EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM INDONESIA REQUEST FOR THE ESTABLISHMENT OF A PANEL BY INDONESIA
Document: REQUEST FOR THE ESTABLISHMENT OF A PANEL
Date: 8 July 2015
Document codes: WT/DS480/2
Complainant: Indonesia
Respondent: EU
Third parties: U.S., Japan, Turkey, Singapore, India, China, Canada, Argentina, Australia, Norway, Russia, Brazil, Ukraine
Dispute stage: Panel
Agreements cited: Art. 2.2, 2.2.1.1  Anti-dumpingArt. VI:1  GATT 1994Art. XVI:4  Agreement Establishing the World Trade OrganizationArt. 2.2.2(i), 18.4, 2.2.2, 2.2.2(iii), 2.4, 2.3, 9.3, 3.1, 3.4, 3.5, 6.5, 6.5.1, 7.1, 7.2, 9.2, 9.3, 1  Anti-dumpingArt. VI  GATT 1994

EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM INDONESIA
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY INDONESIA
The following communication, dated 30 June 2015, from the delegation of Indoneisa to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

On 10 June 2014, the Government of the Re public of Indonesia ("Indonesia") requested
consultations with the European Union
1 pursuant to Articles 1 and 4 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes ("DSU"), Article XXII:1 of the General
Agreement on Tariffs and Trade 1994 ("GATT 1994"), and Articles 17.2 and 17.3 of the Agreement
on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("the Anti-
Dumping Agreement"), with respect to the below-mentioned measures concerning specific
provisions of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against
dumped imports from countries not members of the European Community ("Basic AD
Regulation")
2 and related practices and measures, and the anti-dumping measures imposed on
biodiesel imports from Indonesia 3 including provisional measures imposed as regards one
Indonesian exporting producer.

Consultations were held between Indonesia and the European Union on 23 July 2014, with a view
to reaching a mutually satisfactory solution. These consultations however failed to resolve the
dispute.

2. Measures at issue and claims

Indonesia considers that the measures at issue as described below are inconsistent with the
European Union's obligations under the relevant provisions of the WTO Agreements elaborated
hereunder. The measures at issue include all those mentioned below as well as any subsequent
amendments and replacements.

1 The request for consultations dated 17 June 2014, WT/DS480/1, G/L/1071, G/ADP/D104/1.
2 Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports
from countries not members of the European Community (codified version), OJ L 343, 22.12.2009, p. 51 and
corrigendum to Council Regulation (EC) No 1225/2009, OJ L 7, 12.1.2010, p. 22, as amended, including by
Regulation (EU) No 765/2012 of the European Parliament and of the Council of 13 June 2012, OJ L 237,
3.9.2012, p.1; Regulation (EU) No 1168/2012 of the European Parliament and of the Council of 12 December
2012, OJ L 344, 14.12.2012, p.1 and Regulation (EU) No 37/2014 of the European Parliament and of the
Council of 15 January 2014, OJ L18, 21.1.2014, p.1.
3 Commission Regulation (EU) No 490/2013 of 27 May 2013 imposing a provisional anti-dumping duty
on imports of biodiesel originating in Argentina and Indonesia, OJ L 141, 28.5.2013, p. 6 and Council
Implementing Regulation (EU) No 1194/2013 of 19 November 2013 imposing a definitive anti-dumping duty
and collecting definitively the provisional duty imposed on imports of biodiesel originating in Argentina and
Indonesia, OJ L 315, 26.11.2013, p. 2.

