EUROPEAN UNION – ANTI-DUMPING MEASURES ON IMPORTS OF CERTAIN FATTY ALCOHOLS FROM INDONESIA REPORT OF THE PANEL
Document: Addendum BCI deleted, as indicated [***]
Date: 16 December 2016
Document codes: WT/DS442/R/Add.1; WT/DS442/R.
Complainant: Indonesia
Respondent: EU
Third parties: India, South Korea, Turkey, U.S., Malaysia, Thailand
Dispute stage: Appellate Body
Agreements cited: Art. 2.3, 2.4, 5.8, 3.1, 3.4, 3.5, 9.4, 9.2  Anti-dumpingArt. X:3(a)  GATT 1994Art. 2.6, 4.1, 3.2, 3.3, 6.7, 6.9, 1, 18  Anti-dumpingArt. VI  GATT 1994

EUROPEAN UNION – ANTI-DUMPING MEASURES ON IMPORTS OF
CERTAIN FATTY ALCOHOLS FROM INDONESIA
REPORT OF THE PANEL
Addendum
BCI deleted, as indicated [***]
This addendum contains Annexes A to D to the Report of the Panel to be found in document

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 concerning business confidential information A-7
ANNEX B
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex B-1 First integrated executive summary of the arguments of the European Union B-2
Annex B-2 Second integrated executive summary of the arguments of the European Union B-11
ANNEX C
ARGUMENTS OF INDONESIA
Contents Page
Annex C-1 First integrated executive summary of the arguments of Indonesia C-2
Annex C-2 Second integrated executive summary of the arguments of Indonesia C-17
ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of Turkey D-2
Annex D-2 Integrated executive summary of the arguments of the United States D-5

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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 concerning business confidential information A-7

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ANNEX A-1
WORKING PROCEDURES OF THE PANEL
Adopted on 13 July 2015
1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on
Rules and Procedures Governing the Settlement of Di sputes (DSU). In addition, the following
Working Procedures shall apply.

General

2. The deliberations of the Panel and the documents submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to t he dispute (hereafter
"party") from disclosing statements of its own positions to the public. Members shall treat as
confidential information submitted to the Panel by another Member which the submitting Member
has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non -confidential
summary of the information contained in its submissions that could be disclosed to the public.

3. The Panel shall meet in closed session. The parties, and Members having notified their
interest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU
(hereafter "third parties"), shall be present at the meetings only when invited by the Pa nel to
appear before it.

4. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and third party shall have the responsibility for all
members of its own delegation and shall e nsure that each member of such delegation acts in
accordance with the DSU and these Working Procedures, particularly with regard to the
confidentiality of the proceedings.

Submissions

5. Before the first substantive meeting of the Panel with the parties, each party shall submit a
written submission in which its presents the facts of the case and its arguments, in accordance
with the timetable adopted by the Panel. Each party shall also submit to the Panel, prior to the
second substantive meeting of the Pa nel, a written rebuttal, in accordance with the timetable
adopted by the Panel.

6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity
and in any event no later than in its first written submission to the Panel. If Indonesia requests
such a ruling, the European Union shall submit its response to the request in its first written
submission. If the European Union requests such a ruling, Indonesia shall submit its response to
the request prior to the first substantiv e meeting of the Panel, at a time to be determined by the
Panel in light of the request. Exceptions to this procedure shall be granted upon a showing of good
cause.

7. Each party shall submit all factual evidence to the Panel no later than during the firs t
substantive meeting, except with respect to evidence necessary for purposes of rebuttal, answers
to questions or comments on answers provided by the other party. Exceptions to this procedure
shall be granted upon a showing of good cause. Where such exception has been granted, the Panel
shall accord the other party a period of time for comment, as appropriate, on any new factual
evidence submitted after the first substantive meeting.

8. Where the original language of exhibits is not a WTO working language, the submitting party
or third party shall submit a translation into the WTO working language of the submission at the
same time. The Panel may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any obj ection as to the accuracy of a translation should be raised
promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following
the submission which contains the translation in question. The Panel may grant exceptions to this

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procedure upon a showing of good cause. Any objection shall be accompanied by a detailed
explanation of the grounds of objection and an alternative translation.

9. To facilitate the maintenance of the record of the dispute and maximize the clarity of
submissions, each party and third party shall sequentially number its exhibits throughout the
course of the dispute. For example, exhibits submitted by Indonesia could be numbered IDN-1,
IDN-2, etc. If the last exhibit in connection with the first submission was numbered IDN-5, the first
exhibit of the next submission thus would be numbered IDN-6.

10. Each party and third party should make its submissions in accordance with the WTO Editorial
Guide for Panel Submissions, attached as Annex 1.

Questions

11. The Panel may at any time pose questions to the parties and third parties, orally or in
writing, including prior to each substantive meeting.

Substantive meetings

12. Each party shall provide to the Panel the list of members of its delegation in advance of each
meeting with the Panel and no later than 5.00 p.m. the previous working day.

13. The first substantive meeting of the Panel with the parties shall be conducted as follows:

a. The Panel shall invite Indonesia to make an opening statement to present it s case first.
Subsequently, the Panel shall invite the European Union to present its point of view.
Before each party takes the floor, it shall provide the Panel and other participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies for the interpreters,
through the Panel Secretary. Each party shall make available to the Panel and the other
party the final version of its opening statement as well as it s closing statement, if any,
preferably at the end of the meeting, and in any event no later than 5.00 p.m. on the
first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask each other questions or make comments, through the Panel. Each party shall then
have an opportunity to answer these questions orally. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's written questions within a deadline to be determined by the
Panel.
c. The Panel may subsequently pose questions to the parties. Each party shall then have an
opportunity to answer these questions orally. The Panel shall send in writing, within a
timeframe to be determined by it, any questions to the parties to which it wishes to
receive a response in writing. Each party shall be invited to respond in writing to such
questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with Indonesia presenting its statement first.
14. The second substantive meeting of the Panel with the parties shall be conducted as follows:

a. The Panel shall ask the European Union if it wishes to avail itself of the right to present
its case first. If so, the Panel shall invite the European Union to presen t its opening
statement, followed by Indonesia. If the European Union chooses not to avail itself of
that right, the Panel shall invite Indonesia to present its opening statement first. Before
each party takes the floor, it shall provide the Panel and othe r participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies for the interpreters,
through the Panel Secretary. Each party shall make available to the Panel and the other
party the final version of its opening statement as well as its closing statement, if any,

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preferably at the end of the meeting, and in any event no later than 5.00 p.m. of the
first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask each other questions or make comments, through the Panel. Each party shall then
have an opportunity to answer these questions orally. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's written questions within a deadline to be determined by the
Panel.
c. The Panel may subsequently pose questions to the parties. Each party shall then have an
opportunity to answer these questions orally. The Panel shall send in writing, within a
timeframe to be determined by it, any questions to the parties to whi ch it wishes to
receive a response in writing. Each party shall be invited to respond in writing to such
questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with the party that presented its opening statement
first, presenting its closing statement first.
Third parties

15. The Panel shall invite each third party to transmit to the Panel a written submission prior to
the first s ubstantive meeting of the Panel with the parties, in accordance with the timetable
adopted by the Panel.

16. Each third party shall also be invited to present its views orally during a session of this first
substantive meeting, set aside for that purpose. Each third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 5.00 p.m. the previous
working day.

17. The third-party session shall be conducted as follows:

a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third
parties present at the third -party session and intending to present their views orally at
that session, shall provide the Pan el, the parties and other third -parties with provisional
written versions of their statements before they take the floor. Third parties shall make
available to the Panel, the parties and other third parties the final versions of their
statements, preferabl y at the end of the session, and in any event no later than
5.00 p.m. of the first working day following the session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. Each third party shall
then have an opportunity to answer these questions orally. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the t hird parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.

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Descriptive part

18. The description of the arguments of the parti es and third parties in the descriptive part of
the Panel report shall consist of executive summaries provided by the parties and third parties,
which shall be annexed as addenda to the report. These executive summaries shall not in any way
serve as a substitute for the submissions of the parties and third parties in the Panel's examination
of the case.

19. Each party shall submit an integrated executive summar y of the facts and arguments as
presented to the Panel in its first written submissions, first opening and closing oral statements
and responses to questions following the first substantive meeting, and a separate integrated
executive summary of its written rebuttal, second opening and closing oral statements and
responses to questions following the second substantive meeting, in accordance with the timetable
adopted by the Panel. Each integrated executive summary shall be limited to no more than
15 pages. The Panel will not summarize in a separate part of its report, or annex to its report, the
parties' responses to questions.

20. Each third party shall submit an integrated executive summary of its arguments as
presented in its written submission and statement in accordance with the timetable adopted by the
Panel. This integrated executive summary may also include a summary of responses to questions,
if relevant. The executive summary to be provided by each third party shall not exceed 6 pages.

21. The Panel reserves the right to request the parties and third parties to provide executive
summaries of facts and arguments presented by a party or a third party in any other submissions
to the Panel for which a deadline may not be specified in the timetable.

Interim review

22. Following issuance of the interim report, each party may submit a written re quest to review
precise aspects of the interim report and request a further meeting with the Panel, in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.

23. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review, in accordance with the timetable
adopted by the Panel. Such comments sh all be limited to commenting on the other party's written
request for review.

24. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.

Service of documents

25. The following procedures regarding service of documents shall apply:

a. Each party and third party shall submit all documents to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file 2 paper copies of all d ocuments it submits to the
Panel. Exhibits may be filed in 2 copies on CD -ROM or DVD and 2 paper copies. The
DS Registrar shall stamp the documents with the date and time of the filing. The paper
version shall constitute the official version for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, preferably in Microsoft
Word format, either on a CD -ROM, a DVD or as an e -mail attachment. If the electronic
copy is provided by e -mail, it should be addressed to DSRegistry@wto.org, with a copy
to xxxxx@wto.org, xxxxx@wto.org and xxxxx@wto.org. If a CD -ROM or DVD is
provided, it shall be filed with the DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance

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of the first substantive meeting with the Panel. Each third party shall serve any
document submitted to the Panel directly on the parties and all other third parties. Each
party and third party shall confirm, in writing, that copies have been served as required
at the time it provides each document to the Panel.
e. Each party and third party shall file its documents with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on
the due dates established by the Panel. A party or third party may submit its documents
to another party or third party in electronic format only, subject to the recipient party or
third party's prior written approval and provided that the Panel Secretary is notified.
f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purpose s of the
record of the dispute.
26. The Panel reserves the right to modify these procedures as necessary, after consultation
with the parties.

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ANNEX A-2
ADDITIONAL WORKING PROCEDURES CONCERNING
BUSINESS CONFIDENTIAL INFORMATION
Adopted on 13 July 2015
The following procedures apply to any business confidential information (BCI) submitted in the
course of the Panel proceedings in DS442.

1. For the purposes of these Panel proceedings, BCI is any information that has been
designated as such by the party su bmitting the information and that was previously treated as
confidential within the meaning of Article 6.5 of the Agreement on Implementation of Article VI of
the General Agreement on Tariffs and Trade 1994 by the Commission of the European Union in the
anti-dumping investigation at issue in this dispute. However, these procedures do not apply to any
information that is available in the public domain. In addition, these procedures do not apply to
any BCI if the person who provided the information in the cou rse of the aforementioned
investigation agrees in writing to make the information publicly available.

2. As required by Article 18.2 of the DSU, a party or third party having access to BCI submitted
in these Panel proceedings shall treat it as confidential and shall not disclose that information other
than to those persons authorized to receive it pursuant to these procedures. Any information
submitted as BCI under these procedures shall only be used for the purposes of this dispute and
for no other purpos e. Each party and third party is responsible for ensuring that its employees
and/or outside advisors comply with these working procedures to protect BCI. An outside advisor
is not permitted access to BCI if that advisor is an officer or employee of an ente rprise engaged in
the production, sale, export, or import of the products that were the subject of the investigation at
issue in this dispute, or an officer or employee of an association of such enterprises . All third party
access to BCI shall be subject to the terms of these working procedures.

3. No person may have access to BCI except a member of the Secretariat or the Panel, an
employee of a party or third party under the terms specified in these procedures, or an outside
advisor to a party or third party for the purposes of this dispute.

4. The party submitting BCI shall mark the cover and/or first page of the document containing
BCI, and each page of the document, to indicate the presence of such information. The specific
information in question sha ll be placed between double brackets, as follows: [[xx,xxx.xx]]. The
first page or cover of the document shall state "Contains Business Confidential Information ", and
each page of the document shall contain the notice "Contains Business Confidential Information" at
the top of the page.

5. Any BCI that is submitted in binary -encoded form shall be clearly marked with the
statement "Business Confidential Information" on a label of the storage medium, and clearly
marked with the statement "Business Confidential Information" in the binary-encoded files.

6. In the case of an oral statement containing BCI, the party or third party making such a
statement shall inform the Panel before making it that the statement will contain BCI, and the
Panel will ensure that only persons authorized to have access to BCI pursuant to these procedures
are in the room to hear that statement. The written versions of such oral statements submitted to
the Panel shall be marked as provided for in paragraph 4.

7. If a party or third par ty considers that information submitted by the other party or a third
party contains information which should have been designated as BCI and objects to such
submission without BCI designation, it shall forthwith bring this objection to the attention of th e
Panel, the other party, and, where relevant, the third parties. The Panel shall deal with the
objection as appropriate. Similarly, if a party or third party considers that the other party or a third
party submitted information designated as BCI which sho uld not be so designated, it shall
forthwith bring this objection to the attention of the Panel, the other party, and, where relevant,
the third parties, and the Panel shall deal with the objection as appropriate.

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8. Any person authorized to have access to BCI under the terms of these procedures shall store
all documents containing BCI in such a manner as to prevent unauthorized access to such
information.

9. The Panel will not disclose BCI, in its report or in any other way, to persons not authorized
under these procedures to have access to BCI. The Panel may, however, make statements of
conclusion drawn from such information. Before the Panel circulates its final report to the
Members, the Panel will give each party an opportunity to review the report to ensure that it does
not contain any information that the party has designated as BCI.

10. Submissions containing BCI will be included in the record forwarded to the Appellate Body in
the event of an appeal of the Panel's Report.

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ANNEX B
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex B-1 First integrated executive summary of the arguments of the European Union B-2
Annex B-2 Second integrated executive summary of the arguments of the European Union B-11

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ANNEX B-1

FIRST INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF THE EUROPEAN UNION
1. Introduction

1. Indonesia has presented three sets of legal claims in respect of the EU's anti -dumping duty
on fatty alcohols from Indonesia, which was imposed in 2011. Indonesia considers that the
European Union acted inconsistently with several obligations under the Anti-Dumping Agreement
when adopting the measure relating to (1) the requirement to make adjustments for differences
affecting price comparability in order to make a fair comp arison between the normal value and the
export price; (2) the establishment of causal link between the dumped imports and the injury to
the domestic industry; and (3) the procedural requirement to inform interested parties of the
results of a verification.1

2. The European Union considers that Indonesia's claims are without merit and constitute an
unwarranted attempt at obtaining from the Panel a de novo review of the facts. They are not
supported by the text of the Anti-Dumping Agreement and relevant juri sprudence and they are
based on an inaccurate reflection of the facts on the record. Therefore, all of the claims must be
rejected.

3. Indonesia is effectively asking the Panel to re -do the investigation based on legal concepts
that are nowhere to be found in the Anti-Dumping Agreement. However, the standard of review of
panels in relation to anti -dumping measures is limited to examining whether the EU's
interpretation of the relevant provisions is permissible, whether the investigating authority's
establishment of the facts was proper and whether the evaluation of those facts was unbiased and
objective. It is equally well -established in WTO jurisprudence that a panel's analysis of the legal
obligations imposed on Members of the WTO is to be based on the text of the Agreement, and that
panels may not read into the WTO Agreements words or concepts that are not there.2

2. Indonesia's erroneous interpretation and application of Article 2.4 of the
Anti-Dumping Agreement

4. Indonesia argues that the European Un ion violated Article 2.4 of the Anti-Dumping
Agreement when adjusting PT Musim Mas' export price for the sales commissions received by the
related trading company in Singapore, ICOF -S, through which its export sales to the EU were
made, on the basis (i) th at no adjustment was warranted because ICOF -S and PT Musim Mas
formed a single economic entity, and (ii) that the European Union's adjustment was inconsistent
with Article 2.4 because it treated two Indonesian exporters in identical situations differently and
that this distinction was legally unfounded and unsupported by the facts.

A. The relevant consideration of Article 2.4 is whether there is a difference affecting
price comparability

5. Article 2.4 of the Anti-Dumping Agreement requires adjustments to be made for differences
affecting price comparability in order to make a fair comparison between normal value and export
price. The purpose of this provision is to ensure that the ultimate determination identifies whether
or not there is international pri ce discrimination. If the starting domestic and export prices are
different for some other objective reason, then it is that other reason or countervailing explanation

1 It is important to remember that PT Musim Mas has brought proceedings on most of the issues raised
in the present dispute also in the courts of the European Union and lost. The General Court of the EU in its
judgment of June 2015 made a number of relevant findings that Indonesia seeks to have re-litigated, notably
in relation to the existence of a single economic entity and the alleged discrimination between two Indonesian
producers. Although the EU Court made its findings based on EU law, many of its factual findings rejecting
provide important context for a number of the claims and assertions made in the present dispute (See in
particular paras. 40–84, 92-97, 115-118 and 123–138 of the EU General Court's judgment, Exhibit EU–4).
2 Appellate Body Report, Japan – Alcoholic Beverages II, pp. 11–12; see also Appellate Body Report,
India – Patents (US), para. 45.

