 does not preclude that the United States may have violated Articles 14(d) and 2.1(c),
and the chapeau of Article 2.1.50
7.18. We did not consider it necessary to addre ss the United States' objections in the form of a
preliminary ruling. For the following reasons, we also consider it neither necessary nor
appropriate51, for the purpose of resolving this dispute, to make the specific findings requested by
the United States.
7.19. First, Article 6.2 of the DSU provides that a panel request "shall … identify the specific
measures at issue and provide a brief summary of the legal basis of the complaint sufficient to
present the problem clearly". Consequently, as the United States correctly notes, where a panel
request fails to specify a particular claim under a specific provision, such claim does not form part
of the matter covered by the panel's terms of reference. 52 In this case, however, Indonesia has
made it clear that it is not making any claims under Articles 1.1(a) and Article 22.3 of the SCM
Agreement. Second, arguments, as opposed to claims, are in principle not circumscribed by a
panel's terms of reference. The United States has not convinced us that that it would be
appropriate for us to issue a ruling that Indonesia's arguments referring to those two provisions,
as opposed to claims, which Indonesia has not made, are outside our terms of reference.
7.20. We do agree, however, that in some of its arguments, Indonesia effectively seeks to
challenge aspects of the USDOC's determination of the existence of a financial contribution despite
having made no claim of violation under Article 1.1(a). In our findings below, we consider whether
Indonesia has established a violation of the pro visions it has invoked in light of the legal
requirements of these provisions and of the arguments and evidence it presented in support of its
claims. Where Indonesia's arguments do not pertain to a claim that it has properly stated in its
panel request and that it pursues before the Panel, but rather pertain to a claim which it has not
properly stated, we disregard these arguments.
7.21. Finally, with respect to the United States' objection that Indonesia is effectively making
claims under Article 22.3 by argui ng that the USDOC was required to provide certain explanations
for its determinations, we recall that an investigating authority's determination must provide a
reasoned and adequate explanation as to how the evidence on the record supported the
investigating authority's factual findings, and how those factual findings support ed its overall
determination.53 The requirement for an investigating authority to explain the basis for its decision
is an aspect of the substantive requirements of the provisions of the Anti-Dumping and SCM
Agreements invoked by Indonesia. This is distinct from the public notice requirements of Article 22
of the SCM Agreement. 54 Indonesia has not, in our view, made any claims or arguments with
respect to the latter requirement s. Rather, I ndonesia challenges the analysis and conclusions of
the USDOC in its determinations under Article 14(d), Article 2.1(c), and the chapeau of

49 United States' first written submission, para. 40.
50 Indonesia's response to the United States' preliminary ruling request, paras. 4-7.
51 We note that one of the rulings the United States seeks, in the alternative, is for the Panel to find that
Indonesia's Article 14(d) and Article 2.1(c) claims with respect to the log export ban are in fact financial
contribution claims that are outside the Panel's terms of reference, on the basis that Indonesia's arguments are
limited to arguing that an export ban cannot constitute a financial contribution (see para. 7.15 above). In our
view, Indonesia's arguments in support of its Article 14(d) and Article 2.1(c) claims are not limited to those
objected to by the United States, and the United States' argument in this regard is without merit.
52 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes, para. 120.
53 See above, para. 7.6.
54 Article 22.3, in particular, requires that the public notice of a final determination (or separate report)
set forth in sufficient detail the findings and conclusions reached on all issues of fact and law the investigating
authority considered material.

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Article 2.1.55 For this reason, the United States' request, as it concerns arguments allegedly
amounting to claims under Article 22.3, is unfounded, and we reject it.
7.5 "As applied" claims concerning the USDOC's subsidy determination
7.5.1 Introduction
7.22. In this section, we consider Indonesia's claims with respect to the USDOC's final
determination in its countervailing duty inve stigation on certain coated paper from Indonesia. The
USDOC issued its final determination on 27 September 2010.56 In the determination, the USDOC
determined that the GOI granted, inter alia, the following subsidies to APP/SMG: (a) provision of
standing timber; (b) provision of logs and chipwood by forestry/harvesting companies entrusted
and directed by the GOI through the log export ban imposed by Indonesia; and (c) debt
forgiveness (or "buy-back") through the sale by the GOI of APP/SMG's debt to an affilia ted entity,
Orleans Offshore Investment Limited ( Orleans).57 Indonesia challenges several aspects of the
USDOC's findings with respect to these three subsidies. Indonesia claims that the USDOC's final
subsidy determination is inconsistent with:
a. Article 14(d) of the SCM Agreement because the USDOC's benefit determinations with
respect to the provision of standing timber and the log export ban are based on a per se
determination of price distortion based solely on the GOI's predominant market share of
standing timber from public forests;
b. Article 12.7 of the SCM Agreement because the USDOC found, based on an adverse
inference, that the GOI "knowingly allowed an affiliate of a debtor to buy back its own
debt in contravention of Indonesian law"; and
c. Article 2.1(c) of the SCM Agreement because, in its findings of de facto specificity, the
USDOC failed to determine that the collection of stumpage fees, the log export ban, and
the debt forgiveness were each part of a plan or scheme intended to confer a benefit ;
and the chapeau of Article 2.1 of the SCM Agreement because, with respect to the debt
forgiveness, the USDOC also failed to identify "the jurisdiction allegedly providing a
benefit".
7.23. We note that, prior to the coated paper investigation, the USDOC conducted a
countervailing duty investigation in relation to imports of coated free sheet paper from Indonesia
(CFS investigation). In that investigation, APP/SMG was also the sole respondent and the
programmes examined in the CFS investigation mirror the programmes at issue in the coated
paper investigation.58 On 25 October 2007, before the initiation of the investigation underlying the
countervailing duties at issue in this dispute, the USDOC issued its final determination in the CFS
investigation, finding inter alia that the provision of standing timber, the log export ban , and
APP/SMG's debt buy -back constituted countervailable programmes. 59 In parallel to the USDOC's
investigation, the USITC conducted an injury investigation with respect to imports of coated free
sheet paper from China, Indonesia, and Korea. The USITC determined that the US industry was

55 In the paragraphs of its first written submission that the United States objects to, Indonesia argues,
inter alia, that: (a) the USDOC failed to make an evidentiary finding of price distortion in the market for
standing timber and, instead, based its price distortion finding entirely on the fact that the GOI was the
predominant supplier of standing timber, in violation of Article 14(d) (paras. 33, 34, 41, and 42); (b) that the
USDOC acted inconsistently with Article 2.1(c) by failing to cite to evidence that the GOI had in place a plan,
scheme, or systematic series of actions to confer a benefit (paras. 74, 78, and 81) and, in addition in the case
of the log export ban, to cite any evidence that the law confers a benefit on paper producers (para. 79); and
(c) that the USDOC was required to identify the government entity that allegedly forgave APP/SMG's debt
(para. 95).
56 Final Countervailing Duty Determination, (Exhibits IDN-6/US-47 (exhibited twice)), p. 59211; USDOC
Issues and Decision Memorandum, (Exhibit US-31).
57 As noted above, para. 2.5, APP/SMG was the sole Indonesian producer/exporter individually
investigated by the USDOC. The period of investigation (POI) with respect to which the USDOC conducted its
subsidy analysis was the period 1 January to 31 December 2008.
58 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice)), p. 10764
and fn 7. The POI for the USDOC's CFS investigation was 1 January to 31 December 2005. (CFS Final
Countervailing Duty Determination, (Exhibit US-74), p. 60643).
59 CFS Final Countervailing Duty Determination, (Exhibit US-74), p. 60644.

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not materially injured or threatened with material injury by reason of imports from these countries
and, as a result, no measures were imposed .60 While the USDOC's CFS i nvestigation is not the
subject of this dispute, several of the USDOC's findings in that investigation are relevant to our
analysis of Indonesia's claims in the present dispute, particularly as the USDOC, in its
determination in the coated paper investigat ion, frequently referred to its findings in the CFS
investigation. Consequently, where appropriate, in our findings below we also refer to relevant
aspects of the USDOC's final determination in the CFS investigation (as contained, in particular, in
the Iss ues and Decision Memorandum accompanying that determination) , and to the record
evidence before the USDOC in that investigation that has been submitted to the Panel.
7.5.2 Claims under Article 14(d) of the SCM Agreement ( rejection of in -country prices
as benchmarks to calculate benefit)
7.5.2.1 Introduction
7.24. As indicated above, in the coated paper investigation the USDOC conducted a countervailing
duty investigation into whether the GOI's provision of standing timber and the ban on exports of
logs and chipwood (hereinafte r "log export ban") maintained by Indonesia constituted
countervailable subsidies. The USDOC determined that both the provision of standing timber and
the log export ban constituted financial contributions in the form of provision of goods by the
government and that a benefit was conferred in both cases.61
7.25. With respect to the provision of standing timber, t he USDOC, relying on its findings in the
CFS investigation, found that the GOI allowed timber to be harvested from government -owned
land under two main ty pes of licen ces: Hutan Tanaman Industria ( HTI) licences to establish, and
harvest timber from, plantations, and HPH licences to harvest timber from the natural forest.62 The
USDOC observed that, as it had found in the CFS investigation, HTI licen ce holders paid "cash
stumpage fees" 63 known as "PSDH" (Provisi Sumberdaya Hutan) royalty fees, paid per unit of
timber harvested. The USDOC noted that, in addition to paying PSDH fees, HPH licen ce holders
paid per-unit rehabilitation fee ("Dana Reboisasi" or DR) for timber harvested from natural forests,
and licence holders in Jambi province also paid a "PSDA" fee for harvesting from plantations. In
addition, the USDOC noted that in the CFS investigation it had found that all of the stumpage fees
were administratively set by the GOI. 64 Because the GOI did not provide in the investigation at
issue here new information that materially altered the information concerning the procedures
through which the GOI provided standing timber or how it priced standing timber, the USDO C
determined that the provision of standing timber constituted a financial contribution in the form of
provision of goods by the government.65
7.26. The USDOC also found that the log export ban constituted a financial contribution. Relying
on its findings in the CFS investigation, the USDOC found that the GOI, through the log export
ban, entrusted and directed forestry/harvesting companies to provide goods (i.e. logs and
chipwood) to pulp and paper producers. 66 Of relevance to Indonesia's claims, in the CFS
investigation, the USDOC had found that Article 1(1) of the Joint Decree of the Ministry of Forestry
and the Ministry of Industry and Trade of Indonesia concerning the Discontinuation of Log/Chip
Raw Material Exports 67 "provide[d] for an outright ban on the export of logs and chipwood from
Indonesia", and that the ban was implemented by preventing the issuance of the export permits
required for all products to be exported. 68 The log export ban was administered and operated in

60 USITC Final Determination, (Exhibit US-1), p. I-5.
61 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 7 and 11-14.
62 According to Indonesia, the type of logs used in pulp production differs based on whether they are
harvested from plantations or natural forests. (Indonesia's first written submission, para. 12).
63 The USDOC used the term "stumpage fees" to refer to fees paid for harvesting standing timber.
64 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 6 (referring to CFS USDOC Issues and
Decision Memorandum, (Exhibit US-43), p. 69).
65 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 6-7.
66 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 13.
67 Joint Decree of the Ministry of Forestry and the Ministry of Industry and Trade No. 1132/Kpts-II/2001
and No. 292/MPP/Kep/10/2001. (Log Export Ban, (Exhibit IDN-30)).
68 CFS USDOC Issues and Decision Memorandum, (Exhibit US-43), p. 27. In the CFS investigation, the
USDOC had also found that the GOI had imposed export bans on eight categories of products that included
"Forestry Products," under which logs and chipwood were listed. (Ibid.). See also Log Export Ban, (Exhibit
IDN-30), Article 1(1).

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accordance with the Joint Decree of the Ministry of Forestry and the Ministry of Industry and
Trade, who were responsible for enforcing the ban.69 In the investigation at issue here, the USDOC
found that neither the GOI nor APP/SMG had placed any additional information on the record that
caused i t to reconsider its prior finding, and determined that the ban constituted a financial
contribution.70
7.27. The USDOC found that both the provision of standing timber and the export ban on logs and
chipwood conferred a benefit because the GOI provided standing t imber and logs and chipwood to
producers of coated paper in Indonesia for less than adequate remuneration when measured
against a market benchmark. The USDOC declined to use in-country prices for standing timber and
logs as the basis for determining the ap propriate market benchmark , and instead relied on
out-of-country benchmarks. In both cases, as the basis for determining the benchmark , the
USDOC used Malaysian export prices for acacia pulpwood and mixed tropical hardwood as reported
in the World Trade Atlas (WTA) trade statistics, exclusive of shipments to Indonesia.71
7.28. Indonesia challenges the USDOC's conclusion that there were no market -determined
stumpage fees or market prices for logs in Indonesia that could have been used as a benchmark
and, as a consequence, the USDOC's decision to resort to out -of-country benchmarks.72 Indonesia
claims that the USDOC's findings that the GOI provided standing timber for less than adequate
remuneration and that the log export ban conferred a benefit are inconsistent wit h Article 14(d) of
the SCM Agreement because the USDOC improperly made a per se determination of price
distortion based solely on the GOI's predominant share of the Indonesian market for standing
timber and, as a consequence, failed to determine the adequa cy of remuneration in relation to
prevailing market conditions in Indonesia. 73 According to Indonesia, instead of using Indonesian
prices, the USDOC resorted to "aberrationally high" out-of-country benchmarks.74
7.29. The United States requests that the Panel reject Indonesia's claims.75
7.30. We first address the legal standard under Article 14(d) of the SCM Agreement before
examining Indonesia's claims under that provision with respect to the provision of standing timber
and the log export ban.
7.5.2.2 Legal standard under Article 14(d) of the SCM Agreement
7.31. Article 14 of the SCM Agreement sets forth guidelines for an investigating authority's
calculation of the amount of the benefit to the recipient of a subsidy. It provides, in relevant part:
Article 14
Calculation of the Amount of a Subsidy in Terms
of the Benefit to the Recipient
For the purpose of Part V, any method used by the investigating authority to calculate
the benefit to the recipient conferred pursuant to paragraph 1 of Article 1 shall be
provided for in the nationa l legislation or implementing regulations of the Member
concerned and its application to each particular case shall be transparent and
adequately explained. Furthermore, any such method shall be consistent with the
following guidelines:
…

69 Part Two of GOI First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)), appendix 1,
pp. 1-2.
70 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 13.
71 The USDOC made certain adjustments to this data to arrive at the benchmarks it used; to establish
the benchmark for the provision of standing timber, the USDOC adjusted the WTA prices for logs to remove the
Indonesian costs of harvesting the standing timber and to add an amount for profit for harvesting. (USDOC
Issues and Decision Memorandum, (Exhibit US-31), p. 11).
72 Indonesia's first written submission, paras. 41-42 and 45.
73 Indonesia's first written submission, paras. 3 and 29.
74 Indonesia's first written submission, para. 29.
75 United States' first written submission, para. 355; opening statement at the first meeting of the

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(d) the provision of goods or services or purchase of goods by a government shall not
be considered as conferring a benefit unless the provision is made for less than
adequate remuneration, or the purchase is made for more than adequate
remuneration. The adequacy of remu neration shall be determined in relation to
prevailing market conditions for the good or service in question in the country of
provision or purchase (including price, quality, availability, marketability,
transportation and other conditions of purchase or sale).
7.32. The first sentence of Article 14(d) establishes that the provision of goods by a government
shall not be considered as conferring a benefit unless the goods are provided for "less than
adequate remuneration". How to determine whether adequate remuneration was paid is dealt with
in the second sentence of Article 14(d), which provides that the adequacy of remuneration shall be
determined in relation to prevailing market conditions in the country of origin . The second
sentence of Article 14(d) thus makes clear that a benchmark for adequate remuneration must be
determined "in relation to prevailing market conditions", and that the relevant conditions are those
existing "in the country of provision". 76 Prevailing market conditions in the country of provisio n is
thus the standard for assessing the adequacy of remuneration.77
7.33. The Appellate Body has found 78, and the parties agree 79, that the primary benchmark and,
therefore, the starting point of the analysis under Article 14(d) is the prices at which the same or
similar goods are sold by private suppliers in arm's-length transactions in the country of provision.
They also agree that, while the analysis begins with a consideration of these in -country prices, it
would not be appropriate to rely on private domestic p rices as the benchmark in certain situations
where those prices are not market -determined. This would be the case, for instance, where the
government is the only supplier of the particular goods in the country, or where the government
administratively cont rols all the prices for those goods in the country . In these situations, it
would not be possible to use in-country prices as the benchmark.80
7.34. In addition, whenever the government is the predominant provider of the investigated
goods, even if not the sole provider, an investigating authority may reject in-country private prices
as a benchmark if it concludes that these prices are distorted due to the predominant participation
of the government as a provider in the market, thus rendering the comparison requir ed under
Article 14(d) circular.81
7.35. Having said that, the possibility under Article 14(d) for an investigating authority to use a
benchmark other than private market prices in the country of provision is very limited and the
mere fact that the government is a significant, or even the predominant su pplier of the relevant
good, cannot automatically lead to a finding of price distortion. 82 The Appellate Body has excluded
the application of a per se rule, under which an investigating authority could conclude in e very
case, and regardless of any other evidence, that the fact that the government is the predominant
supplier means that private prices in the country of provision are distorted and, for this reason,
unusable as a benchmark.83 Thus, the distortion of price s in the domestic market for the good in
question must be established on a case -by-case basis, based on the particular facts in the
investigation.84

76 Appellate Body Report, US – Countervailing Measures (China), para. 4.45.
77 Appellate Body Report, US – Carbon Steel (India), para. 4.149.
78 Appellate Body Reports, US – Carbon Steel (India), para. 4.154; US – Softwood Lumber IV, para. 90.
79 Indonesia's first written submission, para. 31; United States' first written submission, para. 48.
80 The panel in US – Softwood Lumber IV considered that, "in these situations, the only remaining
possibility would appear to be the construction of some sort of a proxy for, or estimate of, the market price for
the good in that country". (Panel Report, US – Softwood Lumber IV, para. 7.57 (quoted in Appellate Body
Report, US – Softwood Lumber IV, para. 98)).
81 Appellate Body Reports, US – Softwood Lumber IV, paras. 100-101; US – Anti-Dumping and
Countervailing Duties (China), paras. 444 and 446; US – Carbon Steel (India), para. 4.155; and US –
Countervailing Measures (China), para. 4.50.
82 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 439 (referring to
Appellate Body Report, US – Softwood Lumber IV, para. 102).
83 Appellate Body Reports, US – Carbon Steel (India), para. 4.156; US – Anti-Dumping and
84 Appellate Body Reports, US – Countervailing Measures (China), para. 4.59; US – Carbon Steel
(India), para. 4.156.

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7.36. What an investigating authority must do in conducting the necessary analysis for the
purpose of arriving at a proper benchmark will vary depending on the circumstances of the case,
the characteristics of the market being examined, and the nature, quantity, and quality of the
information supplied by petitioners and respondents, including any additional informati on the
investigating authority seeks so that it may base its determination on positive evidence on the
record. In its analysis of whether in-country prices are distorted, an investigating authority may be
called upon to examine various aspects of the relev ant market, such as its structure, including the
type of entities operating in that market, their respective market share, as well as any entry
barriers. It may also have to assess the behavio ur of the entities operating in that market in order
to determin e whether the government itself, directly or acting through government -related
entities, exerts market power so as to distort private in-country prices.85
7.37. That said, the Appellate Body has also observed that the fact that the government is the
predominant supplier of the good in question makes it likely that private prices for that good in the
country of provision will be distorted. The more predominant a government's role in the market is,
the more likely this role will result in the distortion of private p rices.86 However, there is no
threshold above which the government's significance as a supplier in the market alone becomes
sufficient to establish price distortion. 87 An investigating authority thus cannot refuse to consider
evidence pertaining to factors other than the government's predominance simply because the
government is a significant, or even predominant , supplier of the relevant good. 88 Evidence
regarding other factors on the record must always be considered, but the weight accorded to such
evidence will vary depending on how predominant the government's role is and on how relevant
these other factors are. 89 While a finding of price distortion may not be based merely on
government predominance, "the extent to which [evidence other than government predo minance]
carries weight depends on how predominant the government's role is and on the relevance of
other factors" and "there may be cases … where the government's role as a provider of goods is so
predominant that price distortion is likely and other evidence carries only limited weight".90
7.38. Finally, the investigating authority must explain the basis for its conclusions in arriving at a
proper benchmark.91 Moreover, the authority must ensure that the benchmark it determines –
including an out -of-country benc hmark – relates or refers to, or is connected with, prevailing
market conditions in the country of provision, and reflects price, quality, availability, marketability,
transportation, and other conditions of purchase or sale.92
7.5.2.3 The USDOC's finding that there were no market-determined prices for standing
timber in Indonesia upon which to base the benchmark
7.39. Indonesia argues that the USDOC acted inconsistently with Article 14(d) because it
improperly concluded that Indonesian prices for standing timber paid to private owners were
distorted or not market -determined and, therefore, unusable for benchmarking purposes, based
solely on the fact that the GOI was the predominant supplier of standing timber .93 In Indonesia's
view, the USDOC failed to analyse whether such prices were actually distorted and applied a " per

85 Appellate Body Reports, US – Countervailing Measures (China), paras. 4.51-4.52 and 4.86; US –
Carbon Steel (India), paras. 4.153 and 4.157 and fn 754.
86 Appellate Body Report, US – Countervailing Measures (China), para. 4.52 (quoting Appellate Body
Report, US – Anti-Dumping and Countervailing Duties (China), para. 444).
87 Appellate Body Report, US – Carbon Steel (India), para. 4.156.
88 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), paras. 444 and 446.
89 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 453.
90 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), paras. 446 and 453
(emphasis added). In that dispute the Appellate Body considered that in a situation where the government has
a 96.1% market share, the position of the government in the market is much closer to a situation where the
government is the sole supplier of the goods than to a situation where it is merely a significant supplier of the
goods. The Appellate Body was of the view that this makes it likely that the government, as the predominant
supplier, has the market power to affect through its own pricing the pricing by private providers for the same
goods, and induce them to align with government prices. The Appellate Body further considered that, in such a
situation, evidence of factors other than government market share will have less weight in the determination of
price distortion than in a situation where the government has only a "significant" presence in the market. (Ibid.
para. 455).
91 Appellate Body Report, US – Carbon Steel (India), paras. 4.153 and 4.157.
92 Appellate Body Report, US – Softwood Lumber IV, para. 106.
93 Indonesia's first written submission, paras. 3, 27, 29, and 42; opening statement at the first meeting
of the Panel, para. 30.

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se rule of price distortion". In this regard, Indonesia faults the USDOC for not having made an
evidentiary finding of price distortion in the private market in Indonesia, and for not having
explained whet her and how the market share held by the GOI actually resulted in the
government's possession and exercise of market power such that price distortion occurred through
private suppliers aligning their prices with those of the government -provided goods.94 Indonesia,
in addition, submits that APP/SMG reported actual price data for stumpage paid to a private
supplier, but the USDOC decided, without providing a reason, not to use this data.95
7.40. The United States disagrees that the USDOC applied "a per se rule of price distortion". The
United States submits that the GOI's market share in the market for standing timber (over 93%)
and ownership of harvestable land in Indonesia (approximately 99.5%) were the key bases for the
USDOC's finding that there were no market -determined prices for stumpage in Indonesia.
However, the United States submits, the USDOC also looked to other features of the Indonesian
market that rendered it distorted.96 Notwithstanding the above, the United States submits that the
facts of the present case – the GOI's overwhelming share of the harvest of standing timber and
near total control of the supply of standing timber – in themselves properly supported the
USDOC's conclusion that there were no in -country prices that were not influenced by the GOI 's
market predominance. According to the United States, private transactions in the relevant market
were nominal and, therefore, this is not a situation in which an investigating authority could be
expected to find and cite to significant market -determined activity or other factors that undercut
the likelihood of price distortion. For the United States, this is a situation in which the government
is overwhelmingly predominant, and, for all intents and purposes, the sole provider of the input. 97
In addition, the United States submits that there was no evidence in the record concerning private
prices for standing timber, because although the USDOC requested the GOI and APP/SMG to
report stumpage fees paid for timber on private land, neither responded with infor mation on such
fees. The United States disagrees that certain information submitted by the APP/SMG in the
investigation and referred to by Indonesia constituted evidence of in -country prices for
stumpage.98
7.41. Before we address Indonesia's claim regarding the benchmark, we address certain
allegations presented by Indonesia pertaining to the USDOC's finding that the GOI provided
standing timber to producers of coated paper.
7.42. Indonesia alleges that the entirety of the USDOC's benefit determination is affected by a
fundamental misconception of the nature of the purported subsidy. According to Indonesia, the
GOI does not sell, provide or supply "stumpage", or timber, to concession holders; rather, it only
grants land-use concessions. Indonesia submits that the GOI do es not "own" standing timber; the
standing timber is planted, grown and harvested by plantation owners on timber plantations that
they (or others) have established at their own cost on government land pursuant to land -use
concessions. Indonesia submits tha t the fees payable to the GOI are simply fees for the right to
use land, in the nature of royalties, and therefore do not constitute " remuneration" for the supply
of timber.99 On this basis, Indonesia submits that the USDOC improperly determined that the GO I
was the predominant supplier of standing timber in the market. Indonesia further argues that,
because the GOI was not providing standing timber, it made no sense for the USDOC to calculate
the adequacy of remuneration based on purported third -country benchmarks for standing timber.
Instead, USDOC should have solicited information to examine benchmarks relating to the per
hectare cost of a lease for degraded forest land.

94 Indonesia's first written submission, para. 42 (referring to Appellate Body Report, US – Countervailing
Measures (China), para. 4.101).
95 Indonesia's response to Panel question Nos. 11, 15, and 17.
96 United States' first written submission, paras. 43, 59, 61, and 67; response to Panel question No. 23.
97 United States' first written submission, paras. 52 and 65.
98 United States' second written submission, paras. 30-34.
99 Indonesia's opening statement at the first meeting of the Panel, paras. 18-22; response to Panel
question No. 8; and second written submission, paras. 17-18. Indonesia argues that 93% of the timber at
issue during the POI was planted, grown, and harvested from a plantation and was not pre-standing, and that
concession holders must perform a number of services at their own expense. These include forest management
planning, seed and seedling procurement and planting, maintenance, fire and forest protection, social and
environmental obligations, and infrastructure development. Indonesia also argues that the GOI does not
control or influence the price at which concession holders sell timber harvested from the plantations they
operate.

BCI deleted, as indicated [[***]]

7.43. The United States argues that the issues Indonesia raises are not relevant to the adeq uacy
of remuneration under Article 14(d). For the United States, these allegations go to the issue of
financial contribution, and Indonesia has no basis for asking the Panel to examine them as it has
not made any claims under Article 1.1(a) of the SCM Agre ement. The United States submits that,
in any event, Indonesia's argument is contradicted by record evidence and by the GOI's
representations in the investigation. In particular, the United States contends that the evidence
shows that independently of whether timber is pre -existing or cultivated, the harvesting company
must pay species-specific PSDH cash stumpage fees as a royalty for harvesting the timber. Thus,
the United States asserts, the concessionaire pays stumpage fees on the volume of wood
harvested from the land, rather than paying to lease a given acreage; hence, the royalties are tied
to stumpage, not land use.100
7.44. In our view, Indonesia alleges that the USDOC misread the relevant characteristics of the
GOI's concession or stumpage programme and, as a consequence, improperly found that measure
to be a financial contribution, consisting of the provision of standing timber by the GOI. However,
whether the USDOC properly found that the GOI provided a good, standing timber, pertains to its
finding of the existence of a financial contribution, a question that falls under Article 1.1(a) of the
SCM Agreement. While we agree that the nature of the alleged financial contribution will affect
what methodology is appropriate to determine the adequacy of the remuneration, "financial
contribution" and "benefit" are two separate elements of the existence of a subsidy .101 Only the
latter is at issue in this dispute.
7.45. Indonesia has not made any claims under Article 1.1(a) of the SCM Agreement challenging
the USDOC's dete rmination that the GOI measure constituted a financial contribution in the form
of provision of goods – standing timber.102 In the absence of a claim by Indonesia challenging this
finding, for purposes of considering Indonesia's benefit claim under Article 1 4(d), we must assume
that the USDOC properly found that there was a financial contribution. Thus, the only question
before us is Indonesia's claim under Article 14(d), which concerns solely whether the USDOC
improperly determined that the GOI's provision o f standing timber conferred a benefit because it
concluded that there were no market -based prices in Indonesia for stumpage and as a result
resorted to an out-of-country benchmark.103
7.46. Turning to Indonesia's claims regarding the USDOC's benchmark determinatio n, in the
investigation at issue here the USDOC explained that, under its Regulations, the preferred
benchmark was an observed market price for the good in the country under investigation, from a
private supplier located either within the country or outsid e the country (the latter transaction, in
the form of an import). The USDOC explained that this was because "such prices generally would
be expected to reflect most closely the commercial environment of the purchaser under
investigation".104
7.47. In examining whether there were such prices for stumpage in Indonesia, the USDOC noted
that private forests in Indonesia accounted for only 6.27% of the total harvest during the period of
investigation (POI) and that, in the CFS investigation, it had found that private l and accounted for
only 233,811 hectares of private forest land out of 57 million hectares in Indonesia (approximately
0.5%). The GOI did not provide any updated information on the percentage of government
ownership of forest land in the coated paper invest igation. Based on this evidence, the USDOC
concluded that:

100 United States' second written submission, para. 24 (referring to USDOC Issues and Decision
Memorandum, (Exhibit US-31), p. 6).
101 Appellate Body Report, Brazil – Aircraft, para. 157.
102 Indonesia's panel request, para. 1; response to Panel question No. 2. See also para. 3.1 of this Panel
Report.
103 The parties differ on whether, under the stumpage programme, the GOI retains title to the standing
timber cultivated by the private companies until the applicable stumpage fees are paid. (Indonesia's opening
statement at the second meeting of the Panel, para. 14; United States' second written submission, para. 25).
In the circumstances of this case, we need not decide this question.
104 The USDOC explained that its Regulations at 19 CFR 351.511(a)(2) set forth the basis for identifying
benchmarks to determine whether a government good or service is provided for less than adequate
remuneration. These potential benchmarks, the USDOC continued, are listed in hierarchical order of
preference: (a) market prices from actual transactions within the country under investigation; (b) world market
prices that would be available to purchasers in the country under investigation; or (c) an assessment of
whether the government price is consistent with market principles. (USDOC Issues and Decision Memorandum,
(Exhibit US-31), pp. 7-8).

BCI deleted, as indicated [[***]]

[T]he GOI clearly plays a predominant role in the market for standing timber. As such,
we determine that there are no market -determined stumpage fees in Indonesia upon
which to base a "first tier" benchmark. Furthermore, because standing timber cannot
be imported, there are no actual stumpage import prices to consider.105
7.48. The USDOC then considered whether there were world market prices for standing timber
and concluded that there were no ne given that standing timber cannot be traded across
borders.106 The USDOC next examined whether the GOI's stumpage fees were established in
accordance with market principles. It also reached a negative conclusion in this regard. 107 The
USDOC then looked for an appropriat e proxy to determine a market -based stumpage benchmark.
The USDOC relied on Malaysian log export price data from the WTA exclusive of shipments to
Indonesia.108 In the CFS investigation, the USDOC had used these same prices as the basis for the
stumpage benchmark.109
7.49. Other than its allegations that the GOI does not provide standing timber discussed in
paragraph 7.42 above, Indonesia does not disagree with the factual findings underlying the
USDOC's conclusion that the GOI played a predominant role in the market for standing timber, i.e.
Indonesia does not dispute that over 93% of timber harvested in the POI was from GOI land and
that almost all of the forest land in Indonesia was owned by the GOI. Rather, Indonesia submits
that the USDOC's conclusion of price distortion was improperly based solely on these factual
findings. Given the undisputed evidence that the GOI was the predominant supplier of standing
timber, the question before us is whether , considered as a whole, the USDOC's conclusion – which
was primarily based on this predominant role of the GOI – is consistent with Article 14(d) , in light
of the circumstances of the case.
7.50. As we have noted above, the more predominant a government's role in the market, the
more likely this role will result in the distortion of private prices. 110 In a situation where, as in the
present case, the government's market share is 93.73%, the government's position in the market
approaches that of a sole supplier of the goods. 111 Even in such a situation, a n investigating
authority should consider evidence regarding other factors that is on the record, e.g. evidence of
private prices of the good at issue. However, the extent to which other evidence carries weight
depends on how predominant the government's role is and on how relevant these other factors
are.112
7.51. The United States submits that the USDOC considered , in addition to the GOI's market
share, certain features of the market for standing timber that rendered it distorted, namely t he
fact that the GOI administratively set the stumpage fees , the Indonesian ban on log exports, the
negligible level of log imports and the "aberrationally low " prices of log imports into Indonesia
relative to the surrounding region.113 For the United States, the USDOC's consideration of these
factors, in addition to the GOI's predominant market share and control of virtually all harvestable
land, established that the GOI actually possessed and exercised near -complete control over the
domestic supply of timber, which depressed and distorted domestic market prices.

105 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 8. Indonesia does not take issue with
the USDOC's finding that there were no actual stumpage import prices to consider.
106 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 8.
107 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 9.
108 In explaining the use of log prices as the basis to determine a market-based stumpage benchmark,
the USDOC observed that it was generally accepted that the market value of timber is derivative of the value
of the downstream products. The USDOC explained that "[t]he species, dimension, and growing condition of a
tree largely determine the downstream products that can be produced from a tree; the value of a standing tree
is derived from the demand for logs produced from that tree and the demand for logs is, in turn, derived from
the demand for the products produced from those logs". (USDOC Issues and Decision Memorandum, (Exhibit
US-31), p. 9). Because the GOI dominated the Indonesian stumpage market and because the stumpage and
pulpwood markets were inextricably intertwined, the USDOC considered it inappropriate to use import prices
for pulpwood as a starting point to determine whether Indonesian stumpage prices reflect market prices.
(USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 10).
109 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 8-10.
110 Appellate Body Report, US – Countervailing Measures (China), para. 4.52 (referring to Appellate
Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 444).
111 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 455.
112 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 453.
113 United States' first written submission, paras. 43 and 58; response to Panel question Nos. 9, 12,
and 23.

BCI deleted, as indicated [[***]]

7.52. Indonesia responds that the additional features of the market cited by the United States all
pertain to the issue of market predominance or do not show price distortion, in particular because
the USDOC's conclusion that the prices of log imports in Indonesia were "aberrationally low" was
not based on a comparison of comparable products.114
7.53. We find it relevant that in the context of its benchmark analysis in the present investigation,
the USDOC examined whether the stumpage fees charged by the GOI were set in accordance with
market principles . The USDOC observed that the GOI established the stumpage fees as a
percentage of the so -called "reference price of logs" , which in turn was determined solely on the
basis of domestic prices for logs during the POI. The USDOC concluded that the reference price for
logs could not be considered to be market -based because, through its ownership of virtually all of
Indonesia's harvestable forests, t he GOI had almost complet e control over access to the timber
supply and because "the ban on the export of logs ban affect[ed] the price for logs". In addition,
the percentage applied to the reference price to calculate the stumpage fees was administratively
set by the GOI. Consequ ently, the USDOC concluded that the stumpage fees charged by the GOI,
determined as a percentage of a non -market-determined reference price, were not based on
market principles.115
7.54. While the USDOC did not explicitly link these considerations to its conclusi on that there
were no market-determined stumpage fees in Indonesia, in our view, this consideration of features
of the market for standing timber in Indonesia went beyond merely the GOI's predominant role in
the supply of standing timber. We consider that the USDOC's examination in a different part of its
benefit analysis of the fact that the price at which over 93% of the standing timber in Indonesia
was commercialized during the POI was not market-determined, informed the USDOC's analysis of
whether in-country prices for stumpage could be used as the benchmark.116
7.55. Regarding evidence of private prices, u nlike in the CFS investigation 117, in this case the
USDOC did not refer in its determination to the fact that the GOI and APP/SMG supplied no
information on pri vate stumpage prices before reaching its determination that private prices for
stumpage were not market-determined. However, there is no indication in the record that the GOI
and APP/SMG presented arguments to the USDOC suggesting that it use private price s for
stumpage in Indonesia as the benchmark, nor that they connected any evidence on the record to
such arguments.
7.56. Nevertheless, Indonesia in this dispute argues that suitable data on private prices for
standing timber paid to private owners in Indonesia during the POI was before the USDOC.
Indonesia argues that APP/SMG reported fees it paid to private land owners for the use of their
private forest land to plant, grow and harvest acacia, and that the USDOC gave no weight to this
evidence. Indonesia submit s that the USDOC did not pose further questions about this
arrangement with private parties , suggesting it was satisfied with APP/SMG's response. 118 In
addition, in reaction to the United States' arguments in this respect, Indonesia submits that the
information provided by APP/SMG regarding this private arrangement, "answered all of the
remaining questions USDOC asked" and that the USDOC was required to make its own
determination irrespective of how APP/SMG had characterized the price paid to individuals owni ng
private land. Indonesia also submits that the fact that the arrangement concerned small quantities
does not mean that prices could be disregarded.119
7.57. The United States submits that neither the GOI nor APP/SMG placed on the record any data
concerning private prices for stumpage in Indonesia. Moreover, the United States submits that the

114 Indonesia's opening statement at the first meeting of the Panel, paras. 30-33.
115 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 9.
116 Indonesia submits that since the stumpage fees were determined with reference to domestic market
prices for logs, they were market-driven. (Indonesia's opening statement, para. 22). Indonesia, however, has
not persuaded us that the USDOC erred in concluding that the stumpage fees were not market-determined in
light of undisputed evidence that the government set the percentage to be applied to the reference price,
which was also based on the domestic prices for logs subject to the log export ban.
117 CFS USDOC Issues and Decision Memorandum, (Exhibit US-43), p. 19.
118 Indonesia's opening statement at the second meeting of the Panel, para. 16. Indonesia maintains
that this evidence showed that APP/SMG paid higher fees for acacia harvested from a GOI concession than
from the private forest. (Indonesia's response to Panel question No. 11, fn 13 (referring to Excerpt from
APP/SMG Initial Questionnaire Response, pp. 1, 25, 27, 29, and 30, (Exhibit IDN-25 (BCI)), pp. 27 and 29)).
119 Indonesia's response to Panel question No. 78.

BCI deleted, as indicated [[***]]

GOI provided information only on the volume of timber harvested from private forests during the
POI, and APP/SMG reported only payments to the GOI (PSDH, DR, and PSDA fees). 120 The
United States acknowledges that APP/SMG submitted certain information, but contends that the
USDOC could not have used it for establishing the benchmark. According to the United States,
APP/SMG identified only a single arrangement, concerning small q uantities, under which one of its
cross-owned companies rented land from private owners, on which the affiliate paid the expenses
by growing and maintaining timber.121
7.58. During the investigation, t he USDOC asked the GOI to report the value and volume of
timber harvested on private land, to which the GOI responded that the only information it collected
with respect to such timber was the total volume of timber harvested, i.e. it did not collect price
information on timber harvested from private land. 122 The USDOC also asked APP/SMG to report
fees and charges paid to private owners. Specifically, the USDOC initially requested APP/SMG to
"provide a description of each type of arrangement for private timber harvested during the
[POI]".123 The initial questionnaire to A PP/SMG also contains questions concerning public and
private concession arrangements to harvest timber, including total quantity harvested, value of
fees and charges paid to the GOI or the owner. These questions, in our view, seem to seek
information conce rning, as applicable, harvest of both public timber and private timber. 124 In
response to the first question, APP/SMG submitted certain information concerning a private
arrangement with individuals owning private land around the perimeter of its plantations, in the
context of which one of its cross-owned forestry companies – PT. Wirakarya Sakti (WKS) – "pa[id]
the private owners a fee of 20,000 IDR per ton of acacia harvested". 125 In response to the
subsequent questions, APP/SMG reported information concerning the stumpage fees it paid to the
GOI during the POI, and did not mention or report any fees paid by WKS for private timber
harvested during the POI.126
7.59. In light of these answers, we agree that there was some information regarding prices for
timber harvested on land owned by individuals not related to the GOI before the USDOC. However,
APP/SMG's own description of the data concerning these payments suggests that APP/SMG itself

120 United States' response to Panel question Nos. 10-11.
121 The United States questions the value of that information because it: (a) was based on "a small
quantity"; (b) was not reflected in the stumpage payment records APP/SMG provided to the USDOC; (c) was
not substantiated by any contract or other documentation; (d) was not confirmed to be arm's-length; and (e)
was based on an atypical type of commercial activity that was arranged merely because the private individual's
land abutted the cross-owned company's plantation. The United States adds that APP/SMG did not characterize
the payment as a "stumpage fee", but instead stated that it was a "pure rental payment" and provided
conflicting information regarding whether it was the private individuals or the APP/SMG affiliate involved (WKS)
that grew the timber. (United States' second written submission, paras. 30-34).
122 GOI Initial Questionnaire Response, (Exhibit US-32), pp. 17-18.
123 APP/SMG Initial Questionnaire Response, (Exhibit US-91 (BCI)), p. 27, appendix 2, question (c).
(emphasis added)
124 Question (d) at pp. 27 and 28 asked APP/SMG the following:
For each concession arrangement for public timber held by your company or a cross -owned
company, and each arrangement to harvest private timber, please provide the following
information for the POI:
1. For each species, the stumpage fee and the total quantity harvested and the value of fees and
charges paid to the administering authority or owner.
(APP/SMG Initial Questionnaire Response, (Exhibit US-91 (BCI)), pp. 27-28)
See also question 2 at p. 30: "For each species harvested under the concession arrangements or private
arrangements, please provide a breakdown of the volume and the value of fees and charges paid to the
administering authority or owner for logs that went to: a. pulp and paper mills". (APP/SMG Initial Questionnaire
Response, (Exhibit US-91 (BCI)), p. 30).
125 Specifically, APP/SMG responded:
TK, IK, PD, and the cross -owned forestry companies generally did not harvest timber from
private lands during the POI. WKS purchased a small quantity of logs from private individuals in
villages from the J ambi region, who individually grow trees on their private land. These
individuals own private land around the perimeter of the WKS plantations. During 2008, these
purchases represented [[***]] of total AA and WKS sales of [[***]]. The arrangement with
these private owners is that WKS plants the acacia, incurs all the expenses to maintain the trees,
and then incurs all the costs to harvest the trees. WKS pays the private owners a fee of 20,000
IDR per ton of acacia harvested. Since WKS incurs all the expense , this fee is a pure rental
payment for the use of the land to grow the trees.
(APP/SMG Initial Questionnaire Response, (Exhibit US-91 (BCI)), p. 27, cited in Indonesia's response to Panel
question 78(a))
126 APP/SMG Initial Questionnaire Response, (Exhibit US-91 (BCI)), pp. 28-34.

BCI deleted, as indicated [[***]]

did not consider that they were representative of the private stumpage market – APP/SMG
indicated that "generally [it] did not harvest timber from private lands during the POI" and that
the payments corresponded to a small quantity of logs – and did not refer to these payments when
subsequently asked to report all the stumpage fees it had paid during the POI. This being the case,
we consider that there was no meaningful information concerning private prices for standing
timber before the USDOC.
7.60. Indonesia suggests that the USDOC should have sought more evidence from other sources,
e.g. other companies, in order to assess whether the GOI possessed and exercised market power
so as to distort private stumpage prices. Indonesia submits that the USDOC structured its entire
investigation around the mistaken premise that the GOI was a provider of standing timber because
the USDOC was blinded by the GOI's ownership of the forests. Indonesia argues that had the
USDOC undertaken a good faith analysis based on the facts before it, the USDOC's investigative
path should have been altogether different. 127 The United States submits that the SCM Agreement
does not obligate investigating authorities to collect data from non -interested parties, and that the
USDOC complied with its obligations by asking parties participating in the investigation to provide
such information.128 We are not convinced that Article 14(d) requires the types of investigative
actions Indonesia proposes. In our view, given the near absence of a private market for standing
timber in Indonesia, and the fact that APP/SMG was the main producer, and the company selected
for examination, it was reasonable for the USDOC to limit its request s for information on private
prices to the GOI and APP/SMG, and not to seek to obtain such information from sources not
participating in the investigation.
7.61. In the circumstances of this case, in particular the characteristics of the market for standing
timber in Indonesia and the evidence before the USDOC and which has been placed before the
Panel, in our view, an unbiased and objective investigating authority coul d have reached the
conclusion – as the USDOC did – that there were no market -determined in-country private prices
for stumpage that could be used for benchmarking purposes. In particular, th e fact that the GOI
was the predominant supplier of timber harvested during the POI – with over 93% of the market –
made it likely that private prices would be distorted and that owners of private land would align
their prices for the harvesting of standing timber to those established by the GOI, particularly in
light of the USDOC's conclusion that the GOI fees were not market-determined. In this respect, we
consider that the position of the government in the market of standing timber was much closer to
that of a sole supplier than to that of a significant supplier of thi s good. In our view, in such a
situation, other evidence would carry limited weight. In addition, we have concluded that there
was not meaningful evidence on the record of private prices for stumpage in Indonesia. Moreover,
as noted above 129, the record does not indicate that the parties presented arguments to the
USDOC suggesting that it use private stumpage prices as the benchmark, or that they submitted
evidence to that effect. In light of the foregoing, we consider that the USDOC did not err in
concluding that the GOI's involvement in the market for standing timber resulted in an absence of
market-determined private stumpage fees in Indonesia upon which to base the benchmark.130
7.62. For the foregoing reasons, we conclude that Indonesia has failed to establish t hat the
USDOC acted inconsistently with Article 14(d) of the SCM Agreement by not using domestic prices
for standing timber in Indonesia as the basis for calculating the benchmark.