2.1 "As such" claims concerning the Basic AD Regulation and the European Union's
methodologies, procedures or practices:

(i) Article 2(5) of the Basic AD Regulation
4 and the European Union's 'cost adjustment
methodology, procedure or practice'

A. The second paragraph of Article 2(5) of the Basic AD Regulation which provides that "[i] f
costs associated with the production and sale of the product under investigation are not reasonably
reflected in the records of the party concerned, they shall be adjusted or established on the basis
of the costs of other producers or exporters in the same country or, where such information is not
available or cannot be used, on any other reasonable basis, including information from other
representative markets". Pursuant to this provision, the European Union assesses the reasonability
of the actually incurred costs of inputs used in the production of the product under consideration
by investigated exporters or producers on the basis of a non-distortion test against prices or
benchmarks of those inputs in supposedly undistorted markets/from undistorted sources;
disregards the actually incurred and accurately recorded costs of inputs as not being reasonable
and thus not reasonably reflected in the accounting records of the investigated exporters or
producers even though the records of those expo rters or producers are in accordance with the
generally accepted accounting principles of the investigated country and reasonably as well as
accurately reflect the costs associated with the production and sale of the product under
investigation, in the event the European Union finds that the non-distortion test is not met and/or
that the costs of inputs incurred are artificia lly or abnormally low, distorted, regulated,
below/lower than market prices paid in unregulated markets, or not in line with world market
prices/prices in representative markets; and adjusts or replaces those input costs with other data
including that pertaining to markets or sources outside the country of origin which it considers to
be undistorted.

B. The European Union's 'cost adjustment method ology, procedure or administrative practice'
pursuant to Article 2(5) of the Basic AD Regulation, in original investigations and reviews for the
establishment of the cost of production of the pr oduct under consideration. Pursuant to the 'cost
adjustment methodology, procedure or administra tive practice' the European Union assesses the
reasonability of the actually incurred costs of inputs used in the production of the product under
consideration by investigated exporters or producers on the basis of a non-distortion test against
prices or benchmarks of those inputs in supposedly undistorted markets/from undistorted sources;
disregards the actually incurred and accurately recorded costs of inputs as not being reasonable
and thus not reasonably reflected in the accounting records of the investigated exporters or
producers even though the records of those expo rters or producers are in accordance with the
generally accepted accounting principles of the investigated country and reasonably as well as
accurately reflect the costs associated with the production and sale of the product under
investigation, in the event the European Union finds that the non-distortion test is not met and/or
that the costs of inputs incurred are artificia lly or abnormally low, distorted, regulated,
below/lower than market prices paid in unregulated markets, or not in line with world market
prices/prices in representative markets; and adjusts or replaces those input costs with other data
including that pertaining to markets or sources outside the country of origin which it considers to
be undistorted.

Indonesia considers the above-mentioned measures to be inconsistent as such with the following
provisions of the Anti-Dumping Agreement, the GATT 1994 and the Marrakesh Agreement
Establishing the World Trade Organization ("Marrakesh Agreement"):

1. Articles 2.2, 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994
because these provisions require that the costs be calculated on the basis of the records kept by
the producers under investigation when such records are in accordance with the generally
accepted accounting principles of the exporting country and reasonably reflect the costs associated
with the production and sale of the product under consideration and do not permit (a) the rejection
and subsequent adjustment or replacement of th e costs actually incurred by the producers under
investigation by other costs because they are considered to be artificially or abnormally low,
distorted, regulated, below/lower than market prices paid in unregulated markets, or not in line
with world market prices/prices in representative markets nor do they permit the assessment of
the reasonability of the input costs on the basis of out-of-country of origin input costs/prices from

4 Including any subsequent amendments and replacements.

supposedly undistorted markets/sources; and (b) because these provisions require that the costs
used be associated with the production and sale of the product under consideration.

2. Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, because
these provisions do not permit the adjustment or establishment of the cost of production on the
basis of data or information other than that in the country of origin.

3. Article XVI:4 of the Marrakesh Agreement an d Article 18.4 of the Anti-Dumping Agreement,
insofar as the European Union has not taken all steps to ensure the conformity of its laws,
regulations and administrative procedures with the provisions of the GATT 1994 and of the Anti-
Dumping Agreement.