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that explains what is happening – not the existence of international price discriminatio n by the
producer. Indonesia shares this understanding of Article 2.4.3

6. The main obligation in Article 2.4 is therefore for investigating authorities to adjust for any
difference which affects the price comparability of the export price and normal valu e. Failing to
make such adjustments could result either in a false positive (a finding of dumping when none
exists) or a false negative (a finding of no dumping when it is in fact occurring). Indonesia
correctly acknowledges that "the ultimate litmus test "4 of Article 2.4 is whether a factor affects
price comparability and that, if there is such a factor, Article 2.4 requires that the investigating
authority makes an adjustment to ensure a fair comparison. Following the same line of reasoning,
Indonesia admits that if a sales commission is paid by an exporting producer to a trading company
through which it sells the goods, an adjustment is due.5

7. However, for commissions paid to trading companies, Indonesia argues that Article 2.4
contains an implicit obl igation to consider whether or not a single economic entity exists between
the producer and a related trading company, or whether the producer/exporter and the trader can
be regarded as two economically independent entities operating at arm's length. Where a single
economic entity exists, Article 2.4 would not allow the authority to make any adjustments for a
commission paid even when, for example, there is evidence that such commissions were paid only
in relation to export sales and not for domestic sales transactions.6 Indonesia also proposes to
read into Article 2.4 the principle it calls "follow the money ", i.e. what ultimately goes into the
pocket of the exporting producer when it sells to the importing country compared to what it gets
into the pocket when selling the same product domestically. There is of course no textual basis for
Indonesia's propositions and none has been referred to by Indonesia.

8. First, Article 2.4 does not mention "related parties " or a "single economic entity ". The
concept of a single economic entity is nowhere to be found in the Anti-Dumping Agreement. In any
case, even Indonesia agrees that within a single economic entity adjustments must be made for
costs which objectively are generated by specific transactions. 7 A commissio n, which by
contractual arrangement is paid in relation only to export sales and not in relation to domestic
sales, is such a cost that must be adjusted for irrespective of the relationship. Second, the AD
Agreement concerns the "product", not the producer . Article 2.1 provides that there is dumping if
the product "is introduced" into the commerce of another country at a price that is less than its
normal value and states that this is the case "if the export price of the product exported from one
country to another is less than the comparable price, in the ordinary course of trade, for the like
product when destined for consumption in the exporting country ". The concept of dumping is not
about "following the money " and is not about establishing who ultimatel y benefits from certain
sales transactions or the profitability of those transactions; it is about ensuring a fair and correct
comparison between two types of transactions that are comparable or that are made comparable
such that it can be determined wheth er the product was introduced into the commerce of another
country at less than its normal value.8 The EU also considers that the fourth sentence of Article 2.4
is evidence of the fact that Article 2.4 does not embody the "follow the money principle".9

9. Indonesia also argues that the European Union violated Article 2.4 for treating two
Indonesian producers in similar situations in different ways. However, also this argument is
divorced from the text of Article 2.4 which contains the general obligation to make a fair
comparison and to adjust for factors affecting price comparability. In any case, the differences in
the situation of the two Indonesian exporters justified a different treatment.

10. The essential question under Article 2.4 is whether there i s an objective difference affecting
price comparability between the export price and the normal value. It is immaterial whether the
difference affecting price comparability is, for example, a cost of additional material sourced from
a related or integrated company or from a third party supplier.10 Thus, the question is not whether
the commission is paid to a related party or not. The focus of Article 2.4 is on the price

3 Indonesia's first written submission, paras. 4.51–4.52.
4 Indonesia's first written submission, para. 4.57.
5 Indonesia's first written submission, para. 4.67.
6 Indonesia's first written submission, paras. 4.67–4.71.
7 Indonesia's first written submission, paras. 4.119 and 4.278.
8 See European Union's response to Panel Question 7.
9 See European Union's response to Panel Question 13.
10 See European Union's response to Panel Question 10.

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discrimination and the need to ensure a proper apples -to-apples comparison between the ex port
price and the normal value, adjusted for differences that affected the prices paid by the consumer
in one context that were not affecting the price in another context.

11. The European Union, like many other Members, considers that sales commissions can
constitute an objective difference affecting price comparability and has included "commissions" in
the list of factors that may require an adjustment. 11 In that sense, the EU Basic Anti -Dumping
Regulation goes beyond Article 2.4 that does not expressly refer to commissions. The interference
of a sales agent in the export sale of a product may introduce an element that can affect price
comparability. This is particularly the situation where there is no sales commission paid for the like
product on the domestic market, but a commission is paid in relation to export sales, or vice versa
of course. Just like differences between domestic sales and export sales in terms of insurance or
credit costs need to be adjusted, a difference in commissions paid to tradin g companies that are
involved in the sale of the product require an adjustment if the commission is lower or non -
existent on either the normal value or the export price side, regardless of the degree of closeness
between the trading company and the producer.

12. In the present dispute, the European Union examined all the relevant facts in relation to PT
Musim Mas' export of the product concerned and domestic sales of the like product and concluded
that the commission paid to ICOF –S for export sales affecte d price comparability as no similar
expense was incurred by PT Musim Mas for the domestic sales. The record evidence clearly shows
that PT Musim Mas and ICOF –S signed a Sale and Purchase Agreement, a contract that
undisputedly only concerns export sales an d which stipulated that ICOF –S receives a commission
(in the form of a mark -up) for every export sale it intervenes in. 12 Neither the contract nor any
other piece of evidence presented to the European Union showed that a similar direct selling
expense was i ncurred for the domestic sales made by PT Musim Mas. 13 All other things being
equal, if there were no export sales, ICOF –S would receive neither a commission nor other forms
of remuneration from PT Musim Mas that could be equated to that commission.

13. However, Indonesia argues that the Sale and Purchase Agreement, despite its name and
terms, was drafted for complying with tax laws in Singapore and Indonesia and in order to show
that transfer prices between the two entities reflect the arm's length princip le.14 Indonesia invites
the Panel to ignore what the contract says in clear terms, and suggests that the Panel should
conduct a de novo review. Indonesia logically fails to show that by accepting the terms of the Sale
and Purchase Agreement, the European Commission acted in an unreasonable and biased manner.

14. In summary, Indonesia has failed to establish a prima facie case that the adjustment is
inconsistent with Article 2.4. In fact, the European Union was not only entitled to reach this
reasonable and reasoned conclusion that the ICOF –S' sales commission affected price
comparability, it was "required" by Article 2.4 to adjust for this difference.

B. The existence of a single economic entity is not a relevant consideration under
Article 2.4

15. Indonesia acknowledges that a commission paid to a trader may warrant an adjustment
because it may affect price comparability. 15 It disputes instead the adjustment because of the
European Union's failure to recognize the single economic entity allegedly formed by PT Musim Mas
and ICOF–S. The European Union has already demonstrated that whether or not a single economic
entity exists is not the relevant question for the application of Article 2.4. In fact, the claim that no
adjustment is warranted where a single economic entity exists between the producer and its trader
lacks a legal basis in Article 2.4.

16. The lack of a legal basis in the Anti-Dumping Agreement is evident from Indonesia's first
written submission where, in over 50 pages, it is unable to substantia te a relevant legal obligation
that the European Union would have violated when making the adjustment. Indeed, the "single
economic entity" concept does not even exist in the Anti-Dumping Agreement and it certainly is
not part of Article 2.4. Indonesia dul y acknowledges that "there is no provision of the

11 This is reflected in Article 2(10)(i) of the EU Basic Anti-Dumping Regulation, Exhibit EU–3.
12 Exhibit IDN–25; see also Indonesia's first written submission, para. 4.201.
13 See Exhibit IDN-21, pp. 2 and 3.
14 Indonesia's first written submission, para. 4.227.
15 Indonesia's first written submission, para. 4.67.

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Anti-Dumping Agreement that explicitly references or defines a [single economic entity] ".16
Indonesia merely cites to WTO jurisprudence in relation to Article 6.10 of the Anti-Dumping
Agreement to argue that the concept of a single economic entity is "well-engrained in WTO case
law".17 It also loosely argues that "several provisions in the Anti -Dumping Agreement – in
particular Articles 2.4 and 6.10 – implicitly require consideration whether two or more formal ly
separate entities form an [single economic entity]".18

17. Indonesia is wrong for many reasons. First of all, the fact that Indonesia has to rely from the
beginning on an "implicit" requirement is telling. It is undisputed in the WTO that a panel's
analysis of the legal obligations imposed on Members of the WTO is to be based on the text of the
Agreement. We recall the Appellate Body's statement in India – Patents that "principles of
interpretation neither require nor condone the imputation into a treaty of words that are not there
or the importation into a treaty of concepts that were not intended."19

18. Second, Indonesia's reference to the WTO jurisprudence on Article 6.10 of the Anti-Dumping
Agreement does not suggest that authorities are "implicitly required" to examine whether
companies form a single economic entity. The question addressed in the two cases referred to by
Indonesia, Korea – Certain Paper and EC – Fasteners (China), considered whether the authorities
could deviate from the general rule in Article 6.10 of calculating separate dumping margins when
several companies can be considered as a single "exporter" because of the corporate and
functional links between them. At no point in these two cases did the panels or the Appellate Body
impose a "requirement" to examine this relationship. They merely considered whether the
language of Article 6.10 allowed investigating authorities to impose a single dumping margin on
closely related entities.

19. Third, in neither Korea – Certain Paper nor EC – Fasteners (China) did the panels or the
Appellate Body consider the existence of a single economic entity in relation to the application of
Article 2.4. It was only considered in relation to Article 6.10 and for obvious reasons given that the
calculation of individual dumping margins for entities that are actually part of the same economic
entity could lead to circumvention and avoidance of the payment of duties thus undermining the
protection to be afforded to the domestic industry. The willingness to entertain this concept in both
cases made perfect sense in the logic of Article 6.10; it does not make sense in the price
comparability logic of Article 2.4.

20. The European Union notes with particular interest Indonesia's frequent references to the
Korea – Certain Paper dispute in support of its single economic entity argument. What is
interesting about the panel's findings in that dispute is that, in so far as the panel dealt with claims
under Article 2.4 of the Anti-Dumping Agreement , its findings actuall y go against Indonesia's
arguments in this dispute.

21. First, the panel acknowledged in the context of its Article 6.10 analysis that the trading
company and the relevant Indonesian producers formed a single economic entity, the "Sinar Mas
Group".20 However, this fact played no role in the panel's analysis under Article 2.4 as to whether
any adjustments were required to ensure price comparability. Instead, the panel rightly focused
solely on whether evidence had been presented of a difference between norma l value sales and
export sales that required an adjustment. So, the very same panel that for the first time discussed
the concept of a single economic entity in the context of Article 6.10 and made findings that such a
single economic entity existed betwee n the trader and the producing companies in Indonesia did
not even refer to this relationship when examining whether adjustments under Article 2.4 were
warranted. Under Article 2.4, the existence or not of a single economic entity was a completely
irrelevant consideration for the panel. It should be the same in the current dispute.

22. Second, the panel in Korea – Certain Paper rejected Indonesia's claim that an adjustment
was required because Indonesia had failed to present evidence of such a difference a ffecting price
comparability.21 The panel expressly rejected the notion that the intervention of a trading company

16 Indonesia's first written submission, para. 4.120.
17 Indonesia's first written submission, para. 4.120.
18 Indonesia's first written submission, para. 4.120.
19 Appellate Body Report, Japan – Alcoholic Beverages II, pp. 11 – 12; see also Appellate Body Report,
India – Patents (US), para. 45.
20 Panel Report, Korea – Certain Paper, paras. 7.165–7.168.
21 Panel Report, Korea – Certain Paper, para. 7.147.

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was relevant as such but rather focused on whether there was evidence of any difference affecting
price comparability. It was not convinced th at there were sales -related services rendered by the
trading company in the Indonesian market which were not rendered in the context of export sales
to Korea and thus considered that Indonesia had failed to make a prima facie case that
adjustments were necessary. In the Fatty Alcohol investigation, the European Union did have such
evidence before it, notably in the form of the Sale and Purchase Agreement that refers to the
payment of commissions only for export sales. No evidence was presented by Indonesia or the
Indonesian producers that similar commissions were also paid for domestic sales related support
by the trading company.

23. Third, the dispute in Korea – Certain Paper is also interesting because Indonesia was one of
the disputing parties and it is striking to note that its position in that dispute is the exact opposite
of what it argues in the present dispute. In Korea – Certain Paper , Indonesia argued that an
adjustment was required for the interference of the trader that formed a single economic entity
with the producing company because the trader was only involved in the domestic sales and not in
the export sales. Thus, Indonesia considered that an adjustment should have been made for the
costs of the additional sales -related services of the trad er in the domestic market. However,
because the Korean authority failed to adjust for lack of evidence of such a difference, Indonesia
alleged a violation of Article 2.4 of the Anti-Dumping Agreement.22

24. Indonesia's argument in the present dispute is the exact opposite where it considers that no
adjustment shall be made because of the existence of a single economy entity between PT
Musim Mas and ICOF–S. Although these positions on the same issue are diametrically opposed to
each other, the European Union understands the reason for this opportunistic shift in position:

In Korea – Certain Paper , Indonesia wanted to reduce the normal value to avoid a dumping
determination and thus argued for a downward adjustment of the normal value because of the
involvement of the related trader in the domestic sales; and
In the present dispute, Indonesia wants to maintain the export price as high as possible to avoid a
dumping determination by arguing that no adjustment is required for the involvement of the
related trader in the export sales.
25. The opportunistic shift in positions is strategically understandable but does at the same time
reveal the weakness of Indonesia's present claim under Article 2.4.

26. In sum, the European Union considers that Indonesia has not d emonstrated any legal basis
for its claim that the European Union violated Article 2.4 by failing to account for the alleged single
economic entity between PT Musim Mas and ICOF –S. Indonesia opportunistically attempts to
create an obligation in Article 2.4 that simply does not exist in the text of the Anti-Dumping
Agreement and that is not supported by the WTO jurisprudence it refers to. For this reason as well,
Indonesia's claim under Article 2.4 as well as its purely consequential claim of violation of
Article 2.3 should be rejected.

C. Even accepting arguendo the relevance of a single economic entity in Article 2.4,
Indonesia has failed to demonstrate that the European Union failed to take this into
consideration

27. Even accepting arguendo Indonesia's argument that it is necessary to consider whether a
single economic entity exists under Article 2.4, Indonesia has failed to demonstrate that the
European Union violated such an (non-existing) obligation. The facts on the record did not lead the
European C ommission to the conclusion that PT Musim Mas and ICOF –S constituted a single
economic entity. Indonesia fails to demonstrate that the facts were not properly established or
were examined in a biased and non -objective manner. It simply disagrees with the E uropean
Commission's findings of fact and inappropriately invites the Panel to review the facts as if it was
the trier of fact and not the Commission. The EU General Court already found against PT
Musim Mas on this very factual question .23 The Panel may not reject a determination simply
because it would have arrived at a different outcome assessing the same facts.24

22 Panel Report, Korea – Certain Paper, para. 7.132.
23 See in particular paras. 123–138 of the EU General Court's judgment, Exhibit EU–4.
24 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 187.

- B-7 -

28. In any case, Indonesia argues that the EU's determination lacked a sufficient basis in the
record evidence and that it improperly focused on the functions of ICOF –S as opposed to its
corporate and structural links to PT Musim Mas. These arguments are unfounded and should be
rejected because the European Union's determination to make an adjustment was proper,
unbiased and objective.

29. First, there is no basis in the text of the relevant provisions to consider that only corporate
and structural links are relevant for determining the existence of a single economic entity.
Functions of a related company would appear to be much more relevant given the focus on the
actual services rendered. So, this approach is entirely reasonable. Indonesia points merely to WTO
jurisprudence developed in relation to Article 6.10 of the Anti-Dumping Agreement which is wholly
unrelated to the present dispute, as note d earlier. In any case, the focus on corporate and
structural links makes sense in that context of Article 6.10 for determining whether to calculate
individual dumping margins for related entities given the risk of circumvention and avoidance of
duties. There is no reason, however, to apply only that same test under Article 2.4.

30. Second, the EU's determination to make an adjustment was based on record evidence
presented by PT Musim Mas 25, namely: (i) that a very significant portion of ICOF –S' overall sales
related to products of producers other than PT Musim Mas; (ii) that the commercial relationship
between PT Musim Mas and ICOF –S were governed by a Sale and Purchase Agreement containing
several provisions which clearly negate that ICOF–S was merely an internal sales department of PT
Musim Mas 26; and (iii) that all domestic sales and a significant portion of export sales were
invoiced directly by PT Musim Mas.

31. These factual circumstances, which Indonesia fails to disprove, led the European Union to
reasonably reject the contention that ICOF –S was the internal sales department of PT Musim Mas
with which it allegedly formed a single economic entity. The determination that ICOF–S acted like
an agent was reasonable as it was based on the totality of the fa cts on the record which were
evaluated in an unbiased and objective manner. This determination was therefore one that a
reasonable investigating authority could have made, and should therefore be upheld by the Panel.
Moreover, the European Commission revis ited these facts and revised the adjustment
determination for Ecogreen, but not for PT Musim Mas, following a development in the case law of
the EU Courts. The conclusion that the new case law of the EU Courts did not require repealing the
adjustment for PT Musim Mas' was, subsequently, upheld by the Court in PT Musim Mas' domestic
challenge.27

32. Finally, in relation to the alleged discrimination between PT Musim Mas and the other
Indonesian producer, Ecogreen, Indonesia has not pointed to any legal oblig ation in the
Anti-Dumping Agreement that the European Union allegedly violated by treating these producers
differently. At the first hearing of the Panel, Indonesia ultimately confirmed that it did not claim
that such differential treatment violated Articl e 2.4. 28 Even if there was such an obligation
(quod non), the 2012 Amending Regulation 29 demonstrates that the European Union engaged in
an extensive discussion of the main arguments and factual circumstances on the basis of which the
decision was taken to a djust PT Musim Mas' export price and for distinguishing its situation from
Ecogreen.30 There were three main differences in factual circumstances that led to this
determination: (i) that PT Musim Mas made a significant amount of export sales (about 20% of a ll
export sales) directly while Ecogreen only sporadically engaged in export transactions (not more
than 5% of all export sales) 31, using its trading company for almost all sales; (ii) tha t the
relationship between PT Musim Mas and ICOF –S was governed by a comprehensive and formal
Sale and Purchase Agreement and that ICOF–S traded many products from unrelated parties while
Ecogreen had no contract with its trader, who almost exclusively sold Ecogreen's products; and
(iii) that the contract between PT Musim Mas and ICOF–S stipulated that the trader was to receive
a mark-up on all export sales in which it intervened and this was circumstantial evidence that the

25 See, e.g. European Union's first written submission, para. 95.
26 See Exhibit IDN–25.
27 See Exhibit EU–4.
28 See European Union's response to Panel Question 18.
29 Amending Regulation, Exhibit IDN–5.
30 See, e.g. European Union's first written submission, paras. 97–99.
31 Amending Regulation, Exhibit IDN–5, para. 5 and EU General Court's judgment, Exhibit EU–4,
para 134.