127 Indonesia's response to Panel question Nos. 10-11.
128 United States' response to Panel question No. 11.
129 Para. 7.55.
130 Indonesia relies on the Appellate Body Report, US – Countervailing Measures (China), for the
proposition that the USDOC erred by not having explained "whether and how the mentioned market shares
held by … [the GOI] actually resulted in the government's possession and exercise of market power, such that
the price distortion occurred in a way that private suppliers [of standing timber] aligned their prices with those
of the government-provided goods". (Indonesia's first written submission, para. 42 (quoting Appellate Body
Report, US – Countervailing Measures (China), para. 4.101)). The US – Countervailing Measures (China)
dispute involved the provision of inputs by state-owned enterprises (SOEs). In this context, the Appellate Body
found that the USDOC failed to explain "whether and how the mentioned market shares held by SOEs actually
resulted in the government's possession and exercise of market power, such that the price distortion occurred
in a way that private suppliers aligned their prices with those of the government-provided goods". Thus, the
Appellate Body dealt with a particular situation in which goods were provided by SOEs, requiring a
demonstration that "market shares held by SOEs actually resulted in the government's possession and exercise
of market power" (emphasis added). We do not understand the Appellate Body to have concluded that a
similar demonstration is required in other circumstances such as where the government itself is a supplier of
the goods at issue.

BCI deleted, as indicated [[***]]

7.5.2.4 The USDOC's finding that there were no market prices for logs in Indonesia
upon which to base the benchmark
7.63. Indonesia claims that the USDOC's determination of benefit with respect to the log export
ban suffers from the same WTO -inconsistency as the benefit determination for the provision of
standing timber: the USDOC refused to u se market prices in Indonesia as a result of a per se
determination of price distortion based solely on the GOI's predominant market share of timber
harvested from public forests.131 Indonesia submits that the USDOC had information on in -country
prices for l ogs which it chose not to examine. In this regard, Indonesia argues that APP/SMG
placed on the record prices of some of its affiliates' purchases and sales of timber from affiliated
and unaffiliated parties, and the names and addresses of APP/SMG's unaffiliated log suppliers.132
7.64. In addition, Indonesia takes issue with the USDOC's findings regarding the purpose and
effects of the log export ban. Indonesia submits that the USDOC improperly found that the
purpose of the log export ban was to develop downstream industries and that this meant that
forestry/harvesting companies were directed to provide inputs to pulp and paper companies at low
or supressed prices.133 Indonesia submits that the ban does not create oversupply or result in low
prices for inputs used by Indonesian paper producers. 134 Indonesia submits that the ban was
created to confront the growing problem of deforestation and illegal logging in Indonesia. 135
Indonesia adds that the export of the downstream products used to make paper – pulp, chipwood,
and wood chips – was not prohibited.136 Therefore, if the purpose of the ban was to benefit paper
producers, it made no sense to allow these downstream products to be exported. 137 Indonesia, in
addition, challenges the relevance of the evidence the USDOC, in the CF S investigation, relied
upon in its findings of the purpose and effects of the ban. 138 Indonesia submits that, even if the
effects of the ban were an increased domestic supply of logs, potentially benefitting downstream
industries in Indonesia, the panel in US – Export Restraints and subsequent panels found that
export restraints, including export bans , do not constitute countervailable subsidies within the
meaning of the SCM Agreement. 139 In response to the United States' arguments in this respect,
Indonesia argues that the USDOC's discussion of the purpose of the log export ban was not limited

131 Indonesia's first written submission, para. 45 (referring to Excerpt from USDOC Issues and Decision
Memorandum, pp. 1-20 and 48-56, (Exhibit IDN-10), p. 13); opening statement at the first meeting of the
Panel, para. 4.
132 Indonesia's response to Panel question Nos. 11, 15 and 17 (referring to Exhibit D-8 to APP/SMG
Questionnaire Response in Anti-Dumping investigation, (Exhibit IDN-27 (BCI)); and Exhibit SD3-9 to APP/SMG
Questionnaire Response in Anti-Dumping investigation, (Exhibit IDN-28 (BCI))); closing statement at the first
133 Indonesia's first written submission, para. 44 (referring to Excerpt from USDOC Issues and Decision
Memorandum, pp. 1-20 and 48-56, (Exhibit IDN-10), p. 13; and Excerpt from CFS USDOC Issues and Decision
Memorandum, pp. 1, 27-28, and 40-46, (Exhibit IDN-12), p. 27. Indonesia also takes issue with the fact that
the USDOC's discussion of the purpose of the ban in the CFS investigation refers to a WTO trade policy review,
which Indonesia considers cannot properly serve as a statement of policy.
134 Indonesia's opening statement at the first meeting of the Panel, para. 25.
135 Indonesia's first written submission, para. 44 (referring to Regulation of Minister of Trade of the
Republic of Indonesia, No. 20/M-DAG/PER/5/2008, (Exhibit IDN-13), Article 3).
136 Indonesia indicates that the logs that a forestry company harvests to sell to a pulp mill are called
"chip wood" (or "chipwood"), and that the 2001 Joint Decree imposing the ban was amended in 2003 to allow
chipwood to be exported. Indonesia also submits that the ban never applied to wood chips or pulp, which
together with chipwood, constitute the inputs for making paper. (Indonesia's first written submission,
paras. 11, 13, 44, and 79; opening statement at the first meeting of the Panel, paras. 25, 38-39, and 52;
response to Panel question Nos. 21(a), 73(a), and 80; second written submission, paras. 22, 28-29, and 47;
and opening statement at the second meeting of the Panel, paras. 2, 21, and 33).
137 Indonesia submits that if the log export ban had distorted the price of wood used as an input to
make paper, sellers of logs were free to turn that wood into chips (or pulp) and export that product.
(Indonesia's opening statement at the second meeting of the Panel, para. 23).
138 Indonesia's opening statement at the first meeting of the Panel, paras. 38-40. Indonesia takes issue
with the fact that, in its view, the USDOC relied on studies that concerned another industry, pertained to a
period preceding the POI, and/or emanated from the domestic industry and are not on the record of this
proceeding.
139 Indonesia's first written submission, para. 44 (quoting Panel Reports, US – Export Restraints,
Panel question No. 6.

BCI deleted, as indicated [[***]]

to the financial contribution issue but extended to its benefit analysis because the USDOC
concluded that, due to the ban, APP/SMG purchased inputs at below-market prices.140
7.65. The United States submits that the USDOC's decision to resort to an out -of-country
benchmark was based on record evidence of the GOI's predominance as a supplier of logs and
owner of harvestable forests. In addition, the United States submits that the empirical evidence on
the record, in particular Malaysian export prices to Indonesia and the surrounding region,
confirmed that Indonesian domestic log prices were, in fact, distorted because shipments of logs to
Indonesia were at prices lower than shipmen ts to other destinations in the region. The
United States submits that the information referred to by Indonesia regarding prices for logs in
Indonesia was submitted by APP/SMG in the context of the parallel anti -dumping investigation
and, therefore was not on the record of the countervailing duty investigation. In addition, the
United States requests that the Panel find that Indonesia's arguments concerning the purpose and
the effects of the export ban are outside its term of reference, as they do not relat e to issues
under Article 14(d), but rather refer to issues concerning the existence of a financial contribution
under Article 1.1(a) – and Indonesia's panel request sets out no claim under Article 1.1(a) .141 The
United States nevertheless responds to Indone sia's arguments that the log export ban does not
constitute a "financial contribution" and submits that the USDOC correctly determined that the
export ban constituted a countervailable subsidy.142
7.66. As indicated above143, in its final determination, the USDOC re lied on its findings in the CFS
investigation and found as it had in the earlier case, that the prohibition on log exports
"constituted a financial contribution … through the GOI's entrustment and direction of
forest/harvesting companies to provide goods ( i.e. logs and chipwood)" to companies in the pulp
and paper producing industries. The USDOC indicated that it would assess whether the log export
ban conferred a benefit by comparing the price paid by APP/SMG for the logs it purchased during
the POI from u naffiliated logging companies to a benchmark price based on world market prices .
The USDOC used , as the basis for its benchmark, the same data that it had used in determining
the benefit conferred by the stumpage programme – that is, Malaysian export price s for acacia
pulpwood and mixed tropical hardwood from the WTA, exclusive of shipments to Indonesia. 144
While the final determination does not lay out the USDOC's reasons for not using in -country prices
for logs, the preliminary determination sets forth the reasons for its decision in this respect. 145 In
the preliminary determination, the USDOC explained its conclusion that there were no meaningful
or usable private domestic prices for logs or actual import prices to evaluate for purposes of
establishing the benchmark:
In the instant case, there are no meaningful or usable private domestic prices for logs
or actual import prices to evaluate for purposes of identifying a "first tier" benchmark
(i.e., market prices from actual transactions within the country under investigation).
As discussed above, the GOI did not place any updated information on the record
concerning the fact that the GOI owns 99 percent of the harvestable forest land in
Indonesia. … Furthermore, the GOI reported that the harvest from privately o wned
forest lands is 2,007,156 m3 out of a total of 31,984,443 m 3 (or only 6.27 percent) of
the total harvest. … We also note that all logs, including logs harvested from private
land, are subject to the export ban . Therefore, because of the GOI's predomin ant role
in the Indonesian market for logs, we find that it is not possible to determine a private
domestic log benchmark price in Indonesia … for the GOI's log export ban.
Accordingly, Indonesian import prices likewise would not reflect market prices.146

140 Indonesia's response to Panel question No. 6 (referring to Excerpt from USDOC Issues and Decision
Memorandum, pp. 1-20 and 48-56, (Exhibit IDN-10), p. 12).
141 See also para. 7.12 above, concerning the United States' request for a preliminary ruling in this
respect.
142 United States' first written submission, paras. 84-91.
143 Para. 7.26.
144 USDOC, Issues and Decision Memorandum, (Exhibit US-31), p. 13.
145 In response to a question from the Panel, the United States indicated that the basis for using world
market prices rather than an in-country benchmark is contained in the preliminary determination.
(United States' response to Panel question No. 70). We do not understand Indonesia to dispute that the
preliminary determination provided the rationale for the USDOC's decision not to resort to in-country prices in
the final determination. (Indonesia's comments to United States' response to Panel question No. 70).
146 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice)), p. 10769.

BCI deleted, as indicated [[***]]

7.67. With respect to Indonesia's allegation that the USDOC based its conclusion that there were
no market-based prices for logs in Indonesia solely on the GOI's market share and ownership of
harvestable lands in Indonesia, we note that, in addition to these cons iderations, the USDOC
observed that "all logs, including logs harvested from private land, [were] subject to the export
ban". This consideration clearly forms part of the basis for the USDOC's conclusion that it was not
possible to determine a private domestic log benchmark price in Indonesia.
7.68. It is undisputed that the scope of the log export ban covered all logs produced within
Indonesia, i.e. those harvested from private land and those harvested from public land. 147 As we
have noted before, the USDOC determ ined that the log export ban constituted a financial
contribution because, by means of the ban, the GOI entrusted and directed domestic log suppliers
to provide logs and chipwood.148 In the CFS investigation, the USDOC based this conclusion on the
provision of logs and chipwood at "low er" or "suppressed" prices to pulp and paper producing
industries.149 Contrary to Indonesia's suggestion150, the USDOC did not, either in the CFS or in the
coated paper investigation, establish that a benefit was conferred on the ba sis that the prices of
the logs and chipwood provided were "lower" or "suppressed" . As we have noted above, the
USDOC established that a benefit was conferred by comparing the price paid by APP/SMG for the
logs and chipwood it purchased during the POI from unaffiliated logging companies to an (out-of-
country) benchmark.
7.69. In our view, it logically followed from the manner in which the USDOC defined the measure
at issue that all log sales in Indonesia constituted the financial contribution (government provisio n
of goods) that needed to be tested against a market -based benchmark. In other words, given the
financial contribution at issue, there logically remained no Indonesian "private" log market
unaffected by the financial contribution. We recall that in cases where the government is the sole
supplier of the good at issue or where it administratively sets all the prices, in -country prices
would not provide an appropriate benchmark and therefore Article 14(d) does not require an
investigating authority to rely on in-country prices in such situations . 151 Logically, a similar
reasoning applies in the case of an export ban which affects all domestic transactions.
Consequently, the nature of the financial contribution defined by the USDOC implied that there
were no domestic private transactions that could be used as the benchmark.
7.70. This meant that there were no log prices in Indonesia outside of the scope of the log export
ban that could have been used for benchmarking purposes. While Indonesia considers that the
USDOC was required to determine whether domestic price for logs were actually distorted as a
consequence of the export ban 152, accepting Indonesia's position would lead to an assessment
whether the price charged by the government – that is, the remuneration itself – was distorted.
We do not see how that assessment could be meaningful for determining the adequacy of that
remuneration, which requires a comparison of the government price, i.e. the level of remuneration
in question, with a market-based price.
7.71. Moreover, we understand Indonesia to argue that the USDOC acted inconsistently with
Article 14(d) by improperly determining that a benefit was conferred because prices were "low er"
or "suppressed" and that these conclusions were not sufficient to establish that dom estic prices
were distorted. It is in this context that Indonesia makes arguments related to the purpose and
effects of the log export ban, the fact that it did not extend to downstream products, and the fact

147 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice)), p. 10769;
Part Two of GOI First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)), appendix 1, pp. 2 and 5.
We note that in the CFS investigation, the USDOC considered that the complete ban on the export of logs had
been in place since 1985, with the exception of a short period of time from 1998 to 2001. (CFS USDOC Issues
and Decision Memorandum, (Exhibit US-43), p. 29).
148 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 13.
149 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 12-13 (referring to CFS USDOC
Issues and Decision Memorandum, (Exhibit US-43), p. 27). See also CFS USDOC Issues and Decision
Memorandum, (Exhibit US-43), p. 32.
150 Indonesia's response to Panel question No. 6; opening statement at the second meeting of the Panel,
para. 23.
151 Panel Report, US – Softwood Lumber IV, para. 7.57 (quoted in Appellate Body Report, US –
Softwood Lumber IV, para. 98).
152 Indonesia submits that the mere existence of a ban does not necessarily affect prices; whether a
measure distorts prices for all sales of the good concerned (i.e. impacts them) is precisely what must be
determined based on an examination of the evidence rather than a per se determination. (Indonesia's response
to Panel question No. 73(a)).

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that, in its view, prior disputes established t hat export restraints cannot constitute countervailable
subsidies within the meaning of the SCM Agreement.
7.72. We recall that the issue of the effects of the log export ban was briefly discussed by the
USDOC in the investigation at issue here, in the context of its financial contribution analysis. The
USDOC referred to its prior findings in the CFS investigation that one purpose of the log export ban
was to develop downstream industries, which was why it had determined that the GOI entrusted
and directed domes tic log suppliers to sell logs and chipwood at suppressed prices to domestic
consumers.153 In the CFS investigation, the USDOC had found that:
[T]he totality of the record evidence refutes the GOI's claim that the log export ban is
used to protect forest re sources and prevent illegal logging, and that it is not
"entrusting or directing" (or inducing) log suppliers to provide a financial contribution
to the wood processing industries. To the contrary, these studies show that the GOI
imposed or maintained the log export ban in order to provide lower priced inputs (i.e.,
logs and chipwood) to the industries that consume those inputs, which actually led to
increased deforestation and greater illegal logging. Furthermore, these studies show
that the pulp and paper industries are among the few beneficiaries of this indirect
subsidy. Accordingly, we find that the GOI used its authority to impose a log export
ban that directed these logs suppliers, under threat of criminal sanctions, to provide
logs and chipwood for l ess than adequate remuneration to downstream wood
processing industries. These industries include the pulp and paper industry that
produces subject merchandise. As such, the log export ban provides a financial
contribution in accordance with section 771(5)(D)(iii) of the Act.154
7.73. In our view, Indonesia's allegations that the USDOC erred in finding that the log export ban
had an impact on domestic prices for logs by suppressing them effectively challenges the USDOC's
finding that, by banning the export of logs , the GOI entrusted and directed domestic log suppliers
to sell lower-priced logs and chipwood to paper producers. We recognize that, because the benefit
conferred by a financial contribution is determined based on the nature of the financial
contribution, an improper determination of the financial contribution would impact the
methodology used to calculate the benefit. However, in the present dispute, Indonesia has not
advanced any claims against the USDOC's financial contribution determination in respect to the log
export ban under Article 1.1 (a) of the SCM Agreement. As a consequence, we decline to address
Indonesia's arguments in this respect as they relate to an issue that is not properly before us. In
sum, we find that Indonesia's arguments regarding t he purpose and effects of the log export ban
are not relevant to its claim under Article 14(d) concerning the determination of the benchmark.
We are required to consider Indonesia's challenge to the USDOC's benefit determination on the
premise that the USD OC properly found that the GOI's log export ban constituted a financial
contribution in the form of entrustment and direction. Consequently, we express no views on the
USDOC's finding that the log export ban constituted a financial contribution in the form of
entrustment or direction of domestic log suppliers to sell logs to domestic consumers.
7.74. In addition, Indonesia argues that if the log export ban does not constitute a financial
contribution neither can it bestow or "confer" a benefit under Article 14(d ) of the SCM Agreement.
For Indonesia, there must be a "causal link "between the "provision of goods … by a government"
and any "benefit" or, otherwise, no benefit is "conferred by" a financial contribution by the GOI.
While we agree that there is a connec tion between the financial contribution and the manner the
investigating authority determines the benefit, without a claim challenging the financial
contribution, it is not within our jurisdiction to address this aspect of the USDOC's
determination.155 There is no support in WTO jurisprudence for the proposition that a "causal link"
between the financial contribution and the benefit must be found, such that, even in the absence
of a specific claim under Article 1.1(a) of the SCM Agreement, a claim challenging a benefit
determination allows a panel to also resolve issues related to the existence of a financial
contribution.
7.75. Similarly, we consider that Indonesia's arguments regarding the product scope of the ban
during the POI, i.e. whether the export of certai n downstream products was also prohibited , are

153 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 13.
154 CFS USDOC Issues and Decision Memorandum, (Exhibit US-43), p. 32. (emphasis original)
155 Indonesia's response to Panel question No. 6.

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not relevant to our assessment. As indicated above, Indonesia submits that during the POI the log
export ban did not apply to certain "downstream products" – namely, chipwood, wood chips and
pulp – which in Indonesia's view means that the log export ban did not distort domestic prices for
logs. Indonesia submits that the 2001 GOI Joint Decree of the Ministry of Forestry and the Ministry
of Industry and Trade of Indonesia was amended in 2003 to exclude the export of chipwood, and
that the log export ban never prohibited exports of wood chips and pulp.156
7.76. We understand Indonesia to argue that, because the export of certain downstream products
was allowed during the POI, the log export ban could not have had the dis tortive effects on
domestic prices that the USDOC found it had. We recall that the USDOC found that by means of
the export ban, the GOI supplied logs and chipwood through government-entrusted or -directed
companies. Therefore, Indonesia's allegation that t he ban did not apply to chipwood effectively
challenges the USDOC's financial contribution determination – particularly the USDOC's
determination of the goods that were provided by the GOI – which is matter regulated by
Article 1.1 of the SCM Agreement . We recall that Indonesia has not challenged the USDOC's
financial contribution determination with respect to the log export ban. Moreover, in our view,
even if the export of wood chips and pulp had been allowed during the POI , this would not have
made the use of domestic log prices appropriate as this would not change the fact that the export
ban applied to all logs produced in Indonesia and, for this reason, the use of domestic log prices
would have rendered the comparison required under Article 14(d) circul ar. In other words , we
consider that, even if the export ban had had a lesser impact on domestic log prices given the
absence of a prohibition to export certain downstream products, domestic log prices could not
have been used as the benchmark, as they con stitute the prices at whi ch the GOI, through
government-entrusted or -directed entities, provided the goods at issue.
7.77. Moreover, Indonesia's arguments regarding the findings of the panel in US – Export
Restraints are not relevant to the issue of the determ ination of the benchmark because those
findings were limited to the question of whether an export restraint (as defined by the complainant
in that case) constituted the provision of a good by entrustment or directio n within the meaning of
Article 1.1(a)(iv) of the SCM Agreement and, thus, a financial contribution. Likewise, the findings
of the panel s in China – GOES and US – Countervailing Measures (China) cited by Indonesia
pertain to the issue of financial contribution. 157 As Indonesia has not advanced any claim under
Article 1.1(a), the decisions of these previous panels are not relevant to the issues before us in the
present dispute. We recall that since the issue is not before us, we express no views as to whether
the USDOC's finding that the export ban c onstituted a financial contribution was consistent with
Article 1.1(a) of the SCM Agreement. Thus, as discussed above, we must, in our analysis of
Indonesia's claims under Article 14(d), assume that the export ban constitutes a financial
contribution in th e form of the provision of goods, and must therefore analyse the consistency of
the USDOC's determination on that basis.
7.78. The parties disagree as to whether the USDOC had information on private prices of logs that
it should have used for determining the benchmark. It is clear to us that there was ample evidence
of private domestic and import log prices on the record. Indeed, the USDOC determined the
benefit conferred by the log export ban by comparing the price of private log transactions between
APP/SMG an d unaffiliated private entities to the WTA data concerning Malaysian export prices.
Moreover, the record before the Panel suggests that most, if not all, log sales in Indonesia were
between private entities. However, as indicated above, the fact that all l ogs in Indonesia were
subject to the export ban rendered these domestic log prices un suitable for benchmarking
purposes.
7.79. Indonesia also faults the USDOC for having rejected log import prices in its benefit analysis .
Indonesia submits that absent evidence that the import price data does not reflect an arm's length
transaction, the transaction reflects the price at which an out -of-country supplier is willing to sell
the good in question to a purchaser in the country . In Indonesia's view, the very fact that im ports
took place, even in small volumes, confirms that the Indonesian prices were not distorted. 158
According to the United States, where government intervention has distorted the prices in a

156 See para. 7.64 and fn 136.
157 Panel Reports, US – Export Restraints, para. 8.21; China – GOES, para. 7.90; and US –
Countervailing Measures (China), para. 7.401.
158 Indonesia's opening statement at the first meeting of the Panel, para. 35; opening statement at the
second meeting of the Panel, para. 19; and response to Panel question No. 73.

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domestic market, the distortion will affect any private sales, tha t is, both private sales of
domestically-produced logs and imported logs.159
7.80. In our view, import prices could also be used as the basis for establishing an in-country
benchmark under Article 14(d) . The USDOC assessed whether import prices into Indonesia cou ld
be used as the basis for the benchmark calculation. In its consideration of whether in -country
prices could be used as the benchmark, the USDOC concluded that Indonesian import prices would
not reflect market prices given the GOI's predominant role in t he market, i.e. the fact that nearly
all timber was harvested on public lands, that the GOI owned almost the totality of the harvestable
forest land in Indonesia, and the fact that all logs, harvested from private and public lands, were
subject to the expo rt ban. 160 In the same vein, in its assessment of the benchmarks based on
Malaysian export prices, the USDOC considered that shipments to Indonesia were an inappropriate
source for a benchmark as they were distorted. 161 It therefore excluded such shipments fro m the
Malaysian export data that it used as benchmark. 162 The USDOC explained that, in the case at
issue, only two undisputed factors were necessary to demonstrate overwhelmingly the
predominance of the GOI in the Indonesia timber market: that over 93% of th e harvest volume
during the POI was from government -owned land, and imports were less than 1% of the timber
produced domestically. The USDOC considered that foreign shippers would have to match the
prices of the overwhelming majority of transactions distor ted through government action. The
USDOC added that this conclusion was "borne out by the data on the record, demonstrating a
significant price difference between Malaysian exports of acacia to Indonesia and Malaysian
exports of acacia to other countries i n the surrounding region".163 In this respect, the USDOC took
the view that export data before it revealed a significant difference between import prices into
Indonesia and the prices of exports from Malaysia to other countries in the surrounding region. 164
In particular, the USDOC considered that "Indonesian domestic prices [were] in fact distorted, and
… trading [took] place at prices significantly lower than those found in the surrounding region for
the identical timber."165
7.81. As just noted, the USDOC based its decision not to use import prices on the fact that the
GOI dominated the market for logs and the fact that the log export ban applied to all logs in
Indonesia. We consider that the fact that the log export ban applied to all logs in Indonesia and
the fact that, as noted by the USDOC, import quantities were minimal (less than 1%) relative to
domestic production made it likely that import prices would have to match the government prices
and consequently, would not be usable as benchmark . This therefore provided a reasonable basis
for the USDOC's decision .166 Consequently, in our view, the analysis conducted by the USDOC as
described above was sufficient to conclude that import prices of logs were also distorted.
7.82. Finally, we note that Indonesia asserts that the WTA data does not reflect sales of logs that
would be used to make pulp, that is, the logs and log prices relevant to the underlying
investigation, but rather refers to a different type of product (furniture wood with a very high price

159 United States' response to Panel question No. 70(a).
160 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice)), p. 10769
161 As indicated above, para. 7.27 and 7.66, the USDOC relied on an out-of-country benchmark to
determine the benefit conferred by the log export ban. The USDOC used as the basis for determining the
benchmark Malaysian export prices for acacia pulpwood and mixed tropical hardwood, exclusive of shipments
to Indonesia (i.e. log imports to Indonesia were excluded).
162 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 28, 32, 34, 36, and 40.
163 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 31-32.
164 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 27 and 32. The USDOC considered
that, given the distortion in import prices into Indonesia, "it should not be surprising that figures based on
shipments to Indonesia are obviously lower than prices for goods shipped elsewhere, such as the WTA data,
based on Malaysian shipments to all destinations besides Indonesia, indicates". (USDOC Issues and Decision
Memorandum, (Exhibit US-31), p. 40).
165 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 27.
166 We note that in the US – Anti-Dumping and Countervailing Duties (China) dispute, in which the
government's market share amounted to 96.1%, the Appellate Body, in its assessment whether the USDOC
acted inconsistently with Article 14(d), appears to have given some positive consideration to the fact the
USDOC had considered the role of imports in the market, noting that the USDOC had concluded that import
quantities (3% of the market) were small relative to domestic production. (Appellate Body Report, US –
Anti-Dumping and Countervailing Duties (China), para. 455).

BCI deleted, as indicated [[***]]

instead of pulp wood ).167 The United States rejects Indonesia's assertion that the out -of-country
benchmark selected by the USD OC based on WTA data referred to a different type of product. 168
Given that the USDOC used evidence regarding actual price difference between shipments i nto
Indonesia and other markets merely to corroborate its conclusion that import prices did not
constitute an appropriate benchmark , we need not address Indonesia's arguments that the
products were not comparable.
7.83. In light of the foregoing, we find that an unbiased and objective investigating authority
could have concluded, as the USDOC did, that import prices of logs did not constitute an
appropriate benchmark.
7.84. For the foregoing reasons, we conclude that Indonesia failed to establish that the USDOC
acted inconsistently with Article 14(d) by declining to use private prices for logs in Indonesia as
the basis for calculating the benchmark.
7.5.2.5 Overall conclusion concerning Indonesia's claims under Article 14(d) of the SCM
Agreement
7.85. In light of the foregoing, we find that Indonesia has failed to establish that the USDOC acted
inconsistently with Article 14(d) of the SCM Agreement by not using private prices for standing
timber in Indonesia as the basis for establishing the benchmark for the provision of standing
timber.
7.86. In addition, we find that Indonesia has failed to establish that the USDOC acted
inconsistently with Article 14(d) of the SCM Agreement by not using private prices for logs in
Indonesia as the basis for establishing the benchmark for the log export ban.
7.5.3 Claim under Article 12.7 of the SCM Agreement ("facts available") with respect to
the debt buy-back
7.5.3.1 Introduction
7.87. Indonesia challenges as inconsistent with Article 12.7 of the SCM Agreement the USDOC's
finding that the GOI provided a subsidy to APP/ SMG in the form of a debt buy -back. In particular,
Indonesia challenges the USDOC's finding that Orleans was affiliated with APP/SMG, which the
USDOC made on the basis of an adverse inference after concluding that the GOI had failed to
cooperate in providing necessary information requested by the USDOC.169
7.88. Indonesia's claim pertains to the USDOC's determination that the sale of APP/SMG's debt to
Orleans in 2004 by the Indonesia Bank Restructuring Agency (IBRA) constituted a subsidy in the
form of debt forgiv eness. Of relevance to Indonesia's claim, in the aftermath of the late 1990s
financial crisis, the GOI took ownership of various banks, including their non -performing assets
(loans and equity).170 In 1998, to manage the restructuring of the Indonesian financ ial sector, the
GOI created IBRA. IBRA managed several programmes to dispose of the assets that had been
acquired by the GOI. 171 One of those programmes was the Strategic Asset Sales Program (PPAS),
a special programme created in 2003 to sell assets of mixed packages of loans and/or equity that
involved particularly large debt amounts, or that the GOI had identified as having particular social
or economic significance. The assets of five companies were offered for sale through a bidding
process in various pha ses of the PPAS programme. The initial PPAS programme involved the sale
of the assets of four companies but did not result in any successful bids, and the assets were
offered again in a new phase, referred to as "PPAS 2", which resulted in the sale of the assets of

167 Indonesia's opening statement at the first meeting of the Panel, paras. 27 and 36; closing statement
at the first meeting of the Panel, para. 3; and second written submission, paras. 24 and 27.
168 United States' opening statement at the first meeting of the Panel, paras. 17-20.
169 Indonesia's first written submission, paras. 3 and 28.
170 Excerpt from Part Two of GOI First Supplemental Questionnaire Response, pp. 22-38, (Exhibit
IDN-14), p. 25; Indonesia's first written submission, para. 47; and United States' first written submission,
para. 120.
171 According to the GOI, IBRA sold 300,000 non-performing loans. (CFS USDOC Issues and Decision
Memorandum, (Exhibit US-43), p. 44).

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three of the four companies involved. 172 As explained in more detail below, the USDOC's decision
to apply an adverse inference rested on the fact that, in the investigation at issue, the GOI failed
to provide documentation that had been requested b y the USDOC w ith respect to these three
PPAS 2 sales.
7.89. The sale of APP/SMG's GOI-owned assets, which were composed only of debt, was managed
subsequently and separately from the assets of the other companies because APP/SMG was in the
process of restructur ing its debt at the time of the initial PPAS and of the PPAS 2 biddings.173
APP/SMG's asset portfolio consisted of a mix of loan instruments of various companies of the
APP/SMG group, totalling approximately IDR 7.9 trillion .174 Three companies submitted bids for
this asset portfolio. Orleans, a company incorporated in the British Virgin Islands, won the bid and
eventually purchased APP/SMG's debt for [[***]].175
7.90. According to the information before the USDOC, IBRA Regulation SK -7/BPPN/0101 176
prohibited IBRA from selling assets that were under its control back to the original owner, or to a
company affiliated with the original owner. To ensure that this prohibition was not violated, IBRA
relied on representations by the buyer and the buyer's outside counsel that th e buyer was not
affiliated with the debtor. In addition, the sales contracts177 and (at least for some of the sales)
[[***178 ***179]] provided for penalties in case IBRA discovered that the buyer was, in fact,
affiliated with the debtor; in that case, the buyer would have to pay the entire value of the assets
sold, and not only the amount agreed with IBRA. Moreover, Regulation SK -7/BPPN/0101 contained
a provision allowing IBRA to, if necessary, conduct due diligence on the potential affiliation of the
purchaser with the debtor.180
7.91. In the earlier CFS investigation, the USDOC had determined that the GOI provided a subsidy
to APP/SMG in the form of debt forgiveness. In reaching this determination, the USDOC relied on
facts available and applied an adverse inference to conclude that Orleans was affiliated with
APP/SMG, on the basis that the GOI had not acted to the best of its ability to cooperate in the
investigation by failing to provide, inter alia , Orleans' bid package (which would have revealed
Orleans' ownership) and information regarding IBRA's internal procedures for reviewing and
evaluating bid documents. 181 The USDOC considered that, in light of certain other evidence – a
World Bank Report and press articles that suggested that Orleans was affiliated with APP/SMG –
the requested documents were crucial for the evaluation of whether Orleans was in fact affiliated
with APP/SMG. The USDOC also concluded that it was unable to evaluate the procedures followed
by IBRA in the APP/SMG sale in order to determine whether normal procedures had been followed,
or whether company -specific exceptions had been made in the case of the Orleans sale. The
USDOC concluded that information on the record supported its finding of affiliation. In particular,
the USDOC noted that the World B ank Report mentioned above indicated that "some IBRA sales
allegedly allowed debtors to buy back their loans at a steep discount through third parties, against
its rules"; that court records included speculation that the Widjaja family (owners of APP/SMG)

172 GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), responses to question No. 4,
pp. 5-6, and No. 22(c), p. 16.
173 GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), response to question No. 9, p. 9.
174 GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), response to question No. 3(a),
p. 3. Unlike the other companies in the PPAS programme, APP/SMG's asset portfolio did not include any equity.
175 Exhibit 33 to Part Two of the GOI First Supplemental Questionnaire Response, (Exhibit IDN-41
(BCI)), p. 6), Article 1.1(15). Petitioners alleged that the value of APP/SMG's asset portfolio, and of the price
paid by Orleans amounted, respectively, to approximately USD 880 million and 214 million. (USDOC Issues
and Decision Memorandum, (Exhibit US-31), p. 17). Before the USDOC, the GOI stated that Orleans had paid
USD [[***]] for APP/SMG's debt, which totalled USD [[***]] at the time of the purchase. (Part Two of GOI
First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)), internal exhibit 21, Appendix 4, question
(e)).
176 Exhibit 1 to GOI Third Supplemental Questionnaire Response, (Exhibit US-84).
177 Excerpt from Part Two of GOI First Supplemental Questionnaire Response, pp. 22-38, (Exhibit
IDN-14)/ Part Two of GOI First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)), pp. 28, and
33-35; and [[***]]
178 [[***]]
179 [[***]]
180 Exhibit 1 to GOI Third Supplemental Questionnaire Response, (Exhibit US-84), Article 3. As discussed
below, during the course of the investigation, the GOI indicated that to the best of its knowledge, IBRA did not
exercise this provision with regard to either the sale of APP/SMG's debt to Orleans, or the other assets sales,
and that it relied on the buyers' statements of non-affiliation.
181 CFS USDOC Issues and Decision Memorandum, (Exhibit US-43), pp. 40-46.

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was buying up its own debt through third parties; and that news articles suggested that APP/SMG
was "surreptitiously buying back its debt". In addition, the USDOC stated that during verification,
it had met with an independent expert knowledgeable about th e debt and banking crisis in
Indonesia and that in the expert's opinion, it was likely that Orleans was related to APP /SMG or
the Widjaja family.182
7.92. In its initial questionnaire to the GOI in the coated paper investigation, i.e. the one at issue
in the present dispute, the USDOC requested that if the GOI disagreed with its conclusions in the
CFS investigation concerning the debt forgiveness subsidy, it submit any relevant documents in
this respect . In response, the GOI responded that it believed the USDOC's finding in the CFS
investigation to be factually and legally incorrect. The GOI also stated that it would continue to
review archived documents and would provide any new information that might develop. 183 In a
supplemental questionnaire issued to the GOI on 29 January 2010, and to APP/SMG the following
day, the USDOC requested that if they disagreed with its determination in the CFS investigation,
they provide complete information about the APP/SMG's debt sale and provide documentation
demonstrating that Orle ans had no affiliation with APP/SMG. The USDOC also requested that the
GOI provide it with Orleans' registration and bid package, including Orleans' articles of association
showing its shareholders. In its response, submitted on 22 February 2010, the GOI e xplained that
IBRA structured its bidding policy to ensure that only qualified parties would be allowed to bid.
Requirements for bidding included: (a) the submission of a Letter of Compliance as part of the bid
package, confirming that the bidder was not a ffiliated with the original debtor; (b) a contractual
representation that served as a self -certification from the bidder that it was not affiliated with the
original debtor; and (c) an opinion letter from outside counsel confirming the eligibility of the
bidder to bid on the assets; the GOI provided these documents, as they pertained to the APP/SMG
debt sale, as well as Orleans' articles of association, to the USDOC.184
7.93. In its 9 March 2010 preliminary determination, the USDOC recalled its findings in the CFS
investigation. It stated that the identification of Orleans' shareholders was pivotal to its ability to
analyse the alleged affiliation between APP/SMG and Orleans, and that Orleans' articles of
association, which it had understood would reveal Orleans' s hareholders in fact did not contain
ownership information, and did not constitute sufficient new factual information to warrant
changing its determination in the CFS investigation. 185 The USDOC indicated that, in addition,
there was other information on the record "to indicate that Orleans is affiliated with APP/SMG". In
this respect, the USDOC referred to the above -mentioned meeting between USDOC officials and
the independent expert.186 The USDOC indicated that based on its initial review of the documents,
there appeared to be some gaps in the documentation and they raised additional questions about

182 CFS USDOC Issues and Decision Memorandum, (Exhibit US-43), pp. 40-45. The expert also opined
that it was not uncommon for hedge funds to set up special purpose vehicles for the purpose of participating in
one particular deal and that these special purpose vehicles could easily be established in a way that would
make their ultimate ownership unknowable.
183 GOI Initial Questionnaire Response, (Exhibit US-32), response to question No. E, pp. 29-30.
184 Part Two of GOI First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)), response to
question No. 59, pp. 34-36. In addition, at verification in the CFS investigation, GOI officials had informed the
USDOC that the purchaser would be required, through the documentation it submitted, to establish that it was
not affiliated with the company whose debt it was purchasing. In its response to the first supplemental
questionnaire in the coated paper investigation, the GOI stated that these GOI officials were probably giving
explanations based on their experience in other transactions in which the articles of association did in fact
identify the owners. The GOI stated that it now had identified officials involved in the sale of APP/SMG's debt to
Orleans who had not been present at verification in the CFS investigation, and who would be made available to
answer the USDOC's questions at verification in the coated paper investigation. (Ibid. pp. 25-34; Preliminary
Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice), p. 10772).
185 The USDOC also noted that the GOI was discounting statements made at the CFS verification by
former IBRA officials that ownership information would be part of a purchaser's file. The USDOC found that
those statements were more probative at that point in the investigation, because the officials were discussing
overall IBRA procedures with which they were familiar, even though they may have not been the officials
responsible for the PPAS.
186 Petitioners in the coated paper investigation included in the petition and in their submissions to the
USDOC the World Bank Report and the press articles mentioned above. These documents were provided to the
Panel in Exhibit US-40. Petitioners also attached the Issues and Decision Memorandum to the USDOC's Final
Determination in the CFS investigation to their petition, thereby placing the USDOC's discussion of its meeting
with the independent expert in the CFS investigation on the record of the coated paper investigation. APP/SMG
later placed on the record, as exhibit 52 to its First Supplemental Questionnaire Response, Part Two, the public
version of the USDOC Memorandum reporting on the same meeting. It was submitted to the Panel as CFS
Memorandum: Meeting with an Independent Expert, (Exhibit US-81).

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how IBRA handled the APP/SMG sale. On this basis, it found that the documentation submitted by
the GOI was not sufficient to overcome its determination in the CFS i nvestigation that Orleans was
affiliated with APP/SMG. It therefore preliminarily determined that the GOI's sale of APP/SMG's
debt to an affiliate constituted a financial contribution, in the form of debt forgiveness, and that a
benefit was received equal to the difference between the value of the outstanding debt and the
amount Orleans paid for it.187
7.94. Subsequently, in its third supplemental questionnaire, dated 29 April 2010, the USDOC
requested that the GOI provide it with IBRA's internal guidelines for rev iewing and evaluating bids
under the PPAS programme; the "bid protocols" and terms of reference for PPAS debt sales;
IBRA's due diligence requirements, internal guidelines and procedures; as well as all relevant
documents pertaining to the winning bids for each of the other three sales under the PPAS
programme. With respect to the latter, the USDOC requested that the GOI provide, in each case,
the winning bidder's : (a) articles of association; (b) certificate of incorporation; (c) Statement
Letter confirming that it would comply with the rules of the bid/sale process; (d) the Asset Sale
and Purchase Agreement , including a representation of non -affiliation; and (e) the letter from
outside counsel confirming the purchaser's compliance with the conditions of th e debt purchase.188
After receiving an extension, the GOI responded on 27 May 2010 that the documents pertaining to
other PPAS sales were not available at that time , in addition to questioning their relevance to the
question of Orleans' affiliation with APP/ SMG. The GOI also indicated that IBRA's due diligence
procedures were the same under the various PPAS sales and that the GOI approached its due
diligence of possible buyers in the same manner in each PPAS sale. 189 The GOI stated that while
IBRA had the legal authority to exercise further due diligence, IBRA had relied primarily "upon the
contractual obligations and the enforceability of those provisions ".190 The GOI further stated that
to the best of its knowledge, IBRA did not have any written internal due dil igence guidelines for
evaluating the documentation and other information submitted by potential bidders and had not
been able to locate any such documents, and that "[t]here were no specific threshold factors that
would necessarily trigger more in-depth due diligence of bidders."191
7.95. The USDOC again sought the same documents in its Fifth Supplemental Questionnaire,
issued on 11 June 2010 and, in addition, asked further questions pertaining to whether IBRA had
conducted due diligence in other PPAS and non -PPAS sales and whether it maintained any form of
internal due diligence guidelines.192 Moreover, o n 18 June 2010, the USDOC transmitted to the
GOI an outline for the verification that was to take place from 28 June to 1 July 2010, in which it
identified the APP/ SMG's debt buy -back as a verification item. The verification outline indicated
that the GOI had outstanding questionnaire responses due on 22 June 2010 and that, depending
on the USDOC's analysis of these responses, the outline might be amended, and that i n case the
USDOC deemed the GOI's responses unresponsive on some issues, those issues may be deleted
from the verification agenda. 193 In its response to the Fifth Supplemental Questionnaire, the GOI
responded that the documents concerning the other PPAS winning bids were still not available, but
that it would "continue making its best efforts to collect and organize these documents so they will
be available during the verification". The GOI submitted the bid protocol and terms of reference for
the PPAS 2 prog ramme. The GOI also repeated that it was not aware of any due diligence
conducted regarding winning PPAS bidders, including in the APP/SMG's debt sale, and of any
specific documentation regarding due diligence. It also reiterated tha t the USDOC could discu ss
these issues further with former IBRA officials at verification.194

187 Preliminary Countervailing Duty Determination, (Exhibits IDN-5/US-48 (exhibited twice)),
pp. 10071-10773.
188 GOI Third Supplemental Questionnaire, (Exhibit US-41), question Nos. 5, 6, 7, 12, 17, 18, and 22(c).
189 GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), response to question No. 5,
pp. 6-7).
190 The GOI added that if IBRA had had a specific reason to suspect affiliation between a bidder and the
debtor, it would have had the authority to investigate further, and would have undertaken further
investigation. (GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), response to question No. 7,
p. 8).
191 GOI Third Supplemental Questionnaire Response, (Exhibit IDN-15), responses to question Nos. 6,
p. 7, and 7, pp. 7-8.
192 GOI Fifth Supplemental Questionnaire, (Exhibit US-42), question Nos. 3, 4, 5, and 8.
193 GOI Verification Outline, (Exhibit US-77).
194 The GOI also stated that it could not confirm whether formal or informal inquiries or follow-up may
have been made at the time of the sales, particularly as these activities had taken place several years ago, and

BCI deleted, as indicated [[***]]

7.96. The USDOC informed the GOI on 24 June 2010 that it was cancelling verification of the debt
buy-back issue because the GOI had not provided the information and documentation concerning
the other PPAS sales. The USDOC explained that "[g]iven that the GOI has not provided the
requested information and documentation, it has deprived the Department and other interested
parties of the opportunity to examine this information before verification" , and that "neither the
Department nor interested parties can conduct a meaningful analysis or verification of the GOI's
claims that information on the bidders' ownership structure was not required to be submitted to
IBRA, or of other aspects of IBRA's sta ndard operating procedures under the PPAS program." 195
The GOI and APP/SMG later asserted, in a letter that the GOI sent to the USDOC on 3 August 2010
and in a 17 August 2010 submission by the GOI and APP/SMG, that the GOI had succeeded in
locating at least some of the requested documents on 26 June 2010, two days before verification
was set to begin.196
7.97. In its final determination and the accompanying Issues and Decision Memorandum, the
USDOC found that, as a result of the GOI's failure to provide the requeste d information pertaining
to the other PPAS sales by the required deadlines, there was a hole in its record pertaining to
IBRA's procedures under the PPAS programme, and that without information pertaining to other
transactions, it could not "test" the GOI's claims that Orleans and APP/SMG were not affiliated. The
USDOC considered that this information was necessary to ensure that IBRA followed normal
procedures in the Orleans transaction in not inquiring further into the ownership of Orleans and its
possible affiliation with APP/SMG. The USDOC further considered that the GOI had failed to act to
the best of its ability in responding to the questionnaires as "[o]n balance, the GOI did not put
forth its maximum efforts, despite its many protest s to the contrary" and that "it was reasonable
to expect the GOI to be more forthcoming with this information". O n this basis, the USDOC drew
an adverse inference to the effect that Orleans was affiliated with APP/SMG. 197 Consequently, the
USDOC determined that the sale of APP/SMG's debt to Orleans constituted a financial contribution
to APP/SMG in the form of debt forgiveness. The USDOC considered that APP/SMG's overall debt
obligation was reduced by the difference between the amount of APP/SMG's debt held by IBRA and
the a mount that APP/SMG (through Orleans) paid for this debt because, through this sale,
APP/SMG was effectively relieved of the liability of repaying its debt to an outside party; the
USDOC determined that the transaction provided a benefit in the same amount. On this basis, the
USDOC determined that the debt sale to Orleans provided a subsidy to APP/SMG, and that this
subsidy was company-specific.198
7.98. Indonesia makes two principal arguments in its challenge of the USDOC's determination
that Orleans was affiliated with APP/SMG: (a) the conditions for resorting to facts available under
Article 12.7 of the SCM Agreement were not met; and (b) the "facts available" relied upon by the
USDOC in its determination did not "reasonably replace" the information that the GOI a llegedly
failed to provide, as required by Article 12.7.
7.99. The United States requests that the Panel reject Indonesia's claim. The United States argues
that the USDOC acted consistently with Article 12.7 in its determination that Orleans was affiliated
with APP/SMG. The United States submits that the requirements for resorting to facts available
under this provision were met and that the "facts available" that the USDOC used "reasonably
replaced" the missing information.
7.5.3.2 Legal standard under Article 12.7 of the SCM Agreement
7.100. Article 12.7 of the SCM Agreement allows an investigating authority to make
determinations on the basis of the facts available under certain conditions. It provides as follows:
In cases in which any interested Member or interested party r efuses access to, or
otherwise does not provide, necessary information within a reasonable period or

that the underlying documents had already been archived. (GOI Fourth and Fifth Supplemental Questionnaire
Response, (Exhibit IDN-16), responses to question No. 3, pp. 4-5, No. 4, p. 4, No. 5, pp. 5-6, and No. 8, p. 7).
195 Letter to GOI regarding Verification, (Exhibit US-76).
196 GOI Letter to USDOC Regarding IBRA, (Exhibit US-87); GOI and APP/SMG Case Brief to USDOC,
(Exhibit US-44), pp. 62-63. The Letter states that the GOI "had finally located the remaining few documents
and had them ready to be reviewed during the verification"; the Case Brief is less clear as to whether the GOI
had located all or only some of the requested documents.
197 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 52-55.
198 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 20.