(ii) Article 2(6)(b) of the Basic AD Regulation
5 and the European Union's 'profit
adjustment methodology, procedure or practice'

A. Article 2(6)(b) of the Basic AD Regulation which provides that if the amounts (for SG&A
costs and) for profits cannot be based on the actual data pertaining to the production and sales, in
the ordinary course of trade, of the like product, by the exporter or producer under investigation,
these amounts may be determined on the basis of the " actual amounts applicable to production
and sales, in the ordinary course of trade, of the same general category of products for the
exporter or producer in question in the domestic market of the country of origin ". (Emphasis
added)

Pursuant to this provision, the European Union requires that the sales of the same general
category of products be in the ordinary course of trade, in order for the actual profit amount
realized by the exporter or prod ucer subject to investigation in respect of the sales of the same
general category of products to be used for the co nstruction of the normal value, if the amount for
the profit cannot be based on the actual data pertai ning to sales, in the ordinary course of trade,
of the like product, by the exporter or producer under investigation. (Emphasis added)

B. The European Union's 'profit establishment methodology, procedure or practice' pursuant to
Article 2(6)(b) of the Basic AD Regulation, in original investigations and reviews, for the
establishment of the constructed normal value, pursuant to which the European Union requires
that the sales of the same general category of products be in the ordinary course of trade, in order
for the actual profit amount realized by the exporter or producer subject to investigation in respect
of the sales of the same general category of products to be used for the construction of the normal
value, if the amount for the profit cannot be based on the actual data pertaining to sales, in the
ordinary course of trade, of the like product, by the exporter or producer under investigation.
(Emphasis added)

Indonesia considers the above-mentioned measures to be inconsistent as such with the following
provisions of the Anti-Dumping Agreement and the Marrakesh Agreement:

1. Article 2.2.2(i) of the Anti-Dumping Agreement because this provision does not require that
the actual profit amount realized in respect of the production and sales of the same general
category of products by the exporter or produc er subject to the investigation in the domestic
market of the country of origin pertains to sales in the ordinary course of trade in order to be used
for normal value establishment.

2. Article XVI:4 of the Marrakesh Agreement an d Article 18.4 of the Anti-Dumping Agreement,
insofar as the European Union has not taken all steps to ensure the conformity of its laws,
regulations and administrative procedures with the provisions of the Anti-Dumping Agreement.

2.2 "As applied" claims concerning the anti -dumping measures imposed on imports of
Indonesian biodiesel
6 and the underlying investigation

On 17 July 2012, the European Biodiesel Board fi led an anti-dumping complaint on behalf of
certain European Union producers of biodiesel and on 29 August 2012, the European Commission
initiated an anti-dumping investigation against imports of this product from Indonesia and

5 Including any subsequent amendments and replacements.
6 Including any subsequent amendments and replacements.

Argentina. On 28 May 2013, provisional measures were imposed, followed by the imposition of
definitive anti-dumping duties on 26 November 2013.

Indonesia considers that the anti-dumping measures
7 imposed by the European Union on imports
of biodiesel originating in Indonesia and the underlying investigation are inconsistent with the
following provisions of the Anti-Dumping Agreement and of the GATT 1994:

1. Articles 2.2 and 2.2.1.1 of the Anti-D umping Agreement because the European Union
incorrectly determined the existence of a particular market situation as regards the cost of a raw
material used in the production of biodiesel by the Indonesian producers under investigation, as a
basis to adjust the cost of production of biodiesel.

2. Articles 2.2 and 2.2.1.1 of the Anti-Dumpi ng Agreement and Article VI:1(b)(ii) of the GATT
1994 because in constructing the normal value for the Indonesian producers under investigation,
the European Union did not calculate the cost of production of biodiesel on the basis of the records
kept by those producers even though the records were in accordance with the generally accepted
accounting principles and accurately and reasonably reflected the actual cost of production of
biodiesel, and because the European Union theref ore failed to properly calculate the cost of
production and properly construct the normal value for those producers.

3. Article 2.2 of the Anti-Dumping Agreement because the European Union failed to construct
the normal value for the Indonesian producers under investigation on the basis of the cost of
production of biodiesel in the country of origin, i.e. Indonesia.