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trader acted on a commission basis. On the other hand, there was no such contractual provision
for a commission to be paid by Ecogreen to its trader.

33. For these reasons, the European Union considered that the situation of PT Musim Mas could
be distinguished from that of Ecogreen. This determination was reasonable as it was based on the
totality of the facts on the record which were evaluated in an unbiased and objective manner.
Leaving aside the lack of legal relevance of the fact that no adjustment was made to Ecogreen, the
European Union's determination was one that a reasonable investigating authori ty could have
made. It should therefore be upheld by the Panel.

34. Finally, for the claim of violation of Article X:3(a) of the GATT 1994, which Indonesia orally
added during the hearing even though it was not included in its first written submission and not
even in the written version of the oral statement that was circulated at the time of the first hearing
of the Panel, Indonesia has failed to make a prima facie case that the conditions for its application
are fulfilled. Clearly, merely treating differ ently-situated producers differently in a specific
anti-dumping investigation is not a violation of Article X:3(a) concerning the uniform and
reasonable administration of laws and regulations.

35. In sum, all of Indonesia's claims under Article 2.4 and it s consequential claim under
Article 2.3 are to be rejected as well as the claim under Article X:3(a) of the GATT 1994.

3. Indonesia's erroneous approach to the legal standard in Articles 3.1 and 3.5 of the
Anti-Dumping Agreement

36. Indonesia's second claim argues that the European Union violated Articles 3.1 and 3.5 of the
Anti-Dumping Agreement because it allegedly failed to conduct a proper non -attribution analysis.
In particular, the European Union allegedly failed properly to examine two "known factors" other
than dumped imports, namely (1) the impact of the economic and financial crisis of 2008/2009,
and (2) the impact of the difficulties faced by the EU domestic industry to source raw materials
and the fluctuations in prices of these raw materials. Indonesia's claim, however, is based on an
erroneous approach to the legal standard of these provisions. It is also based on an inaccurate
presentation of the facts on the record and of the European Union's analysis.

37. First, with respect to the economi c and financial crisis, Indonesia errs when it argues that
the European Union simply rejected its relevance and that the assessment of the role of the crisis
was not supported by the facts on the record. In fact, the European Union acknowledged that the
crisis was a factor. This factor was examined in light of the evidence on the record and involved an
examination of the coincidence in developments in the injury factors, the financial crisis, and other
demand-related developments. The European Union carried out a proper correlation analysis which
is central to the causation analysis as indicated by the Appellate Body. 32 Based on this analysis,
the European Union reached the reasonable and reasoned conclusion that although the economic
crisis may have contributed to the injury caused by the dumped imports, it was not of such impact
that it broke the causal link.

38. Indonesia makes a big issue of the fact that the European Commission seemed to consider
that the financial crisis only started in 2008 and asserts that this vitiates the whole reasoning of
the Commission.33 However, the Commission acknowledged that the economic downturn started
in 2008, whilst it cannot be disputed that the effects for the real economy only became manifest
in 2009. In any case, irrespective of when exactly the crisis started, when demand increased again
reflecting a general economic recovery, the Union industry did not recover due to the massive
presence of dumped imports.34 The Panel should therefore reject Indonesia 's attempt at seeking a
de novo review of the facts as established and properly examined during the original investigation.

39. Moreover, Indonesia acknowledges that the Anti-Dumping Agreement provides "considerable
latitude" to investigating authorities to carry out the n on-attribution analysis. 35 Yet, Indonesia
attempts to impose a heightened standard on the European Union by pointing to one panel report
that noted a preference for use of economic models. However, this attempt to impose an
obligation to conduct a quantitat ive as opposed to a qualitative non -attribution analysis should be

32 Appellate Body Report, Argentina – Footwear (EC), para. 144.
33 Indonesia's first written submission, paras. 5.34–5.43.
34 European Union's first written submission, paras. 133, 146–147.
35 Indonesia's first written submission, para. 5.94.

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rejected. The proper standard remains whether the European Union properly established the facts
with respect to the other "known factors" and evaluated the evidence in an objective and unbiased
manner.

40. Second, with respect to the claim that access to raw materials was a separate cause of
injury to the domestic industry and that this was not properly examined, Indonesia also errs both
on the law and on the facts. Indonesia fails to subst antiate the importance of this issue to elevate
it to a "known factor".36 It is not an obligation of investigating authorities to examine every factor
alleged to have caused injury to the domestic industry, but only those "known factors … which at
the same time are injuring the industry ". Article 3.5 r equires an interested party to provide
sufficient argument and evidence of the injurious effect of this factor and not merely to mention a
factor in passing among many others as the Indonesian producers did at the start of the
investigation only. In any case, Indonesia itself appears to admit that the price volatility of raw
materials was closely connected to the economic crisis which was properly examined by the
European Union. Indeed, Indonesia's argument is artificial because it separates the economic crisis
from its concrete effects. It seeks to elevate to the position of "other factors causing injury " a
possible aspect of the crisis. Furthermore, the argument that the domestic industry in the
European Union has greater difficulties to source raw materials is simply not a factor causing injury
but merely a structural aspect of the conditions of competition. There was no evidence to suggest
that this was a separate cause of injury to the domestic industry; rath er it appears to be part of
the conditions of competition which existed also before the dumping. 37 The European Union's
conclusion was reasonable and supported by the facts on the record.38

41. For these reasons, Indonesia 's claim under Articles 3.1 and 3.5 should be rejected by the
Panel.

4. Indonesia's claim that the European Union failed to disclose verification results is
in error

42. Finally, Indonesia's third claim that the European Union violated Article 6.7 of the
Anti-Dumping Agreement by failing to provide any meaningful information about the results of the
verification visits to Indonesia is in error. As the record evidence demonstrates, the
European Union provided full disclosure of the essential facts relating to its final determination to
the relevant Indonesian firms, including the results of the verification visits. Moreover, Article 6.7
does not impose an obligation on investigating authorities to prepare a detailed report of a
verification visit or of the reasons why certain information was requested during verification. It
only requires that the "results" of the verification be communicated. This was clearly done by the
European Union after the verification in the specific disclosures, in the General Disclosure
Document and the Provisional and Definitive Regulations.

43. The Anti-Dumping Agreement provides no definition or guidance regarding the exact content
of the disclosure obligation relating to the "results" of the verification, however the ordinary
meaning of the term "results" is "an effect, issue, or outcome from some action, process or
design".39 The evaluation of the evidence by the investigating authority is not part of the "results"
of the verification visit. Instead, it refers to the essential factual outcome of the verification. This
could include the list of exhibits that were provided during verification. It could also include, where
relevant, other relevant outcomes such as refusals to provide certain information. The purpose is
to inform parties of verification-related developments that could potentially have consequences for
the final determination. Article 6.7 does not impose a "reporting" obligation, as Indonesia seems to
suggest, but a mere obligation to "make available " or "disclose" the results to the relevant
interested parties.40

44. Moreover, the Commission underlined that during the verification visit mistakes and errors
were corrected in agreement with the company. A list of exhibits that were provided by the
Indonesian producers at the time of the verification was a lso made available. Indonesia does not
deny that such discussions took place and that such an agreement was reached. Nor does
Indonesia argue that PT Musim Mas made comments concerning the disclosures as explicitly

36 See European Union's response to Panel Questions 21 and 23.
37 See European Union's response to Panel Question 22.
38 See European Union's response to Panel Question 21.
39 Appellate Body Report, US – Steel Safeguards, para. 315.
40 See European Union's response to Panel Question 26.

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invited by the Commission 41, in order to p oint out omissions or other errors, but that those
comments went unheard. It is also striking that Indonesia cannot point to any information, data or
behaviour whose absence from the disclosure documents might have affected the position of
PT Musim Mas. Basically, it is clear from its first written submission that rather than the "results"
of the verification, Indonesia would like this Panel to blame the Commission not to have disclosed
the "minutes" of the verification.42 However, that is not what the language of Article 6.7 requires.43
Indonesia's claim of a violation of Article 6.7 is therefore without merit.

41 See Exhibit EU–1.
42 Indonesia's first written submission, paras. 6.55 and 6.64.
43 See European Union's response to Panel Question 26.

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ANNEX B-2
SECOND INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF THE EUROPEAN UNION
1. Legal Analysis

1. Indonesia raised three sets of claims aga inst the European Union's AD measure on fatty
alcohols. As demonstrated in the European Union's first written submission, all three sets of claims
are based on an erroneous interpretation of the relevant provisions of the Anti-Dumping
Agreement and in fact request the Panel to make a de novo assessment of the facts on the record.
Indonesia fails to rebut the arguments presented by the European Union in its first written
submission.

1.1. Claim 1: Indonesia's claim that the European Union's adjustment for commissions paid
to ICOF -S violated Articles 2.3 and 2.4 of the Anti -Dumping Agreement is without
merit

2. Indonesia argues that the European Commission made an allegedly inappropriate
adjustment for the sales commissions paid to a trading company based in Singapore, ICOF -S,
when calculating the export price of PTMM, the producer of the product under consideration.
Indonesia fails to respond to the arguments developed by the European Union under Article 2.4 of
the Anti-Dumping Agreement.

3. Indonesia fails to rebut the argument of the European Union that the notion of a Single
Economic Entity ( "SEE") is foreign to Article 2.4 of the Anti-Dumping Agreement and that the
existence of a relationship between certain entities does not preclude making adjustments for
differences affecting price comparability. The determinative question is not whether two entities
are related but whether there exists evidence of a difference affecting price comparability which
requires that an adjustment be made. Without addressing the European Union's legal arguments
under Article 2.4 of the Anti-Dumping Agreement , Indonesia simply asserts that its position is
"obvious as a matter of common sense. " It argues that "splitting up a previously integrated
company … cannot be an automatic reason for treating them as independent so as to justify
imputing a "commission" adjustment under Article 2.4. " This argument is purely theoretical and
does not reflect the facts of the case. ICOF -S is simply not a spinoff of the internal sales
department of PTMM. In addition, it is based on a flawed legal interpretation of Article 2.4 of the
Anti-Dumping Agreement.

4. In fact, in its answers to the Panel questions, Indonesia contradicts its own claim. It
provides an example that contradicts the main arg ument on which its case rests. Its example
suggests that it does not contest the fact that an adjustment was made for the intervention of the
related trader in Singapore, but that it takes issue solely with the amount of the adjustment.
However, its legal claim is not about the amount of the adjustment but about the fact that an
adjustment was made to a transaction between related parties. Indonesia has consistently argued
that the key issue is that no adjustments can be made for transactions between affili ated parties
because these do not affect the price of the transaction. According to Indonesia, no adjustment
can be made at all if the two entities involved are related parties. Thus Indonesia's legal claim in
the present case is contradicted by the very example Indonesia provides.

5. In any case, the European Union considers that Indonesia's approach is entirely misguided
and not supported by the text of Article 2.4 or its context. Indonesia's legal argument is not based
on the text of Article 2.4 of the Anti-Dumping Agreement and the "follow the money" principle that
it seeks to read into this provision is simply an invention of Indonesia that is contradicted by the
context of this provision. First, Article 2.4 is silent on the relevance of any relationship between the
parties. This contrasts with other provisions of the Anti-Dumping Agreement that expressly
concern the treatment of "related parties " (such as Articles 4.1 and footnote 11 of the
AD Agreement on the definition of the domestic industry or Art icle 9.5 on the determination of an
individual margin of dumping for new shippers). Second, neither in Article 2.4 nor in any other
provision of the Anti-Dumping Agreement is the concept of a SEE used, let alone defined in any
way. Third, the notion of an SEE was used only in two instances in WTO disputes, in an entirely

- B-12 -

different context relating to the possibility to apply the same dumping margin to closely related
entities. Fourth, in neither of these disputes was the investigating authority required to examine
whether companies formed an SEE, as the question was merely whether an authority was
permitted to consider this relationship in light of the requirement of Article 6.10 of the
Anti-Dumping Agreement to determine an individual margin of dumping for each producer or
exported under examination. Fifth, in the WTO dispute in which this notion of an SEE was first
addressed in the context of Article 6.10 of the Anti-Dumping Agreement, Korea – Certain Paper,
this very same concept was completely ignored in the context of the Article 2.4 discussion of the
panel in that dispute. There is therefore no basis for Indonesia's focus on the existence of an SEE
under Article 2.4 and none has been offered by Indonesia in this dispute. In fact, as noted before,
even In donesia agrees that it is possible to make an adjustment for payments made between
related parties, and that the only question concerns the amount of the adjustment which may be
affected by the relationship.

6. Indonesia's failure to respond to the argume nt of the European Union based on the Panel's
findings in Korea – Certain Paper, the one relevant WTO precedent in which Indonesia was directly
involved as a complaining party, is also telling. Indonesia tries to avoid the obvious conclusion that
the panel in that dispute did not consider the existence of a "single economic entity " to be a
relevant factor for purposes of determining whether an adjustment was warranted. And neither did
Indonesia in that case. In fact, it appears that Indonesia was arguing in favour of making an
adjustment for the services rendered by the related trading company with respect to domestic
sales in an effort to lower the normal value, thus arguing that an adjustment was required to
reflect the involvement of the "closely related" trading company.

7. In any event, Indonesia's legal argument lacks any textual basis and is fundamentally
flawed.

8. Article 2.4 does not set forth a "follow the money "- principle. Indonesia confuses the
suggestion in Article 2.4 to make the comparison "at the same level of trade, normally at the
ex-factory level" with a requirement to determine how much of the money paid by the buyer of the
goods stays with the producer. Furthermore, the "ex factory" recommendation is not a suggestion
that an investigat ing authority is to pierce the corporate veil to look into the pockets of the
producer to see how much money he was really making on the sale. The recommendation to
compare transactions "ex factory" is simply a way of ensuring a comparison that is not affe cted by
differences in transportation costs, insurance costs, distribution costs, etc. and reflects the fact
that prices of sales to a distributor can be expected to be different from prices of sales to a
wholesaler and different from prices of sales to a consumer. It is merely a recommendation but
there is no obligation (as Indonesia suggests) to compare prices at the "ex factory" level. Nothing
stops an authority from adding the cost of distribution in order to fairly compare a sale to a
distributor with a domestic sale that is made directly to the end consumer for example. The
comparison must not necessarily be made at the "ex factory" level in order to be fair.

9. Indonesia tries to read legal distinctions into the text of Article 2.4 that are simply not there.
Indonesia is making a semantic argument based on terms like "commissions" "direct selling
expenses" and "notional" versus "objective" expenses that are not even used in Article 2.4 of the
Anti-Dumping Agreement.

10. Article 2.4 requires that du e allowance shall be made for any difference affecting price
comparability. The payment of commissions to a trader in relation to export sales and not
domestic sales (or vice versa ) is a relevant feature of the transactions that are compared and
account should be taken of this feature. It may be qualified as a "commission" or "direct selling
expense" for which it is well accepted that an adjustment can be made. The artificial separation
that Indonesia seeks to draw between "direct selling expenses " and "commissions" is irrelevant
and baseless. Similarly baseless is Indonesia's distinction between "objective" costs and other
expenses of the related trader and why an adjustment for such "objective costs " would be
warranted between related parties but no other adjustments for what can be assumed to be "un-
objective" costs? There is nothing in Article 2.4 of the Anti-Dumping Agreement that Indonesia can
point to in support of its constructed legal argument that is completely divorced from the text of
Article 2.4 of the Anti-Dumping Agreement. There is simply no basis in Article 2.4 or any other
provision of the Anti -Dumping Agreement for Indonesia's legal conclusion that "in the case of
payments made between closely -related entities, the requirement of "price comp arability" under
Article 2.4 requires an investigating authority to examine whether a particular flow of funds

- B-13 -

reflects either an "objective" expense (that does "affect price comparability" and should be
adjusted for); or instead a mere shifting of funds ( allocation of profits) between related parties
(that does not affect price comparability and must not be adjusted for) ". This lifting of the
corporate veil that Indonesia claims is "required" under Article 2.4 does not make legal or
economic sense and rais es more questions than it answers, given the absence of any textual
guidance in the Anti -Dumping Agreement. In contrast, the legal position of the European Union is
text-based and straightforward: is there a difference between the export transactions and t he
domestic transactions and, if so, is this a difference that affects price comparability.

11. In any case, Indonesia's legal argument is also based on a misunderstanding of the facts
and findings in this case.

12. Indonesia makes a number of assertions about the European Union's findings in this case
which are factually incorrect and misrepresent the conclusions of the investigating authority. The
European Union never stated that ICOF -S was an "independent trader" and this dispute does not
concern the i mposition of a "notional" commission where there was "no actual expense ". The
evidence on the record confirms that an expense was made in the form of a commission/mark -up
accorded to ICOF-S for its involvement in PTMM's export sales. The adjustment that wa s made to
reflect the fact that this commission/mark -up related to export sales only, did not mean that the
investigating authority deducted PTMM's profits and SG&A from the export price. The record clearly
shows that the European Commission acknowledged t hat ICOF -S was a related trader. The
Commission did not "change reality " in any way. Nor was the price adjustment made for an
"imputed, not actual, commission " given that the Sale and Purchase Agreement between ICOF -S
and PTMM clearly showed that a commiss ion/mark-up was paid by PTMM to ICOF -S and that the
actual "payment" of that mark-up to ICOF-S was never put into question. Based on the dictionary
definition of the relevant terms, a "notional" adjustment is an adjustment "based on a suggestion,
estimate, or theory; not existing in reality ". But, in this case, the Sale and Purchase Agreement
makes this adjustment anything but "notional". It is an adjustment based on a valid contract that
both companies relied on. This contract was provided to the investiga ting authorities and the
companies were expecting the tax and customs authorities to rely on this contract as well. It is
thus simply not correct to refer to a "notional" adjustment in the current situation. The fact that
the investigating authority did not accept the amount of the commission at face value but decided
to construct the amount of the commission, does not turn the adjustment into an adjustment that
is not based on reality. It is simply a matter of ensuring that the amount of the adjustment is not
affected by the relationship between the parties.