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significantly impedes the investigation, preliminary and final determinations,
affirmative or negative, may be made on the basis of the facts available.
7.101. The "process of identifying the 'facts available' should be limited to identifying
replacements for the 'necessary information' that is missing from the record". 199 Thus, Article 12.7
is concerned with overcoming the absence of information required to complete a determination; it
is not directed at mitigating the absence of "any" or "unnecessary" information. 200 Moreover, an
investigating authority must use those "facts available" that " reasonably replace the information
that an interested party failed to provide ", with a view to arriving at an accurate determination. 201
The explanations and analysis provided in the determination must be sufficient to allow a panel to
assess whether the facts available relied upon by the authority are reasonable replacements for
the missing information.202
7.102. In addition, paragraph 7 of Annex II of the Anti -Dumping Agreement, which is relevant to
the interpretation and application of Article 12.7 203, provides that "if an interested party does not
cooperate and thus relevant information is being withheld from the authorities, this situation could
lead to a result which is less favourable to the party than if the party did cooperate."
7.5.3.3 Whether the conditions for resorting to facts available were met
7.103. We first consider Indonesia's argument that the conditions for resorting to facts available
under Article 12.7 of the SCM Agreement were not met in this case.
7.104. Indonesia argues that the GOI acted to the best of its ability and cooperated with the
USDOC's many requests for information by submitting all the necessary information requested by
the USDOC on the issue of affiliation – i.e. the documents concerning Orleans and the debt sale to
that buyer – as well as information on IBRA's internal procedures as it provided all evidence
required under Indon esian law to certify that the debt sale in question was not to an affiliate. 204
Indonesia adds that the information requested by the USDOC relating to the other PPAS debt sales
was not "necessary" to assess the APP/SMG sale and would not have shed light on a ffiliation
because these sales involved different companies. 205 Thus, in Indonesia's view, this information
was not "necessary" to assess the APP/SMG sale and the question of affiliation.
7.105. Indonesia also argues that information concerning Orleans' ownership was not missing; it
was simply not part of the documents that IBRA required from buyers in the PPAS programme.
Indonesia asserts that there were obstacles to the GOI's ability to cooperate, given that IBRA was
dissolved in 2004, its records (which were not in electronic format) archived, and its employees
released. Indonesia contends that the USDOC set a constantly moving target, which it used as a
pretext for drawing an adverse inference. In particular, Indonesia argues that the USDOC waited
before requesting information on the other PPAS sales even though it knew from the beginning of
the investigation that it would require these documents. Indonesia argues that the "organic
principle of good faith" embodied in Annex II of the Anti -Dumping Agreement restra ins
investigating authorities from imposing on interested parties burdens which are unreasonable in
the circumstances. 206 Indonesia also takes issue with the fact that the USDOC cancelled
verification of the Orleans transaction, noting in particular that the GOI had indicated that officials
with knowledge of the transaction would be present at verification and that it would continue to

199 Appellate Body Report, US – Carbon Steel (India), para. 4.416.
200 Appellate Body Report, US – Carbon Steel (India), para. 4.416.
201 Appellate Body Report, US – Carbon Steel (India), para. 4.416 (quoting Appellate Body Report
Mexico – Anti-Dumping Measures on Rice, paras. 293-294). (emphasis by the Appellate Body in US – Carbon
Steel (India))
202 Appellate Body Report, US – Carbon Steel (India), para. 4.421.
203 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice, para. 295; US – Carbon Steel
(India), paras. 4.423 and 4.425.
204 Indonesia's first written submission, para. 55; opening statement at the first meeting of the Panel,
para. 46; and closing statement at the first meeting of the Panel, para. 5.
205 Indonesia's first written submission, para. 65.
206 Indonesia's first written submission, paras. 62-65 (quoting Appellate Body Report, US – Hot-Rolled
Steel, para. 101).

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search for the missing documents and would make them available at verification if they could be
located.207
7.106. Finally, Indonesia considers that the application of facts available with an adverse
inference is limited to situations in which the party possesse s the requested information and
withholds it. The facts of the underlying investigation did not permit USDOC to apply facts
available with an adverse inference because Indonesia was not withholding the information from
USDOC.208
7.107. The United States argues that the USDOC rightly found that the GOI failed to cooperate to
the best of its ability such that an adverse inference was warrant ed.209 In this respect, the
United States considers that the phrase "does not cooperate" in paragraph 7 of Annex II of the
Anti-Dumping Agreement, which informs the meaning of Article 12.7, is not limited to situations in
which the party possesses the reques ted information and withholds it, but also covers other types
of non-cooperation such as failing to provide information in a timely manner, failing to take steps
to obtain requested information, or misrepresenting the meaning of certain information.210
7.108. The United States submits that the GOI was aware from the beginning of the investigation
that affiliation would be an issue, that it had multiple opportunities and a reasonable period of time
(seven weeks) to submit the information requested and did not reques t an extension of the
deadline (as it could have), that the USDOC warned the GOI that it might resort to facts available
if the GOI did not provide the information, and that Indonesia does not cite valid reasons for the
alleged "difficulties" encountered in providing the information. The United States also submits that
the USDOC did not create a "moving target". Rather, the focus of the USDOC's enquiries changed
during the investigation because the documents concerning the Orleans transaction that were
eventually provided by the GOI did not reveal Orleans' ownership, as expected. The documentation
that was eventually provided by the GOI concerned IBRA's policies and did not allow the USDOC to
confirm the extent of IBRA's efforts in other PPAS sales to identi fy the buyers' ownership and
ensure that debtors did not buy back their own debt. The USDOC then altered its focus to test the
validity of the GOI's assertions that IBRA had not inquired into Orleans' ownership beyond
requiring Orleans' (and other purchasers') statements of non-affiliation, and that proceeding in this
manner was consistent with IBRA's procedures and the level of diligence it applied in other PPAS
sales. This is why the USDOC sought more information concerning IBRA guidelines and policies, a s
well as documents concerning the other PPAS transactions. The GOI provided documentation
concerning the former, but this documentation did not allow the USDOC to confirm the extent of
IBRA's efforts in other PPAS sales to identify the buyers' ownership a nd ensure that debtors did
not buy back their own debt.211
7.109. The United States submits that the information sought was, in the absence of direct
evidence of non-affiliation on the record, "necessary" for the USDOC to determine the plausibility
of the GOI's as sertions concerning IBRA's efforts in the Orleans sales and its level of diligence in
other PPAS transactions, in particular its representation that IBRA acted in the Orleans sale in the
same manner as in other PPAS sales , i.e. that it relied on statements of no affiliation from the
buyer and did not carry out additional verifications. Thus, due to the GOI's failure to provide the
requested information, necessary information was absent from the record and the USDOC
appropriately resorted to Article 12.7 "to fill in gaps". Finally, the United States argues that it was
appropriate for the USDOC to cancel the verification because the purpose of verification is not to
review new evidence.212
7.110. We first consider whether the missing information requested by the USDOC – i.e. the
documents pertaining to the other four PPAS sales 213 – was "necessary" within the meaning of
Article 12.7.

207 Indonesia's first written submission, paras. 57-59 and 63.
208 Indonesia's response to Panel question No. 87.
209 United States' first written submission, para. 150.
210 United States' comments on Indonesia's response to Panel question No. 87.
211 United States' first written submission, paras. 136-140 and 150-156.
212 United States' first written submission, paras. 136-140 and 150-156.
213 Winning bidder's articles of association, certificates of incorporation, and certifications that the
winning bidder was not affiliated with the original debtor.

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7.111. In its determination, the USDOC linked its request for the information concerning the other
PPAS sales "to the GOI's claims that IBRA does not inquire into the ownership of bidders under this
program and accepts various affirmations that the bidders are not affiliated with the debtor
companies". The USDOC considered that the missing information "was needed to test the validity
of the GOI's c laims that it was normal procedure not to further inquire into the ownership or
possible affiliations of bidders" and was "necessary to ensure that IBRA followed proper procedures
in the Orleans -APP/SMG transaction in not inquiring further into the ownersh ip of Orleans or any
relationship between the entities". 214 The USDOC also stated that the failure to provide the
requested information, "combined with the apparent lack of any procedural guidelines used in the
PPAS program or other IBRA administered program s", prevented it from corroborating the GOI's
claims regarding the inquiries made concerning Orleans and the contents of its application file.215
7.112. As we have noted above, the term "necessary information" has been interpreted to refer to
information that is "r equired to complete a determination ".216 It is, in the first instance, for the
investigating authority to determine what information it considers "necessary" to make its
determination, in light of the specific circumstances of the investigation at issue. 217 In our view, an
authority may reasonably consider that information needed to verify the accuracy of information
submitted by interested parties or to corroborate such information is "necessary" within the
meaning of Article 12.7, particularly as Article 12.5 of the SCM Agreement requires investigating
authorities to "satisfy themselves as to the accuracy of the information supplied". 218 The
information requested by the USDOC was not information that would have directly established
affiliation or non -affiliation between Orleans and APP/SMG. It was, however, information that the
USDOC would have used to ascertain the accuracy of the GOI's statement that IBRA did not
enquire into the ownership of bidders beyond the statements of non -affiliation. For this reason, we
consider that the USDOC reasonably considered the information to be "necessary" for the USDOC
to satisfy itself of the accuracy of the GOI's representations that IBRA had followed normal
procedures in the Orleans sale. In addition, in arriving at this con clusion we consider it relevant
that the information submitted by the GOI did not conclusively establish who were Orleans'
shareholders, and that other information on the record of the investigation – in particular the press
reports, World Bank Report, and the expert statement mentioned above 219 – raised doubts
concerning Orleans' non-affiliation with APP/SMG. In our view, this other information justified the
USDOC further probing IBRA's procedures concerning the question of affiliation.
7.113. We now turn to consi dering Indonesia's allegation that the GOI did not fail to provide
necessary information within a reasonable period, in light of the USDOC's determination that the
GOI had not cooperated as it had failed to act to the best of its ability, which was the bas is for the
USDOC's decision to apply an "adverse inference". This being the case, we consider whether an
objective and unbiased investigating authority could reasonably have concluded, in light of the
circumstances of the case and the facts before the USDOC, that the GOI failed to cooperate.

214 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 5-6 and 48-55.
215 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 20.
216 See, e.g. Appellate Body Report, US – Carbon Steel (India), para. 4.416.
217 Panel Report, Egypt – Steel Rebar, para. 7.155.
218 In this respect, we agree with the EC – Countervailing Measures on DRAM Chips panel's statement
that:
Article 12.7 … enables an authority to continue with the investigation and make determinations
based on the facts that are available in case the information nece ssary to make such
determinations is not provided by the interested parties , or, for example, verification of the
accuracy of the information submitted is not allowed by an interested party, thereby significantly
impeding the investigation.
(Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.245 (emphasis added))
219 As noted above, fn 186, the press reports and World Bank Report were placed on the record of the
coated paper investigation by the petitioners and provided to the Panel in Exhibit US-40. The press reports
contain statements to the effect that, inter alia: (a) APP/SMG had past dealings with companies in the British
Virgin Islands (internal exhibit 11 to Petitioners' General Factual Information Submission, (Exhibit US-40)); (b)
there were suspicions among foreign creditors that APP and the Widjaja family purchased substantial portions
of APP's debt in an effort to manipulate its restructuring (internal exhibit 18 to Petitioners' General Factual
Information Submission, (Exhibit US-40)); and (c) creditors and bidders had raised questions about who might
be behind the Orleans bid, in part because of the mysterious nature of the bidder and the long-running
suspicions that APP had been "surreptitiously buying back its debt" (internal exhibit 33 to Petitioners' General
Factual Information Submission, (Exhibit US-40)). Other press reports contained more general information
concerning APP/SMG's debt situation and IBRA's sale of APP/SMG's debt. The World Bank Report stated that
IBRA was allegedly allowing debtors to buy back their debt through third parties. (Internal exhibit 24 to
Petitioners' General Factual Information Submission, (Exhibit US-40)).

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7.114. We recall that paragraph 7 of Annex II of the Anti -Dumping Agreement recognizes that " if
an interested party does not cooperate and thus relevant information is being withheld from the
authorities, this situation could lead to a result which is less favourable to the party than if the
party did cooperate."
7.115. We note that the ordinary meaning of "cooperate" is, inter alia, to "act jointly with or with
another (in a task … to an end); participate in a joint or mutual enterp rise".220 Moreover, in our
view the use of the term "failure to cooperate" in paragraph 7 can be contrasted with the more
neutral term "or otherwise does not provide" in Article 12.7 of the SCM Agreement and Article 6.8
of the Anti -Dumping Agreement. We also find it relevant that paragraph 5 of Annex II provides
that " [e]ven though the information provided may not be ideal in all respects, this should not
justify the authorities from disregarding it, provided the interested party has acted to the best of
its ability."221 In light of the foregoing, the use of the term "fails to cooperate" in paragraph 7 of
Annex II connotes more than simply a party's failure to provide the requested information, and
goes instead to the question whether the interested party from w hom information was requested
applied its best efforts – "acted to the best of its ability" – in attempting to provide it. The
foregoing suggests that, for instance, if an interested party is prevented from providing necessary
requested information by exte rnal factors outside its control, an investigating authority could not
reasonably conclude that that party "fail[ed] to cooperate". The Appellate Body reached a similar
conclusion in US – Hot-Rolled Steel:
[C]ooperation is a process, involving joint effort , whereby parties work together
towards a common goal. In that respect, we note that parties may very well
"cooperate" to a high degree, even though the requested information is, ultimately,
not obtained. This is because the fact of "cooperating" is in its elf not determinative of
the end result of the cooperation. Thus, investigating authorities should not arrive at a
"less favourable" outcome simply because an interested party fails to furnish
requested information if, in fact, the interested party has "co operated" with the
investigating authorities, within the meaning of paragraph 7 of Annex II of the
Anti-Dumping Agreement.222
7.116. In the same decision, the Appellate Body further considered – on the basis of, inter alia,
paragraph 5 of the Annex II, that "the le vel of cooperation required of interested parties is a high
one – interested parties must act t o the 'best' of their abilities". 223 The Appellate Body also
considered, however, that paragraph 2 of Annex II 224 requires investigating authorities to strike a
balance between the effort s that they can expect interested parties to make in responding to
questionnaires, and the practical ability of those interested parties to comply fully with all demands
made of them by the investigating authorities. The Appellate Bo dy saw this provision as another
detailed expression of the principle of good faith, which, in this particular context, restrains
investigating authorities from imposing on exporters burdens which, in the circumstances, are not
reasonable.225 The Appellate Bo dy thus considered that paragraphs 2 and 5 of Annex II of the
Anti-Dumping Agreement reflect a careful balance between the interests of investigating
authorities and exporters, adding that:
In order to complete their investigations, investigating authoriti es are entitled to
expect a very significant degree of effort – to the "best of their abilities" – from
investigated exporters. At the same time, however, the investigating authorities are
not entitled to insist upon absolute standards or impose unreasonable burdens upon
those exporters.226

220 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),
Vol. 1, p. 517.
221 Emphasis added.
222 Appellate Body Report, US – Hot-Rolled Steel, para. 99. (emphasis original)
223 Appellate Body Report, US – Hot-Rolled Steel, para. 100.
224 Paragraph 2 of Annex II authorizes investigating authorities to request responses to questionnaires
in a particular medium (for example, computer tape) but, at the same time, states that such a request should
not be "maintained" if complying with that request would impose an "unreasonable extra burden" on the
interested party, that is, would "entail unreasonable additional cost and trouble". (emphasis added in Appellate
Body Report, US – Hot-Rolled Steel, para. 101)
225 Appellate Body Report, US – Hot-Rolled Steel, para. 101.
226 Appellate Body Report, US – Hot-Rolled Steel, para. 102. (emphasis original)

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7.117. In addition, the Appellate Body considered that Article 6.13 of the Anti -Dumping
Agreement 227 (which is identical to Article 12.11 of the SCM Agreement) underscores that
"cooperation" is a two -way process involving joint eff ort as it requires investigating authorities to
make certain allowances for, or take action to assist, interested parties in supplying information,
adding that "if the investigating authorities fail to 'take due account' of genuine 'difficulties'
experienced by interested parties, and made known to the investigating authorities, they cannot …
fault the interested parties concerned for a lack of cooperation". 228 Consistent with these
principles, the Appellate Body also explained that the term "'reasonable peri od' must be
interpreted consistently with the notions of flexibility and balance that are inherent in the concept
of 'reasonableness', and in a manner that allows for account to be taken of the particular
circumstances of each case", adding that:
In considering whether information is submitted within a reasonable period of time,
investigating authorities should consider, in the context of a particular case, factors
such as: (i) the nature and quantity of the information submitted; (ii) the difficulties
encountered by an investigated exporter in obtaining the information; (iii) the
verifiability of the information and the ease with which it can be used by the
investigating authorities in making their determination; (iv) whether other interested
parties are li kely to be prejudiced if the information is used; (v) whether acceptance
of the information would compromise the ability of the investigating authorities to
conduct the investigation expeditiously; and (vi) the numbers of days by which the
investigated exporter missed the applicable time-limit.229
7.118. While the Appellate Body made these statements in the context of considering claims
under the Anti-Dumping Agreement, the Appellate Body has indicated that it would be anomalous
if Article 12.7 of the SCM Agreement were to permit the use of "facts available" in countervailing
duty investigations in a manner markedly different from that in anti-dumping investigation.230
7.119. In the present case, it is clear from the record that the GOI provided a large amount of
information sought by the USDOC, including Orleans' bid package. It is also clear, however, that
the GOI did not provide all the information sought by the USDOC. In particular, the GOI failed to
provide the USDOC with the information pertaining to other PPAS sales th at the USDOC had
requested. In its final determination, the USDOC found that the GOI "failed to cooperate by not
acting to the best of its ability". The USDOC noted in this respect that the GOI had not been asked
to provide the missing information on short notice as it had had seven weeks' notice that the
USDOC required the specific information at issue concerning the other sales under IBRA's PPAS
programme. The USDOC considered that, on balance, the GOI did not put forth its maximum
efforts, despite its many protests to the contrary. The USDOC added that the GOI was aware as of
the initiation of this investigation in October 2009 that the possible affiliation of APP/SMG and
Orleans would be an issue. The USDOC also considered that there was nothing overly b urdensome
in its request for information – it was neither "boundless", nor would it appear to involve "several
bankers boxes of information", as the Indonesian respondents had characterized it. For this
reason, "it was reasonable to expect the GOI to be mo re forthcoming with this information". The
USDOC also considered that the GOl's repeated refusal to provide the requested information by the
deadlines evinced, at a minimum, inadequate inquiries and attempts to locate the information.231
7.120. Indonesia argues th at, as a developing country, the GOI's difficulties in locating the
documents requested by the USDOC should be taken into account in assessing its efforts and its
cooperation in the investigation. Indonesia argues that Article 27 of the SCM Agreement and
Article 15 of the Anti -Dumping Agreement provide "context" to the interpretation and application
of the specific requirements in Article 12.7 of the SCM Agreement and Annex II of the
Anti-Dumping Agreement.232 The provisions invoked by Indonesia, Articles 15 of the Anti-Dumping
Agreement and Article 27 of the SCM Agreement are, on their face, not relevant to an
investigating authority's use of facts available under Article 12.7 , and nothing in Article 12.7 or

227 Article 12.11 of the SCM Agreement and Article 6.13 of the Anti-Dumping Agreement provide that:
"The authorities shall take due account of any difficulties experienced by interested parties, in particular small
companies, in supplying information requested, and shall provide any assistance practicable."
228 Appellate Body Report, US – Hot-Rolled Steel, para. 104.
229 Appellate Body Report, US – Hot-Rolled Steel, para. 85.
230 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 295.
231 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 54-55.
232 Indonesia's first written submission, paras. 50-53, and 65; response to Panel question No. 32.

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elsewhere in the SCM Agreement suggests that a Memb er's developing country status, per se ,
modifies the disciplines of Article 12.7, interpreted in light of Annex II of the Anti -Dumping
Agreement.233
7.121. Article 12.7 strikes a balance between the obligation for an interested party to submit
necessary information and to have that information taken into account, on the one hand, and the
obligation placed upon the investigating authority to conclude its investigation within prescribed
timeframes, on the other. 234 This means that there came a time in the coated paper investigation
when the information had to be provided, or the USDOC could resort to using facts available.
Taking into account the extensions received, the GOI effectively had more than seven weeks (from
the date the USDOC issued the thir d questionnaire to the GOI's response to the fifth
questionnaire) to provide the requested information. Even taking into consideration the fact that
the USDOC requested voluminous information from the GOI, the GOI's explanations concerning
factual circumstances surrounding the fact that IBRA's operations had been terminated several
years prior and the resulting difficulties in locating the documents alleged by the GOI, we are of
the view that in the circumstances of this case, the USDOC did not act unreasonably in concluding
that by failing to provide the requested information within the seven weeks it had to do so, the
GOI failed to provide necessary information within a "reasonable period". As discussed above, the
information was initially requested as part of the USDOC's T hird Questionnaire to the GOI, but not
submitted, and requested anew as part of the USDOC's Fifth Questionnaire to the GOI. In this
respect, we note, by way of comparison, the Agreement mandates a 37 -day minimum period to
respond to an initial questionnaire.235
7.122. Moreover, we note that the USDOC progressively gained knowledge about the Orleans sale
and IBRA's procedures, which led to further questions and requests for information. For instance,
the USDOC initially requested that the GOI provide it with Orleans' complete bid package, which
the GOI had not provided in the CFS investigation. The USDOC stated that once it obtained th ese
documents, given that they did not contain information revealing Orleans' ownership, it broadened
the scope of its inquiry and requ ested that the GOI provide it with documents pertaining to the
other PPAS sales and IBRA's due diligence procedures for ascertaining compliance with the
prohibition on debtors buying back their own debt: "we altered our focus to test the validity of the
GOI's claims not to have inquired into the ownership of Orleans, or any other company purchasing
debt, beyond requiring certain affirmations from bidders regarding their bona fides, which the GOI
stated was consistent with IBRA's evaluation procedures for sa les in the PPAS." 236 This being the
case, we do not consider that the USDOC's successive requests for the information were unduly
burdensome in the circumstances or created a "moving target". We also note that the USDOC
informed the GOI that failure to provi de requested information may result in the USDOC resorting
to the use of "facts available".237
7.123. The USDOC's decision to cancel "verification" regarding the debt buy -back issue because
the GOI had not provided the requested information and documentation concerning the other PPAS
sales238 does not affect our conclusion in this respect. Verification visits are only one of several

233 This is not to say that specific problems which may or may not be related to the fact that a Member
is a developing country may not be relevant in considering whether information is submitted within a
"reasonable period", in assessing the burden placed on the interested party from which information is sought,
and in determining whether it has failed to cooperate.
234 The Appellate Body has recognized the importance for investigating authorities of being able to set
deadlines for the submission of information, adding that investigating authorities must be able to control the
conduct of their investigation and to carry out the multiple steps in an investigation required to reach a final
determination. (Appellate Body Report, US – Hot-Rolled Steel, para. 73).
235 Article 12.1.1 and fn 40 of the SCM Agreement.
236 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 31. (underline original)
237 GOI Third Supplemental Questionnaire, (Exhibit US-41), cover letter; GOI Fifth Supplemental
Questionnaire, (Exhibit US-42), cover letter.
238 Letter to GOI regarding Verification, (Exhibit US-76), quoted above, para. 7.96. In the final
determination, the USDOC reiterated the reasons provided in the letter for cancelling the verification, and
added that "it is well-established that verification is not an opportunity to submit new information, but rather is
intended only to establish the accuracy of the information already submitted", that "neither the Department
nor Petitioners will have adequate time to prepare probing verification questions or suggestions for questions",
and that "the resources available at verification are completely different than those available at Department
headquarters." (USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 56).

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ways in which an authority may satisfy itself of the accuracy of the information before it 239, and
the SCM Agreement does not require an investigating authority to conduct such visits.240
7.124. In addition, Indonesia's argument is premised on the assumption that the USDOC would
have been required to accept the missing information had it been provided by the GOI at
verification. However, paragraph 7 of Annex VI of the SCM Agreement 241 notes that the primary
purpose of verifications is to verify information provided in questionnaire responses, suggesting
that the receipt of new evidence is not. Moreover, the Appellate Body explained in China –
HP-SSST (J apan) / China – HP-SSST (EU) , with respect to Article 6.7 of the Anti -Dumping
Agreement, which is identical to Article 12.6 of the SCM Agreement in all relevant respects, that
"investigating authorities have some degree of latitude in deciding whether to a ccept and use
information submitted by interested parties during on -the-spot investigations and thereafter" 242,
and that an investigating authority is not required "to accept all information presented to it during
a verification visit."243 In the present insta nce, the deadline set by the USDOC for the submission
of the information was six days prior to verification. The GOI could not unilaterally decide to
extend the deadline for the submission of the requested information by promising to make it
available at verification – if it were located – when the USDOC would be less able to verify it, if it
could do it at all, without a prior opportunity to consider it. In any event, the GOI made no effort
to submit the requested information either before or after verific ation, even though it later
asserted that it had located some of the documents after the USDOC cancelled verification of the
debt buy-back issue.
7.125. In sum, in the investigation at issue, the GOI provided some of the information that was
requested by the USDOC, and thus, did cooperate to some extent, but ultimately failed to provide
the USDOC with necessary information it sought concerning the other PPAS transactions. The
information sought by the USDOC was in the control of the GOI, and even though it stated that
some of the information requested had ultimately been located, the GOI never attempted to
submit the information. In light of the foregoing, we consider that in the circumstances of this
case, an unbiased and objective authority could have concluded, as the USDOC did, that the GOI
had failed to provide necessary information within a reasonable period, and thereby failed to act to
the best of its ability to cooperate in the investigation.
7.5.3.4 Whether the facts relied upon by the USDOC "reasonably replaced " the missing
"necessary information"
7.126. Indonesia submits that the facts used by the USDOC did not "reasonably replace" the
missing information, as required by Article 12.7. Indonesia argues that the APP/SMG transaction
documents submitted by the GOI to the USDOC show that there was no affiliation between Orleans
and APP/SMG, and that the information sought by the USDOC would not have shed light on
whether Orleans was an affiliate because those other transactions involved different companies.
Moreover, the other evidence (newspaper articles and World Bank Report) that the USDOC relied
upon was either uninformative (did not relate to APP/SMG itself), or speculative (merely suggested
affiliation between the Orleans and APP/SMG). Indonesia also argues that by giving more weight to
speculative newspaper articles and rumour than to the actual documents from the transaction, the
USDOC acted inconsistently with the requirement, in Annex II of the Anti-Dumping Agreement that

239 Panel Report, EC – Salmon (Norway), para. 7.358. Article 12.5 of the SCM Agreement requires
investigating authorities to "satisfy themselves as to the accuracy of the information supplied".
240 Article 12.6 of the SCM Agreement provides that "The investigating authorities may carry out
investigations in the territory of other Members [i.e. verifications] as required …" (emphasis added).
241 Paragraph 7 of Annex VI provides that:
As the main purpose of the on -the-spot investigation is to verify information provided or to
obtain further details, it should be carried out after the response to the questionnaire has been
received unless the firm agrees to the contrary and the government of the exporting Member is
informed by the investigating authorities of the anticipated visit and does not object to it[.]
242 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.74.
243 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.75 (quoting Panel
Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 7.100). (emphasis added by the Appellate
Body)

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investigating authorities, if they are to re ly on information from a secondary source, do so with
special circumspection.244
7.127. The United States argues that the facts relied upon by the USDOC – newspaper articles,
the World Bank Report and the expert statement, all suggesting an affiliation between Orle ans and
APP/SMG – were "on the record" and that Indonesia's contention that the USDOC gave more
weight to "speculative newspaper articles and rumour than the actual documents from the
transaction" is mistaken, given that the actual documents on the record provided no information
on Orleans' ownership. The United States further argues that, in the present case, it would not
have been practicable for the USDOC to comparatively evaluate record information to determine
the "best" facts available. The question o f affiliation was a binary one (yes/no), and although the
GOI placed information on the record to support its contention that the two companies were not
affiliated, it failed to satisfy its evidentiary burden in this respect by failing to provide all the
information necessary to allow the USDOC to make a determination. Finally, the United States
argues that Article 12.7 acknowledges that non -cooperation can lead to an outcome that is less
favourable for the non -cooperating party, and that the selection of " facts available" leading to "a
less favourable result" is permissible under the Anti -Dumping Agreement and the SCM
Agreement.245 In the present case, to avoid rewarding the GOI for its failure to cooperate, the
USDOC selected facts on record that reflected t he GOI's non -cooperation and led to a less
favourable outcome.246
7.128. We recall that Article 12.7 " permits the use of facts available solely for the purpose of
replacing information that may be missing"; consequently, a n investigating authority must use
those "facts available" that " reasonably replace the information that an interested party failed to
provide"247, with a view to arriving at an accurate determination 248, i.e. with a view to selecting
the best information. 249 The Appellate Body has stressed that an inve stigating authority must
consider the evidence on the record through a process of reasoning and evaluation, with a view to
selecting information that reasonably replaces the missing information, although the degree and
nature of the reasoning and evaluatio n required will depend on the circumstances of a particular
case.250 Where there are multiple "available facts" from which to choose, the process of reasoning
and evaluation should involve a degree of comparison 251; conversely, there may be situations in
which a comparative approach is not feasible, such as where there is only one set of reliable
information on the record that is relevant to a particular issue .252 The Appellate Body has also
indicated that an investigating authority may take into account the procedural circumstances in
which information is missing, including the non -cooperation of an interested party, as part of the
process of reasoning and evaluation of which facts available constitute replacements for missing
necessary information. 253 However, the use of inferences in order to select adverse facts that
punish non -cooperation would not accord with Article 12.7, and procedural circumstances,
including any resulting inferences, may not alone form the basis of a determination; rather,
determinations pu rsuant to Article 12.7 must be made on the basis of "facts" that reasonably
replace the "necessary information" that is missing.254
7.129. Moreover, we recall and agree with the views of the panel in EC – Countervailing Measures
on DRAM Chips that an interested party's failure to cooperate is an element that may be taken into
account by the authority when weighing the evidence and the facts before it, and may be the

244 Indonesia's first written submission, paras. 66-71; opening statement at the first meeting of the
245 United States' response to Panel question No. 87.
246 United States' first written submission, paras. 119, 141, and 158-165.
247 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 294. (emphasis added)
248 Appellate Body Reports, Mexico – Anti-Dumping Measures on Rice, para. 293; US – Carbon Steel
(India), para. 4.416 (quoting Appellate Body Report, Mexico – Anti-Dumping Measures on Rice,
paras. 293-294).
249 Appellate Body Report, US – Carbon Steel (India), para. 4.435.
250 Appellate Body Report, US – Carbon Steel (India), paras. 4.418, 4.424, and 4.431. The Appellate
Body explained that the extent of the evaluation of the "facts available" that is required, and the form it may
take, will "depend on the particular circumstances of a given case, including the nature, quality, and amount of
the evidence on the record, and the particular determinations to be made in the course of an investigation".
(Appellate Body Report, US – Carbon Steel (India), paras. 4.421-4.422).
251 See, in particular, Appellate Body Report, US – Carbon Steel (India) para. 4.426.
252 Appellate Body Report, US – Carbon Steel (India), paras. 4.417 and 4.428.
253 Appellate Body Report, US – Carbon Steel (India), paras. 4.426 and 4.468.
254 Appellate Body Report, US – Carbon Steel (India), para. 4.468.

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element that tilts the balance in a certain direction . The panel also considered that while facts
available should not be used in a punitive manner, and that non -cooperation does not allow an
investigating authority to simply use the information available which leads to the worst possible
result for the interested party, this does not render completely ir relevant the failure to cooperate
in weighing and assessing the information before the authority.255
7.130. In the case before us, the USDOC's determination that Orleans was affiliated with
APP/SMG rested on an adverse inference drawn from its finding that:
[T]he GOI failed to cooperate by not acting to the best of its ability in responding to
our requests. Therefore, the application of an adverse inference is warranted. As an
adverse inference, we are determining that Orleans is affiliated with APP/SMG and
that, therefore, the purchase of APP/SMG's debt by Orleans from the GOI constituted
a buyback by APP/SMG of its own debt.256
7.131. The USDOC referred to the other evidence on the record in the next subsection of the
determination, stating that "[n] evertheless, newspaper articles and reports suggesting that
APP/SMG may have purchased its own debt, and that Orleans was an affiliate of APP/SMG, have
been placed on the record of this investigation."257
7.132. We recall that th e GOI provided factual evidence to the USDOC that stated th at Orleans
was unaffiliated with APP/SMG. The USDOC reasonably considered that other factual evidence,
submitted by the petitioners (World Bank Report , press reports and expert statement ) raised
doubts as to the accuracy and veracity of those documents. We have found above that ,
particularly in light of this other information, it was reasonable for the USDOC to seek additional
information in order to test the veracity of the various statements of non -affiliation and of the
GOI's representations concerning t he processes – or lack thereof – that IBRA followed in
ascertaining compliance with the prohibition on parties purchasing the debt of an affiliated debtor.
We have also concluded that the USDOC was justified in concluding that the information it had
requested was necessary and had not been provided to it, in spite of clear requests to do so, and
that it was reasonable for the USDOC to consider that the GOI had failed to cooperate by not
providing the missing information. 258 In our view, in these circumstances , there was a sufficiently
close connection between the missing information, which pertained to other PPAS sales and,
indirectly, to IBRA's due diligence, and the USDOC's conclusion – reached on the basis of an
adverse inference – regarding the broader que stion of the affiliation between Orleans and
APP/SMG.259 We reach this conclusion in light of the fact that the information not provided was
requested for the purpose of verifying the accuracy of the GOI's position that it was normal for
IBRA not to enquire into the question of ownership or possible affiliation.
7.133. Moreover, we agree with the United States that the issue on which necessary information
was missing – i.e. that of the affiliation of Orleans to APP/SMG – being a binary "yes or no" one,
the USDOC's use of an inference in light of the GOI's failure to cooperate logically could only lead it

255 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.80; see also ibid. para. 7.61.
256 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 5-6; see also ibid. pp. 48-55.
257 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 6. (fn omitted)
258 See above, para. 7.112.
259 We note in this respect that the USDOC indicated that it determined that Orleans was affiliated with
APP/SMG:
[B]ecause the GOI has been unable to demonstrate the accuracy of its assertion that it did not
inquire into the ownership of Orleans, and that information regarding the ownership of Orleans
was never included in Orleans' application file. Failure to provide the requested information for
the three other PPAS bidders, combined with the apparent lack of any procedural guidelines used
in the PPAS program or other IBRA administered programs, prevented the Department from
corroborating the GOI's claims regarding the Orleans inquiry and the contents of its application
file.
(USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 20)
See also ibid. p. 53:
Due to the GOI's failure to provide this information by the required deadlines, there is a hole in
the record pertaining to IBRA's procedures during the strategic asset sales. The GOI has provided
information pertaining to the Orleans transaction, but there is little indication on the record that
this transaction was handled according to normal IBRA procedures, especially as pertains to the
bona fides of bidders. Without information pertaining to other transactions, we cannot "test" the
GOI's claims that Orleans and APP/SMG were not affiliated.

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to conclude that Orleans was affiliated with APP/SMG. In such circumstances, Article 12.7 does not
require the authority to perform a comparative evaluation – there simply were not different facts
for the USDOC to consider as the drawing of an inference in light of the GOI's failure to cooperate
could only lead the USDOC to find that Orleans was affiliated with APP/SMG.260, 261
7.134. In light of the foregoing, we find that Indonesia has failed to establish that the USDOC
acted inconsistently with Article 12.7 in its determination that Orleans was affiliated with APP/SMG.
7.5.4 Claims under Article 2.1(c) and the chapeau of Article 2.1 of the SCM Agreement
(specificity)
7.5.4.1 Introduction
7.135. Indonesia challenges the USDOC's specificity determinations with respect to the three
subsidies at issue in this dispute , i.e. the provision of standing timber, the log export ban, and the
debt buy-back.262
7.136. The USDOC determined that each of these subsidies were de facto specific. In the case of
the provision of standing timber, the USDOC found that, of the 23 industry categories recognized
by the GOI, "standing timber was provided by the GOI to five industries during the POI, including
the paper industry". 263 The USDOC determined, on this basis, that "the provision of stumpage
[was] specific … because it [was] limited to a group of industries". 264 The USDOC also determined
that the log export ban was de facto specific "because the industries receiving subsidies f rom the
operation of the ban [were] limited in number". 265 Finally, the USDOC determined that the debt
buy-back constituted a company -specific subsidy. It found, in this respect, that " [b]ecause the
debt was sold to an APP/SMG affiliate, in violation of the GOI's own prohibition against selling debt
to affiliated companies … the sale was company-specific."266
7.137. Indonesia claims that these findings are inconsistent with Article 2.1(c) because, in each
case, the USDOC failed to determine that the subsidies "were part of a plan or scheme intended to
confer a benefit", i.e. a "subsidy programme". In addition, Indonesia claims that the USDOC's
finding of de facto specificity with respect to the debt buy -back is also inconsistent with the

260 As noted above, para. 7.128, in US – Carbon Steel (India), the Appellate Body rejected the
proposition that Article 12.7 of the SCM Agreement requires a comparative evaluation of the "facts available" in
every case and pointed to a situation in which "there is only one set of reliable information on the record that is
relevant to a particular issue and may thus serve as a factual basis for a determination" as an example of
situation where a comparative approach would not be feasible. (Appellate Body Report, US – Carbon Steel
(India), para. 4.434).
261 In the light of this conclusion, and given that the USDOC did not base its determination on the other
evidence on the record (press articles, World Bank Report, statement by the expert), we do not consider that
we need to consider any further Indonesia's argument that the USDOC gave undue weight to the other
evidence on record and that it should have used circumspection in relying on these documents. Nor do we need
to consider Indonesia's objections with respect to the expert statement, pertaining to the fact that the USDOC
did not disclose the expert's identity and the USDOC's characterization of the person as an independent expert.
(Indonesia's comments on the United States' response to Panel question No. 68).
262 Indonesia's first written submission, para. 3.
263 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 7 (referring to Part Two of GOI First
Supplemental Questionnaire Response, (submitted to the Panel as Exhibit US-34 (BCI)), p. 40).
264 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 7.
265 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 13.
266 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 20. The USDOC's determinations of de
facto specificity were made pursuant to section 771(5A)(D)(iii)(I) of the US Tariff Act of 1930. The
United States indicated that this provision implements Article 2.1(c) of the SCM Agreement. (United States'
response to Panel question No. 82(a)). Section 771(5A)(D)(iii)(I) of the US Tariff Act of 1930 provides that:
(D) Domestic subsidy. In determining whether a subsidy (other than a subsidy described in
subparagraph (B) or (C)) is a specific subsidy, in law or in fact, to an enterprise or industry
within the jurisdiction of the authority providing the subsidy, the following guidelines shall apply:
…
(iii) Where there are reasons to believe that a subsidy may be specific as a matter of fact, the
subsidy is specific if one or more of the following factors exist:
(I) The actual recipients of the subsidy, whether considered on an enterprise or industry basis,
are limited in number.
(Section 771(5A) of the Tariff Act of 1930, (Exhibit US-118), p. 303)

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chapeau of Article 2.1 because the USDOC failed to "identify the jurisdiction allegedly providing a
benefit".267
7.138. The United States requests that the Panel reject Indonesia's claims.268
7.139. We first address the legal standard under the provisions at issue before examining
Indonesia's claims under Article 2.1(c), and then its claim under the chapeau of Article 2.1. Finally,
we address, in a separate section, certain allegations presented by Indonesia , in the context of its
claims under both Article 2.1(c) and the chapeau of Article 2.1, that per tain to the USDOC's
determination that the sale of APP/SMG to Orleans was a company-specific subsidy.269
7.5.4.2 Legal standard under Article 2.1(c) and the chapeau of Article 2.1 of the SCM
Agreement
7.140. Indonesia's claims concern the notion of "subsidy programme" in the first factor under
Article 2.1(c) and the identification of the granting authority providing the subsidy under the
chapeau of Article 2.1 of the SCM Agreement.270
7.141. Article 2.1 of the SCM Agreement provides as follows:
Article 2
Specificity

2.1 In order to determine whether a subsidy, as defined in paragraph 1 of Article 1,
is specific to an enterprise or industry or group of enterprises or industries (referred to
in this Agreement as "certain enterprises") within the jurisdiction of the granting
authority, the following principles shall apply:
(a) Where the granting authority, or the legislation pursuant to which the granting
authority operates, explicitly limits access to a subsidy to certain enterprises, such
subsidy shall be specific.
(b) Where the granting authority, or the legislation pursuant to which the granting
authority operates, establishes objective criteria or conditions governing the eligibility
for, and the amount of, a subsidy, specificity shall not exist, provided that the
eligibility is automatic and that such criteria and conditions are strictly adhered to. The
criteria or conditions must be clearly spelled out in law, regulation, or other official
document, so as to be capable of verification.
(c) If, notwithstanding any appearance of no n-specificity resulting from the
application of the principles laid down in subparagraphs (a) and (b), there are reasons
to believe that the subsidy may in fact be specific, other factors may be considered.
Such factors are: use of a subsidy programme by a limited number of certain
enterprises, predominant use by certain enterprises, the granting of disproportionately
large amounts of subsidy to certain enterprises, and the manner in which discretion
has been exercised by the granting authority in the decis ion to grant a subsidy. In
applying this subparagraph, account shall be taken of the extent of diversification of

267 Indonesia's first written submission, para. 3. As noted in para. 3.1 and fn 27 above, Indonesia
initially submitted claims under the chapeau of Article 2.1 of the SCM Agreement against the USDOC's findings
of specificity in connection with the provision of standing timber and the log export ban. However, Indonesia
informed the Panel at the first meeting that it had abandoned those claims. (Indonesia's first written
submission, para. 3; opening statement at the first meeting of the Panel, para. 56).
268 United States' opening statement at the first meeting of the Panel, para. 43.
269 In the case of the provision of standing timber and the log export ban, Indonesia does not dispute
the USDOC's findings that the recipients of the subsidies were limited in number.
270 Indonesia's claim under the chapeau of Article 2.1 concerns an alleged failure by the USDOC to
"identify the jurisdiction allegedly providing a benefit" or "the relevant jurisdiction". (Indonesia's first written
submission, para. 3; see also opening statement at the first meeting of the Panel, para. 56; and closing
statement at the first meeting of the Panel, para. 6). However, as we describe in more detail below, the
arguments raised by Indonesia in support of its claim fault the USDOC for not having properly identified the
granting authority that conferred the subsidy. (See, for instance, Indonesia's first written submission,
paras. 94-95; response to Panel question No. 30; and second written submission, para. 49).