4. Articles 2.2 and 2.2.1.1 of the Anti-Dum ping Agreement and Article VI:1(b)(ii) of the
GATT 1994 because when constructing the normal value for the Indonesian producers under
investigation, the European Union included costs that were not incurred by those Indonesian
producers and which therefore do not reasonably re flect the costs associated with the production
and sale of biodiesel in Indonesia. The European Union therefore failed to properly calculate the
cost of production and to properly construct the normal value for those producers.

5. Articles 2.2 and 2.2.1.1 of the Anti-Dumpi ng Agreement and Article VI:1(b)(ii) of the
GATT 1994 because the replacement of the actual input costs of the Indonesian producers under
investigation by the European Union with the 'r eference export price' of crude palm oil was
inherently unreasonable since (a) it was based on an improper establishment of facts, and (b) it
did not result in the cost of production of bi odiesel being reasonably reflected because among
others, the 'reference export price' was distor ted, and for some producers the adjustment was
based on a feedstock, i.e. crude palm oil, which they did not actually use in the production of
biodiesel. For instance, one Indonesian producer used palm fatty acid distillate and another
producer used processed palm oil products. Thus, the European Union failed to properly calculate
the cost of production and to properly construct the normal value for those producers.

6. Articles 2.2, 2.2.2 and 2.2.2(iii) of the Anti-Dumping Agreement because when constructing
the normal value for the Indonesian producers under investigation, the European Union did not
establish a cap for the profits as required by Article 2.2.2(iii); the amount for profits established
was not determined by the European Union on the basis of a reasonable method; and the
European Union improperly refused to base the amount for profits for some Indonesian producers
on the actual amounts incurred and realized in resp ect of production and sales in Indonesia of the
same general category of products. The European Union therefore failed to properly construct the
normal value for those producers.

7. Article 2.4 of the Anti-Dumping Agreemen t because when comparing the normal value and
the export price, the European Union failed to ma ke due allowances for di fferences affecting price
comparability including differences in taxation thereby precluding a fair comparison between the
export price and normal value on account of the following:

(i) by comparing a constructed normal value that included a cost of production based on
'reference export price' of crude palm oil -- which was in turn based on 'international
prices' that include the export tax on that raw material -- with export prices that

7 See Footnote 3.

reflected the actual costs of the raw material incurred by the Indonesian producers
under investigation;
(ii) by deducting alleged commissions or mark-up on export sales to the European Union
that were made by an Indonesian producer via related companies located in a third
country;
(iii) by making an allowance for profits accruing to the Indonesian exporters' related
importers in the European Union on a basis other than the actual profits that accrued to
the related importers in the European Union in the investigation period; by rejecting the
actual profits accrued; and by rejecting th e positive evidence provided by certain
Indonesian producers with regard to the level of the notional profit margins of the
European Union importers of biodiesel.
8. Articles 2.3 and 2.4 of the Anti-Dumping Ag reement because the European did not construct
the export price for one Indonesian producer under investigation on the basis of the price at which
the imported biodiesel was first resold to independent buyers in the European Union and/or
because in comparing the constructed normal value with the constructed export price, the
European Union failed to make due allowance for differences affecting price comparability, namely
the premium received for "double-counting" biodie sel by this Indonesian producer for exports
made to one European Union Member State.

9. Article 9.3 (chapeau) of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994
because on account of the inconsistencies with Article 2 specified above in the context of the
calculation of the dumping margin for the Indonesian producers, the European Union calculated a
margin of dumping and imposed and collected an ti-dumping duties in excess of the actual
dumping if any by the Indonesian producers. This resulted in the levy of anti-dumping duties on
the Indonesian producers that exceeded their marg in of dumping which, under Article 9.3 of the
Anti-Dumping Agreement, operates as the ceiling for the amount of anti-dumping duty that can be
levied in respect of the sales made by a producer/exporter.