13. Furthermore, Indonesia is not correct to assert that the Commission "rejected the
transaction price" between PTMM and ICOF -S and "calculated the export price on the basis of the
sale to an "independent" customer in the EU ". Indonesia is confusing the two sales channels and
thus the two ways in which the export price was determined. All export sales to the EU were made
via ICOF-S, the related trader in Singapore. Some of the sales went from ICOF -S to the related
importer in the EU, ICOF-E, and some other sales went directly from ICOF-S to unrelated buyers in
the EU. For sales made by ICOF-S to the related importer in the EU (ICOF-E), the export price was
constructed on the basis of the first sale by I COF-E to an independent customer in the EU in
accordance with Article 2.3 of the Anti-Dumping Agreement. For sales that were made via ICOF -S
to independent buyers in the EU, the export price was not constructed. This means that for sales
made to unrelated importers in the EU, the price at which the product was introduced into the
commerce of the European Union, i.e. the price paid by the unrelated importer in the
European Union was used as the export price. In order to ensure a fair comparison with the normal
value, adjustments were subsequently made pursuant to Article 2.4 of the Anti-Dumping
Agreement/Article 2(10) of the EU Basic AD Regulation for differences affecting price
comparability, including for the commissions paid to ICOF-S.

14. Indonesia keeps suggesting in its replies that the European Commission acknowledged that
PTMM and ICOF -S were "related" parties and that it thus treated both as a "single entity " for
purposes of making the dumping determination. Indonesia argues that "[i]n this case, it is clear
that the EU defined the producer/exporter for which it was calculating dumping margins as PT
Musim Mas/ICOFS as a whole ". According to Indonesia, this confirms the correctness of
Indonesia's approach to both companies as being an SEE and it implie s that no adjustment should
have been made for payments made inside this "single seller". Indonesia is wrong. Indonesia is
clearly reading too much into the European Commission's acknowledgement of the relationship
between PTMM and ICOF -S. A "relationship" exists in the European Union's practice in many

- B-14 -

different situations and even when there is only a 5% direct or indirect shareholding. So, even for
entities that are not more closely related than that, the reliability of the pricing may be questioned
and another basis may be used for determining the price. It is therefore simply not so that the
European Commission first considered PTMM and ICOF -S to be a "single seller" and then treated
them as "unrelated" parties when making an adjustment. The margin of d umping was determined
for PTMM and not, as Indonesia wrongly asserts, for PTMM and ICOF-S "as a whole", whatever that
may mean.

15. It is correct that the investigating authority decided not accept at face value the amount of
the mark-up as shown in the S ale and Purchase Agreement. But Indonesia makes an unjustified
leap of logic by asserting that the European Union's examination of the amount of the commission
meant that a commission was simply assumed or "imputed" when none actually existed. That is
not correct. A commission was "paid" in the form of mark-up. The Sale and Purchase Agreement is
direct evidence of this agreed payment. An allowance is therefore due given that, according to the
Sale and Purchase Agreement that was submitted by PTMM during the investigation, this payment
was made only for export sales, and no evidence exists of similar payments being made for the
alleged involvement of ICOF-S in domestic sales. However, the amount of the mark-up "payment",
and thus the level of the allowance, m ay be subject to review and verification given the
relationship between the two entities.

16. In addition, it is not so that the European Union adjusted the export price of PTMM by
removing the SG&A and profit of PTMM with respect to its export sales but not with respect to its
domestic sales as Indonesia asserts. The Commission did not deduct any amount of profits for
PTMM. In fact, this is confirmed by Indonesia in para. 1.69 of its replies in which it states that the
amount of the export price "includes PT Musim Mas's profits ". Rather, the investigating authority
made an adjustment to the export price of PTMM for the direct selling expense of PTMM given that
PTMM was obliged by contract to pay a commission/mark -up to ICOF-S, just like it used to pay a
commission to the independent trader it used before.

17. Indonesia is wrong to equate the SG&A of ICOF -S with those of PTMM. PTMM has its own
SG&A and no adjustment was made for the SG&A expenses of PTMM. The Sale and Purchase
Agreement makes clear that ICO F-S existed already before PTMM decided to use it as a trading
company. PTMM agreed on a commission/mark-up to be paid for the involvement of ICOF-S. There
was no distinction between the part of the mark-up that would cover costs and the part that would
cover the profit margin of ICOF -S, just like you would expect in a normal trading relationship.
There is no indication that ICOF -S was required to subsequently transfer the profits back to PTMM
or that PTMM was covering the costs of ICOF -S. There is no basis for the suggestion that simply
because of their shareholding relationship, commissions paid to ICOF -S become part of the SG&A
of PTMM. And even then, the commission was paid only for export sales. This suggests that there
was a difference in costs affecti ng price comparability given that such cost was not borne for
domestic sales activities.

18. Indonesia also seeks to draw the Panel into a big discussion about "transfer pricing
agreements". But this dispute does not require the Panel to opine on what con stitutes a transfer
pricing agreement and what does not. The WTO Agreements do not refer to transfer pricing
agreements and there is no agreed definition of a "transfer pricing agreement ". Most relevantly,
however, the Commission did not simply ignore the argument that the Sale and Purchase
Agreement was a transfer pricing agreement. Rather, it addressed the argument and rejected the
alleged legal consequences that the Indonesian producer tried to draw. The investigating authority
referred among others to t he name and "modalities" of the Agreement and explained that even if
this agreement can also be used for purposes of calculating arm's length prices in accordance with
applicable tax guidelines, this does not contradict the finding that pursuant to this sa me
agreement the trader received a commission. Even if the agreement were a transfer pricing
agreement or had the regulation of transfer pricing as its main objective, it would not mean that it
is a useless or fraudulent document that investigating authori ties could not rely on as part of the
totality of the evidence. Transfer pricing agreements are put in place precisely to ensure that,
despite the relationship between the parties, their transactions are carried out at arm's length just
as if they were unr elated parties. Tax authorities are expect to rely on those agreements for tax
purposes as those agreements should genuinely reflect the financial relations taking place between
related parties. The same holds for Anti -Dumping investigation authorities, unless it is proven that
the transfer pricing agreement in question is a sham document, which Indonesia has never
claimed in the present case.

- B-15 -

19. Therefore, it is not unreasonable or biased of an investigating authority in an Anti -Dumping
investigation to also attach importance to this agreement and to consider its provisions to be
trustworthy.

20. Finally, Indonesia appeared to make a separate claim of violation of Article 2.4 of the
Anti-Dumping Agreement as a result of the alleged discrimination in trea tment between PTMM and
Ecogreen. The European Union rebutted that claim by pointing to the lack of legal basis of
Indonesia's claim. As explained at length in the EU's answers to the questions of the Panel, there
were a number of differences that led to th e conclusion that the factual circumstances of Ecogreen
were similar to those present in the Interpipe case that led the European General Court to find that
no adjustment was justified. Indonesia is unable to rebut these conclusions and simply tries to re -
litigate the argument it already lost before the European General Court where this argument about
discriminatory treatment and the application of the European jurisprudence more properly belongs.

21. First, Indonesia does not deny that, as correctly found by the investigating authority, PTMM
invoices directly more than 20% of its export sales while Ecogreen only invoices a very small
number of export sales directly, as was the case for Interpipe. For a number of export sales, PTMM
"must contract directly " and therefore no mark -up is being paid to ICOF -S. Such direct contracts
were concluded in a relatively significant number of cases, different from the situation that
prevailed for Ecogreen. Nothing in Indonesia's reply suggests otherwise.

22. Second, Indonesia merely repeats its view that no weight should be ascribed to any of the
provisions of this contract because it is merely a transfer pricing agreement, but it does not deny
the fact that a contract exists between PTMM and ICOF -S when no such contract exists governing
the relationship between Ecogreen and its related trader, EOS. That is a matter of fact that further
distinguishes the factual situation of both companies.

23. Third, with respect to the significance of the trader's activities and the fac t that the trader's
supplies originate to a significant extent from unrelated companies (similar to the activities of an
agent working on a commission basis) Indonesia again "fails to see the relevance of the trader's
activities with respect to products ou tside of the scope of the investigation ", but does not deny
that those factual findings are correct. The relevance of course is that these were important factual
considerations that led the European Court in Interpipe to reach a certain conclusion. Indones ia
simply tries to minimize the importance of this factual aspect by consistently trying to portray
ICOF-S as an internal sales department of PTMM which was simply spun off to Singapore for tax
reasons, while in fact ICOF -S [***]; ICOF-S was not created as the internal sales department of
PTMM at all; and has significant trading activities that are unrelated to the product concerned and
to PTMM's activities. If that is put in the context of all of the other evidence and is contrasted with
the situation for EOS, the trading company of Ecogreen, it is clear why this factual aspect
differentiates the situation of PTMM and ICOF-S from that of Ecogreen and EOS.

24. In sum, although Indonesia disagrees with the weight given by the investigating authority to
some of the above stated facts and considerations, it fails to demonstrate that those facts are
incorrect and as a consequence that the investigating could not reasonably have concluded that
Ecogreen and PTMM were in a factually different situation, taking into account the relevant factors
highlighted in the Interpipe judgment.

25. In addition, Indonesia has completely failed to indicate which legal provision of the
Anti-Dumping Agreement would be violated as a result of this alleged error to treat Ecogreen and
PTMM in the same manner. There is none.

26. In sum, Indonesia failed to rebut the legal arguments made by the European Union and has
not been able to establish a prima facie case that the European Union's reasonable and reasoned
decision to make due allo wances for commissions paid to ICOF -S for export sales only violated
Article 2.4 of the Anti-Dumping Agreement. Indonesia's consequential claim under Article 2.3 must
also fail. In its answers to questions of the Panel, Indonesia confirmed that it only add ed this claim
because it "considered it prudent " to include a reference to Article 2.3 given that certain export
transactions for which an adjustment was made for the involvement of ICOF -S also involved the
construction of an export price due to the involv ement of the related importer ICOF -E in the
European Union. Its Article 2.3 claim is thus entirely consequential and fails, just like its principal
claim under Article 2.4. Finally, Indonesia did not even begin to develop a prima facie case under

- B-16 -

its allegedly consequential claim under Article X.3 of the GATT 1994 and any continued allegation
of violation of this provision must therefore be rejected.

1.2. Claim 2: Indonesia's claim that the Commission failed to S eparate and distinguish
known factors other than the dumped imports causing injury in violation of articles 3.1
and 3.5 of the Anti-Dumping Agreement is in error

27. Indonesia argues that the Commission's determination that dumped imports caused injury
to the domestic industry is inconsistent with Articles 3.5 and 3.1 of the Anti-Dumping Agreement
because the Commission allegedly failed to conduct a proper non -attribution analysis. In
particular, Indonesia claims that the Commission failed to adequately separate and distinguish the
effects of the ec onomic/financial crisis of 2008/2009 and that it did not properly examine the
effects of the alleged difficulties faced by the domestic industry concerning access to raw materials
and the fluctuations in the prices of these raw materials. In its first subm ission, the
European Union demonstrated that Indonesia's arguments with respect to both factors are flawed.

28. Indonesia does not present any new arguments in its answers to the questions of the Panel,
or in its rebuttal submission. It merely repeats it s erroneous assertions about the alleged lack of a
proper causation and non-attribution analysis by the European Union. Indonesia's unsubstantiated
and formalistic arguments are without merit and do not establish a prima facie case of violation of
Articles 3.1 and 3.5 of the AD Agreement.

29. First, on the evaluation of the effect of the economic crisis, it is clear that the Commission
was well aware of the commonly known fact that the global economic crisis started around the
second half of 2008. The global economic/financial crisis is a complex phenomenon which develops
its effects over time and it is simplistic to turn the debate about its effects on injury factors that
are examined by the investigating authority on a year by year basis into a debate ab out the exact
starting point of this crisis. The European Union also disagrees with Indonesia that the injury
analysis is an "unrelated section" for purposes of examining the effects of other factors on injury.
Article 3.5 of the Anti-Dumping Agreement that sets forth the non -attribution requirement is one
paragraph of Article 3, entitled "Injury". The text of Article 3.5 refers directly to "the effects of
dumping as analysed under paragraphs 2 and 4 " of Article 3, which form the heart of any
investigating authority's injury analysis. The causation and non-attribution analysis of Article 3.5 is
part and parcel of the injury analysis to be undertaken under Article 3 of the
Anti-Dumping Agreement. Indonesia's contrary suggestion that it is not appropriate to r efer to
analysis and conclusions in an investigating authority's injury determination, simply because not
all of this analysis is provided under the heading "non-attribution" is not supported by the text of
the Anti -Dumping Agreement, WTO jurisprudence or, put simply, common sense. The
European Union referred to the findings and reasoning of the investigating authority as included in
the relevant determinations dealing with the economic crisis, both in the specific section dealing
with causation and non -attribution and in the overlapping section dealing with the evaluation of
the injury factors.

30. Second, with respect to the alleged effect of the domestic producers' access to raw materials
and price fluctuation in raw materials, Indonesia confirms that i t "accepts that an interested party
that raises a particular non -attribution factor must provide some evidence that this factor
contributed to the injury , thereby triggering the requirement to perform a non -attribution
analysis". As demonstrated in the Eur opean Union's first written submission and in the answers to
the questions of the Panel, that is precisely what the Indonesian interested parties failed to do.
Indonesia is unable to present any new arguments or evidence to rebut the European Union's
position.

31. It is telling that both in the submissions and in its answers to questions, Indonesia decided
to quote the entire paragraph of the October 2010 comments on the application of PTMM in which
it raised this factor, trying to increase its importance. In fact, if the Panel goes to the exhibit of
Indonesia from which this quote is taken, IDN -35, it will see that these two paragraphs are buried
amidst many other equally unsubstantiated assertions and claims. It is for the interested parties to
adduce sufficient evidence of the effects of another factor such that this factor becomes a factor
that is known to cause injury, requiring the authority to separate and distinguish its effects. It
does not suffice to simply make a blunt statement at the start of th e investigation without
adducing any evidence and then to expect the authority to actively seek to obtain the evidence to
substantiate these assertions.

- B-17 -

32. In its replies to the Panel's questions, Indonesia argues that PTMM produced evidence
showing that the fluctuations in the price of raw material was a factor causing injury distinct from
the economic crisis. Indonesia is wrong. In particular, Indonesia refers in alleged support of its
argument to page 30 of the Complaint, which it files as Exhibit IDN -58. However, page 30 of the
complaint (Exhibit IDN -58) discusses a phenomenon that is precisely the opposite of what
Indonesia considers to have been proven by PTMM, i.e. it discusses the increase of raw material
prices. It explains that the increase of raw material prices cannot be a separate injury factor since
all raw materials for fatty alcohols are traded at world market prices and therefore price
fluctuations affect all producers. It explains that integrated producers can shift profits between the
internal profit centres, but cannot avoid the effect of a raw material price increase. Then it adds
that because the prices of synthetic raw materials and natural raw materials for fatty alcohols have
not evolved in parallel (which is exactly the opposite of w hat PTMM argued in subsection 4.9 of its
comments to the complaint), price development in natural raw materials cannot explain the injury
suffered by all EU producers that use different manufacturing process. Thus the complaint cannot
constitute even an indicator (let alone full evidence) of the claim according to which access to raw
materials constituted a separate cause of injury. Indonesia was not able to point to any other valid
evidence that could have supported that claim and had been submitted during the investigation by
the interested parties. In light of these circumstances, it is clear that it was reasonable of the
investigating authority to conclude that PTMM did not produce any evidence to substantiate its
assertion, made only at the very beginni ng of the investigation, that raw material price fluctuation
constituted a separate cause of injury to the EU industry so as to deserve further investigation.
Indonesia's argument that, as an active "investigating" authority, the Commission should have
actively sought for the additional evidence of such a causal impact is without merit. It is telling
that Indonesia refers to the panel report in Mexico – Rice on the need for an active investigating
authority. However, the finding that Indonesia refers to is in fact one of the few findings of that
panel that the Appellate Body reversed. The Appellate Body rejected this specific conclusion that
Indonesia is relying on and found that the Panel's "extensive interpretation" requiring an "active
investigating authority" imposed too high a burden on the authority.

33. In the context of its discussion of the European Union's rebuttal on the factor "raw material
prices", Indonesia repeatedly asserts that the European Union is making "a series of ex post
arguments, non e of which is reflected anywhere in the Commission's determinations ". The
European Union objects to the repeated allegation that any assistance offered by the
European Union to the Panel in the context of these proceedings to allow it to better understand
the information provided and to address novel arguments made by Indonesia for the first time in
this WTO proceeding would constitute undue "ex post" reasoning. The European Union participated
in these proceedings in good faith and provided answers to the q uestions of the Panel that related
to certain evidence on the record that was not further developed by the interested parties and
which therefore did not need to be further analysed by the investigating authority. The
European Union offered its views to th e Panel to explain why from an economic and legal point of
view the statements about the existing conditions of competition between Indonesian producers
and European producers of fatty alcohols were not relevant and were inaccurate.

34. The Indonesian producers never developed any of the arguments now made by Indonesia in
this proceeding and it is thus not surprising that the investigating authority did not provide all of
the reasonable explanation that the European Union has offered to the Panel in search of a better
understanding of the facts. It is not correct that, as the defendant in this proceeding, the
European Union cannot provide any explanation that is not expressly provided by the investigating
authority when rebutting arguments that the determin ation made by the authority was biased and
not reasonable. If that were the case, there would be no point in having a contradictory debate in
these panel proceedings.

35. In sum, Indonesia has failed to rebut the European Union's argument that effects of the
economic crisis were properly separated and distinguished and that access to raw materials or the
impact of raw material prices was not a known factor causing injury that the investigating
authority was required to examine further as the interested par ties failed to present arguments
and evidence to this effect, as required. Indonesia's claims under Articles 3.1 and 3.5 are thus to
be rejected.

- B-18 -

1.3. Claim 3: Indonesia's claim that the Commission allegedly failed to disclose the results
of the verificat ion to the verified producers in violation of article 6.7 of the
Anti-Dumping Agreement is in error

36. Indonesia claims that the European Union violated the obligation under Article 6.7 of the
Anti-Dumping Agreement to make available the results of the v erification visit it made to the
Indonesian interested parties. In the first written submission, the European Union demonstrated
that Indonesia's claim is based on a misrepresentation of the facts and a misreading of the legal
obligation imposed by Article 6.7 of the Anti-Dumping Agreement. Indonesia fails to respond to
both the factual and legal rebuttal arguments of the European Union. Instead, it simply repeats its
broad reading of what it would have ideally liked the obligation under Article 6.7 of the
Anti-Dumping Agreement to be, ignoring that the requirements it reads into Article 6.7 are
nowhere to be found in the text of that provision.