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economic activities within the jurisdiction of the granting authority, as well as of the
length of time during which the subsidy programme has been in operation.271
7.142. We start by noting that the issue of specificity concerns the limitation of access to a
subsidy. The specificity requirement is not about the existence of a subsidy, which is dealt with in
Article 1.1, but rather about access thereto. 272 This distinction is explicitly reflected in Article 1.2 ,
which states that "[a] subsidy as defined in paragraph 1 shall be su bject to the provisions of
Part II or shall be subject to the provisions of Part III or V only if such a subsidy is specific in
accordance with the provisions of Article 2". 273 The chapeau of Article 2.1 also reflects this
distinction by limiting the analysis of specificity to measures that constitute a subsidy "as defined
in paragraph 1 of Article 1". The specificity analysis, therefore, assumes the existence of a subsidy,
that is, a financial contribution that confers a benefit 274 and the determination that a given
measure constitutes a subsidy informs the scope and content of the analysis required to establish
de facto specificity with respect to that subsidy.275
7.143. Article 2 of the SCM Agreement elaborates on the concept of "specificity" . Article 2.1 sets
out principles for determining whether a subsidy is specific by virtue of its limitation to " an
enterprise or industry or group of enterp rises or industries" .276 Article 2.1(a) establishes that a
subsidy is specific if the granting authority, or the legislation pursuant to which the granting
authority operates, explicitly limits access to that subsidy to eligible enterprises or industries. This
is referred to as de jure specificity, i.e. the limitation of access to a subsidy is explicitly set forth in
the particular legal instrument pursuant to which the granting authority operates. Article 2.1(b) in
turn sets out that specificity "shall not exist" if the granting authority, or the legislation pursuant to
which the granting authority operates, establishes objective criteria or conditions that guard
against selective eligibility.277
7.144. Article 2.1(c) points to certain indicia that an investigating a uthority may evaluate in
determining whether, despite not being de jure specific, a subsidy is specific in fact. 278 In
particular, the inquiry under Article 2.1(c) focuses on whether a subsidy, although not appearing
to be specific on the face of the relevan t legislation, is nevertheless granted in a manner that
belies the apparent neutrality of the measure. 279 The focus of this provision is, therefore, on
factual circumstances surrounding the granting of a subsidy. 280 Article 2.1(c) lists factors that an
investigating authority may consider in its evaluation. The first factor under this provision, which is
the one at issue here, pertains to the "use of a subsidy programme by a limited number of certain
enterprises". The focus under the first factor of Article 2.1 (c) is on a quantitative assessment of
the entities that actually use a subsidy programme and, in particular, on whether such use is
shared by a "limited number of certain enterprises".281
7.145. With regard to the notion of "subsidy programme" in the first factor of Article 2.1(c), in US
– Countervailing Measures (China), the Appellate Body understood this term to refer to "a plan or
scheme regarding the subsidy at issue". 282 The Appellate Body considered that the reference to
"use of a subsidy programme" in Article 2.1(c) suggests that "it is relevant to consider whether
subsidies have been provided to recipients pursuant to a plan or scheme of some kind". 283 The
panel in the same dispute was of the view that the fact that the term "programme" is used only in
the context of an analysis of de facto specificity, combined with the fact that the SCM Agreement
contains no definition of the term, suggests that the term "subsidy programme" should be
interpreted broadly. A broad interpretation of the term "subsidy programme" gi ves due recognition

271 Emphasis added; fns omitted.
272 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 9.21.
273 Emphasis added.
274 Appellate Body Report, US – Countervailing Measures (China), para. 4.144.
275 Appellate Body Report, US – Countervailing Measures (China), para. 4.140 (referring to Appellate
Body Report, US – Large Civil Aircraft (2nd complaint), para. 750).
276 By contrast, Article 2.2 establishes principles relevant to determine whether a subsidy is
regionally-specific.
277 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 367.
278 Appellate Body Report, US – Carbon Steel (India), para. 4.369.
279 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 877.
280 Appellate Body Report, US – Carbon Steel (India), para. 4.369.
281 Appellate Body Report, US – Carbon Steel (India), para. 4.374.
282 Appellate Body Report, US – Countervailing Measures (China), para. 4.142.
283 Appellate Body Report, US – Countervailing Measures (China), para. 4.141.

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to the reality that subsidies can take many forms and can be provided through many different
kinds of mechanisms, some more and some less explicit.284
7.146. The Appellate Body in US – Countervailing Measures (China) held that evidence regarding
the nature and scope of a subsidy programme may be found in a wide variety of forms, for
instance, in the form of a law, regulation, or other official document or act setting out criteria or
conditions governing the eligibility for a subsidy. It further f ound that a subsidy scheme or plan
may also be evidenced by a systematic series of actions pursuant to which financial contributions
that confer a benefit have been provided to certain enterprises. 285 The panel in EC and certain
member States – Large Civil A ircraft considered that an understanding of the legal regime
pursuant to which an alleged subsidy is granted is a relevant and important consideration when
making a specificity determination under Article 2.1(c) as it helps to define the relevant
"programme".286
7.147. With respect to the duty imposed on an investigating authority to identify the subsidy
programme as part of its specificity analysis, the Appellate Body observed in US – Countervailing
Measures (China) that, because Article 2.1 assumes the existence o f a financial contribution that
confers a benefit, and focuses on the question of whether that subsidy is specific, "[i]t stands to
reason … that the relevant 'subsidy programme', under which the subsidy at issue is granted, often
may already have been ide ntified and determined to exist in the process of ascertaining the
existence of the subsidy at issue under Article 1.1."287
7.148. A specificity analysis under Article 2.1 also requires a proper determination of whether the
jurisdiction of the granting authority c overs the entire territory of the relevant WTO Member or is
limited to a designated geographical region within that territory. 288 Since in determining whether a
financial contribution exists, an investigating authority must inquire into the nature of the fin ancial
contribution at issue and determine whether such contribution was provided by the "government",
by "any public body within the territory of a Member", or by a "private body" entrusted or directed
by the government, such assessment will inform the id entification of the jurisdiction of the
granting authority.289 Thus, the chapeau of Article 2.1 does not require an investigating authority
to identify the jurisdiction of the granting authority in an explicit manner or in any specific form, as
long as it is discernible from the determination.290
7.149. With these considerations in mind, we assess Indonesia's claims against the USDOC's
specificity determinations in the underlying investigation.
7.5.4.3 Whether the USDOC's determinations of de facto specificity are inconsisten t
with Article 2.1(c) of the SCM Agreement
7.150. Indonesia claims that, in the underlying investigation, the USDOC failed to determine or
identify the relevant "subsidy programme" in connection with each of the subsidies at issue, in
contravention of Article 2.1(c) of the SCM Agreement.291
7.151. Before we turn to Indonesia's arguments in this regard, we note that although it
formulates it s claims as pertaining to the subsidy programmes at issue, Indonesia is in fact
challenging the USDOC's findings with respect to the ex istence of the three subsidies at issue. The

284 Panel Report, US – Countervailing Measures (China), para. 7.240 (quoting Panel Report, US –
Anti-Dumping and Countervailing Duties (China), para. 9.32).
285 Appellate Body Report, US – Countervailing Measures (China), para. 4.141. The Appellate Body held,
in addition, that "[a]n examination of the existence of a plan or scheme regarding the use of the subsidy at
issue may also require assessing the operation of such plan or scheme over a period of time." (Ibid.
para. 4.142).
286 Panel Report, EC and certain member States – Large Civil Aircraft, para. 7.988.
287 Appellate Body Report, US – Countervailing Measures (China), para. 4.144.
288 Appellate Body Report, US – Countervailing Measures (China), paras. 4.165-4.166. This is because if
the granting authority is a regional or local government, a subsidy available to enterprises throughout the
territory over which that regional or local government has jurisdiction would not be specific; conversely, if the
granting authority is the central government, a subsidy available to the same enterprises would be specific.
289 Appellate Body Report, US – Countervailing Measures (China), para. 4.167.
290 Appellate Body Report, US – Countervailing Measures (China), paras. 4.169.
291 Indonesia's first written submission, para. 3; response to Panel question No. 26; and opening
statement at the second meeting of the Panel, para. 31.

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gist of Indonesia's challenge is that the USDOC improperly found that the measures at issue
constituted financial contributions conferring a benefit. In so doing, Indonesia is effectively seeking
to challenge anew, under Article 2.1(c), findings which are not governed by that provision but are
primarily governed by Article 1.1 of the SCM Agreement. This being the case, it would be
inappropriate for us to consider Indonesia's arguments challenging the USDOC's find ings of
financial contribution and benefit in our analysis of its claims under 2.1(c).292
7.152. Indonesia submits that the use of the term "subsidy programme" in the first factor of
Article 2.1(c) means that, in determining whether a subsidy is de facto specific, an investigating
authority is required to identify that a subsidy programme exists. Indonesia agrees with the
United States that evidence regarding a subsidy programme may be found in a wide variety of
forms, e.g. in the form of written instruments or by a systematic series of actions pursuant to
which subsidies are provided to certain enterprises, and that an investigating authority is not
required to rely, in every instance, on both types of evidence. 293 Indonesia submits that, when the
subsidies at issue e manate from legal instruments, and these "on the face of the writing" do not
provide sufficient evidence to conclude that a plan or scheme that confers a benefit to certain
enterprises exists, further analysis is required. Indonesia considers that, consist ent with the
Appellate Body Report in US – Countervailing Measures (China) , if there is no written plan or
scheme that evidences the existence of a subsidy programme on the face of the writing, the
investigating authority must cite evidence of a systematic series of actions that constitutes a
subsidy programme.294
7.153. Indonesia also agrees with the United States that, in the underlying investigation, the
measures the USDOC found to constitute countervailable subsidies were manifested in certain laws
and decrees i ssued by the GOI. 295 However, Indonesia contends that these written instruments
were insufficient to demonstrate the existence of subsidy programmes because none of them, on
their face, provided evidence of a financial contribution conferring a benefit. Indonesia in particular
contends that the written instruments at issue did not confer, or suggest that the measures were
designed to confer, a benefit to paper producers in Indonesia or, in the case of the debt buy -back,
to APP/SMG. 296 Indonesia links this conte ntion to what it considers are shortcomings in the
USDOC's benefit findings for the three subsidies at issue. 297 In addition, Indonesia raises certain
arguments challenging the USDOC's findings that the measures constituted financial contributions.
7.154. Indonesia argues, first, that the legal instruments regulating the collection of stumpage
fees do not confer a benefit to paper producers because : (a) the GOI does not "provide" standing
timber within the meaning of Article 1.1(a) given that nearly all the timber at issue during the POI
was grown on plantations by licence holders; and (b) these instruments impose obligations on the
licence holders, including the payment of revenues from the use of the land, which ultimately

292 We recall that the United States argues that the arguments that Indonesia advances in paragraph 79
of its first written submission are addressed to a claim under Article 1.1(a) of the SCM Agreement, which is not
one of the provisions enumerated in Indonesia's panel request. (See above, fn 43). In paragraph 79 of its first
written submission, Indonesia argues, inter alia, that a ban on export of logs does not entrust or direct the sale
of logs at suppressed prices in Indonesia especially as chipwood and pulp could be freely exported.
293 Indonesia's response to Panel question No. 27; second written submission, para. 45. We note that
Indonesia's position evolved through the course of these panel proceedings. Initially, Indonesia argued that to
establish the existence of a subsidy programme under the first factor of Article 2.1(c), the investigating
authority must have adequate evidence of the existence of "a systematic series of actions" pursuant to which
financial contributions that confer a benefit are provided to certain enterprises. Indonesia argued that, in the
underlying investigation, the USDOC failed to make a finding that the provision of standing timber, the log
export ban, and the debt buy-back each constituted "a systematic series of actions" that confers a benefit,
because in each instance, it failed to establish that there was a "plan or scheme" based on evidence of "a
systematic series of actions" that confers a benefit. (Indonesia's first written submission, para. 73). In other
words, Indonesia initially argued that irrespective of whether the subsidy programme at issue is expressed in
written form, the authority is required to find that there exists a "systematic series of actions". We understand
Indonesia to now accept that there is no such requirement where the programme is manifested in written
form, insofar as both elements pertaining to the existence of a subsidy (financial contribution conferring a
benefit) are evident from the written manifestation of the subsidy programme.
294 Indonesia's first written submission, paras. 72-83; opening statement at the first meeting of the
Panel, para. 50; second written submission, para. 45; and opening statement at the second meeting of the
Panel, para. 31 (all referring to Appellate Body Report, US – Countervailing Measures (China), para. 4.143).
295 Indonesia's response to Panel question Nos. 27(b) and 27(c).
296 Indonesia's second written submission, paras. 46-48.
297 Indonesia's response to Panel question No. 27(b).

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benefit the GOI.298 Second, regarding the l og export ban, Indonesia takes issue with the USDOC's
finding, in the CFS investigation, that the ban results in inputs being provided to producers of
coated paper at "lower" or "supressed" prices299, contests that the Indonesian decree imposing the
ban conf ers, or was designed to confer, a benefit because its purpose was to address illegal
logging and deforestation, and argues that the ban did not confer a benefit because it did not
extend to pulp or wood chips .300 Indonesia also submits that, even if the effe ct of the log export
ban were an increased domestic supply of logs potentially benefitting downstream industries in
Indonesia, the panel in US – Export Restraints found, and subsequent panels confirmed, that
export restraints including export bans do not c onstitute countervailable subsidies within the
meaning of the SCM Agreement.301 Finally, regarding the debt buy-back, Indonesia argues that the
written instruments pursuant to which IBRA sold APP/SMG's debt to Orleans suggested no benefit
was conferred. Indo nesia argues that, in fact, these instruments prohibited the sale of debt to
affiliates, and that the USDOC only found that a subsidy existed because it determined, following
the application of adverse facts available, that APP/SMG and Orleans were affilia ted and that the
GOI violated its own law.302
7.155. Indonesia argues that, given the lack of evidence of a benefit conferred in the relevant
legal instruments, the USDOC was required to establish the existence of each subsidy programme
by citing to evidence of a "systematic series of actions" that confer a benefit, but failed to do so.303
7.156. The United States asks the Panel to reject Indonesia's claims. For the United States,
Indonesia misreads the findings of the Appellate Body in US – Countervailing Measures (China)
and conflates the issue of specificity with elements that are relevant for the establishment of a
subsidy, i.e. the existence of a financial contribution and a benefit. 304 Moreover, the United States
submits that the three subsidies before the USDOC – the pro vision of standing timber, the log
export ban, and the debt buy -back – were evidenced by specific documents laying out the
respective subsidy programmes concerning the granting of the s ubsidies. Therefore, the
United States submits, there was no need for t he USDOC to additionally consider whether each
subsidy constituted a "systematic series of actions".305
7.157. We turn first to the question whether, as claimed by Indonesia, Article 2.1(c) requires an
investigating authority to establish that the written instruments concerning the subsidy at issue
provide sufficient evidence to conclude that a plan or scheme that confers a benefit exists and
consequently, whether in the absence of such evidence, Article 2.1(c) requires a finding of "a
systematic series of actions" that confers a benefit to certain enterprises.
7.158. We agree with Indonesia that an analysis under the first factor of Article 2.1(c) entails the
identification of the relevant "subsidy programme" pursuant to which the subsidy is provided .306
However, we reject the view that, in considering a subsidy programme that is manifested in the

298 Indonesia's first written submission, paras. 76-77; opening statement at the first meeting of the
Panel, para. 51; response to Panel question No. 27(b); second written submission, para. 46; and opening
statement at the second meeting of the Panel, para. 32.
299 Indonesia's first written submission, paras. 79-80; opening statement at the first meeting of the
Panel, paras. 52-53; response to Panel question No. 27(b); and second written submission, para. 47.
300 Indonesia's second written submission, para. 47.
301 Indonesia first written submission, para. 79 (referring to Panel Reports, US – Export Restraints,
302 Indonesia's first written submission, para. 83; response to Panel question No. 27(b). In addition,
Indonesia argues that to the extent there was even a "programme" at issue, "it concerned the sale of
approximately 300,000 non-performing loans" (Indonesia's response to Panel question No. 85), and that what
informed the USDOC's specificity finding that a subsidy programme had been used was not the existence of the
programme "operating in its intended fashion" but the USDOC's adverse facts available finding that Indonesia
acted contrary to the terms of the programme, i.e. violated its own law and allowed an affiliate of a debtor to
buy-back debt, without any "hard" evidence supporting that finding. Indonesia submits that "a newspaper
article is the only piece of evidence propping up USDOC's finding that a subsidy programme was used". (Ibid.).
303 Indonesia's opening statement at the first meeting of the Panel, paras. 31 and 50; response to Panel
question No. 27(b); and second written submission, para. 45.
304 United States' second written submission, para. 90.
305 United States' second written submission, paras. 89 and 96.
306 As noted above para. 7.145, in US – Countervailing Measures (China), the Appellate Body considered
that the reference to "use of a subsidy programme" in Article 2.1(c) suggests that "it is relevant to consider
whether subsidies have been provided to recipients pursuant to a plan or scheme of some kind". (Appellate
Body Report, US – Countervailing Measures (China), para. 4.141).

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form of written instruments in order to assess whether it has been used by a limited number of
certain enterprises, Article 2.1(c) requires that both the financial contribution and the benefit be
discernible from such instruments. In our view, the term "subsidy programme" in Article 2.1(c)
does not require the determination or identification of the relevant subsidy programme on the
basis of evidence showing a particular conjunction of elements.
7.159. We recall, in this respect that the relevant inquiry under Article 2 is whether access to a
subsidy already found to exist is limited to certain enterprises. Hence, t he identification of the
subsidy programme presupposes that the subsidy in que stion exists.307 It would, in our view, be
redundant and incongruous if the reference to a "subsidy programme" in Article 2.1(c) were
understood to have the effect of requiring the investigating authority not only to address anew
whether a subsidy exists, bu t further to show that the relevant laws or regulations governing the
subsidy programme explicitly provide for both elements of the subsidy , i.e. a financial contribution
conferring a benefit. In our view, this is, in effect, the logical outcome of Indones ia's interpretation
of Article 2.1(c).
7.160. Requiring that both the financial contribution and the benefit be set forth explicitly in the
written instruments for those instruments to constitute a "subsidy programme" would not
acknowledge the reality that gover nments provide subsidies under programmes that take many
forms, some more explicit than others. In many cases, it will not be evident on the face of the
written instruments or acts of the granting authority whether the financial contribution at issue
confers a benefit . Rather than by reference to the written instrument, the investigating authority
will only know whether a benefit exists (and in what amount) after comparing the terms of the
financial contribution to a market-determined benchmark.308
7.161. We note th at Indonesia bases its interpretation of Article 2.1(c) largely on the following
paragraph in the Appellate Body Report in US – Countervailing Measures (China):
The mere fact that financial contributions have been provided to certain enterprises is
not suf ficient, however, to demonstrate that such contributions have been granted
pursuant to a plan or scheme for purposes of Article 2.1(c) of the SCM Agreement. In
order to establish that the provision of financial contributions constitutes a plan or
scheme under Article 2.1(c), an investigating authority must have adequate evidence
of the existence of a systematic series of actions pursuant to which financial
contributions that confer a benefit are provided to certain enterprises.309
7.162. We note that, unlike the subsidies in question in this dispute, the subsidies at issue in US –
Countervailing Measures (China) were not reflected or expressed in written instruments, but
consisted of the consistent provision of certain inputs by state -owned enterprises for less than
adequate remuneration.310 We read the Appellate Body's statement quoted above as addressing a
specific situation in which a subsidy programme is not manifested in written form. We recall in this
regard the earlier statement by the Appellate Body in the same case, to the effect that a subsidy
programme may either be expressed in written form or manifest itself as a systematic series of
actions.311 In any event, we do not understand the above statement to stand for the proposition
that when a subsidy programme is manifested in written instruments, Article 2.1(c) requires the
investigating authority to find that these written instruments set forth both a financial contribution
and the benefit conferred by that financial contribution, or alternatively, where either element is

307 See above, para. 7.142; and Appellate Body Report, US – Anti-Dumping and Countervailing Duties
(China), para. 413:
[T]he purpose of Article 2 of the SCM Agreement is not to identify the elements of the subsidy as
set out in Article 1.1, but to establish whether the availability of the subsidy is limited inter alia
by reason of the el igible recipients (Article 2.1(a)) or by reason of the geographical location of
beneficiaries (Article 2.2).
308 In this respect, we share the view of the panel in US – Anti-Dumping and Countervailing Duties
(China) that a wide variety of possible forms of subsidization falls within the definition in Article 1 of the SCM
Agreement, and that nothing in Article 2 appears to narrow down those forms. (Panel Report, US –
Anti-Dumping and Countervailing Duties (China), para. 9.29).
309 Appellate Body Report, US – Countervailing Measures (China), para. 4.143.
310 Panel Report, US – Countervailing Measures (China), para. 7.242; Appellate Body Report, US –
Countervailing Measures (China), para. 4.149.
311 Appellate Body Report, US – Countervailing Measures (China), para. 4.141.

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not apparent from the written instruments, the authority needs to establish the existence of "a
systematic series of actions" revealing the missing element(s).
7.163. We also find it relevant that the panel in US – Anti-Dumping and Countervailing Dut ies
(China), in the context of a claim under Article 2.1(a) challenging a finding of de jure specificity,
i.e. where the limitation of access to a subsidy was set forth in the relevant legal instruments,
considered that such legal instruments need not refl ect a limitation of each of the definitional
elements of the subsidy. The panel considered that, although "there are many ways in which
access to a subsidy could be explicitly limited", it was not the case "that both the financial
contribution and the bene fit necessarily would have to be set forth explicitly to effect such a
limitation".312 If limitation of access to both elements of the subsidy is not required in the relevant
legal instruments in a de jure specificity analysis – where the focus of the analys is i s those
relevant legal instruments – we see no reason why an investigating authority should be required to
find that the relevant legal instruments evidence both constitutive elements of the subsidy in the
context of de facto specificity – where the analysis normally focuses on the actual use of, or access
to, the subsidy.
7.164. In sum, we are of the view that nothing in Article 2.1(c) requires that an investigating
authority, in considering the relevant subsidy programme at issue in its specificity analysis, must
in all instances make a finding that the programme explicitly set s forth both elements of the
subsidy at issue. Particularly where the subsidy proceeds from a legal framework that is expressed
in written instruments, it in our view suffice s that the authority identifies the subsidy programme
by describing the legal framework pursuant to which the financial contribution is provided .
Moreover, because the subsidy programme at issue often may already have been identified and
determined to exist in the pr ocess of ascertaining the existence of the subsidy, we do not accept
Indonesia's suggestion that, in examining whether subsidies are de facto specific, an investigating
authority is required to make an explicit finding of the existence of the relevant subs idy
programme "before" proceeding to the consideration of the factors provided for in Article 2.1(c).313
7.165. Turning to the USDOC's determinations in the underlying investigation, as noted above, we
do not consider Indonesia's arguments challenging the USDOC's findings concerning the existence
of each of the subsidies in our analysis of its claims under 2.1(c).
7.166. Indonesia does not dispute that the stumpage programme and the log export ban
emanated from written instruments. Indonesia also does not dispute that th e sale of APP/SMG's
debt was made pursuant to written instruments, but argues that the USDOC's findings rested on
an alleged violation of these instruments.
7.167. In our view, with respect to each of the three subsidies at issue, the USDOC identified and
determined each of the relevant subsidy programmes consistently with Article 2.1(c). It did so in
the process of determining the existence of each of the three subsidies at issue.
7.168. As we have described in the section of this Report addressing Indonesia's claims un der
Article 14(d) concerning the provision of standing timber, the USDOC found that the GOI provided
standing timber to pulp and paper producers through the granting of licences to harvest timber
from forest land owned by the GOI, in exchange for stumpage fees. T he GOI granted these
licences and collected the respective fees pursuant to certain laws and regulations.314 The USDOC

312 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 9.26. The Appellate Body
agreed with the panel. (Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China),
paras. 377-378).
313 Indonesia's response to Panel question No. 85. As we have noted above, para. 7.147, in US –
Countervailing Measures (China), the Appellate Body stated that, because Article 2.1 assumes the existence of
a subsidy, and focuses on the question of whether that subsidy is specific, "[i]t stands to reason … that the
relevant 'subsidy programme', under which the subsidy at issue is granted, often may already have been
identified and determined to exist in the process of ascertaining the existence of the subsidy at issue under
Article 1.1." (Appellate Body Report, US – Countervailing Measures (China), para. 4.144).
314 For instance, the procedures for obtaining the HTI licences were promulgated in Minister of Forestry
Regulation No. P19/Menhut-II/2007 and associated Amendment No. P11/Menhut-II/2008 (GOI Initial
Questionnaire Response, (Exhibit US-32), p. 9, discussed in USDOC Verification of GOI Questionnaire
Response, (Exhibit US-35 (BCI)), p. 2); to obtain annual logging permits after receiving the HTI licence, a
company had to obtain approval of a Working Plan of Forest Utilization Document, as stipulated by the Minister
of Forestry Regulation No. P.62/Menhut-II/2008) (GOI Initial Questionnaire Response, (Exhibit US-32),

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found that this measure constituted a financial contribution in the form of the provision of goods
by the government and that it conferred a benefit to paper producers.315 Based on the information
provided by the GOI, the USDOC found that the beneficiaries of the granting of harvesting licences
were five industries in Indonesia, including the paper industry, out of a larger number of ind ustries
existing in that country (23 categories) . On this basis, the USDOC concluded that the provision of
stumpage was specific because it was limited to a group of industries.316
7.169. With respect to the log export ban, as we have described in the section of t his Report
addressing Indonesia's claims under Article 14(d), the USDOC found that, by means of the log
export ban (which, in the CFS investigation, it had found was established pursuant to Joint Decree
No. 1132/Kpts -II/2001 and No. 292/MPP/Kep/10/2001 ), t he GOI entrusted or directed forest
companies to provide goods (i.e. logs and chipwood) to pulp and paper producing companies. 317
The USDOC determined that the prohibition on log and chipwood exports constituted a financial
contribution and that it conferred a benefit to paper producers. The USDOC then found that the log
export ban was de facto specific because the industries receiving the subsidies from the operation
of the ban were limited in number.318
7.170. It is clear to us that in its specificity analysis with respect to both the stumpage
programme and the log export ban, the USDOC relied on the subsidy programme it had defined –
if somewhat implicitly – in its consideration of the existence of the subsidy, that this programme
was manifested in writing, and that the USDOC found that th e programme provided for the
provision of a financial contribution in the form of the provision of a good (in the case of the export
ban, through entrustment and direction). In our view, the USDOC's findings satisfied the obligation
to identify the subsidy programme at issue as a preliminary step in considering whether that
programme was used by a limited number of certain enterprises or industries.
7.171. In the case of the debt buy -back, as we have described in the section of this Report
addressing Indonesia's claims under Article 12.7, the USDOC's determination, relying on facts
available, that Orleans was affiliated to APP/SMG was one of the findings underlying its conclusion
that the sale of APP/SMG's debt constituted a financial contr ibution in the form of debt
forgiveness.319 The USDOC identified the particular action attributed to the GOI that was found to
constitute a subsidy, i.e. the sale of APP/SMG's debt to Orleans , and the written instruments that
constituted the framework pursuant to which IBRA conducted the sale. The USDOC also found that
a benefit was provided to APP/SMG equal to the difference between the value of the outstanding
debt and the amount Orleans paid for it.320 The USDOC then found that, because the debt was sold
to an APP/SMG affiliate, in violation of the GOI's own prohibition against selling debt to affiliated
companies, the sale was company-specific.321
7.172. Indonesia argues that the specificity determination was based on the USDOC's mistaken
conclusion that the relevant law had been violated. The USDOC's findings concerning the existence
of the financial contribution and benefit, which in turn were the basis for the USDOC's finding of
specificity, were based not only on the USDOC's reliance on facts available under Artic le 12.7 of
the SCM Agreement, but also on a number of written documents emanating from the GOI and
IBRA.322 These documents established the scheme pursuant to which the subsidy was provided,

pp. 11-12) and; the reference prices used in the calculation of the PSDH stumpage fees during 2008 were set
forth in Minister of Trade No. 08/M-DAG/PER2/2007 (GOI Initial Questionnaire Response, (Exhibit US-32),
p. 14), discussed in USDOC Verification of GOI Questionnaire Response, (Exhibit US-35 (BCI)), p. 8.
315 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 6-7 and 11.
316 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 7.
317 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 12-13. As indicated above,
para. 7.26, the USDOC relied largely on its findings in the CFS investigation in determining that the log export
ban constituted a financial contribution. In the CFS investigation, concerning the same ban that is at issue
here, the USDOC found that the log export ban was originally imposed in 1985 and lifted in the late 1990s.
While log exports were briefly permitted from 1998 to 2001, the GOI reimposed the ban on log and chipwood
exports in October 2001, pursuant to the Joint Decree No. 1132/Kpts-II/2001 and No. 292/MPP/Kep/10/2001.
(CFS USDOC Issues and Decision Memorandum, (Exhibit US-43), pp. 27-28).
318 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 13.
319 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 5.
320 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 20.
321 USDOC Issues and Decision Memorandum, (Exhibit US-31), p. 20.
322 For instance, the bidding documents and the sales agreement for the APP/SMG debt sale, including
the provisions pertaining to the prohibition on a debtor (and its affiliates) buying back its own debt. (USDOC
Issues and Decision Memorandum, (Exhibit US-31), pp. 17-20).

BCI deleted, as indicated [[***]]

albeit on the basis of a violation of the terms of the instruments at issue. We note Indonesia's
argument that the sale of APP/SMG 's debt to Orleans was a one-time occurrence of alleged
violation of the law and, therefore, it did not constitute a systematic series of actions pursuant to
which financial contributions that confer a benefit are provided to certain enterprises. 323
Indonesia's argument suggests that a subsidy provided to only one recipient requires some kind of
systemic application in order to be found specific. In other words, a subsidy programme only exists
if it provides for a subsidy granted to more than one recipient . We are not persuaded by
Indonesia's argument in this regard. In our view, a one -off subsidy to a company may be
considered to be pursuant to a programme. Moreover, a subsidy that is granted to a specific
enterprise, either pursuant to a written instrument or by means of a single governmental action is,
by definition, specific 324 ; in any event, it can in such cases certainly be concluded that the
programme was used by a limited number of enterprises.
7.173. In sum, in our view, the USDOC identified the three subsid y programmes at issue for
purposes of its specificity analysis under Article 2.1(c) in the context of describing the measures
that it found to constitute the respective subsidies.
7.174. For the foregoi ng reasons, we conclude that Indonesia has failed to establish that the
USDOC's de facto specificity determinations in connection with the provision of standing timber,
the log export ban , and the debt buy -back are inconsistent with Article 2.1(c) of the S CM
Agreement.
7.5.4.4 Whether the USDOC's determination of de facto specificity in connection with
the debt buy-back is inconsistent with the chapeau of Article 2.1 of the SCM Agreement
7.175. Indonesia's second claim refers to an alleged failure by the USDOC to identif y the
"jurisdiction allegedly providing a benefit". 325 However, the arguments raised by Indonesia in
support of its claim under the chapeau of Article 2.1 refer to an alleged omission by the USDOC to
properly identify the granting authority in connection with the debt buy-back subsidy.326
7.176. In this respect, Indonesia challenges the USDOC's determination that the GOI was the
entity that provided the debt buy -back subsidy. Indonesia argues that the USDOC 's finding rests
on an unsupported conclusion, based on two li nes from a single newspaper article, that the GOI
knowingly and deliberate ly violated Indonesian law, which in its view is hardly sufficient support
for a specificity finding. 327 Indonesia initially argued that the USDOC was required to identify the
government entity that allegedly forgave debt. 328 Indonesia revised its position to argue that,
because the USDOC found that it was the action of an individual breaking the law that conferred a
benefit on APP/SMG, the USDOC was required, under the chapeau of Article 2.1, to identify the
individual or individuals acting on behalf of the GOI who violated the law.329
7.177. The United States submits that Indonesia's arguments in fact pertain to the existence of
the subsidy and the USDOC's use of facts available in its determina tion of the existence of the
subsidy. The United States submits that the chapeau of Article 2.1 does not require an
investigating authority to identify the jurisdiction of the granting authority in an explicit manner or
in any specific form, as long as it is discernible from the determination. The United States submits
that, contrary to Indonesia's assertions, the granting authority was discernible from the
determination, i.e. " the GOI's sale of APP/SMG's debt to Orleans constituted a financial
contribution, in the form of debt forgiveness." 330 The United States argues that, although not
required to do so, the USDOC also identified the particular agency within Indonesia that provided

323 Indonesia's first written submission, para. 83.
324 The chapeau of Article 2.1 provides that a subsidy is specific where access to the subsidy is limited to
"certain enterprises". This term includes a single company or a firm. (Appellate Body Report, US –
Anti-Dumping and Countervailing Duties (China), para. 373).
325 Indonesia's first written submission, para. 3.
326 Indonesia's first written submission, paras. 94-95; response to Panel question No. 30; and second
written submission, para. 49.
327 Indonesia's second written submission, para. 49; opening statement at the second meeting of the
Panel, para. 34.
328 Indonesia's first written submission, paras. 93-95.
329 Indonesia's response to Panel question No. 30; second written submission, para. 49.
330 United States' first written submission, para. 221 (referring to USDOC Issues and Decision
Memorandum, (Exhibit US-31), p. 20).

BCI deleted, as indicated [[***]]

the financial contribution, IBRA. The United States submits that Indonesia ci tes no basis in the
SCM Agreement for the proposition that the USDOC should have identified the individual or
individuals who knowingly violated Indonesian law.331
7.178. It is clear to us that, i n the investigation at issue, the USDOC identified the granting
authority (the Indonesian national government, through IBRA) and the jurisdiction at issue (the
whole of Indonesia). 332 Thus, the determinations identified the government entity that effectively
provided the financial contribution, IBRA.
7.179. Indonesia submits that the USDOC should have identified the individual or individuals who
violated Indonesian law by allowing an affiliate of APP/SMG to buy back its debt. We recall,
however, that the purpose of the specificity analysis under Article 2 is to determine whether access
to a subsidy is limited to certain enterprises or industries. The identity of the individual or
individuals involved is not immediately relevant to this question 333, and Indonesia cites no legal
basis, in Article 2.1 of the SCM Agreement or elsewhere, fo r its contention in this regard.
Indonesia's argument appears to rest on the fact that the individual or individuals concerned
allegedly acted in violation of Indonesian law. We consider, however, that this does not suffice to
make their alleged actions no t attributable to the GOI in the context of this dispute; it is well
established under international law that an action or conduct of a government official or entity is
attributable to the State even where that action or conduct is contrary to national law.334
7.180. For the foregoing reasons, we conclude that Indonesia has failed to establish that the
USDOC failed to properly identify the granting authority of the debt buy -back subsidy , or the
jurisdiction of that granting authority, and, as a consequence, that the USDOC's de facto specificity
determination is inconsistent with the chapeau of Article 2.1 of the SCM Agreement.
7.5.4.5 Indonesia's allegations concerning the USDOC's determination that the debt
buy-back was a company-specific subsidy
7.181. Even though Indonesia's cla ims focus on the alleged failure of the USDOC to identify the
subsidy programme at issue and the granting authority, I ndonesia also makes certain allegations
that pertain to the USDOC's determination that the sale of APP/SMG 's debt to Orleans was

331 United States' second written submission, para. 110.
332 USDOC Issues and Decision Memorandum, (Exhibit US-31), pp. 5-6 and 17-20.
333 We find support for this proposition in the Appellate Body's statement in US – Large Civil Aircraft (2nd
complaint), that:
While the scope and operation of the granting authority is relevant to the question of whether
such an access limitation with respect to a particular class of recipients exists, it is important to
keep in mind that it is not the purpose of a specificity analysis t o determine whether the
authorities involved in granting the subsidies constitute a single subsidy grantor or several
grantors.
(Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 756 (emphasis original))
334 See Articles 4 and 7 of the International Law Commission's (ILC) Articles on Responsibility for
Internationally Wrongful Acts. In particular, Article 7 provides that:
Article 7. Excess of authority or contravention of instructions
The conduct of an organ of a State or of a person or entity empowered to exercise elements of
the governmental authority shall be considered an act of the State under international law if the
organ, person or entity acts in that capacity, even if it exceeds its authority or contravenes
instructions.
In the Commentary on Article 7, the ILC indicates that:
(1) Article 7 deals with the important question of unauthorized or ultra vires acts of State organs
or entities. It makes it clear that the conduct of a State organ or an entity empowered to
exercise elements of the governmental authority, acting in its official capacity, is attributable to
the State even if the organ or entity acted in excess of authority or contrary to instructions.
(2) The State cannot take refuge behind the notion that, according to the provisions of its
internal law or to instructions which may have been given to its organs or agents, their actions or
omissions ought not to have occurred or ought to have taken a different form. This is so even
where the organ or entity in question has o vertly committed unlawful acts under the cover of its
official status or has manifestly exceeded its competence.
(International Law Commission, Responsibility of States for Internationally Wrongful Acts. Responsibility of
States for Internationally Wrongful Acts; text adopted by the ILC at its fifty-third session, in 2001, and
submitted to the United Nations General Assembly as a part of the ILC's report covering the work of that
session)

BCI deleted, as indicated [[***]]

company-specific, in the context of its claims under both Article 2.1(c) and t he chapeau of
Article 2.1.
7.182. First, Indonesia argues, in the context of its claim under the chapeau of Article 2.1, that
the World Bank Report and the newspaper articles the USDOC relied up on as evidence in reaching
the conclusion that Orleans was affiliated with APP/SMG suggest that IBRA generally allowed other
companies to buy back the debt of their related companies. 335 Indonesia maintains that, if
newspaper reports are sufficiently credibl e to support a finding that the GOI violated its own law,
then they should also be sufficient evidence to refute the USDOC's finding that the APP/SMG sale
was the only instance in which the GOI allowed a company to buy back its own debt through an
affiliate.336 Indonesia adds that the World Bank Report, which it argues the USDOC relied upon,
was not discussing sales under the PPAS, but was discussing sales of small loans, and there were
some 300,000 non -performing loans that were sold by IBRA . Indonesia also argues that the
"speculation" in the World Bank Report concerning affiliates repurchasing debt does not relate
specifically to APP/SMG, given that the report pre -dates by more than a month the announcement
of the sale of APP/SMG's assets.337
7.183. Second, Indonesia submits, in the context of its Article 2.1(c) claim, that the APP/SMG's
debt sold to Orleans "consisted of multiple companies" – the various APP/SMG entities – which
Indonesia asserts means the debt buy-back could not have been a company-specific subsidy.338
7.184. The United States considers that Indonesia's argument concerning the World Bank Report
and newspaper articles has nothing to do with whether the determination of specificity was
consistent with Article 2.1, but merely rehashes aspects of Indonesia's cl aim under Article 12.7.
Moreover, the United States submits that the fact that some of the evidence before the USDOC
speaks in general terms about companies buying their own debt through the PPAS does not
undermine the USDOC's finding that the subsidy aris ing from the APP/SMG sale was de facto
company-specific, particularly as only the specific company debtor was "eligible to receive that
same subsidy ". 339 In addition, the United States submits that APP/SMG constituted a single
company, regardless of the fact that it comprised multiple entities.340
7.185. Indonesia's allegation concerning the World Bank Report was mentioned for the first time
in its oral statement at the first meeting and developed in its second written submission, and its
allegation that the debt sold to Orleans comprised the debt of various APP/SMG entities was raised
for the first time in its responses to Panel questions following the first meeting of the Panel . We
share the United States' concern that Indonesia has raised a number of new allegations – including
the ones in respect of the debt buy -back at issue here – at a late stage of these proceedings. 341
Indonesia's presentation of its case has evolved significantly during the course of the proceedings ,
which has made the Panel's task of assessing t hese claims all the more difficult. Notwithstanding
our concerns in this regard , with respect to the allegations at issue here, we consider that the
United States was afforded the opportunity to address these arguments in a manner that we
consider respected the United States' due process rights. We also note that the relevant factual
evidence pertaining to these new arguments of Indonesia was placed before the Panel at the
outset of the proceedings.

335 Indonesia has made contradictory statements as to whether, in its view, the USDOC based its
conclusion on affiliation on a single newspaper report or based it on a series of newspaper articles and the
World Bank Report.
336 Indonesia's opening statement at the first meeting of the Panel, para. 57; second written
submission, para. 49.
337 Indonesia's second written submission, paras. 50-51.
338 Indonesia's response to Panel question Nos. 29 and 84. As support for its argument, Indonesia refers
to the list of companies in Part Two of GOI First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)),
exhibit 24, pp. 4-5, and to Exhibit 33 to Part Two of the GOI First Supplemental Questionnaire Response,
(Exhibit IDN-41 (BCI)).
339 United States' response to Panel question No. 31 (quoting Appellate Body Report, US –
Countervailing Measures (China), para. 4.140).
340 United States' second written submission, paras. 102 and 107-109.
341 The United States points out that paragraph 6 of the Panel's Working Procedures provides that
"[b]efore the first substantive meeting of the Panel with the parties, each party shall submit a written
submission in which it presents the facts of the case and its arguments". The United States reads this
paragraph as requiring that any argument necessary to sustain the complaining party's prima facie case of a
breach be presented in its first written submission. (United States' comments on Indonesia's response to Panel
question No. 86).

BCI deleted, as indicated [[***]]

7.186. A more fundamental concern is whether these new allegation s are within our terms of
reference. We recall in this respect that Article 6.2 of the DSU provides that a panel request "shall
… identify the specific measures at issue and provide a brief summary of the legal basis of the
complaint sufficient to present the problem clearly". Consistency with Article 6.2 must be
determined on the basis of an objective examination of the panel request as a whole, as it existed
at the time of filing, and on the basis of the language used therein 342, that is "'on the face' of t he
panel request".343
7.187. Paragraph 1(c)(i) of Indonesia's panel request sets forth a claim under Article 2.1 with
respect to the debt buy-back alleging that the:
USDOC did not identify whether the entity allegedly providing the purported subsidy
was the nationa l, regional or local government, and therefore, failed to properly
examine whether the purported subsidy was "specific to an enterprise … within the
jurisdiction of the granting authority".344
7.188. Paragraph 1(c)(ii) of Indonesia's panel request sets forth a cla im under Article 2.1(c)
alleging that the:
USDOC improperly failed to demonstrate that Indonesia's alleged debt forgiveness
constituted a subsidy program specific to an enterprise or industry or group of
enterprises or industries. USDOC did not cite to evi dence establishing the existence of
a plan or scheme sufficient to constitute a "subsidy programme."345
7.189. Indonesia contends that this language is broad enough to allow it to challenge the
USDOC's determination that the debt buy -back subsidy was company -specific. Indonesia notes
that it expressly challenged, under Article 2.1(c) of the SCM Agreement, the fact that the "USDOC
improperly failed to demonstrate that Indonesia's alleged debt forgiveness constituted a subsidy
program specific to an enterprise or indu stry or group of enterprises or industries." In Indonesia's
view, the next sentence, referring to the USDOC's alleged failure to cite evidence establishing the
existence of a subsidy programme, is not dependent on, and does not limit the preceding
sentence. Rather, it sets forth a separate and additional claim under Article 2.1(c).346
7.190. The United States considers that Indonesia's panel request is not broad enough to cover
Indonesia's challenge to the USDOC's finding that the debt buy -back subsidy was de facto
company-specific. For the United States, Indonesia's panel request focuses on the USDOC's
identification of the granting authority and the subsidy programme, and not on any other aspects
of the specificity analysis . Thus, Indonesia's arguments purporting to challenge the USDOC's
analysis or evidentiary basis for finding the debt buy -back de facto company-specific do not go to
the matters that were presented in Indonesia's panel request and, consequently, are outside the
Panel's terms of reference.347
7.191. In our view, paragraph 1(c)(i) of Indonesia's panel request is properly understood as
setting forth a claim under the chapeau of Article 2.1 that is limited to the issue of the USDOC's
identification of the jurisdiction of the granting authority, to the exclusio n of other aspects of the
USDOC's determination of the company -specific nature of the debt buy -back subsidy. Nothing in
the text of that paragraph can be read as suggesting that Indonesia also takes issue with the
USDOC's determination that the debt buy -back subsidy was limited to APP/SMG. Rather, this
paragraph clearly focuses on the USDOC 's alleged failure to identify whether the entity providing
the subsidy was the national, regional , or local government. Therefore, Indonesia's allegations in
the context of its claims under the chapeau of Article 2.1 that the APP/SMG sale did not constitute

342 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 641 (referring to
Appellate Body Reports, US – Carbon Steel, para. 127; US – Oil Country Tubular Goods Sunset Reviews,
paras. 164 and 169; US – Continued Zeroing, para. 161; and US – Zeroing (Japan) (Article 21.5 – Japan),
para. 108).
343 Appellate Body Report, US – Continued Zeroing, para. 161 (quoting Appellate Body Report, US –
Carbon Steel, para. 127).
344 Indonesia's panel request, para. 1(c)(i).
345 Indonesia's panel request, para. 1(c)(ii).
346 Indonesia's response to Panel question No. 86; comments on the United States' response to Panel
question No. 86.
347 United States' response to Panel question No. 31; second written submission, paras. 107-109.