10. Articles 3.1 and 3.2 of the Anti-Dumping Agreement because the European Union's
determination of injury to the Union industry was not based on an objective examination of the
volume of the allegedly dumped imports and the effect of those imports on prices in the domestic
market for biodiesel and the consequent impact of those allegedly dumped imports on domestic
producers of biodiesel. With regard to the volume of the allegedly dumped imports, the European
Union failed to conduct an objective examination as it did not take into account in its analysis,
inter alia , the large volume of the allegedly dumped imports made by the European Union
industry. Furthermore, the European Union's findin gs regarding the price effects of the allegedly
dumped imports including price undercutting were not based on an objective examination of the
evidence on the record, as among others, the European Union did not ensure price comparability
in terms of physical characteristics and model-matching and based its determination of price
undercutting on partial and unexplained sales of the sampled European Union producers.

11. Articles 3.1 and 3.4 of the Anti-Dumping Agreement because the European Union's injury
determination was not based on positive evidence and did not involve an objective examination of
the consequent impact of the allegedly dumped imports on domestic producers of the like product,
inter alia, in relation to the market share, capacity and capacity utilization of the Union industry
and the European Union failed to conduct an objective examination of the overall developments
and interaction among the injury factors taken together.

12. Articles 3.1 and 3.5 of the Anti-Dumping Agreement because the European Union failed to
conduct an objective examination, based on positive evidence, of the causal relationship between
the allegedly dumped imports and the alleged injury to the domestic industry as the European
Union failed to make an objective determination, on the basis of all relevant evidence before it,
that the allegedly dumped imports were, through the effects of dumping causing injury and also
failed to conduct an objective examination, based on positive evidence, of factors other than the
allegedly dumped imports which at the same time were injuring the Union industry, and thus
attributed the injury caused by these other factors to the allegedly dumped imports. These other
factors include, the effect of the "double-counting" regimes on the demand for biodiesel in the
European Union and on the European Union producer s, the effect of the reduction of support by
the European Union and its Member States for biod iesel, the overcapacity of the European Union

industry, the imports of biodiesel made by the European Union industry, and the lack of vertical
integration and access to raw materials of the European Union industry.

13. Articles 6.5 and 6.5.1 of the Anti-Dumping Agreement because first, the European Union
treated certain information in the complaint and the submissions made in the course of the
investigation by the complainant and the European Union producers as confidential, in the absence
of showing of "good cause", and second, becaus e the European Union failed to require the
complainant and the European Union producers to furnish (a) sufficiently detailed non-confidential
summaries permitting a reasonable understanding of the substance of the information that was
treated as confidential, with respect to certain annexes of the complaint and data as well as
information submitted during the course of the investigation, or (b) explanations appropriately
justifying the reasons why non-confidential summarization was not possible for such information.

14. Articles 7.1, 7.2, 9.2 and 9.3 (chapeau ) of the Anti-Dumping Agreement because the
European Union incorrectly imposed and collected provisional anti-dumping duty with respect to
the imports from one Indonesian producer under investigation, in excess of the actual provisional
margin of dumping of this producer, as it based itself on a provisional dumping margin tainted by
calculation errors.

15. In view of the claims set forth above, Indonesia considers that the European Union has also
acted inconsistently with Article VI of the GATT 1994 and Article 1 of the Anti-Dumping
Agreement.

The European Union's measures noted above, theref ore, appear to nullify or impair, directly or
indirectly, benefits accruing to Indonesia under the cited Agreements.

Indonesia respectfully requests, pursuant to Arti cles 4.7 and 6 of the DSU, Article XXIII of the
GATT 1994 and Article 17.4 of the Anti-Dumping Agreement, that the Dispute Settlement Body
("DSB") establish a Panel with standard terms of re ference as set out in Article 7.1 of the DSU to
examine Indonesia's claims.

Indonesia asks that this request be placed on the agenda of the DSB meeting scheduled to take
place on 20 July 2015.