37. First, on the facts, it is important to re -state what the European Union explained in the first
written submission. Contrary to Indonesia's assertions, it is clearly from the provisional and final
disclosure documents that the European Union provided "discussion of information that was
verified, not verified or corrected with respect to essential facts reference d in Article 6.9 " as
Indonesia seems to suggest is required under Article 6.7 of the Anti-Dumping Agreement . In
addition, at the end of each verification visit, the Commission and the verified producer agreed on
a list of exhibits collected during the verification.

38. Indonesia tries to support its argument by referring to two documents provided during
verification. But it suffices to look at the agreed list of exhibits taken at the time of the verification,
submitted by the European Union as Exhibit EU -14, to see that both documents are clearly
referenced in this list. Furthermore, this alleged lack of information on these two exhibits shared
during verification never stopped PTMM from raising the arguments that these exhibits were
supposed to support. T here is no basis in the record to claim that the interested parties' due
process rights were in any way affected by the fact that they allegedly did not receive a detailed
report explaining that these documents were provided during verification. In fact PT MM made
express reference to these documents in the context of the proceedings before the investigating
authorities. It was thus able to defend its interests and develop comments based on the
information submitted during verification. Other "examples" of Indonesia relate to statements that
were made by PTMM or ICOF -S personnel or representative during the verification and that
according to Indonesia were not contested on the spot. However, a statement or an oral
explanation provided during a verification vi sit and which is not confirmed by any concrete
evidence does not become a result of the verification or an essential fact just because the
verification team did not consider it necessary to rebut it on the spot or to put it in the context of
other evidence on the record.

39. Furthermore, in terms of the legal standard, Indonesia is responding to an argument the
European Union never made. It is not the position of the European Union that complying with
Article 6.9 automatically means that Article 6.7 has be en complied with. The ordinary meaning of
the term "results" is "the effect, consequence, issue, or outcome of some action, process or
design." This suggests that what needs to be made available is not the process as such but rather
the "outcome" of that p rocess. Again, Indonesia seems to acquiesce in the correctness of the
ordinary meaning of the term as offered by the European Union. It refers to the Appellate Body
reading of this term in US – Steel Safeguards as "an effect, issue, or outcome from some ac tion,
process, or design " and concludes that the results referred to in Article 6.7 are the "effect" or
"outcome" of the verification visit. The European Union agrees. However, the European Union does
not understand on what basis Indonesia jumps from this definition to its assertions that "in this
context [of a verification] the "results" would mean both a simple recital of the evidence obtained
during the visit and the evaluation of the evidence". The European Union clearly complied with the
first suggested requirement by exchanging the lists of exhibits and by correcting the data provided
by the interested parties in agreement with them (which is uncontested) but sees no basis for the
second requirement, at least not as part of the verification results. Cl early, to evaluate the
evidence is not the task of the investigators conducting the verification and it cannot be what is to
be provided in terms of the report of the verification. But, to the extent that the verified results
relate to the essential facts, the European Union would agree that, pursuant to the obligation to
disclose the essential facts, such an evaluation will be provided by the investigating authority with
respect to these facts at that time. It will be for the interested parties to make com ments, with
possible reference to the questionnaire information or to information provided during verification.

- B-19 -

Indonesia only confirms everything the European Union has said about the close relationship
between Article 6.7 and 6.9 of the Anti-Dumping Agreement.

40. Furthermore, Indonesia keeps citing to one obiter dictum in Korea – Certain Paper, in which
the panel said that "[i]t is therefore important that such disclosure [under Article 6.7] contain
adequate information regarding all aspects of the veri fication, including a description of the
information which was not verified as well as of information which was verified successfully ". This
statement, which was not essential to the panel's finding and was not appealed, must be read in
its context. First, in that investigation, the Indonesian exporters had expressly requested to see
the results of the verification but their request had been denied. Second, the real reason why the
panel found a violation was because the authority "did not inform the two Sin ar Mas Group
companies of the verification results in a manner that would allow them to properly prepare their
case for the rest of the investigation ". There is no basis for a similar conclusion in this case, as
demonstrated above. The European Union sent a list of information to be verified before the visit
and agreed on a list of exhibits taken at the time of concluding the verification. The interested
parties never complained about a lack of information on the results of the verification, despite
frequent references to the verification visits in the provisional and final determinations

41. In addition, as confirmed by the lack of claims by Indonesia under Articles 6.2, 6.4 or 6.9 of
the Anti-Dumping Agreement , Indonesia does not consider that its due pr ocess rights were
violated or that the disclosure of essential facts was deficient. Again this contrasts with the claims
and arguments made in Korea – Certain Paper.

42. Indonesia continues to seek to raise the profile of the last sentence of Article 6.7 as if this
"verification results"-disclosure obligation is the alpha and omega of due process. It asserts that
"exporters must know what information was not verified — so that they can make further efforts
to put the investigating authority in a position t o ultimately verify that information — as well as
what information was verified. This information is important for the exporter given that verified
information must in principle be used by the investigating authority, and the exporter thus need
not any longer devote its scarce resources to convincing the authority about the reliability of that
information". Indonesia's approach to on -site verification and the alleged consequences of
verification is entirely misguided and it grossly over -states the importance of the last sentence of
Article 6.7.

43. First of all, exporters of course do know what information is verified as they are present
throughout the on -site verification process, as is clear from the legal counsel's notes on which
Indonesia relies. So, th e premise of Indonesia's argument is once again flawed. Second, there is
no obligation on Members to conduct an on -site verification. That is clear from the text of
Article 6.7 (using the term "may") and has been confirmed in WTO jurisprudence. Third, in m ost
cases verification is a documentary process that the investigating authority undertakes on the
basis of the information provided and based on any additional information it requests the
interested parties to provide. Therefore, interested parties do not really know how the
investigating authority will appreciate those documents until they see the disclosure of the
essential facts. Yet, this does not pose a problem from a due process perspective. Fourth, it is
simply not the case that because information has been verified it is necessarily relevant and
probative such that it must be used by the investigating authority, contrary to what Indonesia
seems to suggest. It simply means that the authority checked whether that piece of information is
correct. But t his piece of information still needs to be placed in the context of all of the other
information. Its relevance and weight is still to be reasonably determined by the authority,
irrespective of whether it was verified or not. Fifth, Indonesia errs in its r eliance on Article 6.8 and
Annex II. These provisions concern a different situation: if the necessary information has not been
provided within a reasonable period of time or if the producer has impeded the investigation,
Annex II provides that information that is "verifiable" should still be used by the investigating
authority as part of its reliance on the best information available. Annex II does not require an on -
site verification and does not state that information provided during verification – and only such
verified information – can and must be used. In any event, this issue does not arise in the present
case as the interested parties cooperated with the investigating authority to the extent that during
the verification visits they agreed on the corre ctions to be made to the data previously submitted
to the investigating authority.

44. Indonesia completely over-states the importance both of the on-site verification process and
of the fact that information was verified. Its suggestion that exporters w ill continue to use their

- B-20 -

"scarce resources" to get the authority to further analyse certain information as long as they do
not know whether such information was verified, is not what happens in practice and is not
required by the text of the Anti -Dumping Agreement. Indonesia is simply inventing these systemic
concerns

45. Indonesia has failed to rebut the European Union's factual and legal arguments.

46. Indonesia's claim is not supported by the facts on the record and is based on an erroneous
reading o f the obligation contained in Article 6.7 of the Anti-Dumping Agreement . The
European Union respectfully requests the Panel to reject Indonesia's claim under Article 6.7 of the
Anti-Dumping Agreement relating to the results of the verification visits.

2. Conclusions

47. For the reasons stated in this submission, the European Union respectfully requests the
Panel to reject all of Indonesia's claims.

- C-1 -

ANNEX C
ARGUMENTS OF INDONESIA
Contents Page
Annex C-1 First integrated executive summary of the arguments of Indonesia C-2
Annex C-2 Second integrated executive summary of the arguments of Indonesia C-17

- C-2 -

ANNEX C-1
FIRST INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDONESIA
1. INTRODUCTION AND OVERVIEW
1.1. In this dispute, Indones ia challenges certain anti -dumping measures imposed by the
European Union on so-called fatty alcohols imported into the European Union from Indonesia.

1.2. At the heart of this dispute lies an improper deduction that the EU made when calculating
the ex-factory export price for the Indonesian exporter PT Musim Mas. That deduction accounted
for practically the entire dumping margin. In addition, the Commission failed to conduct a proper
non-attribution analysis, thereby improperly attributing the injury to t he Union's industry to the
allegedly dumped imports. The Commission also failed to disclose to the exporters the results of
the verification conducted at their premises.

1.3. The Commission's determinations and the EU's arguments before the Panel are inco rrect as
a matter of substance, on both the relevant legal and on factual issues. In addition, the EU relies
on extensive ex post rationalisations, that is, reasoning that was not contained in the
Commission's determinations and that the EU has developed f or purposes of these
WTO proceedings. Needless to say, the applicable standard of review requires the Panel to
determine the EU's compliance with its obligations under the Anti -Dumping Agreement exclusively
in the light of the published determination and the reasoning contained therein.

2. INDONESIA'S CLAIM UNDER ARTICLE 2.4 OF THE ANTI-DUMPING AGREEMENT
2.1 Introduction

2.1. When calculating the export price for the Indonesian exporter PT Musim Mas, the
Commission made an adjustment under a provision o f European Union (EU) law that, broadly
speaking, corresponds to Article 2.4 of the Anti -dumping Agreement. Under Article 2.4, an
investigating authority is required to ensure a "fair comparison " between the export price and
normal value. The investigating authority is entitled - and required - to adjust for any difference
that "affect[s] price comparability". Conversely, the investigating authority may not adjust for any
difference that does not "affect price comparability".

2.2. The EU erroneously adjust ed for what it termed "Commission ICOFS markup ". This
deduction allegedly reflected the activities of PT Musim Mas' sales entity, which is located in
Singapore. The key issue before the Panel is whether, in doing so, the EU correctly adjusted for a
factor that "affect[ed] price comparability" within the meaning of Article 2.4 and conducted a "fair
comparison" at the same level of trade.

2.3. In Indonesia's view, the answer to this question is manifestly "no". This is because the
Commission ignored that any transfer of funds between PT Musim Mas and the sales entity ICOFS
are simply transfers within a single economic entity (SEE)/between two closely -related companies;
because the Commission ignored or distorted relevant record evidence; and because it relied on
internally-inconsistent reasoning. Moreover, the Commission treated PT Musim Mas differently
from the second Indonesian exporter Ecogreen, even though Ecogreen was in an identical situation
as PT Musim Mas, and differentiated between the two companies on the basis of irrelevant or
inconsistent criteria. This differential treatment of the two exporters further highlights the
improper nature of the Commission's deduction when calculating PT Musim Mas' export price,
highlighting the violation of Article 2.4.

2.2 The Commission ignored the nature of transactions within a single economic entity

2.4. The Commission made an adjustment on the basis of transactions between PT Musim Mas
and ICOFS. However, the Commission failed properly to consider whether thes e transactions and
the conditions in which they occurred "affect[ed] price comparability ". The Commission therefore
failed to consider whether the adjustment was consistent with the requirement to conduct a "fair
comparison", within the meaning of Article 2.4. The existence of a close relationship – or a "single

- C-3 -

economic entity" formed by two or more formally separate entities – falls within the scope of the
terms "affect price comparability" and "fair comparison", under Article 2.4.

2.5. The evidence before the Commission clearly indicated, both generally as well as with respect
to the sales in question, that the producer/exporter and its Singapore sales affiliate were closely
related or intertwined – put another way, that they were part of an SEE. Theref ore, it was
improper to make an adjustment to the export price on the basis of transactions between the two
arms of the same entity that amounted, in fact, to nothing more than moving money from one
pocket of the same body to another.

2.6. The question o f the relationship between producer/exporter and an affiliated trading
company has not yet arisen in WTO panel proceedings in the context of an adjustment under
Article 2.4. However, it has arisen in the context of Article 6.10, where panels have – like th e
European courts and the Commission itself in the present and other anti -dumping investigations –
found it convenient to use the phrase "single economic entity " to describe a closely -intertwined
relationship.

2.7. Moreover, whether one uses the term "single economic entity " or any other label, the
obligation remains for the investigating authority to examine and to ensure that adjustments –
including those in the context of related companies – be only made for factors that "affect price
comparability". The Commission's own reasoning in its determinations reveals that the Commission
accepts that the degree and nature of the relationship between two companies can be crucial for
determining whether a particular item or expense "affect[s] price comparability " and therefore is
highly relevant for a "fair comparison", within the meaning of Article 2.4.

2.8. The Commission's reasoning confirms that the Commission accepts – as Indonesia argues in
this dispute – that payments made between related parties, at least in some circumstances, do not
justify an adjustment. To recall, the Commission recognized that Ecogreen paid "commissions" to
its Singapore trading department EOS. Initially, the Commission determined that these
commissions "affect[ed] price comparability " and that an adjustment was warranted in order to
ensure a "fair comparison". However, subsequently, the Commission reconsidered certain criteria
concerning the relationship between Ecogreen and EOS and determined that the required "fair
comparison" required not making the adjustment, because the "commissions" paid by Ecogreen
did not "affect price comparability".

2.3 The Commission's adjustment for the activities of PT Musim Mas' selling
department was improper and resulted in a non-"fair comparison"

2.9. The Commission failed to acknowledge, let alone to properly factor into its reasoning, the
fact that ICOFS is PT Musim Mas' selling department, and that the two companies are integral
parts of a single economic entity, characterized by common ownershi p and a common managerial
and operational control structure. The entire SEE is a [***]

2.10. PT Musim Mas repeatedly reminded the Commission, and supported thr ough record
evidence, that it does not have a sales department, and that all of its sales – whether export or
domestic sales – are negotiated, organized and arranged by ICOFS.

2.11. Given this closely intertwined structure, transfers of financial resources between the
companies – for instance the "mark-up" or "margin" retained by ICOFS on some export sales – are
not expenses to be adjusted for, but rather the shifting of money from one pocket into another
pocket of a single economic entity. The "mark-up" or "margin" is simply a way, within an SEE, to
allocate profit generated by that entity and to en sure adequate financing of the selling department
located in a different jurisdiction.

2.12. The need to finance the selling department arises also because, as PT Musim Mas repeatedly
pointed out to the Commission during the investigation, ICOFS does not receive any funds from PT
Musim Mas for its involvement in domestic sales as well as for its involvement in the so -called
"direct" export sales. Moreover, the fact that ICOFS does not receive any remuneration for its
involvement in those sales further underscores the closely-integrated nature of the two companies'
relationship. Of course, an independent trader would never accept to perform sales and trading
services for free.

- C-4 -

2.4 The Commission's argument that, prior to the creation of ICOFS, PT Musim Ma s
used independent traders for its sales precisely serves to highlight the issue at hand and
demonstrates the exact opposite of the Commission's conclusion

2.13. During the Panel's first meeting with the parties, the EU referred to the fact that the
preamble to the transfer pricing agreement between PT Musim Mas and ICOFS states that PT
Musim Mas previously used an independent trader to make its sales. For the EU, this is a
confirmation of its position. However, quite to the contrary, this fact clearly il lustrates the issue
before the Panel and demonstrates why Indonesia's position is correct.

2.14. If PT Musim Mas made its European sales of the investigated product through an
independent trader in Singapore, it would pay that independent trader a commis sion. This was
indeed PT Musim Mas' situation several years ago, before the Musim Mas Group chose to create
ICOFS as its sales and trading office. In an anti -dumping investigation, it would be appropriate to
deduct that commission from the invoice price in order to arrive at the net ex factory price to be
used in the fair comparison under the first, second, and third sentences of Article 2.4. This is
because the commission represents an expense for which an adjustment may – indeed must – be
made under Article 2.4. Of course, an exporter such as PT Musim Mas may decide to stop using an
independent trader for these sales, and instead decide to establish its own affiliated sales company
in Singapore to perform the same functions. PT Musim Mas would do so in ord er to save money
and to increase its profits on the sales. Doing so will change the way in which PT Musim Mas does
business; it will change the expenses that the company incurs; and this change in expenses must
be reflected in the anti -dumping calculations. The Commission's position amounts to a denial of
this very basic principle.

2.15. For example, assume that an exporter sells to an independent European customer at € 100
per unit and pays a commission of € 10 per unit on each sale to an independent tra der in
Singapore. The ex factory price – or, put another way, the net return to the exporter – is € 90 per
unit.

2.16. The exporter may decide that the independent trader is charging too much as a commission.
Therefore, the exporter may set up its own tra ding company in Singapore. Assume that the costs
of maintaining the trading company in Singapore are € 4 per unit. In this case, the exporter can
maintain its price to the independent customer in Europe, reduce its expenses, and increase its
profits. The ex factory price or net return to the exporter now is €100 - € 4 = € 96 per unit. Profit
has increased by € 6 per unit.

2.17. For the purposes of a dumping analysis, two things have changed. First, the nature of the
expense has changed: it is now a selling expense, not a commission. Second, the amount of the
expense has changed: it is now € 4 per unit, not € 10. These changes can be illustrated in the
following table:

 Sales Through Independent
Trader
Sales Through Affiliated
Trading Company
Invoice Price € 100 € 100
Commission € 10 € 0
Selling Expenses € 0 € 4
Ex Factory Price € 90 € 96

2.18. The EU's position before the Panel is that these changes do not affect the dumping analysis.
In other words, for the EU, the ex factory price in the second scenario is not € 96, but € 90, just
like in the first scenario. Even though the exporter has changed how it does business – resulting in
a change in both the type and amount of expenses it incurs, as well as in the net revenue it
receives – the EU contends that it is entitled to disregard these changes and to conduct the same
dumping analysis as if the exporter was still selling through an independent trader.

2.19. Indonesia disagrees. Indonesia does not consider that the EU can correctly calc ulate the
ex factory price and make a fair comparison between export price and normal value within the
meaning of Article 2.4 where it ignores the actual facts. The EU cannot ignore how the exporter
structures its business, the expenses it actually incurs in making the investigated sales, and the
net revenue it receives. It cannot instead replace those amounts with imputed expenses that may
have been incurred based on a notionally -different means whereby the exporter could have
structured, or used to structure, its sales.