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a company-specific subsidy in light of evidence that IBRA allowed other companies to buy back
their own debt do not pertain to claims that are within the Panel's terms of reference.348
7.192. As for Indonesia's claim under Article 2.1(c), we read paragraph 1(c)(ii) of the panel
request as setting forth a claim under Article 2.1(c) that is limited to the issue of the USDOC's
alleged failure to establish the existence of the subsi dy programme. We refer in this regard in
particular to the use of the term "subsidy program" (or "subsidy programme") in both the first and
the second sentence of paragraph 1(c)(ii) of the panel request, which in our view makes clear that
Indonesia intende d to set forth a claim with respect to the identification of the subsidy
programme, and not a broader, more general, claim encompassing additional aspects of the
USDOC's specificity determination. For this reason, we do not accept that the first sentence o f
paragraph 1(c)(ii) of Indonesia's panel request sets forth a claim which is distinct from the claim
set forth under the second sentence of the same paragraph. Thus, we read paragraph 1(c)(ii) of
Indonesia's panel request as setting forth a claim under Ar ticle 2.1(c) that is circumscribed in
scope by the second sentence. This being the case, Indonesia's allegation that the debt buy-back
could not have been a company -specific subsidy because APP/SMG's debt comprised the debt of
multiple companies does not relate to a claim that is within our terms of reference.
7.193. Nonetheless, despite the fact that Indonesia's new allegations are not properly before us,
we address these allegations in case they become relevant in the event of any implementation of
the DSB rulin gs. With respect to Indonesia's allegations in the context of its claims under the
chapeau of Article 2.1 , Indonesia's suggestion that the World Bank Report could not support the
USDOC's finding of affiliation because it pre -dates the announcement of the s ale of APP/SMG's
debt has nothing to do with the USDOC's determination that the debt buy -back was de facto
specific or with the disciplines in Article 2.1 of the SCM Agreement. Rather, it pertains to the
USDOC's use of facts available in finding affiliatio n, a matter governed by Article 12.7, and which
Indonesia challenges under this provision. Similarly, we reject Indonesia's argument to the effect
that the evidence relied upon by the USDOC suggests that the subsidy was generally available.
First, we recall that the USDOC's finding of affiliation between APP/SMG and Orleans was based on
an adverse inference. In our view, the evidence before the USDOC was such that a reasonable and
unbiased authority could have concluded that the subsidy at issue was limited to APP/SMG; it is
not at all clear that the documents in fact support the proposition that the subsidy at issue was
generally available.349 In particular, the World Bank Report merely states that " some IBRA sales
allegedly allowed debtors to buy back their loans at a steep discount through third parties, against
its rules, raising further concerns about transparency".350
7.194. Moreover, with respect to Indonesia's allegation in the cont ext of its claims under
Article 2.1(c), we note that Indonesia's argument indirec tly challenges the USDOC's determination
that the various APP/SMG companies were a single producer/exporter for purpose of its
investigation, and the USDOC's definition of the financial contribution at issue. Indonesia does not,
however, make any claims un der the provisions of the SCM Agreement governing those issues. 351
Moreover, we note that APP/SMG's debt was sold as a single asset. 352 This fact alone would have
justified the USDOC treating APP/SMG as a single company for purposes of its specificity analysis
under Article 2.1(c).

348 Although these arguments logically pertain to the scope of the subsidy programme, Indonesia makes
these arguments regarding the World Bank Report in the section concerning its claim under the chapeau of
Article 2.1.
349 This is not to say that an analysis of specificity must limit itself to the subsidy that was found to
exist. On the contrary, the investigating authority may have to consider whether other financial contributions
may have been granted as part of the same subsidy programme, so as to render non-specific the subsidy that
is the subject of the complaint. (Appellate Body Report, US – Large Civil Aircraft (2nd complaint),
paras. 748-753).
350 Petitioners' General Factual Information Submission, (Exhibit US-40), exhibit 24, p. 13. (emphasis
added)
351 We recall that the evaluation of whether a subsidy is specific assumes that the subsidy at issue
already exists and focuses rather on whether access to that subsidy is limited to certain enterprises.
352 In particular, we note that the "terms of reference" prepared by IBRA for the APP/SMG's debt sale
state that "[t]he current Strategic Asset Portfolio of [IBRA] is made up of 1 (one) asset, namely the APP Group
launched on 8 December 2003, which comprises […]" (a list of five APP/SMG companies and their subsidiaries
follows). (Part Two of GOI First Supplemental Questionnaire Response, (Exhibit US-34 (BCI)), exhibit 24,
pp. 4-5). The fact that the debt was comprised of the debts of various APP/SMG companies or affiliates does
not, in our view, detract from the unitary nature of the debt sale.

BCI deleted, as indicated [[***]]

7.5.4.6 Overall conclusion concerning Indonesia's claims under Article 2.1(c) of the
SCM Agreement and the chapeau of Article 2.1 of the SCM Agreement
7.195. In light of the foregoing, we find that Indonesia has failed to establish that the USDOC
acted inconsistently with Article 2.1(c) of the SCM Agreement by failing to determine or identify
the relevant subsidy programmes in connection with the provision of standing timber, the log
export ban, or the debt forgiveness.
7.196. In addition, we find that In donesia has failed to establish that the USDOC acted
inconsistently with the chapeau of Article 2.1 of the SCM Agreement by failing to identify the
granting authority that forgave debt in favour of APP/SMG, or the jurisdiction of that granting
authority.
7.6 "As applied" claims concerning the USITC's threat of injury determination
7.6.1 Introduction
7.197. The USITC conducted an investigation into whether the US domestic industry was injured
by reason of subsidized and dumped imports of certain coated paper from China and Indonesia.
For purposes of its analysis, the USITC cumulated subject imports from these two Members.353 The
USITC considered data for a POI consisting of three full calendar years, from 2007 to 2009, as well
as the first six months of 2009 and 2010 ("interim " 2009 and 2010). Chinese and Indonesian
producers of the subject product participated in the investigation through their corporate affiliates
Asia Pulp and Paper, Ltd. (China) and Asia Pulp and Paper, Ltd. (Indonesia) (APP ).354 The USITC
defined the domestic industry as the US producers and converters of certain coated paper.355
7.198. The USITC determined that the US domestic industry was threatened with material injury
by reason of dumped and subsidized imports from China and Indonesia .356, 357 In reaching this
determination, the USITC determined that dumped and subsidized imports were likely to increase
significantly, that they were likely to have adverse effects on domestic prices, and that they were
likely to have a negative impact on the condition of the domestic i ndustry, including market share
and sales , in the imminent future . The USITC found that there was a likely causal relationship
between the subject imports and the imminent adverse impact on the domestic industry, and that

353 USITC Final Determination, (Exhibit US-1), pp. 15-17.
354 USITC Final Determination, (Exhibit US-1), p. 3. We note that "APP" in the USITC investigation refers
to both the Indonesian and Chinese corporate entities affiliated with the APP/SMG group. It is therefore not the
same entity as "APP/SMG" in the USDOC investigation. The USITC indicated that, in 2009, the large majority of
subject merchandise was produced and exported by Chinese and Indonesian producers under the corporate
umbrella of APP. (Ibid. p. 24).
355 USITC Final Determination, (Exhibit US-1), p. 13.
356 USITC Final Determination, (Exhibit US-1), pp. 1 and 39. Five Commissioners determined that the
domestic industry was threatened with injury. One of the Commissioners made an affirmative determination of
present injury. (USITC Final Determination, (Exhibit US-1), pp. 41-47). In our findings, we consider the views
of the majority as being those of the USITC.
357 The parties have submitted to the Panel the public version of the USITC Final Determination as
Exhibits IDN-18 and US-1. The version of the determination submitted by Indonesia contains the views of the
USITC but does not contain the Staff Report (which compiles the data the USITC relied upon and is an integral
part of the USITC's Report) contained in Parts I to VII or the appendixes to the determination. Since the exhibit
submitted by the United States (Exhibit US-1) is the complete version of the USITC Report, and Indonesia has
also referred to the US version of the USITC Final Determination in its submissions to the Panel, in this Report
we refer to the exhibit submitted by the United States. In addition, the Panel requested that the United States
provide the confidential version of the USITC's final determination, which contains confidential data redacted
from the public version. In response, the United States stated that due to confidentiality concerns, it was not in
a position to submit the confidential version of the determination to the Panel. (United States' response to
Panel question No. 68). In addition, only the public versions of several exhibits, in particular those containing
submissions made by interested parties to the USITC, were provided to the Panel by the parties. The Panel
requested that the parties submit the confidential versions of these exhibits; for most documents, the parties
indicated that they were not in a position to do so. That is the case, for instance, for APP Pre-hearing Brief to
USITC, (Exhibit IDN-45) and APP Final Comments to USITC, (Exhibit US-105). We base our analysis on the
record evidence that was submitted to the Panel; in any event, Indonesia has not made any specific
representations that suggest to us that information contained in the confidential version of relevant documents
is germane to our resolution of Indonesia's claims.

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other factors would not render ins ignificant the likely effects of subject imports as found by the
USITC.358
7.199. Indonesia claims that the USITC's threat of injury determination is inconsistent with:
a. Article 3.5 of the Anti -Dumping Agreement and Article 15.5 of the SCM Agreement
because the USIT C attributed to subject imports adverse effects attributable to "other
factors" causing injury to the domestic industry at the same time as subject imports;
b. Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the SCM Agreement
because the USITC b ased certain of its findings in its threat of injury determination on
conjecture and remote possibility; and
c. Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM Agreement
because the USITC failed to exercise "special care" in the underlying investigation.
7.200. The United States requests that the Panel reject Indonesia's claims.359
7.6.2 Claims under Article 3.5 of the Anti -Dumping Agreement and Article 15.5 of the
SCM Agreement (non-attribution)
7.6.2.1 Introduction
7.201. Indonesia claims that the USITC's threat of injury determination is inconsistent with
Articles 3.5 of the Anti -Dumping Agreement and 15.5 of the SCM Agreement. We understand
Indonesia to argue that the USITC attributed to the subject imports likely adverse effects of three
other known factors that w ould injure the domestic industry in the future at the same time as
subject imports: (a) declining US demand for coated paper; (b) imports from non -investigated
countries ("non -subject imports"); and (c) the expiration of the "black liquor" tax credit, an
alternative fuel tax credit that certain US producers received in 2009.360
7.202. Indonesia submits that the USITC failed to properly separate and distinguish the adverse
effects attributable to each of the three "other factors" in its threat of injury determinati on.
Indonesia argues that Articles 3.5 and 15.5 contain three requirements: (a) non -attribution; (b) a
concrete examination of "other factors" using economic models or constructs; and (c) isolation of
factors other than subject imports causing injury. 361 Indonesia argues that the USITC acted
inconsistently with each of these requirements. In Indonesia's view, the USITC found a threat of
injury not based on subject imports, but because of these other factors, among other causes. The
USITC attributed the effect s of these other factors to subject imports, in violation of Article 3.5 of
the Anti-Dumping Agreement and Article 15.5 of the SCM Agreement.362 Indonesia argues that the
only reasonable conclusion from the evidence before the USITC and the USITC's finding t hat no
present injury existed was that the projected decline in demand, expiration of the black liquor tax
credit, and non -subject imports were likely to cause injury to the domestic industry such as to
render insignificant the contribution of subject impo rts to the imminent injury threatening the
domestic industry.363
7.203. The United States submits that the USITC's non -attribution analysis complied with
Articles 3.5 and 15.5. The United States argues that the USITC properly separated and
distinguished the effects of other factors from the injury threatened by subject imports by first

358 USITC Final Determination, (Exhibit US-1).
359 United States' second written submission, para. 113.
360 Indonesia's first written submission, para. 4.
361 Indonesia's first written submission, para. 99; second written submission, para. 53. In response to a
question from the Panel as to whether it considers "non-attribution" and "isolation of other factors" to be
distinct concepts, Indonesia explained that, in its view, the principle of non-attribution prohibits the
investigating authority from attributing injury or threat of injury caused by other factors to subject imports,
and the principle of "isolation of other factors" requires for the investigating authority to identify what factors
other than subject imports exist in the market that may be affecting the domestic industry's performance.
(Indonesia's response to Panel question No. 44).
362 Indonesia's second written submission, para. 63.
363 Indonesia's response to Panel question No. 92(a).

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demonstrating a strong causal link between subject imports and the threat of injury, and then
explaining that other factors did not detract from this link and by demonstrating that su bject
imports would have injurious effects independent of those factors.364
7.6.2.2 Legal standard under Article 3.5 of the Ant i-Dumping Agreement and
Article 15.5 of the SCM Agreement
7.204. The text of Article 3.5 of the Anti -Dumping Agreement and that of Article 15.5 o f the SCM
Agreement are largely identical. Article 3.5 of the Anti-Dumping Agreement provides that:
It must be demonstrated that the dumped imports are, through the effects of
dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the dumped imports
and the injury to the domestic industry shall be based on an examination of all
relevant evidence before the authorities. The authorities shall also examine any known
factors other than the dumped imports which at the same time are injuring the
domestic industry, and the injuries caused by these other factors must not be
attributed to the dumped imports. Factors which may be relevant in this respect
include, inter alia, the volume and prices of imports not sold at dumping prices,
contraction in demand or changes in the patterns of consumption, trade restrictive
practices of and competition between the foreign and domestic producers,
developments in technology and the expo rt performance and productivity of the
domestic industry.365
Article 15.5 of the SCM Agreement provides as follows:

It must be demonstrated that the subsidized imports are, through the effects[*] of
subsidies, causing injury within the meaning of this Agree ment. The demonstration of
a causal relationship between the subsidized imports and the injury to the domestic
industry shall be based on an examination of all relevant evidence before the
authorities. The authorities shall also examine any known factors o ther than the
subsidized imports which at the same time are injuring the domestic industry, and the
injuries caused by these other factors must not be attributed to the subsidized
imports. Factors which may be relevant in this respect include, inter alia, the volumes
and prices of non -subsidized imports of the product in question, contraction in
demand or changes in the patterns of consumption, trade restrictive practices of and
competition between the foreign and domestic producers, developments in technol ogy
and the export performance and productivity of the domestic industry.366
 [*fn original]47 As set forth in paragraphs 2 and 4.
7.205. Thus, the first two sentences of both Articles impose on the investigating authority an
obligation to demonstrate a causal link between the dumped or subsidized imports and the injury
to the domestic industry. 367 The last two sentences require that the investigating authority not
attribute to dumped or subsidized imports injury caused by other "known" factors, i.e. the
"non-attribution" requirement. Indonesia's claims are limited to this non-attribution requirement.
7.206. In this respect, Articles 3.5 and 15.5 require that an investigating authority examine any
factor: (a) "other than dumped or subsidized imports"; (b) that is "known" to t he authority; and
(c) that is injuring the domestic industry at the same time as dumped or subsidized imports.368
The investigating authority must ensure that it does not attribute to subject imports the injury
caused by any such "other factor"; i n the conte xt of a finding of threat of injury, we understand
this obligation to encompass non-attribution of injury by other known factors threatening to cause
injury to the domestic industry. Indonesia disaggregates the non -attribution requirement into

364 United States' first written submission, paras. 294-297; opening statement at the second meeting of
the Panel, para. 54.
365 Emphasis added.
366 Emphasis added.
367 We recall in this regard that "injury" as used in these Articles means, inter alia, threat of material
injury to a domestic industry. (Anti-Dumping Agreement, fn 9; and SCM Agreement, fn 45).
368 Appellate Body Report, EC – Tube or Pipe Fittings, para. 175.

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three separa te requirements : (a) non -attribution; (b) concrete examination of "other factors"
using economic models or constructs; and (c) isolation of factors other than subject imports
causing injury. However, this disaggregation of the non-attribution requirement is without support
in the text of Articles 3.5 and 15.5 and in prior WTO decisions. Rather, an appropriate assessment
of the injurious effects of "other factors" "involve[s] separating and distinguishing the injurious
effects of the other factors from th e injurious effects of the dumped [or subsidized] imports". 369
This requires a satisfactory explanation of the nature and extent of the injurious effects of the
other factors, as distinguished from those of the dumped (or subsidized) imports.370
7.207. The Anti-Dumping and SCM Agreements do not specify how the non -attribution analysis is
to be undertaken – they do not prescribe any methods or approaches by which an investigating
authority may avoid attributing injuries caused by factors other than dumped or subsidized
imports.371 Consequently, provided that it does not attribute the injuries of other factors to
dumped or subsidized imports, an investigating authority "is free to choose the methodology it will
use in examining the 'causal relationship' between dumped [or subsidized] imports and injury".372
Consistent with the applicable standard of review, prior panels have taken the view that it is
appropriate "to undertake a careful and in depth scrutiny" of a non -attribution determination in
order to evaluate whether the ex planations given by the investigating authority are "such
reasonable conclusions as could be reached by an unbiased and objective investigating authority in
light of the facts and arguments before it and the explanations given".373
7.208. In this respect, we note t hat an integral part of Indonesia's argument concerning an
alleged obligation to conduct a "concrete" examination of the likely future effects of "other
factors", is its view that an investigating authority's examination of other factors must be
quantitative and rely on economic models or constructs. Indonesia argues that the USITC did not
examine the "other factors" in concrete terms but rather merely listed these factors, without
applying any concrete economic constructs or models, which Indonesia asserts is required by
Articles 3.5 and 15.5.374 Indonesia initially argued that an investigating authority is required to use
a quantitative analysis in all cases. Later, Indonesia acknowledged that in certain cases, a
qualitative analysis might suffice, depending on the facts, but maintained that in any event, the
investigating authority's non-attribution analysis in a threat determination must be as rigorous as
its non-attribution analysis with respect to present injury. Indonesia asserts that in the present
case, the USITC's non-attribution analysis in the threat context was less "concrete" and "rigorous"
than its analysis of whether subject imports caused present injury to the domestic industry.375
7.209. As we have just noted, Articles 3.5 and 15.5 set forth no limits or guidelines as to the
methodology an investigating authority may use for purposes of a non -attribution analysis.
Indonesia proffers no basis in the text of these provisions or in prior decisions for its assertion that
authorities are required, in certain situations, to rely on quantitative methods, economic constructs
or models in their assessment of the injury caused by other factors. In fact, the very panel report
cited by Indonesia as support for its argument, while expressing the view that using eleme ntary
economic constructs or models would be desirable, recognizes that investigating authorities are
not required to do so:

369 Appellate Body Report, US – Hot-Rolled Steel, para. 223.
370 Appellate Body Report, US – Hot-Rolled Steel, para. 226.
371 Appellate Body Report, US – Hot-Rolled Steel, para. 224.
372 Appellate Body Report, EC – Tube or Pipe Fittings, para. 189.
373 See, e.g. Panel Report, EU – Footwear (China), para. 7.483.
374 Indonesia's first written submission, paras. 111-113 (quoting Panel Report, EC – Countervailing
375 Indonesia's first written submission, para. 114; opening statement at the first meeting of the Panel,
para. 61; response to Panel question No. 43(b); and second written submission, paras. 57-58. Indonesia
asserts that the USITC used less precise measurements in its threat of injury analysis than in its present injury
analysis. Indonesia argues that the latter contains "a volume analysis consisting of precise measurements of
the volume of subject imports, non-subject imports, domestic industry shipments, and market share", "a
pricing analysis based on four pricing products", and "an impact analysis that is based on several trade and
financial performance indicators" while the former "appl[ies] less precise, amorphous standards phrased in
general terms like 'increasing volumes of low-priced imports,' 'will take sales from current suppliers such as the
domestic industry,' and 'will gain additional U.S. market share in the imminent future'". (Indonesia's second
written submission, para. 58 (fns omitted); Indonesia made similar assertions in its opening statement at the
first meeting of the Panel, para. 62). As noted below, para. 7.326, Indonesia also argues that the fact that the
USITC allegedly conducted a more concrete and rigorous present injury analysis than threat of injury analysis
is inconsistent with Articles 3.8 and 15.8.

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It is clear that Article 15.5 does not impose any particular methodology when
conducting the causation analysis set forth therein, provided that an investigating
authority does not attribute the injuries of other causal factors to subsidized imports.
The Appellate Body has not provided guidance as to how an investigating authority
should examine other known factors in order to make s ure that the non -attribution
requirement is fulfilled. In our view, it does not suffice for an investigating authority
merely to "check the box". An investigating authority must do more than simply list
other known factors, and then dismiss their role with bare qualitative assertions, such
as "the factor did not contribute in any significant way to the injury", or "the factor did
not break the causal link between subsidized imports and material injury." In our
view, an investigating authority must make a be tter effort to quantify the impact of
other known factors, relative to subsidized imports, preferably using elementary
economic constructs or models. At the very least, the non -attribution language of
Article 15.5 requires from an investigating authority a satisfactory explanation of the
nature and extent of the injurious effects of the other factors, as distinguished from
the injurious effects of the subsidized imports.[*]376
[*fn original]282 Appellate Body report, US – Hot-Rolled Steel, para. 226.
7.210. We agree with this view. While it might, depending on the record information before the
investigating authority and the circumstances of the investigation at issue, be useful or desirable
for an investigating authority to undertake a quantitative assessment of the impact of other
factors, there is no requirement that it do so: an adequately reasoned explanation of the
qualitative effects of other factors based on the evidence before it will suffice. 377 Indonesia's
position – including its suggestion that if an author ity relied on a quantitative analysis in its
analysis of whether imports caused present material injury, it must do the same in its threat
analysis and its non -attribution analysis with respect to threat of injury – also disregards the fact
that threat of injury determinations are by definition based on projections, and that quantifying the
injurious effects of other factors may be difficult or even impossible in such circumstances. 378
Indonesia has also advanced no support for its proposition that, in determ ining consistency with
the non-attribution requirement, a panel should compare the non -attribution analysis performed
by the authority in its threat of injury determination with the authority's analysis in the present
injury context. Nothing in the text of these provisions suggests that such a comparative approach
is required. The legal sufficiency of an authority's non -attribution analysis in a threat of injury
context must be assessed with regard to that determination itself and the explanations provided
by the authority in reaching it.
7.211. In light of the above, the principal issue to be addressed in considering Indonesia's
non-attribution claims is whether the USITC ensured, in its threat of injury determination, that it
did not attribute to dumped and subs idized imports from Indonesia and China any (future) injury
likely to be caused by alleged "other factors". In addressing this issue, insofar as Indonesia's
arguments raise questions in this regard, we will consider whether the USITC provided a
satisfactory explanation of the nature and extent of the likely injurious effects of the other factors,
as distinguished from the likely injurious effects of the subsidized imports, and whether the
USITC's explanations allow us to determine that the conclusions it re ached are such reasonable
conclusions as could be reached by an unbiased and objective investigating authority in light of the
facts and arguments before the USITC.

376 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.405. (emphasis added)
377 See also Panel Report, US – Countervailing Duty Investigation on DRAMS, para. 7.360: "there is no
obligation under Article 15.5 to quantify the amount of injury caused by alleged subsidies and non-subject
imports, respectively".
378 In this respect, we agree with the United States that while data concerning subject imports and
industry performance during the POI can be collected and analysed by the investigating authority in analysing
both present injury and threat of injury:
[D]ata on the future volumes and price effects of subject imports obviously cannot exist. ADA
Article 3.7 and SCMA Article 15.7 recognize this difference between a nalysis of the past (for
which data are available) and of the future (for which they are not), providing, for instance, that
investigating authorities should consider "the likelihood of substantially increased importation,"
based on trends during the period of investigation and the capacity of subject exporters.
(United States' second written submission, para. 129 (emphasis original))

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7.212. In our analysis, we first consider two general arguments that Indonesia makes with
respect to the USITC's non -attribution analysis before considering Indonesia's specific allegations
with respect to each of the alleged "other factors". Before doing so, however, we first briefly
summarize the relevant aspects of the USITC's determination.
7.6.2.3 The USITC's consideration of the three alleged "other factors"
7.213. The USITC's non-attribution analysis, as it pertains to its threat of injury determination, is
contained in its analysis of the future impact of subject imports on the domestic industry. The
USITC did, however, also discuss the decline in demand (during the POI or projected) , the black
liquor tax credit, and non -subject imports in the sections of its determination concerning the
volume – present and future – of subject imports, the price effects – present and future – of
subject imports and in the section of its determination in which it considered the impact – also
present and future – of subject imports on the domestic industry.
7.214. With respect to the volume of subject imports during the POI , the USI TC noted that as
apparent US consumption of coated paper declined by 21.3% from 2007 to 2009, subject imports
were the only source of increased volume; domestic industry and non -subject import volumes
declined during that period.379
7.215. With respect to the future volume of subject imports, the USITC recalled that even though
US demand had declined from 2007 to 2009, the volume and market share of subject imports had
increased.380 It also stated that although US demand was "expected to remain depressed in the
near fut ure", subject producers would likely target orders that arise, consistent with their
behaviour in aggressively seeking to gain sales and market share during the POI.381
7.216. With respect to price effects during the POI , the USITC found that subject imports
depressed domestic prices at least to some extent for part of the POI, but stopped short of finding
significant price depression by reason of subject imports because other factors – the decline in
demand and the black liquor tax credit – "likely also contributed importantly to lower prices" and it
was unable to gauge whether significant price effects were attributable to subject imports. 382 With
respect to price suppression, t he USITC observed that although the domestic industry's ratio of
cost of goods sold (COGS) to net sales had risen from 2007 to 2009, "other factors", in particular
the effects of the black liquor tax credit, undermined the ratio as a reliable indicator that the
industry was experiencing a growing cost/price squeeze. 383 The USITC added that even i f the
industry did experience a cost/price squeeze, "factors other than subject imports may have
prevented domestic producers from raising prices, including the accelerating fall in demand from
2007 to 2009".384 On this basis, the USITC found no evidence that subject imports had prevented
price increases which otherwise would have occurred to a significant degree during the POI.385
7.217. With respect to future price effects, the USITC noted that "U.S. demand for certain coated
paper [was] projected to decline moderat ely over the next two years", and considered that any
increase in subject import volumes would therefore not be absorbed by increased demand. 386 The
USITC also found that the "other factors" that it had identified as having negative effects on
domestic prices during the POI, i.e. the decline in demand and the black liquor tax credit, "[would]

379 USITC Final Determination, (Exhibit US-1), pp. 26-27.
380 USITC Final Determination, (Exhibit US-1), p. 27.
381 USITC Final Determination, (Exhibit US-1), p. 29.
382 USITC Final Determination, (Exhibit US-1), p. 33:
[D]emand for certain coated paper was significantly depressed, with apparent U.S. consumption
dropping by 14.7 percent from 2008 to 2009. The black liquor tax credit s purred greater pulp
production by domestic producers in 2009, contributing to lower prices for fiber/pulp which is a
key input to production of coated paper. We find that the failure of domestic prices to rebound
significantly in interim 2010 even after su bject imports largely ceased in March 2010 indicates
the important role that factors other than subject imports played in the market. Accordingly,
although we find some evidence of price depression by subject imports, we do not find that
cumulated subject imports from China and Indonesia significantly depressed prices of the
domestic like product in the U.S. market. (fns omitted)
383 USITC Final Determination, (Exhibit US-1), p. 33.
384 USITC Final Determination, (Exhibit US-1), p. 33.
385 USITC Final Determination, (Exhibit US-1), p. 33.
386 USITC Final Determination, (Exhibit US-1), p. 34.

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not play the same role in the imminent future", and consequently that subject imports would be a
"key driver" affecting prices. 387 Overall, with respect to the future pric e effects of likely future
imports, the USITC concluded that increased quantities of subject imports, priced aggressively,
would put pressure on domestic producers to lower prices "in a market recovering from severely
depressed demand". On this basis it concluded that subject imports were likely to cause significant
price depression or suppression in the imminent future.388
7.218. In its analysis of the impact of subject imports during the POI , the USITC recalled that
from 2007 to 2009, US consumption fell by 21.3% and noted that "most indicators of domestic
industry performance declined" during that period. 389 The USITC described the domestic industry's
situation as having improved in interim 2010 compared to interim 2009. It also noted that over
the period 2007 -2009, the market shares of the domestic industry and subject imports had
increased at the expense of non -subject imports, whose market share fell by 9.3 percentage
points.390 Overall, the USITC did not find a sufficient causal nexus such that it could determine that
subject imports were having a significant adverse impact on the domestic industry. The USITC
noted that the deterioration "in almost all of the domestic industry's performance indicators
between 2007 and 2009 coincided with the economic downturn and a sharp decline in demand for
CCP". It also noted that domestic producers had a significant revenue stream from the black liquor
tax credit in 2009, which encouraged them to produce greater volumes of pulp, and may have
insulated them to some degree from coated paper price declines in 2009.391
7.219. In its analysis of the likely impact of subject imports in the imminent future , the USITC
first found that the industry was vulnerable to material injury, given the downward trend in most
of its performance indicators during the POI; in this context it also considered that the black liquor
tax credit, which expired in 2009, would not be a mitigating factor to injury in the future, as it had
been during the latter part of the POI:
Even in light of an overall decline in app arent U.S. consumption during the period of
investigation, the downward trends in virtually all of the domestic industry's
performance indicators during the period examined weigh heavily in our consideration
of the impact of subject imports in the imminent future. … We recognize that the
domestic industry's financial indicators may have been worse in 2009 if not for the
revenue it received from the black liquor tax credit. As discussed, this tax credit
expired in 2009, and therefore any benefit that the dom estic industry received from it
in 2009 will not continue into the imminent future. Even as demand recovered
somewhat in interim 2010, and a large majority of subject imports left the market,
the domestic industry's COGS/sales ratio continued to increase a s its number of
production workers and operating margins continued to decline. Accordingly, we find
that the industry is vulnerable to material injury.392
7.220. The USITC considered that as a result of the declining trends and given its vulnerable
state, the domes tic industry would "likely continue to experience even lower employment levels,
net sales, operating income, and profitability as increasing volumes of low -priced subject imports
enter the U.S. market and compete with the domestic like product". 393 The USITC considered that,
given the projected decline in US consumption, the US market would not be able to accommodate
growth in subject imports without material injury to the domestic industry and, in this context,
future volumes of subject imports would not be in response to growing demand, but would take
sales from current suppliers, including the domestic industry. The USITC concluded that, given

387 USITC Final Determination, (Exhibit US-1), p. 34:
Domestic consumption is likely to decline only modestly from 2010 to 2011. Although sluggish
demand will likely restrain pric e recovery to some degree, there are no projections of a sharp
falloff in consumption similar to the one in 2009. In addition, the "black liquor" tax credit expired
in 2009 and is not likely to be renewed. Without the prominence of these other market force s,
we anticipate that a key driver of domestic market prices will be the significant volumes of
subject imports.
388 USITC Final Determination, (Exhibit US-1), p. 35.
389 USITC Final Determination, (Exhibit US-1), p. 35.
390 USITC Final Determination, (Exhibit US-1), p. 36.
391 USITC Final Determination, (Exhibit US-1), p. 37. The USITC also described a certain lack of
temporal correlation between movements in import volumes and the situation of the domestic industry.
392 USITC Final Determination, (Exhibit US-1), p. 38
393 USITC Final Determination, (Exhibit US-1), p. 38.

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that the domestic industry was already in a weakened state, unless anti -dumping duty and
countervailing duty orders were issued, material injury by reason of subject imports would occur,
and found that there was a "likely causal relationship between the subject imports and an
imminent adverse impact on the domestic industry".394
7.221. In its non-attribution analysis properly speaking, the USITC considered whether there were
other factors, i.e. the reduced levels of domestic consumption and non-subject imports, that would
likely have an imminent impact on the domestic industry. It concluded that the modest decline in
demand pro jected for 2010 -2012 would not "render insignificant" the causal link between
projected subject imports and the likely imminent injury:
As noted, U.S. consumption of CCP is projected to decline modestly from 2010 to
2011. Although a lower level of consumpt ion is likely to limit the domestic industry's
sales opportunities and restrain potential price increases to some degree, the decline
is not of a magnitude that would render insignificant the likely effects of subject
imports that we have described above.395
7.222. The USITC also found that non -subject imports were not an "other factor" that rendered
insignificant the likely effects of subject imports as a cause of imminent injury to the domestic
industry.396
7.223. Our analysis below focuses on the explanations contained i n this non -attribution analysis
with respect to the threat of injury to the domestic industry, while also taking into account the
USITC's discussion of other factors elsewhere in its determination.
7.6.2.4 The USITC's re-statement of the legal standard under US law
7.224. Indonesia argues that a statement of the USITC in the section of its determination
discussing the relevant "legal standards" under US law – to the effect that the USITC "need not
isolate the injury caused by other factors from that caused by unfairly tr aded imports" – makes it
clear that the USITC acted inconsistently with what Indonesia argues is the requirement to
"isolate" the threat of injury resulting from other factors. 397 The Unit ed States submits that
Articles 3.5 and 15.5 contain no "isolation" re quirement distinct from the need to "distinguish"
injury caused by other factors, that the statement of the USITC on which Indonesia focuses was
part of the USITC's re -statement of applicable US law, and that the USITC did in fact "separate
and distinguish" (i.e. effectively "isolate") the effects of other factors.398
7.225. The USITC statement referred to by Indonesia appears in the following discussion of
applicable US law:
The legislative history explains that the Commission must examine factors other than
subject imports to ensure that it is not attributing injury from other factors to the
subject imports, thereby inflating an otherwise tangential cause of injury into one that
satisfies the statutory material injury threshold. In performing its examination,

394 USITC Final Determination, (Exhibit US-1), p. 38. That the USITC attached significant weight to the
vulnerability of the domestic industry in reaching this conclusion is also evident from the USITC's statement
(ibid. p. 38) that "the downward trends in virtually all of the domestic industry's performance indicators during
the period examined weigh heavily in our consideration of the impact of subject imports in the imminent
future" and from the USITC's final conclusion in its threat of injury analysis:
[G]iven the vulnerability of the domestic industry, together with the likelihood that cumulated
subject imports will increase significantly in the imminent future at prices that will likely undersell
the domestic like product and depress or suppress domestic prices to a significant degree,
material injury by reason of subject imports will occur absent issuance of antidumping duty and
countervailing duty orders against subject imports. We therefore conclude that the domestic CCP
industry is threatened with material injury by reason of cumulated subject imports from China
and Indonesia.
(Ibid. p. 39)
395 USITC Final Determination, (Exhibit US-1), pp. 38-39.
396 USITC Final Determination, (Exhibit US-1), p. 39.
397 Indonesia's first written submission, paras. 118-121 (quoting Excerpt from USITC Final
Determination, pp. 3-39 and C-3-C-7, (Exhibit IDN-18), p. 18).
398 United States' first written submission, fn 630.

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however, the Commission need not isolate the injury caused by other factors from
injury caused by unfairly traded imports. Nor does the "by reason of" standard require
that unfairly traded imports be the "principal" cause of injury or contemplate that
injury from unfairly traded imports be weighed against other factors, such as
nonsubject imports, which may be contributing to overall injury to an industry. It is
clear that the existence of injury caused by other factors does not compel a negative
determination.
Assessment of whether material injury to the domestic industry is "by reason of"
subject imports "does not require the Commission to address the causation issue in
any particular way" as long as "the injury to the domestic industry can reasonably be
attributed to the subject imports" and the Commission "ensure{s} that it is not
attributing injury from other sources to the subject imports." Indeed, the Federal
Circuit has examined and affirmed various Commission methodologies and has
disavowed "rigid adherence to a specific formula.399
7.226. Although informative of the USITC's understanding of US law, we do not consider this
statement of US law to be determinative of the consistency of the USITC's determination with
Articles 3.5 and 15.5. The consistency of the USITC's non-attribution analysis with these provisions
is to be determined with regard to whether, in its determination, the USITC properly ensured that
it did not attribute to dumped and subsidized imports injury caused by other factors.400
7.6.2.5 The USITC's finding of vulnerability
7.227. Indonesia takes issue with the fact that, having found that the decline in demand, along
with the expiration of the black liquor tax credit, rendered the domestic industry vulnerable 401, the
USITC went on to find that subject imports threa tened to injure the domestic industry in the
imminent future. Indonesia considers that if the domestic industry was rendered vulnerable by
other factors, then the investigating authority cannot find threat of injury caused by subject
imports. Indonesia also notes that the vulnerable condition of the US domestic industry weighed
heavily in the USITC's affirmative threat of injury analysis. 402 Indonesia argues that rather than
finding that the domestic industry's vulnerability made it more likely that subject i mports
threatened injury, the USITC should have analysed the impact of the subject imports on the
domestic industry during the POI in isolation, isolating out the other factors and, based on that

399 USITC Final Determination, (Exhibit US-1), pp. 18-19. (emphasis added; fns omitted)
400 In addition, we are reluctant to read the USITC's statement that, under US law, it "need not isolate
the injury caused by other factors from injury caused by unfair imports" as demonstrating that the USITC did
not consider it necessary to "separate and distinguish" the injurious effects of different causal factors.
Indonesia relies on the Appellate Body Report in US – Hot-Rolled Steel for the proposition that Articles 3.5 and
15.5 require the investigating authority to "isolate" injury caused by other factors. (Indonesia's first written
submission, paras. 118-119 (referring to Appellate Body Report, US – Hot-Rolled Steel, para. 226)). However,
the Appellate Body's views were more nuanced:
The United States contends that th e panel in United States – Atlantic Salmon Anti -Dumping
Duties correctly stated that there is no need to "isolate" the injurious effects of the other factors
from the injurious effects of the dumped imports. We are not certain what the panel, in that
dispute, intended to imply through the use of the word "isolation". Nevertheless, we agree with
the United States that the different causal factors operating on a domestic industry may interact,
and their effects may well be inter -related, such that they produc e a combined effect on the
domestic industry. We recognize, therefore, that it may not be easy, as a practical matter, to
separate and distinguish the injurious effects of different causal factors. However, although this
process may not be easy, this is pr ecisely what is envisaged by the non -attribution language. If
the injurious effects of the dumped imports and the other known factors remain lumped together
and indistinguishable, there is simply no means of knowing whether injury ascribed to dumped
imports was, in reality, caused by other factors. Article 3.5, therefore, requires investigating
authorities to undertake the process of assessing appropriately, and separating and
distinguishing, the injurious effects of dumped imports from those of other known causal factors.
(Appellate Body Report, US – Hot-Rolled Steel, para. 228 (emphasis original))
In our view, in this passage the Appellate Body clearly distinguished the requirement to "separate and
distinguish" the effects of other factors from a putative requirement to "isolate" those factors, and found the
former was required, while the latter was not.
401 In its submissions, Indonesia sometimes refers to the economic downturn and the decline in demand
as being the cause of the US industry's vulnerability; at other times, it refers to the decline in demand and the
expiration of the black liquor tax credit.
402 Indonesia's first written submission, paras. 109 and 116; response to Panel question No. 92(a).

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analysis, determined whether a threat of injury was likely i n view of the condition of the industry
unaffected by such other factors.403
7.228. The United States argues that the USITC's assessment of vulnerability was based on the
domestic industry's condition at the end of the POI, based on trends in its performance indic ators
during the POI . It was not, as Indonesia asserts, based exclusively on events at the end of the
POI, i.e. the expiration of the black liquor tax credit and declining demand. 404 In fact, the
United States contends, these two elements, moderately declini ng demand and the expiration of
the black liquor tax credit, were changes in circumstances from those during the earlier part of the
POI which underlay the USITC's conclusion that the likely significant increase in subject imports
would be a key driver of domestic prices in the imminent future, and would likely depress prices to
a significant degree. 405 In addition, the United States argues that the USITC cited the declining
demand and expiration of the black liquor tax credit in assessing the "vulnerability" of the
domestic industry as part of establishing the baseline condition of the domestic industry for
purposes of the threat analysis, including the non -attribution analysis, that followed. Hence, the
United States submits, the USITC's "vulnerability" anal ysis was not part of its non -attribution
analysis, but was rather a prelude to that threat analysis.406
7.229. The United States further argues that past panels have recognized that an investigating
authority's finding that an industry is vulnerable to material inj ury would reduce the magnitude of
the change in circumstances necessary to cause the industry to experience material injury in the
imminent future.407 The United States argues that Indonesia's argument would create a Catch -22
situation: Indonesia's theory suggests that a finding of vulnerability stemming from considerations
other than subject imports would preclude attribution of any subsequent future injury to subject
imports and therefore preclude a finding of threat of injury; but where a domestic industry was not
shown to be vulnerable, subject imports could not threaten the industry. The result would be that
investigating authorities could not make findings of threat of material injury, a proposition that
would render Articles 3.7 and 3.8 of the Anti -Dumping Agreement and Articles 15.7 and 15.8 of
the SCM Agreement inutile.408
7.230. We understand Indonesia to argue that the USITC improperly attributed to subject imports
the injury caused by the expiration of the black liquor tax credit and the decline in demand
because it relied on its finding of vulnerability in its evaluation of the likely future impact of subject
imports, without giving due consideration to the fact the domestic industry's vulnerability had been
caused by these other factors, and not by subject imports.409
7.231. We note that panels in several prior disputes have considered it appropriate, and even
necessary, for investigating authorities to first consider the present state of the domestic industry,
before considering whether it is threatened with injur y by reason of subject imports. In particular,
the panel in Egypt – Steel Rebar explained that:
Solely as a matter of logic, it would seem necessary, in order to assess the likelihood
that a particular change in circumstances would cause an industry to beg in
experiencing present material injury, to know about the condition of the domestic
industry at the outset. For example, if an industry is increasing its production, sales,
employment, etc., and is earning a record level of profits, even if dumped imports are
increasing rapidly, presumably it would be more difficult for an investigating authority

403 Indonesia's second written submission, para. 62; response to Panel question No. 41.
404 United States' second written submission, para. 115.
405 United States' first written submission, paras. 296-299.
406 United States' first written submission, para. 293.
407 United States' opening statement at the first meeting of the Panel, para. 52 (referring to Panel
Reports, Egypt – Steel Rebar, para. 7.91; and Mexico – Corn Syrup, para. 7.140); second written submission,
408 United States' opening statement at the first meeting of the Panel, para. 53; second written
submission, paras. 119-120; and opening statement at the second meeting of the Panel, para. 36.
409 Indonesia's opening statement at the first meeting of the Panel, para. 60; second written
submission, para. 54.

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to conclude that it is threatened with imminent injury than if its production, sales,
employment, profits and other indicators are low and/or declining.410
7.232. Recently, the panel in EU – Biodiesel (Argentina) observed that the concept of injury is not
limited to a situation in which the condition of a "healthy" domestic industry worsens over the
course of the POI, but also covers circumstances in which a domestic indust ry already in a difficult
situation at the beginning of the POI sees its situation deteriorate:
[W]hether an industry is in good or poor condition at the outset of the period
examined is not determinative of whether dumped imports caused material injury. …
the concept of injury under Article 3 of the Anti -Dumping Agreement is not limited to
the situation in which a healthy industry is injured by dumped imports. Rather, the
notion of "injury", in our view, calls for an inquiry into whether the situation of the
industry deteriorated during the period considered. Our view is supported by the fact
that Article 3.5 itself envisages the possibility of more than one factor causing
injury.411
7.233. We agree with the understanding of the panel in EU – Biodiesel (Argentina). In our view,
the same considerations apply in the context of a threat analysis. The fact that other factors may
have contributed to rendering the domestic industry "vulnerable" – i.e. more susceptible to future
injury – does not, in our view, preclude an investigating authority from finding a causal link
between subject imports and a threat of future injury to the domestic industry. Thus, to the extent
that Indonesia is suggesting that the fact that the domestic industry's vulnerable condition was
caused by factors other than dumped or subsidized imports requires the authority not to attribute
future injury to subject imports or precludes a finding of threat of injury, we consider that there is
no basis in Articles 3 and 15 for this suggestion. We reject th e view that, if a domestic industry is
found to be vulnerable to future injury for reasons other than the effect of subject imports during
the POI, then it cannot be found to be threatened with injury by future subject imports. That said,
where other facto rs contributed to the vulnerability of a domestic industry, we would expect that
the likely future impact of such other factors would be considered and addressed by the
investigating authority, so as to ensure that any likely future injury resulting from t hese other
factors is not attributed to the subject imports.
7.234. In the present case, on the basis of its consideration of various factors, the USITC found
that the domestic industry was vulnerable at the end of the POI. 412 The USITC reached this
conclusion in its consideration of the question of threat of injury, having already determined that
there was no present material injury by reason of subject imports during the POI. In the course of
reaching the latter conclusion, the USITC determined that the deteriora tion in the domestic
industry's condition coincided with an economic downturn and a sharp decline in demand for
coated paper.413 On this basis, and in light of the fact that when subject imports largely left the
market in interim 2010 due to the pendency of the investigation, many of the domestic industry's
performance indicators did not improve, the USITC "[did] not find a sufficient causal nexus
necessary to make a determination that the subject imports [were] having a significant adverse
impact on the dome stic industry".414 However, notwithstanding declining demand, the downward
trends in virtually all of the domestic industry 's performance indicators during the period weighed
heavily in the consideration of the impact of subject imports in the imminent futur e as part of the
USITC's conclusion that the industry was vulnerable to material injury.415

410 Panel Report, Egypt – Steel Rebar, para. 7.91. See also Panel Report, Mexico – Corn Syrup,
para. 7.131:
[T]he text of the AD Agreement requires consideration of the Article 3.4 factors in a threat
determination. Article 3.7 sets out addit ional factors that must be considered in a threat case,
but does not eliminate the obligation to consider the impact of dumped imports on the domestic
industry in accordance with the requirements of Article 3.4.
411 Panel Report, EU – Biodiesel (Argentina), para. 7.469. (fn omitted; emphasis original)
412 USITC Final Determination, (Exhibit US-1), p. 38.
413 USITC Final Determination, (Exhibit US-1), p. 37.
414 USITC Final Determination, (Exhibit US-1), p. 38. The USITC had found that there were "some
evidence that the imports depressed domestic prices, but the record [did] not establish that the effects of
subject imports on domestic prices were significant". (Ibid. p. 37).
415 USITC Final Determination, (Exhibit US-1), p. 38.