- C-5 -

2.5 The Commission's adjustment for "profit" and for indirect selling expenses was
improper and resulted in a non-"fair comparison"

2.20. Above and beyond the fundamentally improper nature of the Commission's deduction, the
very items (and the labels applied to these items) deducted by the Commission demonstrate that
this adjustment violates Article 2.4.

2.21. To recall, the Commission's deduction consists of two elements: "profit" and "indirect selling
expenses". Both items are imprope r elements to be deducted in determining the ex factory price
(whether on the export or normal value side).

2.22. First, profit is not an item to be adjusted for. It is not customary for investigating authorities
to deduct "profit" when determining the ex factory price, whether on the normal value or on the
export side. This is because dumping is international price discrimination, and "price" includes
profit. Indeed, the conventional theory is that dumping is "unfair", because the exporter is using
"high profits" from the domestic market to finance "low profits" (or losses) in the export market.
Profit is also not deducted because, after deducting profits, only costs would remain. However,
costs should be the same no matter where the product is subsequently sold.

2.23. Hence, the items to be adjusted for under Article 2.4 are expenses. However, "profit" is not
an expense; "profit" is a residual amount, after all costs and expenses have been deducted from
the price.

2.24. Further proof that profits are no t to be deducted is the fact that a constructed normal value
includes an amount for profit, as per Articles 2.2 and 2.2.2 of the Anti -dumping Agreement. (The
only exception to the rule that profits are not to be deducted is in the context of a constructed
export price, which was a controversial topic in the Uruguay Round and is not at issue in this
dispute).

2.25. Second, the Commission deducted ICOFS' indirect selling expenses . Indirect selling
expenses (items such as sales department staff salaries, adve rtising, office expenses of sales
departments, etc.), as opposed to direct selling expenses (such as freight, insurance, etc.), are
normally not deducted when determining the ex factory price. This is also supported by the fact
that, in the construction of normal value, indirect selling expenses are included. In the case at
hand, however, the Commission – without any explanation – deducted ICOFS' indirect selling
expenses when calculating the ex factory export price. However, the Commission proceeded
entirely differently when calculating normal value. It did not deduct any indirect selling expenses
when determining the ex factory normal value; and, correspondingly, it included indirect selling
expenses when constructing normal value for certain product model s. Hence, the Commission
deducted items on the export price side that it did not deduct on the normal value side. This
asymmetry further vitiates the Commission's comparison, renders it unfair, and contributes to the
violation of Article 2.4.

2.6 The cri teria relied on by the Commission for justifying the adjustment are
irrelevant, factually incorrect or involve ignoring or distorting record evidence

2.26. In the Amending Regulation, in which it justified its differential treatment of PT Musim Mas
from that of Ecogreen, the Commission highlighted certain criteria as supporting its determination.
In Indonesia's view, none of these criteria has any relevance in determining whether the
involvement of ICOFS "affect[s] price comparability ". Moreover, in its t reatment of these criteria,
the Commission repeatedly ignored or distorted record evidence.

- C-6 -

2.6.2 The Commission improperly relied on "direct" export sales

2.27. The Commission relied on the fact that PT Musim Mas, rather than ICOFS, featured as the
official selling party on a certain proportion of export sales (the so -called "direct" export sales).
This, in the Commission's view, meant that certain export sales were "performed" by PT
Musim Mas "from Indonesia "1 and that PT Musim Mas was not "using" its sales department in
Singapore for these export sales.2

2.28. This characterization is demonstrably incorrect and highly misleading. PT Musim Mas
explained repeatedly during the investigation, and supported by evidence, that, with respect to
these "direct" export sales, ICOFS handles all contact with the client, as well as negotiates and
arranges the sale, just as it does for all other export sales. However, in certain instances, the
client (typically Asia -based clients) prefer for PT Musim Mas to feature on the contract as the
formal selling party, in order for the client to obtain an Indonesian certificate of origin. In order to
accommodate this client preference, as the final step in the standard formal sales process, ICOFS
sends PT Musim Mas a [***]. (No client ever contacts PT Musim Mas directly). Subsequently, PT
Musim Mas ships the products, as it does for all other export sales.

2.29. Hence, all (export) sales are negotiated and arranged by ICOFS; and all (export) sales are
physically "performed" (shipped) out of Indonesia. It therefore amounts to a distortion of the
record evidence when the Commission found that the "direct" export sales are somehow different
due to being "performed" out of Indonesia. Moreover, Indonesia fails to unders tand why the mere
formality of PT Musim Mas appearing on the contract, rather than ICOFS (a difference driven
entirely by client preferences), should be one of the decisive criteria for considering that PT
Musim Mas and ICOFS operate at arm's length and are fundamental ly different from Ecogreen
(which also has "direct" export sales, for th e same reason as PT Musim Mas). If anything, the
flexibility of adapting one formal aspect of the sale depending on what the client communicates to
ICOFS is further evidence of the tig htly knit relationship and cooperation between the two
companies.

2.30. In any event, and leaving aside all of the above, the Commission failed to explain the
significance of the "direct" export sales for the key issue at hand; namely, why, with respect to the
sales under investigation, the involving of ICOFS and any transfer of funds from PT Musim Mas to
ICOFS should be regarded as a sales expense that affects price comparability.

2.6.3 The Commission improperly relied on ICOFS' other trading activities

2.31. As another criterion for distinguishing PT Musim Mas from Ecogreen, the Commission stated
in the December 2012 Amending Regulation that, because "the trader's overall activities [are]
based to a significant extent on supplies originating from unr elated companies ", the "trader's
functions are therefore similar to those of an agent working on a commission basis."3

2.32. Indonesia fails to see the relevance of the activities of the trader's office that involve
products outside of the scope of invest igation. The Commission's task was to decide whether, with
respect to the sales under investigation, the allocation of funds between PT Musim Mas and ICOFS
is an expense that affects price comparability. For Indonesia, it is clear that transactions between
ICOFS and unrelated third parties, of products outside the scope of investigation, have nothing to
do with the transactions between PT Musim Mas and ICOFS.

2.33. To the extent that these third party sales can shed any useful light on the question before
the Commission, they would have to relate to the overall relationship between ICOFS and PT
Musim Mas, for instance, regarding corporate control, management and operational decision -
making such as pricing decisions. However, the Commission made no attempt to examine such
circumstances and merely looked at the quantities of these sales (which, in any event, it did not
disclose or otherwise discuss).

2.34. By way of example, had the Commission examined these "third party" purchases and sales
in more detail, it could have found that these sales are oftentimes an integral part of how PT

2 EU's First Written Submission, para. 98.

- C-7 -

Musim Mas interacts with ICOFS and how ICOFS closely coordinates such purchases and sales with
PT Musim Mas. Specifically, for a number of products (although not including the product under
investigation), ICOFS may sometimes purchase from third parties in order to sell to clients that
normally purchased PT Musim Mas -produced products. This will occur when, on any given
occasions, [***] Had the Commission properly investigated t he issue, it would have been
informed about these matters.

2.6.4 The Commission improperly considered that the existence of a sales and
purchasing agreement as well as certain clauses of that agreement support the
contested deduction

2.35. As the third criterion, the Commission relied on the fact that a sales and purchase
agreement ("S&P Agreement" or "transfer pricing agreement") existed between PT Musim Mas and
ICOFS. It also relied on unspecified elements of the content of this agreement, in rejecting PT
Musim Mas' explanation that this contract was a "master agreement to regulate transfer prices
between [the] related parties".4

2.36. The contract governs sales from PT Musim Mas and ICOFS. It was concluded in order to
demonstrate to both Singaporean a nd Indonesian tax authorities arm's length pricing prac tices
applied by the companies. Such transfer pricing agreements (or intercompany agreements) are a
daily occurrence in business practices. In its Answers to the Panel's first set of questions,
Indonesia presented several exhibits to support this point, including general advice to private
companies from a reputed law firm about intercompany/transfer pricing agreements and how to
conclude them; as well as two templates for intercompany/transfer pricing a greements that
contain clauses identical or very similar to those of the S&P Agreement between PT Musim Mas and
ICOFS.

2.37. It is nonsensical to argue that two related companies become arm's length companies
because they conclude an intercompany agreeme nt that looks like, or seeks to imitate, an
agreement between unrelated companies. As demonstrated by Indonesia's evidence above, it is
the very purpose of intercompany agreements to structure commercial interaction in a manner
that reflects practices between unrelated companies.

2.38. The Commission also relied in its determinations on certain aspects of the S&P Agreement.
For instance, it relied on the fact that the trading office "was involved in a range of different palm
oil-based products".5 Indonesia does not understand what relevance this criterion has for the issue
at hand and why the Commission thinks this point proves anything. The Commission also claimed
that ICOFS bought products from PT Musim Mas under "one single contract without distinguishi ng
among products".6 This statement is factually incorrect, because the transfer pricing agreement
does differentiate between products. Moreover, even if true, lack of, or limited, differentiation
would suggest – if anything – that the two companies do not deal at arm's length.

2.39. The Commission left unanswered – as does the EU in these proceedings – the simple fact
that this type of transfer pricing agreement/intercompany agreement reflects international practice
and is recommended by international tr ansfer pricing guidelines, including those issued by the
OECD and the United Nations. Such recommendations also exist in transfer pricing guidelines at
the national level in numerous jurisdictions, including in the EU's own legal order.

2.40. During the panel proceedings, the EU has also provided certain ex post rationalisations
concerning other specific clauses of that agreement, not mentioned in the Commission's
determinations. Besides being procedurally inadmissible, the EU's reliance on these elements is
also misplaced as a matter of substance. For instance, the allocation of risk between PT Musim Mas
and ICOFS is customary for this kind of agreement. PT Musim Mas even highlighted this risk
allocation, on its own initiative, to the Commission during th e investigation, to argue that –
contrary to the Commission's view – this risk allocation demonstrated that ICOFS did not act as an
"agent working on a commission basis ", as stated by the Commission. During the investigation,
the Commission ignored these a rguments. Now, in the WTO proceedings, the Commission
impermissibly relies on them to argue the opposite . Besides being incorrect on substance, this is
procedurally unfair and arbitrary.

- C-8 -

2.41. As another example, the Commission's reliance on the clauses co ncerning the manner of
communication between the contracting parties and the clause concerning dispute resolution
makes no sense. These clauses are entirely consistent with how related parties structure
intercompany/transfer pricing agreements. Indonesia has submitted evidence to this effect.7

2.7 The Commission ignored or distorted further evide nce that suggests that PT
Musim Mas and ICOFS are closely intertwined and closely cooperate, including on the
sales at issue

2.42. Although it purported to analy se the relationship and the mutual "functions" of PT
Musim Mas and ICOFS, the Commission ignored relevant evidence of how closely the two
companies are related and operate. For instance, as part of its Questionnaire Response, PT
Musim Mas submitted highly confidential cost data pertaining to ICOFS. Needless to say, a
producer would never have access to such confidential data of an independent trader. The tight
relationship between PT Musim Mas and ICOFS is even implied in how the Commission initially
treated the two companies. Indeed, in a pre -verification visit letter addressed to PT Musim Mas'
lawyers, the Commission referred to ICOFS as "the company's premises in Singapore ([ICOF-S])".8

2.43. Furthermore, ICOFS staff assisted PT Musim Mas throughout the anti-dumping investigation.
During verification, ICOFS staff was present at the PT Musim Mas' verification and answered
questions on PT Musim Mas domestic sales and on technical issues concerning PT Musim Mas' plant
in Indonesia.

2.44. Finally, ICOFS is involved in PT Musim Mas' domestic sales in the same manner as it is
involved in export sales (the only exception being that it is formally PT Musim Mas that signs all
domestic sales agreements). However, ICOFS does not [***] for its involvement on domest ic
sales. The Commission did not contest this evidence during the investigation. The involvement of
ICOFS [***] in the domestic sales process (as well as its involvement [***] in certain export
sales) demonstrates that the two companies do not deal with each other at arm's length.

2.8 The Commission's proffered logic for the adjustment is internally inconsistent

2.45. The lack of principled reasoning underpinning the contested adjustment is also discernible
from how the EU explained its logic during the first panel hearing: According to the Commission,
PT Musim Mas pays a "commission" to ICOFS on export sales, but not on domestic sales.
Consequently, the EU explained, the Commission made the adjustment for ICOFS' "commission"
on export sales, but not on domestic sales. However, because the two companies are related, the
Commission did not use the amount/percentages actually paid by PT Musim Mas to ICOFS, but
rather changed the amounts to be deducted. The EU cannot contest that ICOFS negotiated and
arranged PT Musim Mas' domestic sales in the same manner as it negotiated and arranged PT
Musim Mas' export sales. However, the EU argues, ICOFS did not [***] on the domestic sales, no
money changed hands and therefore no adjustment was warranted.

2.46. However, inconsistently with the above explanation, the EU made the adjustment on all
export sales, including the "direct e xport sales", even though [***] Thus, the Commission
violated its own approach and its own logic. To be consistent with its own logic, the C ommission
should have made the adjustment only for those export sales in which ICOFS featured as the
formal contracting party and on which ICOFS retained a mark-up, and it should not have made the
adjustment for the "direct" export sales.

2.47. In addition to highlighting the internally inconsistent approach of the EU, the fact that ICOFS
did not [***] on the "direct" export sales further demonstrates the non-arm's length nature of the
dealings between the companies. It bears repeating that ICOFS negotiate s and arranges all export
and all domestic sales. However, ICOFS receives [***] Clearly, an independent trader would
never do so.

7 See Indonesia's exhibits IDN-52, IDN-53, and IDN-54.
8 Letter from the European Commission to PT Musim Mas, 5 November 2010, p. 1. Exhibit IDN-41.

- C-9 -

2.9 The EU's incorrectly argues that the Panel should reject Indonesia's arguments in
case it disagrees with the label "single economic entity"

2.48. As part of its legal argument, the EU has stated that, if the Panel does not consider the
"single economic entity" or "closely related parties" terminology or criteria for addressing this issue
to be the optimum, the Panel should reject Indonesia's claim. According to the EU, if Indonesia has
not guessed precisely how the Panel would interpret and articulate the meaning of the Article 2.4,
including the phrase "to affect price comparability", in the context of transactions between related
parties, Indonesia's claim should be rejected.

2.49. This, of course, is incorrect. Indonesia's claim is that the EU has violated Article 2.4 because
it has made an adjustment for something that does not "affect price comparability " within the
meaning of Article 2.4, thereby failing to conduct a "fair comparison " under that provision.
Indonesia's argument as to why the transactions, or the transfers between PT Musim Mas and
ICOFS, do not affect price comparability is expressed through the term "single economic entity" or
"closely related parties " test. However, even if the Panel does not wish to rely on the "single
economic entity" or "closely related parties" language or test proposed by Indonesia, the Panel has
to provide what it considers to be the correct interpretation of, or the correct legal standard under,
the phrase "to affect price comparability " in the context of transactions between closely related
parties under Article 2.4. The Panel must then apply that legal standard to the facts bef ore it.
Indonesia's claim would not fail simply because the Panel might articulate the relevant legal
standard in different words or using different concepts than the complainant.

2.50. This is because no party bears the burden of providing the correct le gal interpretation to a
WTO dispute settlement body. This principle – also known as "iura novit curia" – has been affirmed
by the Appellate Body in several decisions, including in EC – Tariff Preferences,9 EC - Hormones10
and EC – Export Subsidies on Sugar.11

2.51. Therefore, in summary, it is for the Panel in this dispute to decide what the phrase "to affect
price comparability" means in the context of transfers of funds between closely related parties and
non-arm's length transactions. Should the Panel con sider pertinent Indonesia's proposed legal
standard of "single economic entity " or "close relationship", the Panel can rely on this standard.
Should the Panel disagree with this articulation of the legal standard, the Panel is bound by
Article 11 of the DSU to enunciate its own version and to apply it to the facts before it.

2.10 The Commission's differential treatment of PT Musim Mas and Ecogreen further
highlights the unjustified character of the Commission's adjustment

2.52. Another arbitrary aspect o f the Commission's adjustment for PT Musim Mas is the different
treatment of that company from the treatment of the second Indonesian exporter, Ecogreen.
Specifically, the Commission relied on the existence of direct export sales; the existence of the
written S&P Agreement; as well as the type and extent of other activities of the sales department
to justify the differential treatment between PT Musim Mas and Ecogreen. This reasoning is flawed
and further demonstrates the arbitrary nature of the Commission's determination.

2.53. Indonesia submits that the Panel should bear in mind that the Commission initially
determined that the companies should be treated the same, because they were in an identical
position. Subsequently, the Commission turned around and determined the exact opposite,
arguing that the two companies were situated so fundamentally differently as to warrant an
entirely different treatment. Indonesia acknowledges that an investigating authority enjoys a
degree of discretion in its assessment of the facts. However, the required "reasoned and adequate
explanation" is seriously undermined where the investigating authority, within a span of a few
months, goes from emphasizing the commonality between two companies for purposes of an
adjustment to a rguing that these companies are so fundamentally differently situated that they
should be treated in diametrically opposite fashion. Where the investigating authority has itself,
merely a few months earlier, espoused an entirely different explanation and i nterpretation of the
same record evidence, it is particularly important to explain, in compelling terms, the plausibility of
its now diametrically opposed conclusions.

9 Appellate Body Report, EC – Tariff Preferences, footnote 220 to para. 105.
10 Appellate Body Report, EC – Tariff Preferences, footnote 220 to para. 105.
11 Panel Report, EC – Export Subsidies on Sugar, para .7.121.

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2.54. In any event, the Commission's reasoning in the Amending Regulation is flawed. With
respect to "direct" export sales, the Commission initially relied on the fact that both companies had
"direct" export sales; and that for both companies these "direct" export sales" were "structural"
and "permanent".12 The Commission subsequently treats the initial criterion as irrelevant and
decides that what matters is the quantity of these sales. This shift in reasoning is not explained.

2.55. In any event, the Commission has failed to provide any further context or description of the
circumstances of these sales and what light these sales, or their respective quantities, might shed
on question why amounts of money shifted between Ecogreen and EOS should not be considered
an expense; and the amounts shifted between PT Musim Mas and ICOFS should be considered an
expense.

2.56. With respect to the written S&P Agreement , the Commission fails to explain why the
existence of such a written master transfer pricing agreement between PT Musim Mas and ICOFS
should place PT Musim Mas in such a different positio n from Ecogreen. It stands to reason that,
even in the absence of a written master agreement, some form of agreement and agreed -upon
terms of sale – perhaps transaction -specific contracts or discernible from invoices – must have
existed between Ecogreen an d its trading department EOS. After all, the Commission found that
Ecogreen also paid "commissions" to EOS. However, the Commission has made no reference to,
nor has it analysed, any evidence submitted by Ecogreen on this point. Such evidence must,
nevertheless, be part of the record, given that it would have been part of Ecogreen's response to
its Questionnaire.

2.57. Moreover, Indonesia has presented evidence that demonstrates that some related
companies choose to conclude intercompany/transfer-pricing agreements in order to facilitate their
interaction with tax authorities, whereas other related companies choose not to do so. This type of
choice, however, cannot influence the analysis of an anti -dumping investigating authority as to
whether an adjustment between two related companies is warranted. In addition, unrelated
companies may choose to use or not to use written agreements similar to the S&P Agreement.
Contrary to the EU's assumption, how parties choose to memorialize their relationship is not as
important as the substance or nature of that relationship.

2.58. Furthermore, the Commission's reliance on individual clauses of the written agreement is
also misplaced. For instance, the Commission's reliance on the risk allocation between PT
Musim Mas and ICOFS suggests that Ecogreen and ICOFS did not allocate risk between themselves
or allocated that risk differently. However, the Commission has not pointed to any evidence
whatsoever to substantiate this implied assertion. However, relevant information must be
contained in the investigation record, in particular, in Ecogreen's Questionnaire Response.

2.59. With respect to other activities of the selling office, the Commission confirmed in the
Definitive Regulation that EOS traded products from companie s other than Ecogreen. Hence, the
only difference appears to be the extent of such third-party sales. As noted above, the Commission
has not explained why the extent of such sales should have any bearing on the determination
whether, with respect to the investigated sales, PT Musim Mas and ICOFS should be considered as
an SEE or closely related.

2.11 The Commission also acted inconsistently with Article 2.3

2.60. The EU also violated Article 2.3 of the Anti -Dumping Agreement, because the dumping
margins for several sales were calculated using the constructed export price methodology of
Article 2.3 and the third and fourth sentences of Article 2.4. Given this tight nexus between the
two provisions, and the overarching role of Article 2.3 for the construct ion of the export price, an
adjustment with respect to a constructed export price that violates Article 2.4 may also be said to
mean that the constructed export price under Article 2.3 was also calculated improperly.

3. INDONESIA'S CLAIMS U NDER ARTICLES 3.5 AND 3.1 OF THE A NTI-DUMPING
AGREEMENT
3.1. The EU's determination is inconsistent with Articles 3.5 and 3.1 of the Anti -Dumping
Agreement, because the EU Commission failed to conduct a proper non-attribution analysis for two

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"known factors". These two factors are (i) the "economic/financial crisis of 2008/2009", and (ii)
"the effects of the difficulties faced by the EU domestic industry with access to raw materials and
of the fluctuations in the prices of these raw materials".

3.2 The Commission faile d to conduct a proper non -attribution analysis of the factor
"financial crisis"

3.2. It is undisputed – and the EU accepts in these proceedings – that the financial crisis was a
"known factor" other than dumped imports, in that it caused injury to the EU industry at the same
time as the dumped imports. Nevertheless, the Commission's analysis of this factor is entirely
inadequate and flawed for the following reasons.

3.3. First, the Commission's finding of causation is premised on the unexplained assumpti on
that 2009 was the year in which the financial crisis started or the year in which its effects could
first be felt. This is explicit in the Commission's reference to the year 2008 as "the year before the
financial crisis" in paragraph 96 of its Definitiv e Regulation. The Commission thus relied on 2008
as a baseline period (counterfactual) during which the EU industry was unaffected by the financial
crisis and during which injury reflected the effects of dumped imports only.

3.4. However, the assumption that the Union industry in 2008 was unaffected by the financial
crisis, and that the financial crisis started only the following year, is contradicted by evidence in
the record as well as by commonly known facts of which judicial notice can be taken. At th e very
least, the Commission should have provided a reasoned and adequate explanation for its view that
the year 2008 could serve as evidence of a year in which dumped imports were the only injurious
factor. However, it failed to do so.

3.5. The EU relies on various unrelated statements in the Commission's Provisional Regulation. It
argues that the Commission did not find that the financial crisis began in 2009, but rather
acknowledged that the crisis began showing some effects already in 2008. This argume nt,
however, contradicts the explicit words of the Commission in paragraph 96 of the Definitive
Regulation – the same factor cannot begin both in 2008 and also in 2009. Moreover, the passages
from the Provisional Regulation to which the European Union refe rs paint a confusing picture.
Some suggest that the crisis started in 2008; others imply that the crisis started in 2009; in its
first written submission, the European Union seems to adopt an intermediary position, suggesting
that the crisis existed in som e fashion, but was not "clearly felt in 2008". All of these explanations
are ex post rationalisations that may not be taken into account by the Panel. Moreover, the EU
draws on the statements that, by their very nature, do not address the issue of causatio n/non-
attribution, but instead deal with a description of injury indicators. An investigating authority does
not satisfy the requirements of Articles 3.1 and 3.5 when its explanation is poorly structured,
incoherent, illogical, and requires interested parties to piece together various disjointed statements
scattered across the record.

3.6. Second, the Commission failed to "separate" and "distinguish" the injurious effects of the
factor financial crisis from those of dumped imports. It may be recalled that the non-attribution
analysis requires the investigating authority to examine the nature and the extent of the injurious
effects of other factors. 13 The Commission accepted that the crisis affected the Union industry
through the same channels as did the (all egedly) dumped imports, namely by reducing the
demand for the Union industry's product and lowering sales prices. In other words, the
Commission found that the nature of the effects of the financial crisis was the same as that of
dumped imports. Thus, without knowing the extent to which the financial crisis affected the Union
industry, the Commission was unable to distinguish between the injurious effects of dumped
imports and the financial crisis, respectively, and therefore could not make its causation an d non-
attribution finding in a manner consistent with Article 3.5.

3.7. Third, the Commission failed to address the parties' arguments and record evidence that
contradicted its conclusion. For example, the Commission failed to address Musim Mas' explanation
that, in late 2009 and early 2010, imports from the countries concerned increased, but, at the
same time, the profit of some EU companies as a whole and for the care chemicals segment in
particular improved considerably. This casts in serious doubt the Commission's narrative that
dumped imports, and their increased amounts, were responsible for the domestic industry's injury.

13 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.405.

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In light of this argument, an entirely plausible (if not compelling) interpretation of the record
evidence is that the injury to the domestic industry in 2008 was caused by the financial crisis,
rather than dumped imports. The applicable standard of review requires an investigating authority
to address alternative explanations of record evidence. Nevertheless, the Commission left th is
argument unaddressed.

3.8. Fourth, in its first written submission, the EU invoked the "correlation/coincidence" approach
approved by the Appellate Body in Argentina – Footwear (EC). However, both the panel and the
Appellate Body in that dispute – just as the case law ever since then – treated "correlation/
coincidence" and "non -attribution" as separate elements of the causation analysis. In any event,
the European Union's argument constitutes ex post rationalization, which should be rejected.

3.9. Finally, the Commission's conclusion with respect to the financial crisis, in paragraph 109 of
the Provisional Regulation, is that the economic crisis "does not break the causal link established in
relation to the low -priced dumped imports from the countrie s concerned". Indonesia submits that
this "breaking the causal link" analytical framework and language is inappropriate to satisfy the
non-attribution requirement. It is not methodologically possible to first establish a causal link for
dumped imports and only then enquire about the injurious effects of other factors, by determining
whether these factors "break" an already established causal link. This amounts to putting the cart
before the horse. An investigating authority cannot determine a causal link b etween injury and
dumped imports without looking at the effects of other injurious factors. Rather, an initial
determination of the effects of other injurious factors is the logical basis for a determination
whether the link between dumped imports and inju ry satisfies the standard for "causal link " of
Article 3.5; it is also the logical prerequisite for ensuring that the effect of other factors is not
improperly attributed to the dumped imports.

3.3 The Commission failed to conduct a proper non -attribution analysis of the factor
"raw materials"

3.10. The Commission failed to conduct any analysis for the factor "raw materials". At the very
outset of the investigation, interested parties provided argument and evidence that the domestic
industry experienced injury due to insufficient access to raw materials and fluctuations in raw
material prices. PT Musim Mas provided extensive explanations that the EU industry faces a
structural disadvantage vis -à-vis Indonesian exporters, because Indonesian exporters have their
own sources of raw materials. The EU domestic industry is, therefore, exposed to greater potential
price fluctuations for these raw materials. This risk of price fluctuations materialized in particular
during the financial crisis, starting in mid -2008; during this period, the price of the raw material
decreased by over 60 per cent just between July and December 2008. The significantly longer
lead-times for the EU industry, and the resulting greater exposure to price fluctuations, can leave
the EU industry severely limited in its ability to compete with foreign producers.

3.11. In support, PT Musim Mas relied on raw material pricing data, as well as on other documents
and record evidence submitted to the Commission. The accuracy of the price data was not
disputed, nor was the fact that the raw materials account for "a substantial part of the overall
production costs" in the fatty alcohols production process. It was similarly demonstrated,
undisputed and verified that some EU companies depend on the su pplies of raw materials by their
Indonesian competitors, and that the long duration of raw material shipments from
Indonesia/Malaysia to the EU exposes the industry to price fluctuations.

3.12. The Commission rejected PT Musim Mas' extensive explanation and evidence on the grounds
that it was allegedly unsubstantiated. This was the entirety of the Commission's explanation for its
decision in paragraph 98 of the Definitive Regulation. This one -sentence finding is entirely
inadequate and is inconsistent wit h the requirements of Articles 3.5 and 3.1. The extent of PT
Musim Mas' arguments and evidence required the Commission to investigate whether the alleged
factor was indeed an injurious factor for which a non -attribution analysis should have been
performed.

3.13. To the extent that, notwithstanding the amount of argument and evidence placed before it,
the Commission considered that it required further evidence, it was incumbent on it to gather such
evidence. As an investigating authority, in these circumstances, the Commission was not permitted
to remain passive, but rather had an active duty to investigate.

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3.14. Indonesia also emphasizes that the violation of Article 3.5 does not reside in the
Commission's failure to find that this factor was causing inj ury at the same time as dumped
imports. Rather, the violation of Article 3.5 arises from the Commission's refusal to engage in any
analysis at all.

3.15. The EU's defense in these proceedings is that the factor "raw materials " is part of the
"conditions of competition", and was subsumed in the factor "economic crisis". This is in manifest
contradiction to the Commission's determination. Both interested parties and the Commission
treated the factor "economic crisis" as a separate factor, acknowledged its i njurious effects and
analysed (albeit inadequately) it. In contrast, the factor "raw materials" is treated in subsequent
paragraphs of the determination; and the Commission stated explicitly that, with respect to this
particular factor, the interested part ies had failed to "substantiate" their assertions. Hence, the
EU's defense is not only an ex post rationalisation, but is in direct contradiction to the content and
structure of the Commission's determinations.

4. THE EU VIOLATED ARTI CLE 6.7 BECAUSE IT F AILED TO REVEAL TO TH E
INTERESTED PARTIES THE RESULTS OF THE VERIFICATION VISIT
4.1. Indonesia's final claim is that the EU violated Article 6.7, because it failed to disclose the
results of the verification visit, as required by this provision.

4.2. Article 6.7 requires the investigating authority to disclose the results of the verification
either in a separate report or as part of its disclosure of the essential facts under Article 6.9 of the
Anti-Dumping Agreement. In this case, however, contrary to Art icle 6.7, the EU did not disclose
any meaningful information about the results of the verification visits to the premises of the
Indonesian exporters and their affiliates.

4.3. It is undisputed that the Commissio0n did not issue a separate disclosure docu ment.
Instead, in the Provisional and Definitive Disclosures issued pursuant to Article 6.9, the
Commission in essence only stated that verification had taken place and that unspecified
information had been verified, unspecified errors had been corrected a nd additional unspecified
information had been collected.

4.4. This is insufficient to comply with the requirements of Article 6.7. Article 6.7 requires the
investigating authority to disclose the "results" of the verification visits, by means of one or o ther
of two different avenues: the investigating authority may either (i) "make available" a separate
report containing the results of the verification visits, or (ii) "provide disclosure" of the results as
part of the disclosure of the essential facts und er Article 6.9. Regardless of which avenue is
chosen, the investigating authority must disclose the same thing – the "results" of the verification
visit.

4.5. The "result" referred to in Article 6.7 is the "effect" or "outcome" of the verification visit. As
with the "result" of any activity, the "result" of a verification visit is closely linked to the conduct,
content and purpose of that verification visit. Indeed, the Appellate Body in US – Steel Safeguards
stated that the term "result" is to be read as "an effect, issue, or outcome from some action,
process or design". 14 Annex I(7) of the Anti -Dumping Agreement defines the purpose of a
verification visit as to "verify the information provided or to obtain further details". The purpose,
conduct, and conten t of a verification visit is thus to verify the information provided by the
investigated firms in their questionnaire responses and to enable the investigating authority to
obtain, and the investigated exporter to provide, additional information or explana tions regarding
the exporter's submitted questionnaire responses.

4.6. In the normal course of events, during a verification visit, an investigating authority will
request the investigated company to provide access to its accounting system and other recor ds,
including all of the worksheets and source documents used to prepare the questionnaire
responses. During the verification visits, the investigating authority normally reviews these
documents and cross-checks them against the data provided in the questi onnaire responses. The
investigating authority also uses the opportunity to clarify any areas of doubt regarding the
contents of the questionnaire responses. As part of this process, the investigating authority may,

14 Appellate Body Report, US – Steel Safeguards, para. 315. (original emphasis).

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for instance, request access to an entire category of documents or data or focus on certain specific
documents.

4.7. Normally, therefore, a verification visit involves a quasi -audit of all information relevant to
the company's operations with respect to the investigated product as explained in its questionnaire
responses. There may be several "results" of the verification, for instance, the investigating
authority will have collected additional documents , worksheets, copies of invoices, financial
statements, etc. A proper listing/description of these documents and their contents, therefore,
forms part of the "results" of the verification. The investigating authority may also have satisfied
itself as to the accuracy of certain facts and figures contained in the exporter's questionnaire
responses. The questions posed and answers received by which the investigating authority
satisfied itself of this accuracy forms part, therefore, of the results of the verification. The
investigating authority may have received corrections or additional explanations regarding matters
in the exporter's questionnaire responses. These corrections or explanations are part of the
"results" of the investigation. Next, the investigating authority may discover errors in the
questionnaire responses. The ability or inability to correct these errors is also part of the "results"
of the investigation. The "results" also include any reasons why a particular piece of information
was not verified , including, for instance, because the exporter refused to provide the required
information and did not provide access to the relevant documents.

4.8. This is precisely the conclusion reached by the panel in Korea – Certain Paper, which stated
that "results" of verifications include "adequate information regarding all aspects of the
verification, including a description of the information which was not verified as well as of
information which was verified successfully".15

4.9. It is also important to keep in mind the due process -purpose of the disclosure requirement
under Article 6.7. As noted by the panel in Korea – Certain Paper:

The purpose of the disclosure requirement under Article 6.7 is to make sure that
exporters, and to a certain extent other interested parties, are informed of the
verification results and can therefore structure th eir cases for the rest of the
investigation in light of those results.16

4.10. In other words, the purpose of Article 6.7 is, inter alia, to enable exporters to safeguard
their rights in an anti -dumping investigation and "structure their cases for the rest of the
investigation in light of those results". 17 For this purpose, exporters must know what information
was not verified – so that they can make further efforts to put the investigating authority in a
position to ultimately verify that information – as w ell as what information was verified, since
verified information must in principle be used by the investigating authority and the exporter thus
need not any longer devote its scarce resources to convincing the authority about the reliability of
that information.

4.11. Throughout these proceedings, the EU has sought to blur or even eliminate the difference
between the disclosure of the results of the verification, pursuant to Article 6.7, and the disclosure
of essential facts , pursuant to Article 6.9 of the Anti-Dumping Agreement. In its First Written
Submission, the EU argues that the term "results" refers to the "essential factual outcome of the
verification" or the "essential facts under consideration as established through the on -the-spot
investigation".18

4.12. This is of course incorrect. Even if the investigating authority has the option of disclosing the
"results" of the verification at the same time as disclosing the essential facts, the subject of these
two sets of disclosures is different: "Results" of the verification visit, on the one hand, and
"essential facts", on the other hand. The difference between these two terms is obvious not only as
a matter of treaty interpretation – since the drafters used two different terms, they must have
meant two different things. It is also obvious from the structure and the unfolding of an

15 Panel Report, Korea – Certain Paper, para. 7.192. (emphasis added).
16 Panel Report, Korea – Certain Paper, para. 7.192. (emphasis added).
17 Panel Report, Korea – Certain Paper, para. 7.192.
18 EU's First Written Submission, paras. 185.

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anti-dumping investigation. More specifically, whereas the results of the verification become part
of the investigation record, the essential facts are merely a subset of the facts on the record.

4.13. The verification team normally cannot or does not take any final decisions on how the
verification will affect the investigating authority's determinations of dumping and injury in the
investigation until they have returned home and had the opportunity to consult with their superiors
and other colleagues on any issues arising during the verification. The verification is, therefore, in
essence a fact -gathering and a fact -checking exercise. The results of this exercise, therefore,
relate to what facts have been gathered and checked and, by implication, what facts have not
been gathered or checked. However, the results of the verification do not include any subsequent
determinations by the investigating authority as to how to use the results of the verification, and
other items in the record, to calculate dumping margins for the exporter in accordance with the
Anti-Dumping Agreement. The subsequent decision how to determine the dumping margins is the
result of the investigation – and disclosed inter alia in the disclosure under Article 6.9 – and not
the result of the verification that must be disclosed under Article 6.7.