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7.235. The USITC considered that this vulnerability made the domestic industry more susceptible
to future injury caused by increased subject imports. 416 Contrary to Indonesia' s suggestion, the
USITC did not find that the expiration of the black liquor tax credit contributed to rendering the
domestic industry vulnerable. Rather, the USITC observed that the situation of the domestic
industry might have been worse at the end of the POI, but for the revenues from this tax credit.417
In our view, that the decline in demand during the POI may have contributed to the domestic
industry's vulnerability did not, in and of itself, preclude the USITC from finding that industry
vulnerable, or from concluding that subject imports would, in the imminent future, cause material
injury to the domestic industry.
7.236. Finally, we note that Indonesia maintains that the United States wrongly presumes that
the USITC did not err in considering whether subject imports threatened to cause injury taking into
account the condition of the domestic industry at a single point in time, the end of the POI.
Indonesia contends that nothing in Articles 3.7 and 15.7 requires an investigating authority to
consider a single point in time in assessing the domestic industry's condition and whether there is
a threat of injury. According to Indonesia, these provisions require an investigating authority to
consider the totality of what happened during the entire POI and to identif y clear and foreseeable
changes in circumstances that would cause subject imports to injure the domestic industry. 418 We
see nothing in the text of these provisions that would support Indonesia's position.
7.237. We now turn to the USITC's consideration of the thre e alleged "other factors" which
negatively affected the domestic industry during the POI in the context of its non -attribution
analysis in finding threat of material injury.
7.6.2.6 Projected decline in demand
7.238. Indonesia argues that the USITC should have found tha t the projected decline in demand
broke the causal link between subject imports and the threat of injury to the domestic industry ,
particularly given that the declining US demand led to the domestic industry's vulnerability, which
in turn was a basis of th e USITC's threat of injury determination. Indonesia also argues that the
USITC's consideration of the decline in demand as an "other factor" consists of a single conclusory
sentence (quoted in para graph 7.241 below) and lacks analysis, such that it is impossible to
evaluate whether it is reasonable.419
7.239. The United States maintains that the USITC demonstrated that subject imports would have
adverse effects on the domestic industry independent of the projected decline in demand: the
USITC explained that the likely increase in the volume of subject imports, coupled with
underselling by those imports, would cause material injury to the domestic industry in the
imminent future given its vulnerable condition. The United St ates submits that the USITC
explained that the projected moderate decline in demand would likely exacerbate the adverse
impact of subject imports on the domestic industry, as in view of moderately declining demand,
the market could not accommodate the like ly increase in subject import volumes without injury to
the domestic industry, and this increase would take sales from current suppliers, including
domestic producers.420 The United States adds that the USITC explained in its findings that the

416 USITC Final Determination, (Exhibit US-1), p. 38: "Given that the industry is already in a weakened
state, we conclude that, unless antidumping duty and countervailing duty orders are issued, significant
volumes of dumped and subsidized imports will gain additional U.S. market share in the imminent future and
material injury by reason of subject imports will occur" (emphasis added). The USITC also considered that, in
light of the projected moderate decline in demand, future growth in import volumes would not be in response
to growing demand, but would take sales from current suppliers such as the domestic industry. (Ibid.).
417 USITC Final Determination, (Exhibit US-1), fn 249. As we have noted above, the USITC also
considered that the black liquor tax credit contributed to lowering domestic prices during the POI. This was one
of the considerations that led the USITC not to find that subject imports significantly depressed domestic prices
during the POI, notwithstanding some evidence of price depression by subject imports during the POI. (Ibid.
p. 33).
418 Indonesia's response to Panel question No. 92(c).
419 Indonesia's first written submission, paras. 109 and 116.
420 United States' first written submission, para. 300; opening statement at the first meeting of the
Panel, para. 55.

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projected decl ine in demand was not of such a magnitude as to render insignificant the likely
injurious effects of subject imports or to obscure their contribution to these injurious effects.421
7.240. We recall that an investigating authority may consider the state of the domestic industry at
the end of the POI as the starting point of its threat of injury analysis notwithstanding the fact that
the state of the domestic industry may in part result from the effect of factors other than subject
imports. For this reason, the fact that the decline in demand during the POI negatively affected the
domestic industry did not preclude the USITC from concluding that subject imports would cause
injury to the domestic industry in the imminent future. Thus, our analysis focuses on the USITC's
consideration of the likely impact, in the imminent future, of the projected decline in demand.
7.241. The USITC concluded that the "modest" decline in demand projected for 2010 -2012 (3.3%
for 2011 and 2.5% for 2012) 422 would not render insignificant the likely e ffects of subject imports
on the domestic industry:
As noted, U.S. consumption of CCP is projected to decline modestly from 2010 to
2011. Although a lower level of consumption is likely to limit the domestic industry's
sales opportunities and restrain pote ntial price increases to some degree, the decline
is not of a magnitude that would render insignificant the likely effects of subject
imports that we have described above.423
7.242. In addition, we recall that, in finding that subject imports threatened injury in t he
imminent future, the USITC had observed that, given the projected decline in US consumption, the
US market would not be able to accommodate growth in subject imports without material injury to
the domestic industry because in this context, future subjec t imports would not be in response to
growing demand, but would take sales from current suppliers, including the domestic industry.424
7.243. The USITC also discussed the decline in demand during the POI in its consideration of the
price effects of subject imports and of the impact of such imports during the POI. Concerning price
effects, the USITC described the decline in demand during the POI as a factor that contributed to
lowering prices during the POI. 425 In its consideration of the impact of subject imports, th e USITC
noted that US demand had declined by 21.3% from 2007 to 2009. 426 The USITC also cited the
economic downturn and the "sharp decline in demand" as an "other factor" contributing to injuring
the domestic industry, that led it, inter alia, to conclude that there was an insufficient causal nexus
between the subject imports and the adverse impact on the domestic industry. The domestic
industry's resulting "weakened state" was an important consideration in the USITC's conclusion

421 United States' first written submission, paras. 300 and 305.
422 The figures are redacted from the public version of the USITC Final Determination, (Exhibit US-1),
pp. 38 and II-12. However, the US demand projections data were provided to the Panel, Indonesia, and the
third parties in Excerpt from Petitioners Post-hearing Brief to USITC, a public document, ((Exhibit US-4), p. 1
and exhibit 1 (RISI Paper Trader, July 2010), p. 21), and were discussed in the United States' first written
submission (inter alia, in paras. 229 and 243). Indonesia does not challenge the USITC's reliance on these
projections.
423 USITC Final Determination, (Exhibit US-1), pp. 38-39.
424 USITC Final Determination, (Exhibit US-1), p. 38. The USITC stated that "Although apparent U.S.
consumption recovered somewhat in interim 2010 from its lowest levels in 2009, RISI projects a decline of
[3.3] percent in apparent U.S. consumption from 2010 to 2011 and a further reduction of [2.5] percent in
2012." As noted above (fn 422) the figures were redacted from the public version of the USITC Final
Determination but were included in the Petitioners' Post-hearing Brief and provided to the Panel as Exhibit
US-4. Moreover, in its analysis of the future price effects of subject imports, the USITC considered that falling
consumption and increased pulp production due to the black liquor tax credit, which had likely placed negative
pressure on domestic prices during the POI, would not play the same role in the imminent future. The USITC
considered that:
Domestic consumption is likely to decline only modestly from 2010 to 2011. Although sluggish
demand will likely restrain price recovery to some degree, there are no projections of a sharp
falloff in consumption similar to the one in 2009. In addition, the "black liquor" tax credit expired
in 2009 and is not likely to be renewed. Without the prominence of these other market forces,
we anticipate that a key driver of domestic market prices will be the significant volumes of
subject import s. We have described above how the subject imports led domestic prices
downward in late 2008 and early 2009.
(USITC Final Determination, (Exhibit US-1), p. 34)
425 USITC Final Determination, (Exhibit US-1), p. 33.
426 USITC Final Determination, (Exhibit US-1), e.g. pp. 22 and C-6 (table C-3).

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that unless anti-dumping and countervailing duty orders were issued, subject imports would cause
material injury to the domestic industry in the imminent future.427
7.244. The USITC's analysis of likely injury primarily hinges on its findings concerning the effects
of the projected increase in the volume of imports (due, in large part, to the projected increase in
capacity in China) and its conclusion that they would undersell domestic coated paper. 428 In
reviewing the USITC's consideration of the future impact of the projected decline in demand, we
note in particular the USITC's characterization of the projected decline in demand as "modest". In
this respect we note that while from 2007 to 2009, US coated paper consumption declined by
21.3% (-7.7% in 2007-2008 and -14.7% in 2008-2009)429, according to the Resource Information
Systems Inc. (RISI) data on which the USITC relied, it was projected to decline by 3.3% in 2011
and 2.5% in 2012. 430 The fact that a much larger decline in demand (21.3%) had not persuaded
the USITC to conclude that there was a c ausal link between subject imports and the injury to the
domestic industry at the end of the POI does not in our view mean that it was precluded from
finding threat of injury notwithstanding a projected decline of 5.8%. We see no reason why the
lesser magnitude of the projected decline, in the circumstances of the domestic industry projected
for the imminent future, should necessarily have led the USITC to the same negative conclusion it
reached with respect to causation of present material injury. In our v iew, the USITC's explanation
regarding the likely future impact of the projected decline in demand, that it was "not of a
magnitude that would render insignificant the likely effects of subject imports," is a reasonable one
in light of the facts, and one t hat could have been reached by an objective an d unbiased
investigating authority. In light of the foregoing, we conclude that Indonesia has failed to establish
that the USITC attributed to subject imports imminent injury that was likely to be caused by the
projected decline in demand.
7.6.2.7 Expiration of the "black liquor" tax credit
7.245. "Black liquor" is a by -product of paper pulp production. The tax credit at issue was an
alternative fuel tax credit of USD 0.50 per gallon of "black liquor" that certain domestic in dustry
producers received in 2009. 431 The tax credit went into effect in late 2007 and expired at the end
of 2009.432 Before the USITC, respondent parties contended that the tax credit allowed domestic
producers to lower prices on certain coated paper in 2009 433, whereas petitioners argued that the
tax credit was not a factor in domestic producers' pricing decisions in 2009.434

427 USITC Final Determination, (Exhibit US-1), p. 38.
428 However, contrary to the United States' suggestion, the USITC's finding with respect to the effects of
subject imports in the future is not entirely independent of the projected decline in demand – the USITC makes
the point that "the U.S. market cannot accommodate growth in subject imports without material injury to the
U.S. industry" and that the increased import volumes will not be in response to a growing demand, but will
take sales from, inter alia, the domestic industry.
429 USITC Final Determination, (Exhibit US-1), table C-3 on p. C-6.
430 USITC Final Determination, (Exhibit US-1), p. 38; Excerpt from Petitioners Post-hearing Brief to
USITC, (Exhibit US-4), p. 1 and exhibit 1 (RISI Paper Trade, July 2010), p. 21; and United States' first written
submission, paras. 229 and 243.
431 USITC Final Determination, (Exhibit US-1), pp. V-2 and VI-18-VI-20. The United States indicates that
domestic producers qualified for the alternative fuel mixture credit because they used black liquor, a
by-product of their wood pulping process, as an alternative fuel to power their paperboard mills.
(United States' response to Panel question No. 46(a)).
432 USITC Final Determination, (Exhibit US-1), p. 25. The final determination indicates that between
USD 132 million and USD 2.1 billion in black liquor tax credit, albeit not all attributable to coated paper
production, was reported by individual US producers as part of their "operating income" or "other income".
(USITC Final Determination, (Exhibit US-1), fn 164).
433 In its Pre-hearing Brief, APP referred to the black liquor tax credit as "a massive … subsidy, that
created an enormous incentive for domestic producers to lower prices to buy the volume that would earn them
these tax credits". (Excerpt from APP Pre-hearing Brief to USITC, pp. 24, 30, 36, 49-53, and 72, (Exhibit
US-95), p. 24). See also APP Pre-hearing Brief to USITC, (Exhibit IDN-45) p. 3 where APP argues that
"NewPage has repeatedly stated that it passed through this tax credit in the form of lower prices to customers.
The record confirms substantial pass-through of these credits. This change in 2009 had a major impact on
domestic price levels, for both integrated and non-integrated producers" and that "Intra-industry competition
intensified in 2009, as domestic producers increasingly began to compete fiercely for a larger share of a
declining total market, so they could expand production to claim the lucrative 'black liquor' subsidies. These
credits and the ensuring [sic] intra-industry competition seriously distorted the market in 2009, and drove
down prices." (emphasis original). APP makes similar comments on p. 36 of the same document.
434 USITC Final Determination, (Exhibit US-1), p. 25.

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7.246. Although Indonesia's formulation of its argument has varied over the course of these
proceedings435, we understand Indonesia to take the position that the expiration of the black liquor
tax credit was an "other factor" that would be causing injury to the domestic industry in the future,
and that the USITC impermissibly attributed injury caused by the expiration of this tax credit to
subject imp orts. Indonesia notes in this respect that the USITC found that the black liquor tax
credit mitigated the effects of price depression by subject imports and benefited domestic
producers' costs and production-related activities. Indonesia asserts that the USITC considered the
black liquor tax credit as one of the factors that broke the causal link between subject imports and
the domestic industry's condition during the POI. Indonesia argues that the USITC failed to give
any consideration or devote any of its threat analysis to the fact that subject imports would likely
respond differently in a market without the "subsidy" of the black liquor tax credit.436 Indonesia
also faults the USITC for failing to undertake a "concrete analysis" of this factor, based on
economic constructs, as it had done in its present injury analysis. 437 Indonesia also faults the
USITC for examining the question of threat of injury in the context of a domestic industry that was
vulnerable.438
7.247. The United States argues that having expired in 20 09, the black liquor tax credit was no
longer an "other factor" for the investigating authority to "examine" pursuant to Articles 3.5 and
15.5, and the USITC logically considered that the credit would have no effect – positive or
negative439 – going forward. The United States disputes Indonesia's assertion that the USITC
found that the expiration of the black liquor tax credit was a source of domestic industry
vulnerability. Rather, the USITC noted that the domestic industry's financial indicators in 2009
might have been even worse than they were, but for the temporary black liquor tax credit
payments in that year. The United States submits that the USITC considered the black liquor tax
credit as a one -time event that might have obscured the full extent of the domestic industry's
vulnerability in 2009 and found that its non -renewal eliminated a factor that had contributed to
lower domestic like product prices in 2009, thereby obscuring the contribution of subject imports
to price depression in that year. 440 The U nited States also submits that, in the investigation,
Indonesian interested parties did not argue that the expiration of the black liquor tax credit would
likely injure the domestic industry in the future.441
7.248. The USITC considered that black liquor tax credi t payments received by producers during
the POI reduced their costs and improved their financial position in 2009. The USITC also
mentioned the black liquor tax credit as a factor that obscured the contribution of subject imports
to negative price effects during the POI and made it unclear whether the prices evidenced a
negative trend, given that the tax credit contributed to reducing domestic producers' prices. 442 In
its threat of injury determination, the USITC noted that the tax credit expired at the end o f 2009;
therefore any benefit that the domestic industry had received from it in 2009 would not continue
into the imminent future. 443 The USITC did not address the black liquor tax credit further and did
not discuss it in considering non-attribution.

435 Indonesia has argued that the USITC found that the black liquor tax credit was another factor that
broke the causal link between subject imports and the condition of the domestic industry during the POI
(Indonesia's response to Panel question No. 47); that the tax credit rendered the domestic industry vulnerable
(Indonesia's first written submission, para. 114; response to Panel question No. 97); that its expiration
rendered the domestic industry vulnerable (Indonesia's first written submission, paras. 109; response to Panel
question Nos. 41 and 47; second written submission, paras. 55-63); and that the USITC found that the
expiration of the tax credit was a cause of likely future injury to the domestic industry because it contributed to
the US industry's vulnerability (Indonesia's first written submission, paras. 106, 108, and 109; response to
Panel question No. 45(a)).
436 Indonesia's second written submission, para. 55.
437 Indonesia's opening statement at the first meeting of the Panel, para. 61.
438 Indonesia's response to Panel question No. 47.
439 The United States also submits that while the USITC "recognized that domestic producers received
revenues from the black liquor tax credit in 2009, [it] never found that the black liquor tax credit yielded a net
benefit to the domestic industry". (United States' response to Panel question No. 46(a) (referring to USITC
Final Determination, (Exhibit US-1) fns 164 and 249)).
440 United States' second written submission, paras. 117 and 125.
442 USITC Final Determination, (Exhibit US-1), p. 33.
443 USITC Final Determination, (Exhibit US-1), p. 38. As noted above (fn 424) in its analysis of the
future price effects of subject imports, the USITC also considered that falling consumption and increased pulp
production due to the black liquor tax credit, which had expired in 2009, had likely put negative pressure on

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7.249. We recall that, rather than finding the black liquor tax credit to have been an "other factor"
causing injury to the domestic industry, the USITC found that it mitigated the injury suffered by
the domestic industry during the POI. Having noted that the black liquor tax credit had expired at
the end of 2009, such that it would have no effect going forward, it is clear that the USITC
regarded the black liquor tax credit as a one-time event (limited to year 2009), the expiry of which
would have no impact on the domes tic industry in the future. In our view, an unbiased and
objective investigating authority could have considered, as the USITC did, that the expiration of a
tax credit which only benefited the domestic industry during one year of the POI was not an "other
factor" threatening to cause injury to the domestic industry in the future. 444 In other words, an
unbiased and objective authority could, in the circumstances, have considered the absence of a
temporary, one -off, financial benefit that was no longer in effec t at the end of the POI as the
"baseline" for its consideration of whether subject imports threatened material injury to the
domestic industry. In our view, the USITC's treatment of the absence of the black liquor tax credit
in the future is reasoned and adequate.445, 446
7.250. For the foregoing reasons, we conclude that Indonesia has not established that the USITC
acted inconsistently with Articles 3.5 and 15.5 with respect to its treatment of the expiration of the
black liquor tax credit.
7.6.2.8 Non-subject imports
7.251. The USITC found that non -subject imports were not an "other factor" that rendered
insignificant the likely effects of subject imports as a cause of imminent injury to the domestic
industry. The USITC observed that non -subject imports lost market share to both subject imports
and the domestic like product (except in interim 2010 when subject imports declined, and
non-subject imports gained market share) and that they were generally priced higher than subject
imports. The USITC concluded that in the future, subject imports would compete on price to regain
the market share that they lost both to the domestic industry, and to non -subject imports in
interim 2010.447

domestic prices during the POI, but would not play the same role in the imminent future. The USITC found that
"[w]ithout the prominence of these other market forces … a key driver of domestic market prices will be the
significant volumes of subject imports". (USITC Final Determination, (Exhibit US-1), p. 34).
444 There is some disagreement between the parties as to whether the overall impact of the tax credit
on the domestic industry was, during the period that it was in place, a positive one. We are, in our analysis,
focusing on the impact of the tax credit during the POI as benefiting domestic producers and mitigating the
downward trend in their financial condition and the absence of that positive impact on domestic producers in
the future.
445 As noted above, Indonesia also argues that the USITC failed to give any consideration or devote any
of its threat analysis to the fact that subject imports likely would respond differently in a market without the
"subsidy". It is not clear to us whether this argument of Indonesia is a reference to the USITC's analysis of
future price effects of subject imports. In any event, we address the USITC's analysis concerning future price
effects in the following section of this Report, concerning Indonesia's claims under Articles 3.7 and 15.7.
446 In reaching this determination, we recall that Indonesian interested parties did not argue during the
investigation that the expiration of the black liquor tax credit would likely injure the domestic industry in the
future. Thus, it is not clear to us that the expiration of the black liquor tax credit was a "known" other factor
threatening injury to the domestic industry. Interested parties' arguments focused on the price-lowering effects
of the tax credit during the POI, and to some extent the impact of its expiration on the domestic industry's
performance. (Indonesia's response to Panel question No. 47 (referring to Excerpt from APP Pre-hearing Brief
to USITC, pp. 5 and 51, (Exhibit IDN-36), p. 5)).
447 USITC Final Determination, (Exhibits IDN-18/US-1), p. 39:
The same [i.e. that they would not render insignificant the likely effects of subject imports] is
true for CCP imports from countries other than China and Indonesia. These nonsubject imports
were sold in the U.S. market throughout the period examined, although from 2007 to 2009 their
market share declined by 9.3 percentage points overall fr om 25.4 percent in 2007 to
16.1 percent in 2009. The market share held by nonsubject imports was 18.4 percent in interim
2009 and 24.5 percent in interim 2010. Although nonsubject imports did gain market share in
interim 2010 when subject imports left the market due to the pendency of the investigations, the
domestic industry also gained 6.8 percentage points of market share from interim 2009 to
interim 2010. Moreover, the availabl e data reflect that non -subject imports are generally priced
higher than subject imports. Once the preliminary duties are lifted, subject imports will compete
on price to regain the market share that they lost both to the domestic industry and to
non-subject imports in interim 2010, which will in turn result in a more price -competitive U.S.
market.

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7.252. Indonesia argues that the USITC's threat of injury determination is devoid of any analysis
that accounts for the fact that subject imports would not take market share exclusively from the
domestic industry but, rather, were likely to gain market share from non -subject imports.
Indonesia notes in this respect that the USITC found that during the POI, subject imports gained
market share at the expense of non -subject imports and not the domestic industry. Indonesia
argues that to the extent subject imports gained market share from non -subject imports in the
future, this would reduce the likelihood of an adverse impact on the domestic industry. 448 Thus,
Indonesia's argument goes to the USITC's explanation for its finding that subject imports would, in
the future, take market share from both the domestic industry and non-subject imports.
7.253. The United States argues tha t the USITC identified no injurious effects caused by non -
subject imports during the POI, and that Indonesia does not argue that non -subject imports would
cause injury to the domestic industry, and therefore cannot establish that the USITC improperly
attributed to subject imports injury likely to be caused by non-subject imports. 449 The
United States also argues that there is no inconsistency between the USITC's findings concerning
market shares during the POI and its finding that subject imports would take s ales from the
domestic industry in the future.450
7.254. Indonesia does not argue that non -subject imports would in the future cause injury to the
domestic industry.451 To the contrary, Indonesia's argument seems to be that non -subject imports
would mitigate any inj urious effect of future subject imports by losing market share to those
imports, rather than the domestic industry losing such market share. Given that Indonesia does
not allege that non -subject imports were an "other factor" threatening to cause injury to the
domestic industry452, we conclude that Indonesia has failed to establish a claim that the USITC
failed to properly examine whether injury threatened by non -subject imports was attributed to the
subject imports. Consequently, we conclude that Indonesia h as failed to make a prima facie case
of violation of the non -attribution obligation under Articles 3.5 and 15.5 with respect to the
USITC's examination of non-subject imports, and we reject Indonesia's claim as it pertains to this
alleged "other" factor.
7.6.2.9 Overall conclusion concerning Indonesia's claims under Article 3.5 of the
Anti-Dumping Agreement and Article 15.5 of the SCM Agreement
7.255. In light of the foregoing, we find that Indonesia has failed to establish that the USITC's
threat of injury determination is inconsistent with Article 3.5 of the Anti -Dumping Agreement and
Article 15.5 of the SCM Agreement because the USITC attributed to the subject imports adverse
effects caused by other factors.
7.6.3 Claims under Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the
SCM Agreement (threat of injury)
7.6.3.1 Introduction
7.256. Indonesia claims that the USITC's threat of injury determination is inconsistent with
Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the SCM Agreement because the
USITC based cer tain findings on conjecture and remote possibility. 453 Specifically, Indonesia
challenges two intermediate findings that form part of the basis for the USITC's affirmative threat
of injury determination : that subject imports would gain market share at the ex pense of the
domestic industry; and that subject imports would have adverse price effects on domestic

448 Indonesia's first written submission, paras. 110 and 117; response to Panel question No. 48(b).
449 United States' first written submission, paras. 301 and 306-308; second written submission, fn 218.
450 United States' first written submission, paras. 301 and 306-308.
451 See Indonesia's response to Panel question No. 48(b): "To the extent subject imports gained market
share from nonsubject imports, this would reduce the likelihood of an adverse impact on the domestic
industry." This suggests that Indonesia's position is not that non-subject imports threatened injury, i.e. were
an "other known factor [threatening to cause] injury" but rather that they would mitigate any injury caused by
subject imports by losing market share to those imports.
452 We also note that there is no indication in the record evidence submitted to the Panel that arguments
were made before the USITC to the effect that non-subject imports were causing, or would in the future cause,
injury to the domestic industry.
453 Indonesia's first written submission, para. 4.

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prices.454 For Indonesia, the USITC based these findings on conjecture or speculation regarding
certain events which were not clearly foreseen and imminent , in viola tion of Article 3.7 and
Article 15.7.455
7.257. The United States argues that the USITC based its threat of injury determination on facts
and changes in circumstances which were clearly foreseen and imminent and requests that the
Panel reject Indonesia's claims.456
7.6.3.2 Legal standard under Article 3 .7 of the Anti -Dumping Agreement and Article
15.7 of the SCM Agreement
7.258. Article 3.7 of the Anti-Dumping Agreement provides as follows:
A determination of a threat of material injury shall be based on facts and not merel y
on allegation, conjecture or remote possibility. The change in circumstances which
would create a situation in which the dumping would cause injury must be clearly
foreseen and imminent. [*] In making a determination regarding the existence of a
threat of material injury, the authorities should consider, inter alia, such factors as:
(i) a significant rate of increase of dumped imports into the domestic market
indicating the likelihood of substantially increased importation;
(ii) sufficient freely disposable, or an imminent, substantial increase in, capacity
of the exporter indicating the likelihood of substantially increased dumped
exports to the importing Member's market, taking into account the availability
of other export markets to absorb any additional exports;
(iii) whether imports are entering at prices that will have a significant
depressing or suppressing effect on domestic prices, and would likely increase
demand for further imports; and
(iv) inventories of the product being investigated.
No one of these factors by itself can necessarily give decisive guidance but the totality
of the factors considered must lead to the conclusion that further dumped exports are
imminent and that, unless protective action is taken, material injury would occur.
[fn original]10 One example, though not an exclusive one, is that there is convincing reason to believe that
there will be, in the near future, substantially increased importation of the product at dumped prices.
7.259. The text of Article 15.7 of the SCM Agreement lar gely parallels that of Article 3.7 of the
Anti-Dumping Agreement, without footnote 10, and with the addition of a factor that the
investigating authority should consider, namely the nature of the subsidy and the trade effects
likely to arise therefrom (Article 15.7(i)).457
7.260. Indonesia's claims concern the first sentence of Article 3.7 of the Anti-Dumping Agreement
and Article 15.7 of the SCM Agreement, which require an investigating authority to base an
affirmative threat of injury determination "on facts and n ot merely on allegation, conjecture or
remote possibility". In addition, Indonesia refers to the second sentence of the provisions which

454 Indonesia's first written submission, para. 124 (referring to Excerpt from USITC Final Determination,
pp. 3-39 and C-3-C-7, (Exhibit IDN-18), pp. 38-39).
455 Indonesia first written submission, para. 124; opening statement at the first meeting of the Panel,
456 United States' first written submission, para. 259.
457 Prior panels have concluded that decisions concerning Article 3.7 instruct the understanding of
Article 15.7 and vice versa. See, e.g. Panel Report, EC and certain member States – Large Civil Aircraft,
para. 7.2159. Any differences between the two provisions are not pertinent to the issues in this dispute.

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provides that the change of circumstances, which would create a situation in which the dumping or
subsidy would cause injury, must be clearly foreseen and imminent.458
7.261. The Appellate Body has stated that Article 3.7 and Article 15.7 combine positive
requirements – a determination of threat of injury must "be based on facts" and show how a
"clearly foreseen and imminent" chang e in circumstances would lead to further subject imports
causing injury in the near future – with an express prohibition of a determination based "merely on
allegation, conjecture or remote possibility". 459 A threat of injury determination thus requires that
the determination of the investigating authority clearly disclose its inferences and explanations in
order to ensure that any projections or assumptions made by it regarding likely future
occurrences, are adequately explained and supported by positive evi dence on the record 460, and
show a high degree of likelihood that projected occurrences will occur.461
7.262. Article 3.7 and Article 15.7 make clear that certain, listed, factors relating to the likelihood
of increased imports (based on the rate of increase of impor ts, the capacity of exporters, the
availability of other export markets and, under Article 15.7, the nature of the subsidy and the
trade effects therefrom ), the effects of imports on future prices and likely future demand for
imports, and inventories should be considered in making a threat of injury determination .462 It is
also understood that the Anti -Dumping Agreement and the SCM Agreement require consideration
of the Article 3.4 and Article 15.4 factors in a threat of material injury determination. This is in
order to establish a background against which the investigating authority can evaluate whether
imminent further subject imports will affect the industry's condition in such a manner that material
injury would occur in the absence of protective action. 463 In determining the existence of a threat
of material injury, the investigating authorities will also necessarily have to make projections
relating to the "occurrence of future events" since such future events "can never be definitively
proven by facts". Notwithstanding this intrinsic uncertainty, a "proper establishment" of facts in a
determination of threat of material injury must be based on events that, although they have not
yet occurred, must be "clearly foreseen and imminent", in accordan ce with Arti cle 3.7 and
Article 15.7.464
7.263. In this respect, Article 3.7 and Article 15.7 provide that " [t]he change in circumstances
which would create a situation in which the [dumping/subsidy] would cause injury must be clearly
foreseen and imminent". The change in circ umstances that would give rise to a situation in which
injury would occur is not limited – it may encompass a single event, or a series of events, or
developments in the situation of the industry, and/or concerning the dumped or subsidized
imports, which l ead to the conclusion that injury which has not yet occurred can be predicted to
occur imminently.465
7.6.3.3 The USITC's finding that subject imports would gain market share at the
expense of the domestic industry
7.264. Indonesia challenges the USITC's conclusion that su bject imports would gain market share
at the expense of the domestic industry in the imminent future. Indonesia, in particular, takes
issue with the USITC's finding that " future volumes of subject imports [would] take sales from
current suppliers such as t he domestic industry".466 This conclusion was preceded by the USITC's
finding that the volume and market share of subject imports was likely to be significant in the

458 Indonesia's first written submission, para. 122; opening statement at the first meeting of the Panel,
459 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 96 (quoting
Appellate Body Report, US – Lamb, para. 136). See also Appellate Body Report, Mexico – Corn Syrup
460 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 96 (referring to
Appellate Body Report, US – Lamb, para. 136). See also Appellate Body Report, Mexico – Corn Syrup
(Article 21.5 – US), para. 85.
461 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 109.
462 Panel Report, Mexico – Corn Syrup, paras. 7.125-7.126.
464 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 85 (referring to Appellate
Body Report, US – Hot-Rolled Steel, fn 59 and para. 56).
465 Panel Report, US – Softwood Lumber VI, para. 7.57.
466 Indonesia's first written submission, para. 124 (referring to Excerpt from USITC Final Determination,
pp. 3-39 and C-3-C-7, (Exhibit IDN-18), p. 38); opening statement at the first meeting of the Panel, para. 65;

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imminent future. Indonesia also asserts that the USITC bas ed its finding of likely significa nt
increase in subject import volume on conjecture rather than facts.467
7.265. The USITC concluded that subject import volume was likely to be significant in the
imminent future, both in absolute terms and relative to consumption and production in the
United States, and that the increase in subject imports' market share was likely to be
significant.468 The USITC based these conclusions on subject import trends during the POI and on
certain projections it made about the imminent future. These findings are part of the broader set
of considerations that led the USITC to conclude that the domestic industry was threatened with
material injury by reason of subject imports.
7.266. In reaching its finding of a likely increase in subject import volume, the USITC relied
principally on the fact that subject imports increased substantially during the POI, despite a
substantial decline in apparent US consumption , and on its conclusion that subject foreign
producers had the ability and the incentive to further increase shipments to the U nited States in
the imminent future. With respect to the former, the USITC first concluded that, during the POI ,
subject imports from China and Indonesia increased significantly, both on an absolute basis and
relative to apparent US consumption and productio n.469 The USI TC noted that subject imports
were present in substantial volumes and market share at the beginning of the POI and increased
their presence in the US market during the period 2007 -2009. It observed that during this period
subject import volume increased by 3.8% and market share increased by 4.4 percentage points.
Subject imports declined from 398,309 shorts tons in 2007 to 382,245 short tons in 2008, before
increasing "sharply" to 413,593 short tons in 2009. The USITC also noted that, during the same
period (2007-2009), the ratio of subject imports to US production increased by 4.3 percentage
points.470 The USITC observed that subject imports increased despite a substantial decline in
apparent US consumption.471
7.267. As noted above, i n addition, the USITC concluded that subject foreign producers had the
ability to increase exports to the United States. The USITC concluded that the increase in
production capacity in China between 2009 and 2011 would be substantial and that projected
consumption growth in Chi na and in the rest of Asia would not be sufficient to absorb the new
capacity.472
7.268. The USITC also concluded that subject foreign producers had the incentive to increase
exports to the United States. The USITC first found that these producers had a strong int erest in
increasing shipments to the US market. The USITC relied, inter alia, on an affidavit by an official of
a domestic distributor (Unisource affidavit) which indicated that one such producer, APP had
planned to double shipments to the United States and was willing to lower its prices .473 The USITC
also noted that, soon after APP lost its major US distributor – Unisource Worldwide, Inc.

467 In the sections of its submissions concerning its claims under Articles 3.5 and 15.5 and under
Articles 3.8 and 15.8, Indonesia further elaborated on some of the arguments in support of its Articles 3.7 and
15.7 claims. In this section, where relevant we take into account Indonesia's statements that concern its
Articles 3.7 and 15.7 claims, irrespective of where in its submissions Indonesia made these arguments.
468 USITC Final Determination, (Exhibit US-1), pp. 30-31.
469 USITC Final Determination, (Exhibit US-1), p. 27.
470 USITC Final Determination, (Exhibit US-1), p. 26.
471 USITC Final Determination, (Exhibit US-1), p. 30 and fn 230. The USITC noted that apparent US
consumption had declined from 2.86 million short tons in 2007 to 2.64 million short tons in 2008, and to
2.25 million short tons in 2009, for an overall decline of 21.3% between 2007 and 2009. The USITC also noted
that subject imports declined sharply in interim 2010, both in absolute terms and relative to production and
consumption, relative to interim 2009. Subject imports were 210,506 short tons in interim 2009 and
85,033 short tons in interim 2010. On a monthly basis, subject imports continued at elevated levels in January
and February 2010 and then dropped precipitously in March 2010, the month in which the USDOC issued
affirmative preliminary countervailing duty determinations. The USITC found that the decline in subject import
volumes at the end of the POI was attributable to the pendency of these investigations and that, absent these
investigations, the absolute and relative volumes of subject imports would likely have been greater in interim
2010. (USITC Final Determination, (Exhibit US-1), p. 27). The USITC noted in this respect that the statutory
provision governing the USITC's treatment of post-petition information provides that if any change in the
volume of the subject merchandise since the filing of the petition in an investigation is related to the pendency
of the investigation, the USITC may reduce the weight accorded to the data for the period after the filing of the
petition. (USITC Final Determination, (Exhibit US-1), fn 174).
472 USITC Final Determination, (Exhibit US-1), p. 28.
473 USITC Final Determination, (Exhibit US-1), p. 29; Redacted excerpts of USITC Final Determination
and APP Final Comments to USITC, (Exhibit US-107), pp. 1-2.

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(Unisource) – in 2009, APP established its own distributor in the US market – Eagle Ridge Paper
Co. (Eagle Ridge ), which the USITC found was for the purpose of retaining and growing APP's
presence in the US market . 474 The USITC further considered that the US market was well
understood by producers in China and Indonesia, and that it was attractive to subject foreign
producers in terms of prices and other market characteristics.475
7.269. Moreover, the USITC also found that subject imports would cause adverse price effects –
specifically, price underselling and price depression – in the imminent future.476
7.270. The USITC then assessed the lik ely impact of subject imports on the domestic industry.
The USITC found that the domestic industry was vulnerable to material injury given the downward
trend in virtually all of the domestic industry performance indicators during the POI. 477 The USITC
concluded that, given this vulnerable state, the domestic industry would likely continue to
experience even poorer results, as increasing volumes of low -priced subject imports entered the
US market and competed with the domestic like product.478 The USITC added that:
Subject producers have already shown the ability and willingness to lower prices for
subject merchandise that was already underselling the domestic like product in order
to significantly increase their exports to the United States, even in a contractin g
market. We believe that this behavior will continue in the imminent future, particularly
in light of the significant new capacity in China, the establishment of Eagle Ridge in
2009, and the attractiveness of the U.S. market.
The U .S. market cannot accomm odate growth in subject imports without material
injury to the U.S. industry. Although apparent U.S. consumption recovered somewhat
in interim 2010 from its lowest levels in 2009, RISI projects a decline of [3.3] percent
in apparent U.S. consumption from 2 010 to 2011 and a further reduction of [2.5479]
percent in 2012. Accordingly, future volumes of subject imports will not be in
response to growing U .S. demand for CCP, but will take sales from current suppliers
such as the domestic industry.
Given that the i ndustry is already in a weakened state, we conclude that, unless
antidumping duty and countervailing duty orders are issued, significant volumes of
dumped and subsidized imports will gain additional U.S. market share in the imminent
future and material injury by reason of subject imports will occur.480

474 USITC Final Determination, (Exhibit US-1), p. 29.
475 The USITC found that prices were generally higher in the United States than in China or other
markets in Asia. In the USITC's view, the fact that a large share of coated paper was supplied on a spot sales
basis allowed purchasers to switch between suppliers with relative ease. In addition, the USITC considered that
the prevalence of private label products, in which merchants or retailers offer coated paper products under
their own brands, provided a ready avenue for subject imports to expand their presence in the US market even
without an advertising or distribution infrastructure. (USITC Final Determination, (Exhibit US-1), p. 29).
Indonesia submits that the attractiveness of the US market could not be considered a factor that was going to
change in the imminent future. We note that the attractiveness of the US market to subject producers was a
factor that existed throughout the POI. However, the USITC did not conclude that this factor was going to
change in the imminent future. Rather, the USITC concluded that there was no indication that subject
producers would find the US market any less attractive in the imminent future than they did from 2007 to 2009
when they increased their exports to the United States and their market share. (USITC Final Determination,
(Exhibit US-1), p. 29).
476 USITC Final Determination, (Exhibit US-1), pp. 34-35.
477 The USITC indicated that, from 2007 to 2009, the domestic industry suffered double-digit percentage
declines in production, shipments, capacity utilization, net sales, production workers, operating income, and
capital expenditures. (USITC Final Determination, (Exhibit US-1), p. 38).
478 USITC Final Determination, (Exhibit US-1), p. 38.
479 This percentage, as well as the 3.3% projected decline in US consumption from 2010 to 2011, are
redacted from the public version of the USITC's determination. (USITC Final Determination, (Exhibit US-1),
p. 38). However, as noted above, fn 422, the US demand projections data were provided to the Panel,
Indonesia, and the third parties in Excerpt from Petitioners Post-hearing Brief to USITC, a public document,
((Exhibit US-4), p. 1 and exhibit 1 (RISI Paper Trade, July 2010), p. 21), and were discussed in the
United States' first written submission (inter alia, in paras. 229 and 243).
480 USITC Final Determination, (Exhibit US-1), p. 38 (fns omitted). As discussed in the previous section
of this Report, the USITC further considered that the effect of other factors in the imminent future would not
render insignificant the likely effects of subject imports.

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7.271. We now turn to the consideration of Indonesia's arguments in support of its claim that the
USITC based its finding that subject imports would gain market share at the expense of the
domestic industry on conjecture or speculation.
7.6.3.3.1 Market share trends during the POI
7.272. Although Indonesia frames its claims and its arguments as pertaining to the USITC's
findings concerning market share, we understand Indonesia to also take issue with the USITC's
conclusion that futur e volumes of subject imports would not be in response to growing US
demand, but would take sales from current suppliers, including the domestic industry.481
7.273. Indonesia argues that the USITC's finding that subject imports would gain market share at
the domestic industry's expense was based on conjecture or speculation. According to Indonesia,
there was no basis on the record for the USITC to draw this conclusion because that situation –
subject imports taking market share from the domestic industry – did not o ccur during the POI ;
Indonesia submits that during the POI subject imports competed for market share with
non-subject imports, rather than with the domestic industry. 482 In addition, Indonesia argues that,
contrary to the United States' assertion, there was no correlation between increased subject
imports and declining domestic industry US shipments during the POI.483
7.274. Indonesia's central argument in support of its claim s is that the absence of an evident
correlation between subject import and the domestic indus try's market share trends during the
POI undermines the likelihood that subject imports would gain market share from the domestic
industry in the imminent future.
7.275. The United States submits that the USITC had ample evidentiary support for its conclusion
that subject imports would gain market share at the expense of the domestic industry . The
United States considers that Indonesia's arguments are based on mistaken assumptions that
trends during the POI, which influenced the USITC's negative present injury de termination, would
continue in the imminent future. For the United States, Indonesia ignores the explanations
provided by the USITC that clearly foreseen and imminent changes in circumstances made it likely
that subject import volume would increase signifi cantly in the imminent future . 484 The
United States further argues that the USITC's conclusion was based, inter alia, on the fact that the
projected demand could not absorb such an increase, on volume trends during the period
2007-2009 and on market share trends during the interim period.485
7.276. We start by noting that Indonesia's position suggests that a finding with respect to future
events contributing to an affirmative threat of injury determination could be considered to be
based on conjecture rather than facts if events that occurred during the POI do not clearly reflect
the situation the investigating authority predicts would occur. In other words, with respect to the
issue before the Panel, if the market share and volume of subject imports, on the one hand, and of
the domestic industry , on the other, show no clear inverse correlation during the POI, a
determination that in the imminent future subject imports would gain market share at the expense
of the domestic industry would necessarily be based on conjecture rather than facts.

481 Indonesia's first written submission, para. 129 (referring to Excerpt from USITC Final Determination,
pp. 3-39 and C-3-C-7, (Exhibit IDN-18), p. 38).
482 Indonesia submits that, during the period 2007-2009, subject imports and the domestic industry
gained market share from non-subject imports; and, in the interim period, subject imports lost market share,
while non-subject imports gained market share. (Indonesia's first written submission, para. 128. (referring to
Excerpt from USITC Final Determination, pp. 3-39 and C-3-C-7, (Exhibit IDN-18), pp. 22-23)).
483 Indonesia's opening statement at the first meeting of the Panel, para. 65 (referring to United States'
first written submission, para. 263).
484 The United States, in particular, refers to the USITC's conclusion that subject producers possessed
both the ability and the incentive to increase their exports to the United States in the imminent future.
(United States' first written submission, paras. 223, 261, and 284).
485 United States' first written submission, paras. 267-271. The United States submits that Indonesia
does not dispute that subject import volume was likely to increase significantly in the imminent future.
(United States' opening statement at the first meeting of the Panel, para. 45; second written submission,
para. 131). However, several of Indonesia's arguments, particularly those related to the USITC's determination
of likely increase in subject producers' capacity, the establishment of Eagle Ridge and the Unisource affidavit,
challenge this very finding. (See, for instance, Indonesia's second written submission, para. 75).

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7.277. We do not agree. In our view, projections about future events need not necessarily reflect
a continuation of trends that took place during the POI for a threat of injury determination to be
based on facts as opposed to allegation, c onjecture or remote possibility . As noted above, an
investigating authority is required to provide a reasoned and adequate explanation as to how
evidence in the record supports its finding that a situation of injury w ould occur in the imminent
future.486 While we would expect the authority to rely on facts from the present to support the
projections it makes about the future and its resulting conclusions about the future, in our view
events that took place during the POI provide the background against which a n investigating
authority can evaluate the likely future events, but do not limit the scope of projections that the
authority may make concerning future events .487 Of course, the investigating authority would be
expected to explain the change in circumstance s that will result in the future situation being
different from the past.
7.278. With these considerations in mind, we proceed to examine the arguments put forward by
Indonesia in support of its contention that the USITC's finding regarding the likely future mark et
share of subject import was based on conjecture rather than facts.
7.279. We note that , as Indonesia asserts, the USITC observed that over the period 2007-2009,
subject imports and the domestic industry gained market share at the expense of non-subject
imports, in a context of a significant decline in demand of 21 .3%. 488 While non-subject
imports' market share decreased from 25.4% in 2007 to 16.1% in 2009 ( -9.3 percentage
points)489 , subject import s' market share increased from 13.9% in 2007 to 18.3% in 2009
(+4.4 percentage points) 490 and the domestic industry 's market share increased from 60.7% in
2007 to 65.5% in 2009 ( +4.8 percentage points). 491 However, the USITC also noted that in the
last part of the POI, i.e. in the interim period , when subject imports left the market due to the
pendency of the investigations , both non-subject imports' and the domestic industry 's market
share increased.492 The volume of s ubject imports decreased from 210,506 short tons in interim
2009 to 85,033 short tons in interim 2010 493, and their market share declined by 12.9 percentage
points from interim 2009 to interim 2010 (from 19.7% to 6.8% ), while non-subject imports' and
the domestic industry's market shares increased by 6.1 percentage points (from 18.4% to 24.5%)
and 6.8 percentage points (from 61.9% to 68.7%), respectively.494
7.280. Indonesia submits that there was no correlation between subject import volumes and the
decline in the domestic industry's shipments , because the volume of the domestic industry's
shipments declined in each year of th e POI, including from 2007 to 2008, when the volume of
subject imports also declined. 495 According to Indonesia, if there were a correlation between
subject import volumes and domestic shipments, one would expect domestic shipments to have
increased during the period in which subject imports declined (i.e. 2007-2008).
7.281. Volume trends during the POI do not support Indonesia's allegation that subject import
volumes and domestic industry shipments were not correlated. The USITC noted that during the
period 2007 -2009, in a context of significant decline of demand, subject imports were the only
source whose volume increased in the US market, as the volume of the domestic industry's US

487 In this regard, we share the view of the panel in US – Softwood Lumber VI that the consideration of
the factors set out in Article 3.2 and Article 3.4 of the Anti-Dumping Agreement, and Article 15.2 and
Article 15.4 of the SCM Agreement, in the context of a threat of injury analysis, "forms part of the background
against which the investigating authorities can evaluate the effects of future dumped and/or subsidized
imports". (Panel Report, US – Softwood Lumber VI, para. 7.111).
488 Apparent US consumption declined from 2.86 million short tons in 2007 to 2.64 million short tons in
2008, and to 2.25 million short tons in 2009. Apparent US consumption was 1.07 million short tons in interim
2009 and 1.25 million short tons in interim 2010. (USITC Final Determination, (Exhibit US-1), pp. 22, 26, 36,
and 44; fns 129 and 230; and table C-3).
489 USITC Final Determination,(Exhibit US-1), pp. 23, 36, and 39; table IV-7, p. IV-12; and table C-3,
p. C-6.
490 USITC Final Determination,(Exhibit US-1), pp. 22 and 36; table IV-7, p. IV-12; and table C-3, p. C-6.
491 USITC Final Determination,(Exhibit US-1), pp. 22 and 36; table IV-7, p. IV-12; and table C-3, p. C-6.
492 USITC Final Determination,(Exhibit US-1), p. 39.
493 USITC Final Determination, (Exhibit US-1), p. 27 and table C-3.
494 USITC Final Determination, (Exhibit US-1), pp. 22, 23, and 39, and table C-3.
495 Indonesia's opening statement at the first meeting of the Panel, para. 70; second written
submission, para. 72 (referring to Excerpt from USITC Final Determination, pp. 3-39 and C-3-C-7, (Exhibit
IDN-18), table C-3).

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shipments and of non-subject imports declined over this period .496 Indonesia's argument focuses
on the single year of the POI in which subject imports decreased , without acknowledging the
USITC's overall conclusion regarding the evolution of subject import volume over the entire POI.497
As indicated above, despite the decrease in the first year of the POI, the USITC found that, during
2007-2009, subject imports increased and that the increase was significant. 498 In contrast, the
domestic industry's shipment volumes declined throughout this period. We also note that, in the
last part of the POI , namely interim 2010, when subject imports' volume declined, the domestic
industry's shipments and non-subject import volume increased.
7.282. In light of the foregoing, in our view, the movements in market share throughout the POI,
especially in the interim period, do not support Indonesia's allegation that subject imports and the
domestic industry did not compete for market share during the POI, or that the changes in their
respective market share s showed no correlation during the POI. Nor do we read the USITC
determination as reflecting a finding that subject imports competed only with non -subject imports
for market share during the POI, as Indonesia suggests. 499 The relative changes in volumes and
market share s of the domestic industry, subject imports and non-subject imports during the
entirety of the POI suggest, on the contrary, that these three groups of suppliers competed in the
US market to a large extent. Thus, in our view, this aspect of the USITC's findings is not
contradicted by the evidence before it.
7.283. Indonesia submits that trends during the interim period are not indicative of how subject
imports would compete for market share with the domestic industry if orders were not imposed
because subject imports left the market due to the pendency of the inves tigations. According to
Indonesia, this was not a market share gain in the traditional sense of competing for customers. 500
Indonesia, in addition, faults the USITC for finding that the removal of preliminary duties was a
key change in circumstances justifying the imposition of duties.501
7.284. In our view, Indonesia's arguments impl y that the decline in subject imports and their
withdrawal from the US market as a result of the investigations should have been viewed as
meaning that those imports would not compete wi th or take market share from the domestic like
product and non-subject imports in the future if no duties were imposed. We see no basis for such
a conclusion. More relevant than the reason underlying foreign suppliers' decision to participate,
and when to participate, in the US market, is how the market responds to that participation. In the
case at issue, the USITC observed that when subject imports exited the US market, the volumes
and market shares of both the domestic industry and non-subject imports increased. The fact that
the decrease in the market share of subject imports in the last part of the POI coincided with a
gain in market share by the domestic industry supports the USITC's finding that a likely increase in
subject imports would come at the e xpense of current suppliers, including the domestic industry.
Moreover, we do not understand the determination to be predicated on the lifting of provisional
measures and the subsequent shifts in volumes an d market shares as the relevant change in
circumstances that would bring about an increase in subject imports. The USITC did take into
account the effects of the preliminary duties in determining that s ubject imports would seek to
regain lost sales in the future; however, the USITC's determination primari ly focuses on the fact
that subject imports were already underselling the domestic industry during the POI and on the
ability and incentive of subject producers (in light, notably, of the significant imminent increase in
production capacity) to increase their sales volumes to the US market.
7.285. We further note that the USITC did not conclude that the likely subject import increase
would take sales and market share exclusively from the domestic industry, as Indonesia

496 USITC Final Determination, (Exhibit US-1), pp. 26-27. The domestic industry's US shipments
declined from 1,737,222 short tons in 2007, to 1,648,972 short tons in 2008 and 1,477,233 short tons in
2009, and non-subject imports volume declined from 727,306 short tons in 2007, to 611,626 short tons in
2008 and 363,472 short tons in 2009. While subject imports volume declined from 398,309 short tons in 2007
to 382,245 short tons in 2008, subject imports increased "sharply" to 413,593 short tons in 2009, for an
overall increase of 3.8% during the period 2007-2009.
497 USITC Final Determination, (Exhibit US-1), p. 27.
498 USITC Final Determination, (Exhibit US-1), pp. 26-27. See also ibid. table C-3.
499 Indonesia's opening statement at the first meeting of the Panel, para. 67.
500 Indonesia's opening statement at the first meeting of the Panel, para. 67; second written
submission, para. 68.
501 Indonesia's opening statement at the second meeting of the Panel, para. 44.

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suggests.502 Rather, the USITC found that subj ect imports would compete on price to regain the
market share that they lost "both to the domestic industry and to non -subject imports" in interim
2010 and would take sales "from current suppliers such as the domestic industry" 503, which clearly
refers to both the domestic industry and non -subject imports. This being the case, we also reject
as inconsistent with the facts Indonesia's contention that the USITC did not address the fact that
subject imports were likely to gain market share from non-subject imports rather than the
domestic industry and that the USITC's threat of injury determination is devoid of any analysis
that accounts for the fact that subject imports would not have taken market share exclusively from
the domestic industry.504
7.286. Indonesia also argues that the subject imports were not responsible for the decline in
domestic industry US sales volumes during the POI. 505 Indonesia submits that the USI TC found
that declining consumption and the economic downturn were responsible for that decline.506 In our
view, however, it was appropriate for the USITC to take into account changes in subject import
volumes, the domestic like product sales, and non-subject imports in the context of declining US
demand, in determining the likely impact of subject imports volu me on the domestic industry . We
note that the USITC also took the projected decline in apparent US consumption into account in its
conclusion that subject imports would gain market share at the expense of the domestic
industry.507
7.287. Indonesia also submits tha t it was unreasonable for the USITC to conclude that subject
imports would gain anything approaching the "twelve percentage points" of market share that they
lost in the interim period.508 Indonesia further submits that the USITC failed to explain how subject
imports' market share could expand beyond the share that they held in 2009; Indonesia argues in
this respect t hat the only support for the USITC's finding concerning the projected increase in
market share of subject imports was the attractiveness of the US market.509 We are not convinced
by these arguments. In our view, the USITC provided a reasonable explanation for its conclusion
that subject imports' market share would increase significantly in the imminent future. In
particular, we note that, as indicated above, the USITC principally based this conclusion on (a) the
increase in subject imports during the POI, and (b) its findings regarding the likely increased
production capacity in China and subject producers' export intentions. Indonesia does not
challenge the former, and b elow, we uphold the latter. 510 In our view, these two sets of findings
provide a sufficient basis for the USITC's conclusion regarding the likely imminent increase in
subject imports' market share.511

502 Indonesia's first written submission, para. 128; response to Panel question No. 48(b).
503 USITC Final Determination, (Exhibit US-1), pp. 38-39.
504 Indonesia's response to Panel question No. 48(b).
505 See for instance Indonesia's opening statement at the second meeting of the Panel, para. 48.
506 Indonesia's first written submission, para. 121 (referring to Excerpt from USITC Final Determination,
pp. 3-39 and C-3-C-7, (Exhibit IDN-18), pp. 37-38); response to Panel question No. 41; and second written
submission, para. 72 (referring to Excerpt from USITC Final Determination, pp. 3-39 and C-3-C-7, (Exhibit
IDN-18), p. 37). Indonesia also argues that there was no correlation between movements of subject import
volumes and the condition of the domestic industry. (Indonesia's opening statement at the first meeting of the
Panel, para. 70; second written submission, paras. 64 and 72; and opening statement at the second meeting
of the Panel, para. 47). These arguments pertain to the causal relationship between subject imports and the
threat of injury to the domestic industry, and are not directly relevant to our consideration of the USITC's
findings concerning likely future increases in subject imports volumes and market share.
507 USITC Final Determination, (Exhibit US-1), p. 38, quoted above para. 7.270.
508 Indonesia's first written submission, para. 126 (referring to Excerpt from USITC Final Determination,
pp. 3-39 and C-3-C-7, (Exhibit IDN-18), p. 38).
509 Indonesia's opening statement at the second meeting of the Panel, para. 52.
510 See below, paras. 7.297 and 7.307.
511 In addition, contrary to Indonesia's suggestion, reading the determination as a whole suggests that
the USITC's finding was not that subject imports would regain the 12.9 percentage points of market share lost
in interim 2010, but rather that subject import volumes would increase significantly in the imminent future to
levels higher than those recorded during the POI. (See for instance USITC Final Determination, (Exhibit US-1),
pp. 27, 29, and 30-31). Moreover, we note that the USITC considered that the decrease in subject imports'
volume in interim 2010 resulted from the investigations, and that absent these investigations, the volume of
subject imports would likely have been greater in interim 2010. (USITC Final Determination, (Exhibit US-1),
p. 27). Indonesia appears to agree that this decrease was caused by the pendency of the investigations.
(Indonesia's opening statement at the first meeting of the Panel, para. 72; second written submission,
para. 78).

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7.288. For the foregoing reasons, based on the explanations provided by the USITC in light of the
evidence that was on the record, we find that Indonesia has not demonstrated that , in the context
of its threat of injury analysis, the USITC based its conclusion that future volumes of subject
imports would gain market share at the expense of the domestic industry by taking sales from the
domestic producers in the imminent future on conjecture or remote possibility.
7.6.3.3.2 The likely increase in production capacity in China
7.289. Indonesia argues that the USITC's findings regarding new capacity in China were based on
conjecture and do not support a determination of likely increase in subject imports. Indonesia
makes this argument in reaction to the United States' argument that the USITC's finding
concerning the likely gains in market share by subject imports was supported by an intermediate
finding that subject imports would likely increase significantly, which in turn was supported by the
fact that there would be substantial new capacity in China that was not projec ted to be absorbed
by Chinese producers' home market and other markets in Asia.512
7.290. As indicated above, the USITC considered that subject producers had the ability to
increase their shipments to the United States based , in particular, on the projected growth of
production capacity in China between 2009 and 2011.
7.291. Regarding new capacity in China, the USITC started by noting that the parties disagreed
about the amount of new capacity coming on-line in China in 2011. The USITC noted that, based
on estimates from a paper industry consultancy ( EMGE & Co.) , the petitioners contended that
projected capacity in China would increase by 2.9 million short tons by 2011, and that this
increased capacity would not be absorbed by the Chinese home market or by other markets i n
Asia. The USITC also observed that, based on questionnaire responses, respondents claimed that
Chinese producers' increase in capacity in 2010 and 2011 would be lower , at 1.5 million short
tons, and that increases in capacity were necessary to keep up wi th increased demand in China
and regional markets and were not intended for export to the US market. 513 The USITC found that
even this lower amount of increased capacity posited by the respondents was substantial , given
that it was equivalent to approximatel y 75% of total 2009 US consumption of over 2 million tons.
The USITC also found that, even assuming that the additional Chinese capacity was being brought
on-line with the intention of supplying the growing Chinese home market, projected consumption
growth in China would not be sufficient to absorb the new Chinese capacity because, according to
projections by another paper industry consultancy (RISI), growth in Chinese production capacity
from 2009 to 2011 would be "approximately double" the growth of Chine se consumption. The
USITC also noted that, according to RISI projections, consumption growth in the rest of Asia would
be "well below" the excess of projected Chinese capacity growth over projected Chinese
consumption growth.514

512 Indonesia's opening statement at the first meeting of the Panel, para. 74. Indonesia does not
challenge the USITC's findings regarding the projected capacity of Indonesian producers.
513 USITC Final Determination, (Exhibit US-1), p. 28. The actual amount is redacted from the
non-confidential version of the determination submitted to the Panel. (USITC Final Determination, (Exhibit
US-1), p. 28). In its submissions to the Panel, the United States indicates that the new Chinese capacity
suggested by respondents, and redacted from the USITC's non-confidential version of the determination,
amounted to 1.5 million short tons. Indonesia does not take issue with the amount the United States indicates.
514 USITC Final Determination, (Exhibit US-1), p. 28 and fn 181. The USITC noted that:
RISI projects that capacity to produce coated woodfree and coated mechanical paper in China
will grow from 7.2 million metric tons in 2009 to 9.0 million metric tons in 2011, or by 1.8 million
metric tons. RISI projects that Chinese consumption of these products will grow from 5.4 million
metric tons in 2009 to 6.3 million metric tons in 2011, or by 900,000 metric tons. The excess of
capacity growth over consumption growth is 900,000 metric tons. Respondents' Prehearing Brie f
at Ex. 28.
Although the combination of the RISI categories of coated woodfree and coated mechanical
paper is likely to be somewhat broader than the paper defined by Commerce's scope, we
consider the data to be probative of the likely relative growth of C hina's capacity and
consumption of in-scope products.
Consumption growth in the rest of Asia is not projected to absorb the excess of Chinese capacity
over consumption. Excluding Japan (which is projected to shed some capacity but increase its
production), RISI projects consumption growth from 2009 to 2011 to exceed capacity growth in
the rest of Asia by 160,000 tons, well below the excess of projected Chinese capacity growth

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7.292. Thus, it is clear from the de termination that the USITC relied, in its finding of likely
increase in production capacity in China, on record evidence from two sources, i.e. the 1.5 million
short tons increase in capacity projected by the respondents (which, we recall , the USITC
considered would still be a substantial increase in production capacity), and RISI's projections on
consumption growth in China and other Asian markets (which the USITC relied upon as an
indicator of the magnitude of the increase in capacity and the ability of t hese markets to absorb
it).
7.293. In this dispute, Indonesia submits that the USITC ignored actual data submitted by the
Chinese exporters in their questionnaire responses, suggesting that the RISI data should not have
been used over more precise questionnaire data. In this respect, Indonesia faults the USITC for
relying on a "third party source" that the USITC admitted covered a broader array of products than
those subject to the investigation . 515 Indonesia refers the Panel to table VII-2 in the
determination, which contains Chinese producers' data for the POI, as well as their projections for
2010 and 2011, regarding capacity, production , and shipments to China and third markets: the
United States, the European Union, Asia and "all other markets". Indonesia submits that
table VII-2 shows that Chinese producers had excess capacity in every year of the POI which, in its
view, disproves the USITC's theory of likely increase of subject imports to the United States, as it
shows that Chinese producers were not fully uti lizing their existing capacity to export to the US
market during the POI. We note, however, that according to the data submitted by the
respondents, Chinese producers were operating at high capacity utilization levels during the
POI. 516 Indonesia also argues that, despite the projected additional new capacity, Chinese
producers projected very little excess capacity in 2011 .517 We understand Indonesia's argument to
be that, according to Chinese producers' sales projections, the additional production capacity
would be absorbed such that they would not need, or have the ability, to significantly increase
their sales to the US market. We understand Indonesia's arguments as suggesting that these
projections constituted a more appropriate basis for assessing the abili ty of other markets to
absorb additional Chinese production capacity than the RISI data on projected consumption
growth in China and the rest of Asia and, therefore, that the USITC should have relied on this data
in its analysis of the likelihood of substantially increased Chinese exports to the US market.518
7.294. The USITC noted that RISI was a source that both petitioners and respondents relied upon
as support for their allegations throughout the underlying investigation. 519 The RISI data the
USITC considered as e vidence of the likely relative increase of capacity and consumption in China
was relied upon by respondents in their arguments before the USITC 520 , and respondents
characterized that source as "independent". 521 APP even characterized the RISI data as "the best
available for assessing consumption growth in Asia". 522 Moreover, we note that the RISI
information contains data concerning projected increase s in production capacity in China and

over projected Chinese consumption growth of 900,000 metric tons. Respondents' Pre hearing
Brief at Ex. 28.
(USITC Final Determination, (Exhibit US-1), fn 181)
515 Indonesia's opening statement at the second meeting of the Panel, paras. 41 and 52.
516 According to the data contained in table VII-2 of the USITC Final Determination, Chinese producers
were operating at the following capacity utilization rates during the POI: 90.7% in 2007; 92.5% in 2008; and
95.9% in 2009.
517 Indonesia's second written submission, para. 70; opening statement at the second meeting of the
Panel, para. 41; and comments on the United States' response to Panel question No. 97(a).
518 In addition, we note that the United States submits that the RISI data was comprehensive, with
capacity projections covering the entire Chinese industry and consumption projections covering every major
market in Asia, including China, whereas, by contrast, foreign producer questionnaire responses covered only a
subset of the Chinese industry. (United States' response to Panel question No. 99, fn 183). Indonesia disagrees
that the foreign producer questionnaire responses before the USITC did not provide a complete coverage of the
Chinese exporters to the United States. (Indonesia's comments on the United States' response to Panel
question No. 97(a), fn 57).
519 USITC Final Determination, (Exhibit US-1), p. 28. APP referred to the RISI data in, for instance, APP
Post-hearing Brief to USITC, (Exhibit US-104), p. 12, in which it referred to the "growth in apparent
consumption within China and the rest of Asia as reflected in the RISI data" (referring to exhibit 28 to APP
Pre-hearing Brief).
520 USITC Final Determination, (Exhibit US-1), fn 181 (referring to exhibit 28 to APP Pre-hearing Brief).
Thus it appears that exhibit 28 to APP Pre-hearing Brief was actually submitted by APP to the USITC. Exhibit 28
to APP Pre-hearing Brief has been submitted in this dispute as Exhibit IDN-52. See also APP Pre-hearing Brief
to USITC, (Exhibit IDN-45), pp. 136 and 139.
521 APP Pre-hearing Brief to USITC, (Exhibit IDN-45), pp. 122, 134, and 136.
522 APP Post-hearing Brief to USITC, (Exhibit US-104), p. 13.

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consumption growth for the Chinese and Asian markets, whereas the data repor ted in table VII
contains self-reported projections regarding capacity in China and sales in various markets. In our
view, it was reasonable for the USITC to rely on data from an independent source such as RISI in
considering whether other available market s could absorb Chinese exports , rather than relying
exclusively on investigated producers' projections concerning their future sales, as Indonesia
apparently suggests it should have done. This is particularly the case here, where the independent
source, RISI, had been relied upon by respondents themselves in their submissions to the USITC ,
and respondents had characterized RISI as an independent source. In addition, we note that
Article 3.7(ii) and Article 15.7(iii), which provide guidelines for the examina tion of new capacity in
the context of the threat of injury analysis, provide that in examining this factor account should be
taken of the availability of other export markets to absorb any additional exports. In light of this, it
appears to us that the RISI data was an appropriate basis for the analysis of additional capacity.
7.295. Indonesia faults the USITC for not having explained how the overbroad RISI data was
probative.523 The USITC did note that the scope of products covered by the RISI data was
"somewhat b roader" than the product scope of the investigation. The USITC explained that
although the combination of the RISI categories of coated woodfree and coated mechanical paper
was likely to be somewhat broader than the coated paper defined in the in vestigation, it
considered the RISI data "to be probative of the likely relative growth of China's capacity and
consumption of in-scope products".524 Thus, we do not understand the USITC to have relied on the
exact figures in the RISI data to predict the likelihood of increased subject imports but, rather, to
have used the RISI data as an indicator of the order of magnitude of the relative increase in new
capacity in China in relation to consumption growth in China and other Asian markets.525 In light of
the foregoing, even though it did not exactly match the investigated product, we do not consider it
was improper for the USITC to have considered and relied on the RISI data. Indonesia also faults
the USITC for having concluded that the Chinese industry would export all o f its excess in capacity
to the United States during the period 2009 -2011.526 However, the USITC made no such finding.
Nor do we read the USITC's discussion of this issue as reflecting an assumption that this would be
the case. Rather, as indicated above, the USITC found that consumption growth in the rest of Asia
would be well below the excess of projected Chinese capacity growth over projected Chinese
consumption growth 527 and, in light of this, concluded that subject producers had the ability to
significantly increase shipments to the United States. Nothing in this conclusion implies that the
USITC considered that Chinese producers would export all production from excess capacity to the
United States.
7.296. Indonesia also faults the USITC for not having undertaken an analysis of other markets to
which the Chinese industry might export . However, the USITC did consider whether there were
other destinations, in addition to the Chinese producers' principal destination, i.e. their home
market, that could absorb production from their projected new capacity. We recall that the USITC
examined whether other Asian markets could absorb shipments from the additional capacity, and
concluded that they could not. The USITC did not conduct a detailed analysis of projected demand
in other markets. The USITC did, however, note that the European Union had initiated
anti-dumping and countervailing duty investigations on coated paper from China in 2010, and
considered that this might make the EU market less attractive to Chinese exports in the imminent
future.528 That the USITC focused on Asia and the EU as possible destinations for Chinese exports
in the imminent future was in our view reasonable given the respondents' statements in the
underlying investigation; in its submissions in the un derlying investigation, APP principally
identified the Chinese market, other Asian markets, and the EU as the export markets of Chinese
exports.529 Moreover, the USITC's analysis reflects the existing sales patterns of the Chinese

523 Indonesia's opening statement at the second meeting of the Panel, fn 63.
524 USITC Final Determination, (Exhibit US-1), fn 181.
525 This is particularly clear from the USITC's statement that RISI projected that the growth in capacity
would be "approximately double the growth of Chinese consumption". (USITC Final Determination, (Exhibit
US-1), p. 28).
526 Indonesia's opening statement at the first meeting of the Panel, paras. 68 and 71; second written
submission, paras. 70 and 73.
527 USITC Final Determination, (Exhibit US-1), p. 28.
528 USITC Final Determination, (Exhibit US-1), fn 188.
529 APP Pre-hearing Brief to USITC, (Exhibit IDN-45), p. 121, where APP states that "[t]here can be little
dispute that China is the most important global market for subject coated paper suppliers. RISI flat out
proclaims that the resurgence in the coated paper market will be driven by China". See also APP Post-hearing
Brief to USITC, (Exhibit US-104), p. 13, where APP states that "[t]he Chinese industry has explained that these

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producers, covering 93% of Chinese export sales during the POI .530 Overall, we consider the
USITC's analysis of other export markets was based on relevant facts, and not on speculation.531
7.297. For the foregoing reasons, based on the explanations given by the USITC in light of the
evidence t hat was on the record, we find that Indonesia has not demonstrated that the USITC
based its findings regarding the projected increase in production capacity in China on conjecture
rather than on facts.
7.6.3.3.3 The Unisource affidavit and the establishment of Eagle Ridge
7.298. Indonesia takes issue with the USITC's reliance on the Unisource affidavit and the
establishment of Eagle Ridge. Indonesia makes this argument in response to the United States'
arguments that the USITC reasonably relied on the Unisource affidavit as positive evidence of
APP's intentions to significantly increase shipments to the US market and that the USITC properly
found that APP established Eagle Ridge in furtherance of its goal of doubling exports to the
United States.532
7.299. The USITC found that subject producers had a strong interest in increasing shipments to
the United States.533 In reaching this conclusion, t he USITC relied, among other evidence, on the
statements of a Unisource representative, reflected in the Unisource affidavit, concerning his
interactions with APP . The USITC indicated that, a ccording to the affidavit , APP stated that it
wanted to double its shipments to Unisource and that it was willing to lower its prices. In addition,
the USITC noted the fact that APP, after losing Unisource as a distributor, had established its own
distributor for the US market, Eagle Ridge:
Chinese producers have been motivated to increase subject exports for quite some
time. In particular, we note the behavior of APP, whose affiliated companies accounted
for [[]] of reported subject imports in 2009. In late 2008, as U .S. CCP demand and
the U .S. economy were falling into a deep recession, APP informed Unisource, a
leading distributor of CCP in the United States, that "it was exporting 30,000 metric
tons of CCP to the United States each month and that it wanted to increase that
volume to 60,000 metric tons per month". APP also stated that it wanted to double its
shipments to Unisource immediately and that it was willing to lower its prices by
between two and five p ercent for the increase in purchases, prices that were already
15 percent below what domestic supplier NewPage was quoting at that time for its
economy sheets. Moreover, soon after APP lost the Unisource account in 2009, it

additional tons will be spread across primarily the Chinese market, next to other Asian markets, and finally
other emerging markets outside Asia"; and APP Pre-hearing Brief to USITC, (Exhibit IDN-45), pp. 123-125,
where APP refers to Asia as "other export markets". In APP Post-hearing Brief to USITC, (Exhibit US-104),
p. 12, APP states that "any increase in Chinese capacity will be absorbed entirely in Asian markets". In APP
Pre-hearing Brief to USITC, (Exhibit IDN-45), p. 125, APP refers to the EU market as another possible
destination for its exports when it indicates that "the ongoing EU trade case will not cause diversion of large
volumes to the United States". See also table VII-2 of the USITC Final Determination, which reports Chinese
producers' shipments to China, the United States, the European Union, Asia, and "all other markets" during the
POI.
530 On the basis of the data contained in the USITC determination, it appears that the USITC considered
markets accounting for the vast majority of current Chinese sales. From table VII-2 and from figure II-1, p. 9,
of the USITC Final Determination, it appears that in 2009, 61.5% of Chinese producers' sales were on the
Chinese market, 9.3% on the US market, 7.6% on the EU market, 13.9% to other Asian markets, and 7.6% on
"all other markets", the only market not considered by the USITC. In other words, the USITC considered
markets accounting for approximately 93% of Chinese producers' sales in 2009.
531 We also note that Indonesia argues that the 2009-2011 period identified by the USITC calls into
question the imminence of the alleged increase. (Indonesia's opening statement at the first meeting of the
Panel, para. 68; second written submission, para. 69). Indonesia has not, however, developed its argument in
this respect or explained why this period is not "imminent" in light of the time-frame examined by the USITC
(2011).
532 Indonesia's opening statement at the second meeting of the Panel, paras. 37-39 (referring to
United States' second written submission, paras. 112-113).
533 USITC Final Determination, (Exhibit US-1), p. 28.

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made an investment to establish Eagle Ridge, an ecommerce U.S. distribution network
for APP's products to retain and grow its U.S. market presence.534
7.300. The United States argues that the affidavit was made by Unisource's Vice President of
Strategic Development and Sourcing under penalty of p erjury and that its content was confirmed
by other testimonies that were in the record. 535 Indonesia alleged at the second meeting of the
Panel that APP never expressed its intention to double exports to the US market and that the
proper characterization of the Unisource affidavit is as a domestic industry allegation and not a
statement by APP.536 However, in its last submission to the Panel, Indonesia indicated that it does
not know "every statement ever made by an APP representative". 537 In the same submission,
Indonesia argued that there were other testimonies on the record that conflict with the statements
in the Unisource affidavit .538 In view of these statements, we understand Indonesia to be taking
the position that the content of the Unisource affidavit was untrue or inaccurate and therefore that
the USITC could not have relied on it in reaching its determination.
7.301. Indonesia also argues that the respondents never had an opportunity to rebut the
Unisource affidavit. In this regard, Indonesia argues that the pe titioners filed the Unisource
affidavit with their post-hearing brief, which is the final opportunity the USITC gives parties to
submit new information. According to Indonesia, because the deadline for submitting post -hearing
briefs for the domestic indust ry and respondents was the same, respondents were not able to
rebut the information in the Unisource affidavit before the USITC. The United States contends that
APP had the opportunity to address the Unisource affidavit in its final comments to the USITC, filed
after the post -hearing briefs, and that APP actually did so. 539 Indonesia responds that, while final
comments are permitted to address the accuracy, reliability or probative value of information on
the record, the submission of evidence to counter the accuracy, reliability, or probative value of
such information is not permitted at this stage of the USITC investigation.540
7.302. In addition, Indonesia argues that the establishment of Eagle Ridge does not constitute
evidence of an increase of subject imports bu t, at most, of an attempt to recoup lost sales given
APP's loss of business with Unisource and that, in fact, subject imports decreased after the
establishment of Eagle Ridge.541
7.303. We recall that the question before us is whether the USITC ac ted inconsistentl y with
Article 3.7 and Article 15.7 by basing its determination of the existence of threat of injury by
reason of subject imports on conjecture rather than facts or evidence. We also recall that in a
threat of injury analysis an investigating authority is permitted to make projections about the
future provided that they are based on facts or evidence. We recall that the Panel must not
undertake a de novo review of the evidence nor substitute its judgement for that of the
investigating authority.542 Given these considerations, and in light of the evidence in the record
that has been presented by the parties to this dispute, we are of the view that, contrary to
Indonesia's allegation, the USITC did not base its finding in relation to APP's interest in the US
market and the establishment of Eagle Ridge merely on conjecture.
7.304. In our view, the USITC relied on record evidence in reaching its conclusion regarding APP's
interest in increasing exports to the United States. This evidence comprised, inter alia , the
statements contained in the Unisource affidavit , to the effect that APP intended to increase its
sales to Unisource and to the US market in general, and the fact that , in response to losing its

534 USITC Final Determination, (Exhibit US-1), pp. 28-29; Redacted excerpts of USITC Final
Determination and APP Final Comments to USITC, (Exhibit US-107), p. 1. (fns omitted)
535 United States' response to Panel question No. 95.
536 Indonesia's opening statement at the second meeting of the Panel, para. 39.
537 Indonesia's comments on the United States' response to Panel question No. 95.
538 Indonesia's comments on the United States' response to Panel question No. 95.
539 United States' response to Panel question No. 95.
540 In Indonesia's view, even if APP possessed emails and other information refuting what was said in
the Unisource affidavit, it could not have submitted that information, nor could it have submitted its own
affidavit challenging what was said in the Unisource affidavit. (Indonesia's response to Panel question No. 94).
541 Indonesia's opening statement at the first meeting of the Panel, para. 66; second written
submission, para. 65; and opening statement at the second meeting of the Panel, paras. 38 and 52.
542 See above, para. 7.7.

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principal distributor in the US market (Unisource ) 543 in May 2009, APP established its own
distribution network for the US market (Eagle Ridge) in October 2009.544 This occurred at a time
when subject imports were increasing their presence in the US market. 545 We consider that this
evidence reasonably supported the USITC's conclusion that subject producers had a strong interest
in increasing shipments to the United States.
7.305. Although Indonesia argues that respondents never had an opportunity to rebut the
Unisource affidavit, we note that in its final comments to the USITC in the und erlying
investigation, APP refer red to the Unisource affidavit but d id not challenge the validity of the
statements contained therein .546 Even assuming new evidence could not be submitted after the
filing of pre -hearing briefs, as Indonesia alleges 547, it seems clear that, at a minimum, APP could
have challenged the veracity of the statements contained in the affidavit . In the absence of such
an objection to the Unisource affidavit during the investigation , we see no basis to conclude that
the USITC erred in re lying on it in reaching its conclusion that Chinese producers had a strong
interest in the US market.548
7.306. Regarding Eagle Ridge, Indonesia's central argument is that trends in subject imports
before APP lost the Unisource account and after the establishment o f Eagle Ridge contradict any
alleged intention on the part of APP to double its exports to the US market. 549 As indicated above,
while the Unisource affidavit refers to APP's alleged intention to double its exports to the US
market, we do not read the USITC' s determination as suggesting that the determination of the

543 Unisource changed suppliers from APP to New Page, a US producer. (APP Pre-hearing Brief to USITC,
(Exhibit IDN-45), p. 116). APP indicated that it "had no choice but to open [Eagle Ridge] as a way to attempt
to recover from the Unisource loss".
544 USITC Final Determination, (Exhibit US-1), pp. 29 and IV-2; Indonesia's response to Panel question
No. 93; and United States' response to Panel question No. 93. Evidence on the record indicates that the first
two Eagle Ridge Paper locations in the United States opened in October 2009, and that APP opened eight
additional locations during the following three months. (APP Pre-hearing Brief to USITC, (Exhibit IDN-45),
p. 116; see also United States' response to Panel question No. 93).
545 As indicated before, subject imports were at their peak in the period 2008-2009.
546 In its final comments APP stated that:
Petitioners try to rely on statements by large national distributors, but these statements – and
more importantly, the actions by these distributors – contradict Petitioners' theory. Petitioners
cite statement by Unisource, but leave out the important detail that Unisource was describing
2007-2008, not 2009, and was describing small shifts in volume. In early 2009, Unisource
switched from APP to NewPage. Subject imports cannot explain low NewPage pricing to
Unisource, when APP had been eliminated as a supplier for non-price reasons.
(APP Final Comments to USITC, (Exhibit US-105), pp. 16-17; Redacted excerpts of USITC Final Determination
and APP Final Comments to USITC, (Exhibit US-107), pp. 2-3 (fn omitted))
547 The parties differ on whether interested parties are allowed to submit new evidence after the filing of
the post-hearing briefs before the USITC. (Indonesia's response to Panel question No. 94; United States'
comments to Indonesia response to Panel question No. 94). In the circumstances of this case, we need not
decide this question.
548 We further note that the United States argues that the content of the Unisource affidavit was
confirmed by other testimonies at the USITC's hearing: those of the same Unisource Vice President of Strategic
Development and Sourcing (Mr Hederick) and of APP's own witness (Mr Hunley). (United States' response to
Panel question No. 95 (referring to Excerpt from USITC Conference Transcript, pp. 45-48 and 179-180, (Exhibit
US-108), pp. 47 and 180)). Indonesia disagrees that the testimony of APP's witness (Mr Hunley) confirms the
statements in the Unisource affidavit. In Indonesia's view, the testimony of APP's witness presented a
conflicting version of the reasons why the relationship of APP with Unisource soured – Indonesia argues that it
was a disagreement over commercial terms and that APP wanted to initiate a price increase while Unisource
wanted lower prices. (Indonesia's comments on the United States' response to question No. 95 (referring to
Excerpt from USITC Conference Transcript, pp. 45-48 and 179-180, (Exhibit US-108), pp. 48 and 180; and
Excerpt from USITC Conference Transcript, pp. 181-182, (Exhibit IDN-51), pp. 181-182)). In our view, these
testimonies neither directly confirm nor directly contradict the central element of the Unisource affidavit on
which the USITC relied, i.e. that in late 2008, APP expressed its intention to double its sales to Unisource and
the US market and offered to lower its prices. In addition, the reasons why APP lost the Unisource account are
not germane to the question of whether the USITC based its conclusion that subject producers had a strong
interest in the US market on conjecture rather than facts. It is not in dispute that APP lost the Unisource
account and, in response to that event, established Eagle Ridge to at least maintain its share in the market. In
any event, as noted above, APP could have challenged the veracity of the affidavit in its Final Comments to the
USITC but did not do so.
549 Indonesia argues that before losing Unisource as a customer, from 2008 to 2009 imports from China
increased by 7% and imports from Indonesia increased by 15% – hardly doubling, and that after Eagle Ridge
was established subject import volumes decreased. (Indonesia's opening statement at the second meeting of
the Panel, paras. 38 and 52).

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threat of injury was based on a conclusion that APP would in fact d ouble its exports to the
United States. Rather, as we have indicated above, the USITC concluded that subject producers
had the ability and the incentive to increase significantly shipments to the US market.550
7.307. For the foregoing reasons, based on the explanations given by the USITC in light of the
evidence that was on the record concerning the Unisource affidavit and the establishment of Eagle
Ridge, we find that Indonesia has not demonstrated that the USITC based its conclusion regarding
subject producers' interest in the US market merely on conjecture or speculation.
7.308. We now address Indonesia's allegation regarding the USITC's price effects analysis.
7.6.3.4 The USITC's finding that subject imports would have adverse effects on
domestic prices
7.309. Indonesia argues that the USITC's finding that subject imports would have adverse effects
on domestic prices in the imminent future was based on conject ure or speculation regarding
events which were not clearly foreseen and imminent. 551 The United States submits that, on the
contrary, the USITC had sufficient factual evidence to conclude that the future significant increase
in subject import volume, driven by the underselling by those imports found during the POI, would
pressure domestic producers to lower their prices, thereby depressing or suppressing them.552
7.310. In finding that subject imports were likely to have significant adverse effects on domestic
producers' prices in the imminent future by causing price depression , the USITC first noted that
subject imports undersold domestically -produced coated paper to a significant degree throughout
the POI, particularly in 2009 when demand was depressed .553 The average margin of underselling
for all types of product was 12.3% in 2009, when the volume of subject imports was at its peak.554
Moreover, the USITC found that pricing trends, particularly from the first quarter of 2009, together
with the significant underselling b y subject imports, showed that subject imports depressed
domestic prices "at least to some extent" for part of the POI. 555 The USITC did not make a finding

550 Whereas Indonesia asserts that the volume of subject imports declined after Eagle Ridge was
established (Indonesia's opening statement at the second meeting, paras. 38 and 52), record evidence shows
that subject imports increased in the months following the establishment of Eagle Ridge. We recall that, the
parties agree before this Panel, and record evidence submitted to the Panel shows, that APP lost the Unisource
account in May 2009 and Eagle Ridge started operating in the United States in October 2009 (Excerpt from
USITC Conference Transcript, pp. 45-48 and 179-180, (Exhibit US-108), p. 179; Indonesia's response to Panel
question No. 93; and United States' response to Panel question No. 93). The USITC noted that APP's loss of
business with Unisource did not result in a substantial reduction in the volume of overall subject imports in
2009 or the first two months of 2010. (USITC Final Determination, (Exhibit US-1), pp. 29-30 and fn 193).
Moreover, subject imports volume was relatively stable from April 2009 – the month before APP's loss of the
Unisource account – to October 2009 – when APP opened Eagle Ridge (33,084 short tons in April; 35,575 short
tons in May; 32,972 short tons in June; 36,198 short tons in July; 36,698 short tons in August; 36,227 short
tons in September; and 29,323 short tons in October). From October 2009 until January 2010, subject import
volumes increased – from 29,323 short tons in October, to 31,542 short tons in November, and to
33,099 short tons in December of 2009; in January 2010, subject imports were 34,326 short tons. From
February 2010, subject imports started decreasing, and this decrease was accentuated from March 2010 when
preliminary countervailing duties were applied: 29,837 short tons in February; 5,365 short tons in March;
6,318 short tons in April; 3,852 short tons in May; and 5,334 short tons in June. (Monthly Import Statistics,
(Exhibit US-102), p. 2).
551 Indonesia's first written submission, paras. 124-126.
552 United States' first written submission, para. 273.
553 USITC Final Determination, (Exhibit US-1), p. 34.
554 USITC Final Determination, (Exhibit US-1), p. 31. The USITC collected pricing data for five products.
The data showed that prices of cumulated imports undersold the domestic like product in 48 out of 58
quarterly comparisons by margins ranging from 1.5% to 25.2%.
555 In this regard, the USITC considered, in particular, movements in the prices of the domestic product
and of subject imports from China for two types of coated paper over the POI (Product 1 – which accounted for
the majority of the sales of Chinese subject imports for which prices were reported, and accounted for a
significant quantity of sales of the domestic product – and Product 4 – for which reported prices represented a
significant volume of subject imports from China). The USITC found that the prices of subject imports from
China for Products 1 and 4 began to fall in the fourth quarter of 2008, when domestic prices for these products
were rising (modestly, in the case of Product 1), which led to an increase in the underselling margins in the
first quarter of 2009, as subject import prices continued to decline. For Product 1, domestic prices continued to
decline in the second quarter of 2009 and the price of subject imports from China levelled off; for Product 4,
both domestic prices and the price of subject imports continued to decline in the second and third quarters of
2009. The USITC considered that there was an indication that the drop in domestic prices starting in the first

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of significant price depression, however, because other factors that were occurring in the US
market "likely also contributed importantly to lower prices" and thus the USITC concluded that it
was unable "to gauge whether there [were] significant effects attributable to subject imports". The
USITC did not find evidence that subject imports prevented price i ncreases which otherwise would
have occurred to a significant degree (i.e. the USITC did not make a finding of "price suppression"
by reason of subject imports).556
7.311. The USITC next considered the likely price effects of subject imports in the imminent
future. The USITC concluded that significant underselling would continue and was likely to be
significant in the imminent future. 557 In addition, the USITC found that subject imports were likely
to have significant adverse effects on domestic producers' prices in t he imminent future.
Specifically, the USITC found that subject imports were likely to put pressure on domestic
producers to lower prices , i.e. subject imports would cause price depression in the imminent
future. The USITC considered that the other factors that placed negative pressure on domestic
prices during the POI, namely falling consumption and increased pulp production due to black
liquor subsidies, would not play the same role in the imminent future.558 The USITC also noted that
domestic producers' prices were relatively flat in interim 2010. The USITC found that any increase
in subject imports would not be absorbed by an increase in US demand, because while in interim
2010 demand was higher than in interim 2009, demand was nonetheless depressed compare d to
its earlier levels and was projected to decline moderately over the next two years. In light of this,
the USITC anticipated that a key driver of domestic market prices would be the significant volumes
of subject imports. The US ITC also noted that subj ect imports led domestic prices downward in
late 2008 and early 2009. The USITC further noted that the domestic product and subject imports
had moderately high interchangeability and that price was an important consideration in
purchasing decisions.559 The USITC concluded that:
[I]n the imminent future, the aggressive price competition and underselling by subject
imports during the bulk of the period examined will continue, and the introduction of
increased quantities of subject imports, priced aggressively in an effort to gain market
share, will put pressure on domestic producers to lower prices in a market recovering
from severely depressed demand. As subject imports cause domestic sales volumes
and prices to deteriorate, the domestic industry will likely experience significant price
depression or suppression.
In sum, we conclude that subject imports are likely to have significant adverse effects
on domestic producers' prices in the imminent future.560
7.312. Indonesia's central allegation is that the USITC' s conclusion that subject imports would
depress domestic prices in the imminent future was speculative because , despite significant
underselling, the USITC did not reach that conclusion with respect to the POI.

quarter of 2009 was not only subsequent to, but was in response to, the decline in subject import prices. It
noted that domestic producers had testified that they lowered prices to compete with falling prices of subject
imports from China, and that numerous purchasers had confirmed that domestic producers lowered prices over
the POI to meet the prices of subject imports. (USITC Final Determination, (Exhibit US-1), pp. 32-33).
556 USITC Final Determination, (Exhibit US-1), p. 33.
557 The USITC found that underselling by subject imports was likely to increase the attractiveness of
those imports to domestic purchasers compared with domestic production, and that the underselling was likely
to increase demand for further subject imports. (USITC Final Determination, (Exhibit US-1), p. 34).
558 USITC Final Determination, (Exhibit US-1), p. 34.
559 USITC Final Determination, (Exhibit US-1), p. 31.
560 USITC Final Determination, (Exhibit US-1), p. 35 (emphasis added). The USITC also relied on the
following considerations: (a) absent anti-dumping or countervailing duty orders, the likely increasing and
significant volumes of subject imports would need to enter the US market priced aggressively in an effort to
regain market share lost in interim 2010; (b) subject producers had substantial new capacity coming on-line in
the imminent future that could not be absorbed by home market demand; (c) subject producers were likely to
find the United States an attractive market; (d) Chinese producers had shown a willingness to cut their already
low prices further in order to greatly increase their shipments to an already depressed US market; (e) with the
establishment of Eagle Ridge in 2009, subject producers would have added ability and incentive to increase
shipments to the US market quickly; and (f) given that many of the coated paper sales were on a spot basis,
and purchasers had a history of quickly switching suppliers, subject imports would put pressure on domestic
producers to lower prices in a market with depressed demand in order to compete for sales and prevent an
accelerated erosion of their market share. (USITC Final Determination, (Exhibit US-1), pp. 34-35; Redacted
excerpts of USITC Final Determination and APP Final Comments to USITC, (Exhibit US-107), p. 2).

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7.313. We see nothing in Article 3.7 and Article 15.7 that would require an investigating authority
to have found negative price effects during the POI as a prerequisite for concluding that negative
price effects will occur in the imminent future. Indeed, it is the essence of a threat determination
that the situatio n existing during the POI is predicted to change such that there will be injury in
the imminent future, if measures are not imposed. The lack of present material injury caused by
subject imports may be a consequence of their volumes during the POI , their p rice effects, their
impact during the POI or the injurious effects of other factors . What is important in a
determination of threat of injury is that the investigating authority adequately explains, based on
the evidence before it, why the situation it predicts can be projected to occur.
7.314. We recall that, in the present case, the USITC found that subject imports had some
negative effects on domestic prices during the POI. The USITC noted that subject imports
depressed domestic prices "to some extent" for par t of the POI, particularly from the first quarter
of 2009, which it found , inter alia, on the basis of a certain correlation in the pricing trends for
subject imports and the domestic product.561 While the USITC did not make a finding of significant
price depression by reason of subject imports because it found that, during the POI, factors other
than subject imports, namely decreasing demand and the black liquor tax credit, had likely placed
negative pressure on domestic prices , the USITC went on to explain why these factors would not
have the same consequences in the future . The USITC explained that the black liquor tax credit
had ended in 2009 and that the decline in demand was expected to be less in the near future than
it had been during the POI. In other words, whereas the decline in demand and the black liquor
tax credit were factors that affected the USITC's analysis of price effects in the context of present
injury, in the context of its threat of injury analysis , the USITC had to predict how subject imports
would perform in a market where these factors were not operating to lower prices. The USITC
determined that these other factors would not play the same role in the imminent future and that,
absent these factors in the same magnitude as during the PO I, a "key driver" of domestic market
prices would be the significant volumes of subject imports. We find that the USITC's explanations,
viewed in their totality, sufficiently support its conclusion with respect to the future price effects of
subject imports.562
7.315. Indonesia also takes issue with the USITC's finding in the context of its threat analysis that
subject imports would attempt to "regain market share lost in interim 2010" and would lower
prices "aggressively" to do so.563 Indonesia considers that it was speculative to conclude that "such
a small portion of the market" would drive prices in the remaining market.564 While the statements
referred to by Indonesia are part of the considerations underlying the USITC's conclusion of
adverse price effects, as we h ave indicated above 565 , a more comprehensive reading of the
determination shows that the USITC's central finding was not that subject imports would attempt
to regain the market share lost in interim 2010 (i.e. 12.9 percentage points), but that subject
import volume would increase significantly in the imminent future to levels higher than those in
the POI. The USITC took into account the situation that existed during the POI, when subject
imports increased significantly in absolute and relative terms, in a con text of substantial decline in
demand, and concluded that subject producers would continue to increase their penetration of the
US market despite sluggish apparent US consumption because they had both the ability and the
incentive to increase shipments to the United States. 566 Moreover, we note that the USITC's
conclusion that significant volumes of subject imports would be a "key driver" of domestic prices
did not stem from the magnitude of subject imports' market share at any specific point in time
during the POI, but from the fact that the "other factors" that it considered had likely placed
negative pressure on domestic prices during the POI were no longer present or would not be as
relevant in the imminent future as they had been during the POI. 567 Finally, we consider that the

561 USITC Final Determination, (Exhibit US-1), pp. 32-33. See also fn 555.
562 For the same reasons, we disagree with Indonesia that the USITC speculated when it found that
other factors would no longer obscure the adverse effects of subject imports on domestic prices, and that the
USITC lacked any basis to make a projection about how subject imports would perform in a market where such
other factors were not operating to lower prices. (Indonesia's opening statement at the first meeting of the
Panel, para. 69).
563 USITC Final Determination, (Exhibit US-1), p. 34.
564 Indonesia's first written submission, paras. 125-129.
565 See above, para. 7.287.
566 USITC Final Determination, (Exhibit US-1), pp. 27, 28, and 34.
567 It is not clear whether the "small portion" referred to by Indonesia refers to the market share that
subject imports occupied in interim 2010 (6.8%), the market share lost from interim 2009 to interim 2010, or
the levels that they would reach if they regained all the market share lost (19.7% if the first half of 2009 is the

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USITC's conclusion that subject imports would be "priced aggressively" in the imminent future was
reasonable given the significant price underselling determined to exist by the USITC throughout
the POI.568
7.316. In light of the above, we cons ider that the USITC provided adequate explanations for its
determination that subject imports would, in the imminent future, be a key driver of domestic
prices and would cause significant price depression or suppression.
7.317. Finally, we note that Indonesia initially challenged what it regarded as a USITC's finding of
likely price suppression, on the basis that the USITC made no finding of price suppression with
respect to the POI. 569 The United States has indicated that the USITC only made reference to
"significant price depression or suppression" to couch its likely-price-effects finding in terms of the
US statute, and that likely price suppression was not a basis for the USITC's final determination of
threat of material injury.570 Indonesia did not, in subsequent submissions to the Panel, refer to the
USITC's purported finding of price suppression. In any event, the United States' explanations are
in line with our reading of the USITC's determination – although the determination concludes by
stating that the domest ic industry would be likely experiencing significant price depression or
suppression in the future, the preceding analysis focuses on price depression, and there is no
suggestion in the determination that the US ITC considered or made a finding of likely future price
suppression.
7.318. In sum, we find the USITC 's finding of future price effects of subject imports to be
reasonable and adequately explained in light of the evidence that was on the record. Indonesia has
not presented any arguments or pointed to evide nce in the record that undermines the
reasonableness of these conclusions so as to demonstrate that an unbiased investigating authority
could not have reached the conclusions or made the determination at issue before us. Therefore,
we find that Indonesia h as not demonstrated that the USITC 's findings regarding the future price
effects of subject imports were based on conjecture or speculation.
7.6.3.5 Overall c onclusion concerning Indonesia's claims under Article 3.7 of the
Anti-Dumping Agreement and Article 15.7 of the SCM Agreement
7.319. We conclude that Indonesia has failed to establish that the USITC's findings that in the
imminent future subject imports would gain market share at the expense of the domestic industry
and would have adverse effects on US prices were based on conjecture and remote possibility. In
light of the foregoing, we find that Indonesia has not demonstrated that, in reaching these
findings, the USITC acted inconsistently with Article 3.7 of the Anti -Dumping Agreement and
Article 15.7 of the SCM Agreement.
7.6.4 Claims under Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the
SCM Agreement ("special care")
7.6.4.1 Introduction
7.320. Indonesia claims that the USITC's threat of injury determination is inconsistent with
Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM Agreement because the
USITC failed to exercise "special care".571
7.321. The United States requests that we reject Indonesia's claims.572

baseline, or 18.3% if the whole of 2009 is the baseline). In any event, Indonesia has not made a convincing
argument that it would have been unreasonable for the USITC to consider that import prices lowered to regain
even a "small" portion of market share would have a negative impact on domestic prices.
568 USITC Final Determination, (Exhibit US-1), pp. 34-35.
569 Indonesia's first written submission, para. 127.
570 United States' first written submission, para. 285 (referring to USITC Final Determination, (Exhibit
US-1), pp. 35 and 39). (emphasis added)

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7.6.4.2 Legal standard under Article 3.8 of the Ant i-Dumping Agreement and
Article 15.8 of the SCM Agreement
7.322. With respect to the relevant legal standard under Article 3.8 of the Anti -Dumping
Agreement and Article 15.8 of the SCM Agreement, we refer to our interpretation of these
provisions below in the section of this Report addressing Indonesia's "as such" c laims. As
explained in that section, we understand these provisions to require an investigating authority to
apply a heightened level of attention in considering whether the domestic industry is threatened
with injury.573
7.6.4.3 Whether the USITC's threat of injur y determination is inc onsistent with
Article 3.8 of the Anti-Dumping Agreement and Article 15.8 of the SCM Agreement
7.323. Indonesia considers that arguments made under other Articles of the Anti -Dumping and
SCM Agreements can also demonstrate a violation of Art icles 3.8 and 15.8. Indonesia submits that
the deficiencies it identified in the context of its claims under Articles 3.5 of the Anti -Dumping
Agreement and 15.5 of the SCM Agreement and of its claims under Articles 3.7 of the
Anti-Dumping Agreement and 15. 7 of the SCM Agreement equally and independently render the
USITC's threat of injury determination inconsistent with Articles 3.8 and 15.8.574
7.324. The United States argues that Indonesia's "as applied" claims under Articles 3.8 and 15.8
are largely derivative o f, and indistinguishable from, its claims under Articles 3.5 of the
Anti-Dumping Agreement and 15.5 of the SCM Agreement and its claims under Articles 3.7 of the
Anti-Dumping Agreement and 15.7 of the SCM Agreement. Consequently, for the United States, as
Indonesia fails to establish a prima facie case of violation under the latter provisions, Indonesia
also fails to establish a prima facie case of violation under Articles 3.8 and 15.8.575
7.325. We have, in the preceding sections of this Report, found that Indones ia has failed to
establish that the USITC's threat of injury determination is inconsistent with Articles 3.5 of the
Anti-Dumping Agreement and 15.5 of the SCM Agreement or with Articles 3.7 of the Anti-Dumping
Agreement and 15.7 of the SCM Agreement. In do ing so, we rejected Indonesia's arguments
challenging aspects of the USITC's determination that Indonesia considered were inconsistent with
these provisions. Indonesia has not presented any different or additional arguments in support of
its contention that the same alleged inconsistencies are also, independently, inconsistent with the
"special care" requirement in Articles 3.8 and 15.8. Thus, to the extent that Indonesia's claims
under Articles 3.8 and 15.8 are premised on its claims of violation of the ot her provisions
enumerated above, we find that Indonesia has failed to establish that the United States acted
inconsistently with Articles 3.8 and 15.8.576
7.326. In addition, Indonesia argues that the USITC failed to exercise special care because of the
cumulative effect of the alleged deficiencies it identified in its claims under the other provisions
cited above. In essence, we understand Indonesia to assert that, cumulatively, the alleged
deficiencies it identified in its other Article 3 and Article 15 claims res ulted in a more robust and
rigorous or precise and thorough present injury analysis by the USITC than threat of injury
analysis, and that the USITC resolved the issues identified by Indonesia in its Article 3.5, 3.7,

573 See below, para. 7.346.
574 Indonesia's first written submission, paras. 131-132; response to Panel question No. 56; and second
written submission, para. 76.
575 United States' first written submission, paras. 310-311; opening statement at the first meeting of the
Panel, para. 56; second written submission, paras. 147-148 (referring to Panel Report, US – Softwood
Lumber VI, para. 7.34); and response to Panel question Nos. 56 and 99.
576 Our conclusion is consistent with the approach of the panel in US – Softwood Lumber VI:
While we do not consider that a violation of the special care obligation could not be
demonstrated in the absence of a violation of the more specific provision of the Agreements
governing injury determinations, we believe such a demonstration would require additional or
independent arguments concerning the asserted violation of the special care requirement beyond
the arguments in support of the specific violations[.]
(Panel Report, US – Softwood Lumber VI, paras. 7.34 (bold original; italics added))

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15.5, and 15.7 claims against the Indonesian exporters, and for these reasons acted inconsistently
with Articles 3.8 and 15.8.577
7.327. The United States argues that the Agreements require that an investigating authority
resolve all issues before it based on an objective analysis of positive evidence, applying the
relevant standards. 578 The United States considers that there is no basis for suggesting that
Articles 3.8 and 15.8 require an investigating authority to resolve some percentage of issues, or
"key" issues, in favour of respondents instead of res olving each based on an analysis of the facts
and application of the applicable legal standards.579
7.328. We agree that the Anti -Dumping and SCM Agreements require an investigating authority's
threat of injury determination to be based on an objective analysis of positive evidence and to be
consistent with the relevant obligations under the applicable provisions of Article 3 of the
Anti-Dumping Agreement and Article 15 of the SCM Agreement, including Articles 3.5 and 15.5
and 3.7 and 15.7. Hence, the consistency o f an investigating authority's threat of injury
determination must be considered on its own terms, and not by comparison to the investigating
authority's evaluation of the impact of dumped or subsidized imports on the domestic industry
during the POI. 580 Thus, Indonesia's view that Articles 3.8 and 15.8 require that, in a given
investigation, the investigating authority's threat of injury analysis be at least as "robust" or
"rigorous" as its analysis of the situation of the domestic industry during the POI is without support
in the text of the Agreements.581
7.329. Nor has Indonesia advanced any basis, in Articles 3.8 and 15.8 or any other applicable
provision of the Agreements, for the proposition that Articles 3.8 and 15.8 require an investigating
authority to reso lve some issues, or "key" issues, in favour of respondents. Again, the relevant
question is whether the USITC resolved each "issue" consistently with its obligations under the
provisions at issue. Consequently, whether the investigating authority resolved some, or all, of the
relevant "issues" in favour of foreign producers/exporters, or in favour of domestic producers, is
not a relevant consideration. An investigating authority may well resolve all the "issues" before it
in favour of either the domestic pr oducers or in favour of foreign producers/exporters, so long as
in doing so, it acts consistently with the provisions of the covered agreements. In the present
case, we have found above that Indonesia has not established that the USITC's threat of injury
determination is inconsistent with Articles 3.5 and 3.7 of the Anti -Dumping Agreement and with
Articles 15.5 and 15.7 of the SCM Agreement.
7.330. On the basis of the foregoing, we find that Indonesia has failed to establish that the
USITC's threat of injury deter mination is inconsistent with Article 3.8 of the Anti -Dumping
Agreement and Article 15.8 of the SCM Agreement.

577 Indonesia's first written submission, paras. 130-132; opening statement at the first meeting of the
Panel, para. 75; response to Panel question No. 56; and second written submission, para. 76.
578 United States' second written submission, para. 148.
579 United States' second written submission, para. 148; response to Panel questions No. 99 and 103;
and comments on Indonesia's response to Panel question No. 103.
580 Indonesia's position is also problematic in that it assumes that an investigating authority will, in all
instances, make a fully analysed determination regarding both present injury and threat of injury. However,
while an investigating authority considering the question of threat of injury would be expected to consider the
present condition of the domestic industry in that context (see above, para. 7.231), we see no reason why that
investigating authority would necessarily be required to consider all aspects required for a present injury
determination. An investigating authority could, for instance, conclude that the domestic industry is not
presently injured and may therefore go on to consider the question of threat of material injury without
addressing the question of causation or non-attribution in the context of present (non)injury.
581 In paragraph 7.210 above, we reject a similar argument advanced by Indonesia to the effect that, in
assessing consistency with the non-attribution requirement under Article 3.5 of the Anti-Dumping Agreement
and Article 15.5 of the SCM Agreement, a panel should compare the investigating authority's threat of injury
analysis to its present injury analysis and determine whether the former is as robust as the latter. In our
findings above, we also note that present injury determinations require consideration of actual data for the
POI, whereas threat of injury determinations by definition in addition involve consideration of projections for an
imminent future period.

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7.7 "As such" claims alleging inconsistency of Section 771(11)(B) of the US Tariff Act of
1930 ("tie vote" provision) with Article 3.8 of the Ant i-Dumping Agreement and
Article 15.8 of the SCM Agreement ("special care")
7.7.1 Introduction
7.331. Indonesia challenges Section 771 (11)(B) of the US Tariff Act of 1930 "as such" – i.e.
independently of its application in specific instances – as it applies to threat of i njury
determinations, asserting that this provision is inconsistent with the "special care" obligation under
Articles 3.8 of the Anti -Dumping Agreement and 15.8 of the SCM Agreement in threat of injury
determinations.582
7.332. The United States requests that we reject Indonesia's claim.583
7.333. It is well established in WTO dispute settlement practice that a complaining party may
challenge another Member' s measures of general and prospective application "as such", i.e.
independently of their application in specific inst ances.584 Indonesia's claims concerning the "tie
vote" provision are independent of its claims concerning the US measures on coated paper from
Indonesia. The tie vote provision did not come into play in the coated paper investigation – all
Commissioners cast an affirmative vote (five found that the domestic industry was threatened with
injury, one found that it had suffered present injury).
7.334. There is no substantial disagreement between the parties concerning the interpretation
and operation of Section 771(11)(B) of the US Tariff Act of 1930, as amended (codified at Title 19
of the United States Code, Section 1677(11)(B) ). This provision of US law provides that if there is
an evenly split vote between the USITC Commissioners on whether dumped or subsidized impor ts
are causing injury (whether present injury, threat of injury, or material retardation) in an anti -
dumping or countervailing duty investigation, the USITC shall be considered to have made an
affirmative determination:
If the Commissioners voting on a det ermination by the Commission, including a
determination under section 1675 of this title, are evenly divided as to whether the
determination should be affirmative or negative, the Commission shall be deemed to
have made an affirmative determination. For th e purpose of applying this paragraph
when the issue before the Commission is to determine whether there is
(A) material injury to an industry in the United States,
(B) threat of material injury to such an industry, or
(C) material retardation of the establishment of an industry in the United States,
by reason of imports of the merchandise, an affirmative vote on any of the issues
shall be treated as a vote that the determination should be affirmative.585
7.335. Moreover, we note that pursuant to this provision, a vote that any of the three "types" of
injury (present material injury, threat of material injury, or material retardation) exists is
considered to be an "affirmative" vote when compiling the votes of individual Commissioners.
Indonesia's claim is, however, limited to instances in which an equal number of Commissioners 586
cast an affirmative vote of "threat of injury" by reason of subject imports and cast a negative vote
(i.e. a vote finding no form of injury by reason of subject imports).587
7.336. Moreover, the part ies agree that, under US law, the imposition of anti -dumping or
countervailing measures automatically follows affirmative determinations by both the USDOC (on

582 Indonesia's first written submission, paras. 3 and 133-165.
583 United States' first written submission, para. 353.
584 See, e.g. Panel Report, US – Shrimp II (Viet Nam), para. 7.94.
585 19 U.S.C., Section 1677, (Exhibit US-12), Section 1677(11)(B).
586 The parties agree that in some instances, fewer than six Commissioners will participate in the vote.
(United States' response to Panel question No. 100 (referring to 18 U.S.C., Section 208, (Exhibit US-110))).
587 Indonesia's first written submission, para. 135.

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the existence and a non -de minimis amount of dumping and/or subsidization) and the USITC (on
the existence of injury, in any of its forms, by reason of subject imports). When both agencies
have made an affirmative determination, the USDOC is required, under US law, to issue an
anti-dumping or countervailing duty order imposing duties.588
7.337. We first addre ss our understa nding of the "special care" requirement in Articles 3.8 and
15.8, before considering Indonesia's claims of inconsistency of the US tie vote provision.
7.7.2 Legal standard under Article 3.8 of the Anti -Dumping Agreement and Article 15.8
of the SCM Agreement
7.338. Article 3.8 of the Anti-Dumping Agreement and Article 15.8 of the SCM Agreement read as
follows:
With respect to cases where injury is threatened by [dumped/subsidized] imports, the
application of [anti -dumping/countervailing] measures shall be considered and
decided with special care.
7.339. The parties disagree on the interpretation of Article 3.8 of the Anti -Dumping Agreement
and Article 15.8 of the SCM Agreement, in terms of both the scope of application of the "special
care" obligation, and the content of that obligation.
7.340. Concerning the scope of application of Articles 3.8 and 15.8, Indonesia considers that the
"special care" provision applies to all steps leading to the imposition of duties, and thus to both an
investigating authority's considerat ion of the substantive requirements for the imposition of
anti-dumping or countervailing measures and to the decision to apply duties that follows, including
the decision-making or voting procedures pursuant to which that decision is made. In this respect,
Indonesia argues that, pursuant to the principle of effective treaty interpretation ( effet utile) and
Article 31(1) of the Vienna Convention, meaning must be given to both the terms "considered" and
"decided" in Articles 3.8 and 15.8. In Indonesia's view, if "considered" may refer to or even be
limited to the USITC's substantive consideration of the requirements under the Agreements, the
term "decided" unequivocally includes the way an investigating authority brings the question of
applying or not applying measures in threat of injury situations "to a resolution or conclusion",
including the way in which the investigating authority resolves a tie vote in those situations. 589 In
addition, Indonesia considers that the use of the term "application" in Articles 3 .8 and 15.8 results
in the "special care" obligation applying to all steps leading up to the actual imposition of the
duties.590 Indonesia also argues that where the drafters wanted to refer to the final step of actually
charging duties, they used the terms "impose", "imposition", "levying" or "collection" of duties, not
the broader terms "application" of "measures". 591 Indonesia contends that the Appellate Body
Report in US – Line Pipe does not stand for the general proposition that Members' internal-decision
making processes are always within the discretion of Members.592
7.341. The United States, for its part, argues that the "special care" obligation in Articles 3.8 and
15.8 applies to an investigating authority's substantive analysis, i.e. its consideration of thre at
factors and other requirements concerning whether the domestic industry is threatened with injury
by subject imports and its ultimate decision of whether such a threat exists. 593 The special care
obligation does not, in the United States' view, discipline a Member's voting system or
decision-making procedures.594 The United States finds support for its interpretation of Articles 3.8
and 15.8 in the placement of these Articles as part of the provisions concerning the substantive
requirements applicable to inj ury (including threat of injury) determinations, and argues that it is
in the satisfaction of those obligations that investigating authorities exercise special care under

588 United States' response to Panel question No. 102(a); 19 U.S.C., Section 1671d, (Exhibit US-56),
Section 1671d(c)(2); and 19 U.S.C., Section 1673d, (Exhibit US-60), Section 1673d(c)(2).
589 Indonesia's opening statement at the first meeting of the Panel, para. 79; response to Panel question
Nos. 58 and 59(c); and second written submission, para. 81.
590 Indonesia's response to Panel question Nos. 59 (a), (b), and (c).
591 Indonesia's response to Panel question No. 59(c).
592 Indonesia's opening statement at the first meeting of the Panel, para. 80; response to Panel question
No. 60; and second written submission, para. 83.
593 United States' second written submission, paras. 155-156.
594 United States' first written submission, para. 319.

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Articles 3.8 and 15.8. 595 The United States also finds support for its position in Arti cle 9 of the
Anti-Dumping Agreement and Article 19 of the SCM Agreement, concerning the imposition of
duties. The United States notes that these Articles provide that it is desirable – but not required –
for the imposition of duties to be permissive and that these Articles do not distinguish between
cases involving present injury and those involving threat of injury. The United States also argues
that interpreting "application" in Articles 3.8 and 15.8 as referring to a decision on whether to
impose measures following a determination that the prerequisites for application have been met
may prevent the automatic application of measures in cases involving threat of injury, contrary to
the statement in Articles 9 and 19 that discretion is merely desirable.596
7.342. The United States further submits that where the Anti -Dumping and SCM Agreements
discuss procedural matters, they do so explicitly, and nothing in the Anti -Dumping and SCM
Agreements curbs Members' discretion regarding their framework for assigning responsibi lity for
conducting injury investigations and for counting votes. The United States notes in this respect
that the Appellate Body in US – Line Pipe held that panels and the Appellate Body are "concerned
only with the determination itself, which is a singul ar act for which a WTO Member may be
accountable in WTO dispute settlement", and that a Member's internal decision -making process is
entirely within the discretion of that Member. 597 The United States also asserts that Indonesia's
interpretation of Articles 3.8 and 15.8 would imply structural requirements for investigating
authorities and would require intrusive examination of their decision -making process. 598 Finally,
the United States submits that the negotiating history of Articles 3.8 and 15.8 confirms that the
"special care" language evolved from text about the forecasted level of effect of dumped imports
on the domestic industry, demonstrating that the concept of special care relates to the substantive
standards used to assess whether a threat of injury exists.599
7.343. With respect to the scope of application of the "special care" provision, we note that
Articles 3.8 and 15.8 refer to the "application" of measures, which shall be "considered and
decided" with special care. The use of the term "application" , combined with the use of the term
"decided"600, might, at first glance, suggest that the "special care" obligation concerns a Member's
decision to apply duties once it has determined that all the substantive requirements for doing so
have been met . We recall, howe ver, that the provisions of the covered agreements are to be
interpreted in accordance with the ordinary meaning of their terms, read in context and in light of
the object and purpose of the relevant agreements .601 Here, the context of both Articles 3.8 and
15.8 strongly suggests that they concern the substantive requirements for an investigating
authority's determination of whether the domestic industry is threatened with material injury by
subject imports. In our view, Articles 3.7 and 15.7 , which immediately precede Articles 3.8 and
15.8, provide the most relevant context for the ir interpretation. The fact that the two sets of
provisions apply to determinations of threat of injury and the placement of Articles 3.8 and 15.8
immediately following Articles 3.7 and 15.7 suggests that the "special care" requirement relates to
the obligations set out in those preceding provisions. In this respect, we agree with the

595 United States' first written submission, paras. 322 and 327-329 (quoting Panel Report, US –
Softwood Lumber VI, paras. 7.33-7.34); second written submission, paras. 150 and 158; and response to
Panel question No. 58 (referring to Panel Report, US – Softwood Lumber VI, para. 7.34).
596 United States' response to Panel question No. 59(a).
597 United States' first written submission, paras. 312-353; opening statement at the first meeting of the
Panel, para. 58; and second written submission, paras. 150-151 (in both instances referring to Appellate Body
598 United States' second written submission, paras. 164-165.
599 United States' first written submission, para. 330; second written submission, paras. 159-163
(referring to Group on Anti-Dumping Policies, Anti-Dumping Code draft (August 1966), (Exhibit US-26);
Anti-Dumping Code (July 1967), (Exhibit US-27); and Group on Anti-Dumping Policies, Anti-Dumping Code
draft (December 1966), (Exhibit US-30)).
600 In the Anti-Dumping and SCM Agreements, the concept of "application" generally refers to a
Member's imposition of duties, not including their final collection. See, e.g. Articles 7.1, 10.1, 10.2, and 15 of
the Anti-Dumping Agreement and the corresponding provisions of the SCM Agreement. The ordinary meaning
of the term "decided" suggests that it can be interpreted to refer to the overall conclusion reached, as a result
of an investigating authority's "consideration" of a matter. The Shorter Oxford Dictionary, defines "decide" as,
inter alia, "[s]ettle (a question, dispute, etc.) by finding in favour of one side; bring to a settlement, resolve"
"[b]ring (a person) to a determination or resolution (against, in favour of, to do)", "[c]ome to a determination
or resolution". (Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),
Vol. 1, pp. 618-619). We also note that there is no notable difference between the English, the French, and the
Spanish texts of Articles 3.8 and 15.8.
601 Vienna Convention, Article 31(1).

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United States that the negotiating history of Articles 3.8 and 15.8 suggests that the "special care"
requirement was originally linked to the nature of the information – predictions about the future –
that authorities must rely on in making threat of injury determinations. 602 The apparent reason for
the inclusion of what became the "special care" requireme nt supports our understanding that the
obligation applies to an investigating authority's consideration of the substantive requirements for
a determination of threat of injury. In addition, Articles 3.8 and 15.8 form part of , respectively,
Article 3 of the Anti-Dumping Agreement and Article 15 of the SCM Agreement . The focus of these
two Articles, both of which are entitled "Determination of Injury", is "on the substantive obligations
that a Member must fulfil in making an injury determination". 603 The placem ent of the "special
care" language in Articles 3 and 15 thus suggests that, in line with all the other provisions of those
Articles, the "special care" provision concerns the substantive requirements for an investigating
authority's determination of whethe r the domestic industry is threatened with material injury by
subject imports. 604 By contrast, disciplines on the procedural and evidentiary aspects of
anti-dumping and countervailing duty investigations are found primarily in Article 6 of the
Anti-Dumping Agreement and Article 12 of the SCM Agreement, and the imposition and collection
of duties is addressed in Article 9 of the Anti -Dumping Agreement and Article 19 of the SCM
Agreement.
7.344. We find further support in Article 6.9 of the Anti-Dumping Agreement and Article 12.8 of
the SCM Agreement for our view that Articles 3.8 and 15.8 concern an investigating authority's
consideration of the substantive requirements for a determination of threat of injury. Articles 6.9
and 12.8 impose a procedural obligation to disclose the "essential facts under consideration which
form the basis for the decision whether to apply definitive measures ".605 This obligation applies to
the facts underlying a n authority's substantive consideration of the existence of dumping or
subsidization, of injury, and of a causal link between the dumped or subsidized imports and the
injury.606 The fact that Articles 6.9 and 12.8 are, like Articles 3.8 and 15.8, formulated in terms of
the decision to apply anti -dumping or countervailing measures even th ough they apply to
substantive requirements lends support to our view that Articles 3.8 and 15.8 concern the
substantive requirements applicable in determining whether a threat of injury exists.
7.345. In any event, even if the special care requirement could app ly to something else than an
investigating authority's consideration of the substantive requirements under Articles 3 and 15, we
agree with the United States and the European Union 607 that the Anti -Dumping and SCM
Agreements generally do not discipline Membe rs' voting procedures or the manner in which
decisions to apply duties are made. There is nothing in either the Anti -Dumping or SCM
Agreements concerning the structure or responsibilities of the decision -making for investigations
beyond the statement in fo otnote 3 of the Anti -Dumping Agreement that the term "authorities"

602 Group on Anti-Dumping Policies, Anti-Dumping Code draft (August 1966), (Exhibit US-26);
Anti-Dumping Code (July 1967), (Exhibit US-27); and Group on Anti-Dumping Policies, Anti-Dumping Code
draft (December 1966), (Exhibit US-30).
603 Appellate Body Report, Thailand – H-Beams, para. 106. (emphasis original)
604 Our understanding of Articles 3.8 and 15.8 is consistent with that of the panel in US – Softwood
Lumber VI, which took the view that Articles 3.8 and 15.8 reinforce the fundamental obligation under
Articles 3.7 and 15.7 that an investigating authority base a threat of injury determination on facts and not
allegation, conjecture, or remote possibility. The panel also was of the view that Articles 3.8 and 15.8 "apply
during the process of investigation and determination of threat of material injury", that is, "in the
establishment of whether the prerequisites for application of a measure exist", and not merely afterward when
final decisions whether to apply a measure are taken. (Panel Report, US – Softwood Lumber VI, para. 7.33).
We note that in its report in the compliance proceedings in the same dispute, the Appellate Body included
Articles 3.8 and 15.8 in a list of the substantive provisions of Articles 3 and 15 informing the standard of review
to be applied by a panel considering claims concerning these provisions and, in this context, referred to the
above discussion of Articles 3.8 and 15.8 by the US – Softwood Lumber VI panel. (Appellate Body Report, US –
Softwood Lumber VI (Article 21.5 – Canada), paras. 95-96). See also Appellate Body Report, China – GOES,
fn 213: "Articles 3.7 and 3.8 of the Anti-Dumping Agreement and Articles 15.7 and 15.8 of the SCM Agreement
set out the requirements regarding the determination of a threat of material injury".
605 Article 6.9 of Anti -Dumping Agreement and Article 12.8 of the SCM Agreement read, in
relevant part:
The authorities shall, before a final determination is made, inform all interested parties of the
essential facts under consideration which form the basis for the decision whether to apply
definitive measures.
(emphasis added)
606 See, e.g. Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.130.
607 United States first written submission, paras. 320-325; second written submission, para 153; and
European Union's third-party response to Panel question No. 14.

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used in the Agreement "shall be interpreted as meaning authorities at an appropriate senior level".
Had the drafters intended for the Anti -Dumping and the SCM Agreements to subject to revie w the
manner in which Members structure their investigating authorities and the manner in which
decisions to apply duties are made, they would, we believe, have done so explicitly, particularly in
view of the wide variety of ways in which Members have orga nized and structured their
investigating authorities.608 We see no basis in the texts of the Anti -Dumping or SCM Agreements
that would support Indonesia's argument that those Agreements impose procedural disciplines on
how determinations are made.609
7.346. In light of our conclusion concerning the scope of application of Articles 3.8 and 15.8, we
do not consider it necessary to go on to consider further the meaning of the term "special care".
Nonetheless, we make the following observations in this regard. First, the ordinary meaning of the
"special care" language implies an obligation on Members to apply a high degree of attention in
threat of injury determinations. 610 Second, we note that Indonesia refers to the following as
relevant context for the interpretation of the term "special care" : (a) Articles 3.1 of the
Anti-Dumping Agreement and 15.1 of the SCM Agreement requiring that an injury determination
be based on an "objective examination" of "positive evidence"; (b) Article X:3(a) of the GATT 1994
requiring that measures be administered in a "uniform, impartial and reasonable manner"; (c) the
principle of good faith as a "relevant rule of international law applicable in the relations between
the parties" pursuant to Article 31(3)(c) of the Vienna Convention; (d) a general standard of
even-handedness, which, Indonesia argues, underlies the WTO covered agreements; and (e)
Article 15 of the Anti -Dumping Agreement and Article 27 of the SCM Agreement, which set out
special rules concerning developing country Members. 611 With the exception of Article 3.1 of the
Anti-Dumping Agreement and Article 15.1 of the SCM Agreement, we do not see, and Indonesia
has not persuaded us of, the relevance for the interpretation of the special care requirement of the
provisions and concepts that it refers to . As indicated above, in our view, Articles 3.7 and 15.7,
which immediately precede Articles 3.8 and 15.8 , provide the most relevant context for the
interpretation of Articles 3.8 and 15.8 , and this context suggests that the "special care"
requirement relates to the obligations set out in those preceding provisions.
7.347. Finally, we note Indonesia's argument that the fact that the laws of certain other Members
and the Statutes of the International Court of Justice provide for either an odd numb er of

608 Members have adopted a variety of different structures for the administration of their trade remedy
systems. In some systems, the decision-maker is formally part of the government, while in others it is a
separate, often quasi-judicial, body outside the formal government hierarchy. In some systems, there is a dual
system in which one authority determines whether imports are dumped or subsidized, and another determines
whether the domestic industry is injured by such imports. The ultimate decision whether to impose measures
may rest with one or the other of these authorities, or with a separate authority. We recall that in the US
system, while the USITC makes determinations regarding injury, the USDOC makes determinations regarding
dumping and subsidization and the imposition of measures; the latter is required under US law if the USDOC
and the USITC both make affirmative determinations of, respectively, dumping or subsidization, and injury. In
some systems, the investigation and evaluation of the substantive requirements for the imposition of measures
(i.e. dumping, subsidy, injury, and causation) is undertaken by one authority, which recommends a
determination to another authority, which makes the ultimate determination whether to apply measures, and
may accept, reject, or modify the recommendation.
609 We also note the Appellate Body's statement in US – Line Pipe that the Agreement on Safeguards is
not:
[C]oncerned with how the competent authorities of WTO Members reach their determinations in
applying safeguard measures. The Agreement on Safeguards does not prescribe the internal
decision-making process for making such a determination. That is entirely up to WTO Members in
the exercise of their sovereignty. We are concerned only with the determination itself, which is a
singular act for which a WTO Member may be accountable in WTO dispute settlement. It is of no
matter to us whether tha t singular act results from a decision by one, one hundred, or —as
here—six individual decision-makers under the municipal law of that WTO Member. What matters
to us is whether the determination, however it is decided domestically, meets the requirements
of the Agreement on Safeguards.
(Appellate Body Report, US – Line Pipe, para. 158)
610 The Shorter Oxford Dictionary defines "care" as "[s]erious attention, heed; caution, pains; regard,
inclination (to, for)" (Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press,
2007), Vol. 1, p. 348), and "special", (as an adjective), as "[e]xceptional in quality or degree; unusual; out of
the ordinary". (Ibid. Vol. 2, p. 2942).
611 Indonesia's first written submission, paras. 140-153; response to Panel question No. 63(b); opening
statement at the first meeting of the Panel, paras. 79, 82; and second written submission, para. 85. (emphasis
original)

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decision-makers or for the presiding member to have a deciding vote are "circumstances
surrounding the conclusion of a treaty" within the meaning of Article 32 of the Vienna Convention,
which indicate that the special care requirement is generally pe rceived to entail a greater degree
of diligence than that afforded by the US tie vote provision, thus showing that the provision is
inconsistent with Articles 3.8 and 15.8. 612 Indonesia fails to explain how other Members'
procedures could properly be regarde d as circumstances surrounding the conclusion of the
Anti-Dumping and SCM Agreements in this regard, given that the conclusion of the se Agreements
preceded the adoption of at least some of those procedures ; legislation enacted subsequent to the
conclusion of a treaty cannot be considered "circumstances of its conclusion". 613 Nor has Indonesia
explained how tie-breaking provisions in other Members' trade remedy legislation could have been
of relevance to, informed, or impacted, the negotiation of Articles 3.8 and 15.8, particularly as
these Articles apply only in threat of injury determinations, and on their face have nothing to do
with voting procedures.614
7.348. In its first written submission, Indonesia also argued that these same laws constituted
"subsequent practice" within the meaning of "Article 31(1)(b) (sic) " of the Vienna Convention. 615
Indonesia later asserted, in its opening statement at the second meeting with the Panel , that it
had not invoked Article 31(3)(b) or sought to rely on the subsequent practice of Members. In light
of Indonesia's repudiation of its own argument, it is unnecessary to address this question.
Nonetheless, we again note that there is no obvious connection between the tie-breaking
provisions in other Members' legislation and the special care provision, and that Indonesia refers to
the practice of only a handful of WTO Members. Thus, Indonesia in any event failed to
demonstrate "a common, consistent, discernible pattern of acts or pronouncements" that "imply
agreement on the interpretation of the relevant provision".616 Indonesia also refers to the fact that
in safeguards cases, under US law, the US president (who determines whether a measure will be
applied and if so what measure) may deem a tied vote by the USITC to be affirmative.617 However,
Indonesia again fails explain the relevance of this decision -making procedure to the interpretation
of Articles 3.8 and 15.8.

612 Indonesia's first written submission, paras. 160-165 (referring to Other Members' Laws on Tie
Voting, (Exhibit IDN-20); and ICJ Statute, (Exhibit IDN-47)); opening statement at the second meeting of the
Panel, para. 62.
613 In EC – Chicken Cuts, the Appellate Body upheld the panel's view that the ''circumstances of the
conclusion should be ascertained over a period of time ending on the date of the conclusion of the WTO
Agreement''. (Appellate Body Report, EC – Chicken Cuts, para. 293 (emphasis added)). Canada's legislation
appears to pre-date the entry into force of the Uruguay Round Agreements, whereas Argentina, South Africa,
and Turkey's legislation appear to post-date it. Of course, it may well be that these Members had similar
legislation in place prior to the conclusion of the Uruguay Round, but we cannot assume this to be the case in
the absence of evidence to this effect and Indonesia has not submitted evidence that would demonstrate that
the laws were enacted prior to the conclusion of the Uruguay Round. Moreover, in the present case, the
language of Articles 3.8 and 15.8 originates in the Kennedy Round Anti-Dumping Code, and in our view, the
laws would have to pre-date the conclusion of that agreement to qualify under Article 32 of the Vienna
Convention in the manner argued by Indonesia.
614 In addition, Indonesia invokes the practice of only four Members, and fails to mention that at least
one other Member, Korea, has a provision similar to the US tie vote provision. (South Korea, Act on the
Investigation of Unfair International Trade Practices, (Exhibit US-29), Article 32 (referred to in United States'
first written submission, para. 343)).
615 Indonesia's first written submission, para. 161. Indonesia explained that:
The Appellate Body has defined 'subsequent practice as a 'concordant, common and consistent'
sequence of acts or pronouncements which is sufficient to establish a discernible pattern implying
the agreement of the parties [to a treaty] regarding its interpretation', see Appellate Body
Report, Japan – Alcoholic Beverages II, p.13. Indonesia can rely on laws enacted after the entry
into force of the WTO agreements as an indication of how states perceive 'special care' to be
correctly interpreted.
(Ibid. fn 216)
The language of the Appellate Body Report in Japan – Alcoholic Beverages II cited by Indonesia
concerns the use of subsequent practice under Article 31.3(b) of the Vienna Convention, which provides that,
in interpreting a treaty, "[t]here shall be taken into account, together with the context: … (b) any subsequent
practice in the application of the treaty which establishes the agreement of the parties regarding its
interpretation".
616 Appellate Body Reports, US – Gambling, para. 192; EC – Chicken Cuts, paras. 258-259. (emphasis
original)
617 Indonesia's first written submission, para. 164; response to Panel question No. 60 (referring to
Safeguard Tie Vote, (Exhibit IDN-37)).

BCI deleted, as indicated [[***]]

7.7.3 Whether the US "tie vote" provision is inconsistent with Article 3.8 of the
Anti-Dumping Agreement and Article 15.8 of the SCM Agreement
7.349. Indonesia's argument that the US tie vote provision is inconsistent with Article 3.8 of the
Anti-Dumping Agreement and Article 15.8 of the SCM Agreement is premised on its interpretation
of the "special care" obligation. We have rejected Indonesia 's interpretation of Articles 3.8 and
15.8, concluding that these provisions establish no disciplines on Members' decision -making
procedures in determining whether a domestic industry is threatened with injury and whether to
apply measures. The US tie vote provision is a procedural mechanism to establish an outcome
based on the votes of individual Commissioners in the event of a tied vote on whether there is
injury caused by subject imports. Consequently, we conclude that Indonesia has failed to establish
the inconsistency of the US tie vote provision with the special care requirement under Articles 3.8
and 15.8.
7.350. Finally, we note that the parties also disagree as to the significance, for Indonesia's claims,
of the fact that under US law 618 the USDOC has no dis cretion not to issue an anti -dumping or
countervailing duty order following affirmative determinations by the USDOC and the USITC. In
particular, the parties disagree whether this means that under US law, an affirmative USITC
decision constitutes a decision to apply duties.619 In light of our conclusions regarding the scope of
application of Articles 3.8 and 15.8, we see no need to address the parties' arguments in this
respect.
7.351. In light of the foregoing, we find that Indonesia has f ailed to establish that
Section 771(11)(B) of the US Tariff Act of 1930, as amended (codified at Title 19 of the
United States Code, Section 1677(11)(B) ), as it applies to threat of injury determinations, is
inconsistent with Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM
Agreement and reject Indonesia's "as such" claims under these provisions.
8 CONCLUSIONS
8.1. For the reasons set forth in this Report, the Panel concludes as follows:
a. With respect to Indonesia's claims concerning the USDOC's subsidy determination:
i. Indonesia has failed to establish that the USDOC ac ted inconsistently with
Article 14(d) of the SCM Agreement by not using private prices for standing timber in
Indonesia as the basis for establishing the benchmark for the provision of standing
timber;
ii. Indonesia has failed to establish that the USDOC ac ted inconsistently with
Article 14(d) of the SCM Agreement by not using private prices for logs in Indonesia
as the basis for establishing the benchmark for the log export ban;
iii. Indonesia has failed to establ ish that the USDOC ac ted inconsistently with
Article 12.7 of the SCM Agreement in its determination that Orleans was affiliated
with APP/SMG;
iv. Indonesia has failed to establish that the USDOC ac ted inconsistently with
Article 2.1(c) of the SCM Agreement by failing to determine or identify the relevant
subsidy programmes in connection with the provision of standing timber, the log
export ban, or the debt forgiveness;
v. Indonesia has failed to establish that the USDOC acted inconsistently with the
chapeau of Ar ticle 2.1 of the SCM Agreement by failing to identify the granting
authority that forgave debt in favour of APP/SMG or the jurisdiction of that granting
authority.

618 See above, para. 7.336.
619 United States' first written submission, paras. 319 and 333-336; second written submission,
para. 153; response to Panel question No. 102(a); Indonesia's response to Panel question Nos. 59 (a), (b), and
(c); and comments on the United States' response to Panel question No. 102(a).

BCI deleted, as indicated [[***]]

b. With respect to Indonesia's claims concerning the USITC's threat of injury
determination:
i. Indonesia has failed to establish that the USITC's threat of injury determination is
inconsistent with Article 3.5 of the Anti -Dumping Agreement and Article 15.5 of the
SCM Agreement because the USITC attributed to the subject imports adverse effects
caused by other factors;
ii. Indonesia has failed to establish that the USITC's findings that in the imminent
future subject imports would gain market share at the expense of the domestic
industry and would have adverse effects on US prices are based on conjecture an d
remote possibility, and there fore that the USITC 's threat of injury determination is
inconsistent with Article 3.7 of the Anti -Dumping Agreement and Article 15.7 of the
SCM Agreement;
iii. Indonesia has failed to establish that the USITC's threat of injury de termination is
inconsistent with Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the
SCM Agreement.
c. With respect to Indonesia's "as such" claims concerning Section 771 (11)(B) of the US
Tariff Act of 1930 (the "tie vote" provision):
i. Indonesia has failed to establish that Section 771 (11)(B) of the US Tariff Act of
1930, as amended (codified at Title 19 of the United States Code,
Section 1677(11)(B)), as it applies to threat of injury determination s, is inconsistent
with Article 3.8 of the Anti -Dumping Agreement and Article 15.8 of the SCM
Agreement.
8.2. In light of these conclusions, the Panel makes no recommendation under Article 19.1 of the
DSU.