4.14. The respective objects of the disclosure under Article 6.7 and 6.9 must also be clearly
distinguished because disclosure pursuant to Article 6.7 may occur at a point in time well before
the disclosure under Article 6.9. The investigating authorities of numerous WTO Members provide
a separate "verification report"; in the chronology of anti -dumping investigations, this report is
typically issued well before these authorities have decided on what constitutes essential facts.
Indonesia of course accepts that an investigating authority may choose to disclose the results of
the verification visit simultaneously with th e essential facts, as reflected in the text of Article 6.7.
However, that choice of the investigating authority may under no circumstances modify the type of
information to be disclosed or otherwise result in an impairment of the procedural rights and
position of the investigated parties. Otherwise, the term "results" would refer to different matters
depending on when the authority decided to satisfy its obligation under Article 6.7. This
interpretative outcome would be alien to basic principles of treaty i nterpretation and would subject
the due process rights of investigated companies to discretionary choices by the investigating
authority.19

4.15. Thus, the results of a verification visit are reflected in the investigating authority's choices as
to (i) whi ch information to look at; (ii) why it looks at that information and (iii) whether it is
satisfied during the verification that a given specific piece of information or document was
successfully verified. However, the results of the verification may also include information that was
provided and substantiated by the exporter but that the investigating authority did not
immediately consider relevant to its final determination.

4.16. Yet another consideration is that Article 6.7 is also intended to provide d omestic courts
(using their own standard of review) and WTO panels (using the standard of review pursuant to
Article 17.6(i)) with the ability to review the determinations of investigating authorities. This ability
depends on the existence of a proper disc losure of the "results" of the verification visit under
Article 6.7 of the Anti-Dumping Agreement.

4.17. WTO case law – such as Korea – Certain Paper and US – Steel Plate – demonstrates that
information contained in the disclosure of the verification resu lts (whether through a verification
report or with the disclosure of essential facts) – concerning the type of information verified; the
authority's decision whether the information was verifiable, verified or not; as well as any
attendant circumstances, such as behaviour of the investigated firm – plays an important role for a
panel's ability to examine whether the investigating authority complied with Article 17.6(i) of the
Anti-Dumping Agreement. A failure to disclose the results of the verification, or an incomplete
disclosure, will thus significantly undermine a panel's ability to examine, in a "critical and
searching" fashion, the establishment and evaluation of the facts by the investigating authority. 20
Similarly, only a proper reporting of the result s of the verification visit will enable the appropriate
judicial review within a WTO Member's domestic legal system, as required by Article 13.

4.18. Moreover, a failure by the investigating authority to describe accurately and in detail events
during th e verification visit is a failure to permit interested parties to see information that is
relevant to the presentation of their cases. This is contrary to Article 6.2 - which requires that all

19 Indonesia's Opening Statement at the First Panel Hearing, para. 98.
20 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.

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interested parties have a "full opportunity for the defence of their interests" — as well as
Article 6.4, which requires authorities, whenever practicable, to "provide timely opportunities for
all interested parties to see all information that is relevant to the presentation of their cases … that
is used by the authorities … and to prepare presentations on the basis of this information".

4.19. In this case, the EU argues that the Commission provided the results of the verification visits
as part of the disclosure of the findings of the investigation. However, these ef forts were, at best,
cursory and cannot be considered to have met the standard required under Article 6.7. For
instance, the Commission failed to set out

 which specific types of information, documents, or issues were addressed in the
verifications.
 which particular documents (e.g. sales invoices, rebate notes, etc.) were examined; and
 what questions were asked by the Commission officials or what answers were provided
by the exporters.
4.20. The extent of the Commission's failure to disclose the results of the verification is clearly
visible from a reading of the contemporaneous notes taken by PT Musim Mas' counsel during the
verifications at that exporter's premises in Singapore, Medan, and Hamburg. These notes contain
the kinds of basic information that are entirely absent from the Commission's purported disclosure
of the verification results, namely, who attended the verifications, what documents were reviewed,
what questions were asked, and what answers were given. There are several issues of critical
importance to the Commission's subsequent adjustment of PT Musim Mas' export price and to
Indonesia's related claim under Article 2.4 of the Anti -Dumping Agreement. As the counsel notes
demonstrate, the issues at hand were discussed during verification, bu t were not subsequently
disclosed by the Commission. These issues include the close corporate, management,
organizational and operational links between PT Musim Mas and ICOFS; transfer pricing policy; the
so-called "direct" export sales by PT Musim Mas; th e manner in which ICOFS and PT Musim Mas
co-operate on such export sales as well as for domestic sales; and the fact that ICOFS was
involved in negotiating, preparing and executing each and every sale of PT Musim Mas' products,
including domestic sales. The Commission's conclusion that ICOFS is not the sales department of
PT Musim Mas, but rather stands in a commission-agent relationship with PT Musim Mas is in direct
contradiction with this information.

5. CONCLUSION AND REQUEST FOR FINDINGS
5.1. For th e above reasons, Indonesia respectfully requests that the Panel find that the
European Union.

 Acted inconsistently with Articles 2.3 and 2.4 of the Anti -Dumping Agreement, by
making an improper deduction for the activities of PT Musim Mas' trading arm ICOFS and
disregarded the fact that the two entities are part of an SEE;
 Acted inconsistently with Articles 3.1 and 3.5 of the Anti -Dumping Agreement, by failing
to conduct a proper non -attribution analysis with respect to the factors
"financial/economic cri sis" and "issues related to the European Union's domestic
industry's access to raw materials"; and
 Acted inconsistently with Article 6.7 of the Anti -Dumping Agreement, by failing to
disclose to either of the investigated Indonesian exporters the results o f the verification
visit.
5.2. Indonesia thanks the Panel and the Secretariat team for its work so far. Indonesia looks
forward to assisting the Panel in the subsequent stages of this dispute.

- C-17 -

ANNEX C-2
SECOND INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDONESIA
1 INTRODUCTION AND OVERVIEW
1.1. The key issue regarding Indonesia's claim under Article 2.4 of the Anti -Dumping Agreement
is that adjustments may be made only for actual/genuine expenses incurred by the seller that
affect the price and therefore a ffect price comparability, within the meaning of Article 2.4. In this
case, the EU's adjustment for internal transfers between the two arms of the seller, PT Musim Mas
and ICOFS did not reflect an actual expense that was incurred by the seller. Therefore, the internal
transfer did not reduce the net price received by the seller for the goods. The EU has failed to
address this issue or to explain how this was any other than a purely notional adjustment, based
on what might have happened had the producer/exporter structured its business differently.
1.2. Regarding Indonesia's claim under Article 3.5 of the Anti -Dumping Agreement, the EU has
failed to show where the Commission provided a reasoned and adequate explanation of the factors
raised by Indonesia. Instead, the EU relies on ex post explanations, which in any event, frequently
contradict record evidence or are internally inconsistent. Finally, the EU 's arguments under
Article 6.7 of the Anti-Dumping Agreement cannot surmount the fact that the Commission simply
failed to provide the investigated companies with any meaningful "results" of the verification visit.
2 INDONESIA'S CLAIM UNDER ARTICLE 2.4 OF THE ANTI-DUMPING AGREEMENT
2.1 Indonesia's claim does not hinge on the label "single economic entity"
2.1. The EU contin ues to argue that Indonesia's claim stands and falls on whether the Panel's
decision adopts the terminology of a "single economic entity". Indonesia has explained at length
that its legal claim is that the EU has acted inconsistently with Article 2.4 of th e
Anti-Dumping Agreement by making an adjustment for an item that does not affect the price
received by the seller and therefore does not affect price comparability, resulting in an "unfair
comparison", within the meaning of Article 2.4.
2.2. In Indonesia's vie w – and in keeping with prior WTO case law and the EU's own domestic
legal terminology – a suitable terminology for the process of considering whether transactions
between related parties affect price comparability is to ask whether the two entities form a "single
economic entity". However, the term "single economic entity" is nothing but a phrase intended to
operationalize, in the context of related parties, the concept of "affect[ing] price comparability",
within the meaning of Article 2.4. Needless to say, other labels are perfectly possible, e.g. whether
two companies are sufficiently closely related or, to paraphrase the EU Commission, whether an
adjustment is "appropriate". This is the term the Commission used when examining transactions
between Ecogreen and EOS. The choice of the most appropriate label, as decided by the Panel,
does not affect either the substance of the analysis or Indonesia's claim that the "mark -up" at
issue is not an item that affects price comparability. If the companies at issue are sufficiently
closely related or intertwined as to operate as a single entity, transfers between them do not affect
the price they receive for the goods.
2.2 The EU's adjustment under Article 2.4 does not reflect an actual or genuine expense
incurred by the seller
2.3. The central question under Article 2.4 is whether the adjustment is required to ensure price
comparability. An adjustment is required for any item that affects price comparability; and,
conversely, an adjustment is prohibited for any item that doe s not affect price comparability.
Hence, the key issue is whether transactions between ICOFS and PT Musim Mas and the "mark-up"
discussed in these proceedings affects the price received by the seller and hence price
comparability. However, both the Commiss ion and now the EU have failed to explain how the
"mark-up" can be regarded as an actual or genuine expense incurred by the seller of the
investigated goods.

- C-18 -

2.4. Indonesia has explained in detail how a company's cost structure will be impacted by the
different ways in which it may organize its business activities. For instance, if a producer uses an
in-house sales department to conduct sales activities or an in -house transportation department to
provide transportation services to its customers (or if a single economic entity uses separate legal
entities within its structure for that purpose), the producer's expenses will be the financial outlay
required to operate these departments or legal entities. In contrast, if the producer uses
independent third party en tities (traders or a transportation company) to provide these services
for its customers, the producer's expenses will be the actual fees paid to these independent third
party service providers. The difference between in -house expenses and actual fees paid to
independent third parties cannot be blurred by pretending, for instance, that a producer that in
reality is using an in -house sales department is actually relying on an independent trader. The
difference between these two scenarios has significant impl ications for the nature of the expense
(cost vs. a commission) and the amount (one may be higher than the other, which is the very
reason why companies choose one option over the other).
2.5. Indonesia has provided multiple examples – along with numerical values in table format – to
illustrate this point. The EU has not addressed any of these arguments or examples directly. The
EU cannot make notional or fictitious adjustments as if PT Musim Mas were using (or were
continuing to use) an independent trader, if t he company in reality is relying on a sales
department with which it is tightly integrated and with which it jointly sells the investigated
product.
2.6. Moreover, there is not a shred of evidence in the record of the investigation to suggest that
the "mark-up" represents the amount of an actual commission paid by the seller on these sales.
Even the Commission did not consider that the "mark -up" was an actual commission. Instead, it
decided that the actual "mark -up" was not reliable "in order to avoid any disto rting effects that
may arise from the transfer prices". 1 Consequently, instead of relying on the transfer prices, the
Commission used "a reasonable profit margin" based on "a reasonable profit for the activities
carried out by trading companies in the chem ical sector". Thus, even in the Commission's view,
the amount of the "mark -up" appears to be irrelevant: the Commission would, it seems, use a
reasonable profit margin of other companies regardless of whether the "mark -up" was zero, the
percentage amount s et out in the S&P Agreement or some other (higher) amount . This makes
clear that the Commission did not consider that the "mark -up" was an actual commission or
expense, but merely the justification for making a notional adjustment.
2.7. It is clear also that ev en the Commission does not consider that either the actual "mark -up"
between PT Musim Mas and ICOFS or the "reasonable profit" it used instead represents the actual
selling, general and administrative expenses (SG&A) incurred by either ICOFS or PT Musim Mas for
these sales. As Indonesia has explained, the Commission also deducted ICOFS' SG&A, suggesting
that this adjustment was intended to represent profit (which is, indeed, the term used by the
Commission – "a reasonable profit margin", "actual profit marg ins" etc). The EU now argues that
this case concerns a direct selling expense in the form of a commission that is related to export
sales only. There is, however, no suggestion in the Commission's determinations that the
"mark-up" was an actual selling exp ense actually incurred by the seller – ICOFS and
PT Musim Mas – in this case. Instead, it is clear that the Commission decided that the "mark -up"
was not reliable but that it was nevertheless entitled to make a "notional" adjustment as if ICOFS
and PT Musim Mas had used a different structure and process.
2.8. Moreover, the audited financial statements of PT Musim Mas and ICOFS provide no evidence
whatsoever that the "mark -up" was an actual expense incurred by the seller – ICOFS and
PT Musim Mas – in making the investigated sales. If PT Musim Mas had used an independent
trader – or an agent working on a commission basis – a corresponding entry would exist in its
financial records. However, there is no such entry. Instead, the "mark -up" is simply an allocation
of revenue between the two arms of the producer/exporter, and the actual selling expenses are
clearly recorded as SG&A expenses in the financial statements of the two companies.
2.9. Throughout this dispute, the EU has failed to establish that a commission was act ually paid in
this case. While the EU chooses to use the terms "commission" and "mark -up" interchangeably,
and the EU's regulation defines "commission" to include a "mark -up", the EU has failed to show
how a commission was actually paid in this case. Moreo ver, the EU has failed to explain the legal

- C-19 -

or economic justification for treating a "mark -up" as the same as an actual commission and
imputing a notional expense to the seller in these circumstances. It has not explained how a
transfer between two entities that form part of the investigated producer/exporter affects the price
received by the producer/exporter for the investigated goods. It has not explained on what
grounds it is permissible to ignore the actual sales structure and process, as well as the a udited
financial statements, of the producer/exporter in order to impute a notional expense in this case.
The EU has not explained how the "mark-up" can be a cost to the "seller", when it is the party that
actually sells the goods – ICOFS – that receives the "mark-up".
2.10. The EU has argued that Indonesia's argument is, in effect, that once two parties are related,
there can be no adjustments for transactions between them. This is incorrect. Indonesia has made
clear that there may be situations in which parties are related in the sense that there is some
common stockholding but, overall, the relationship does not satisfy the Korea – Certain Paper
criteria. In that case, it may be appropriate to treat the two parties as independent. In that case,
however, several factors would be different than the present case: (i) it is unlikely that the
investigating authority would reject the price charged by the producer to its not -closely-related
affiliate as unreliable; (ii) if the not -closely-related affiliate was acting a s an agent on commission
basis, it would not take title to the goods and be treated as the "seller"; and (iii) any commission
paid in those circumstances would likely be recorded as such in the audited financial statements of
the seller.
2.11. Again, there is n o evidence that this is an actual commission paid or actual expense
incurred by the producer/exporter, even if the Commission considers that it has the right to
proceed as if it is. The standard of review under Article 17.6(i) of the Anti -Dumping Agreement
requires a panel to determine whether an investigating authority's "establishment of the facts was
proper and whether their evaluation of those facts was unbiased and objective". In this
investigation, the Commission ignored the actual facts regarding the expenses actually incurred by
the producer/exporter and instead adjusted for a hypothetical, imputed commission that is based
solely on the Commission's view of what expenses would have been incurred if the
producer/exporter used a different sales process and determined that it is entitled to make an
adjustment on that basis . In the absence of any evidence in the financial statements of either
PT Musim Mas or ICOFS that the intra-company transfer of funds represented an actual expense to
the producer/exporter as a whole, there is no basis for the Panel to find that the Commission's
"establishment of the facts was proper".
2.12. Even assuming that the mark -up could be considered as a cost to PT Musim Mas, it is
revenue to ICOFS. As explained in greater length in the next section, it is fundamental to note
that the Commission treated both PT Musim Mas and ICOFS – taken together – as the seller. The
export price on the basis of which an ex works price was calculated was the price charged by
ICOFS to European custom ers, not the price at which PT Musim Mas sold to ICOFS. This means
that both PT Musim Mas and ICOFS together were the seller. To the producer/exporter as a whole,
therefore, the "mark-up" does not represent a cost: the cost to one entity and the revenue to the
other cancel each other out. The EU has never addressed this point, nor provided any legal basis
for a deduction for an amount which, under its own logic, is revenue to the very seller (ICOFS) on
whose price it is basing its determination of export price.
2.3 The EU's determinations concerning the relationship between PT Musim Mas and
ICOFS are contradictory
2.13. The starting point for the EU's determination of the export price was the price charged by
ICOFS to the first unrelated customer in the EU. This mean s, in effect, that the Commission
treated ICOFS as the seller of the investigated goods and PT Musim Mas/ICOFS together as the
producer/exporter for whom a single dumping margin must be and was calculated in accordance
with Article 6.10 of the Anti-Dumping Agreement.
2.14. The EU contends that there is no contradiction between the treatment of PT Musim Mas and
ICOFS as a single entity for the purpose of identifying the starting price and as, in effect, separate
entities for the purpose of adjustments. The EU arg ues that the use of ICOFS' price to the first
unrelated customer in the EU merely flows from the reference in Article 2.1 to the price at which
the investigated goods are "introduced into the commerce" of the investigating Member.

- C-20 -

2.15. The EU omits, however, t hat the Commission's reliance on ICOFS' price to the first
unrelated customer pre-supposes a finding by the Commission regarding the relationship between
PT Musim Mas and ICOFS and the reliability of the transfer price between the two. Put another
way, at the outset of the investigation, the Commission made a crucial choice to treat
PT Musim Mas and ICOFS as a single entity. This choice entails logical consequences that the EU
now seeks to avoid.
In a number of cases the foreign producer will not sell dire ctly to the Community. A
trading house, for instance, may act as an intermediary between the foreign
producer and the Community importer. … If the intermediate company is
independent from the producer, provided that the producer knows when selling to
the i ntermediate company, that the final destination of the goods is the EC, the
export price is normally the price charged by the foreign producer to the
intermediate company for further resale to the Community … In principle, related
sales subsidiaries located in the country of the producer will be treated as an export
sales department of the producer and the export price will be determined on the
basis of the prices charged by the related company to the first independent
customer in the Community … The same approach may also be taken with respect
to related sales subsidiaries located in a country other than the producer. In Welded
Tubes, the Commission acknowledged that the prices charged by a company
located in a country other than that of the producer and pe rforming the tasks of an
export department (e.g., conclusion of export contracts, invoicing and collection of
payments) had to be taken into account for the dumping calculation.2
2.16. The EU's decision to use the price charged by ICOFS to the first unrelated cu stomer in the
EU is, therefore, not simply a matter of applying the definitional provisions of Article 2.1 of the
Anti-Dumping Agreement. It also involves a decision by the investigating authority regarding the
relationship between PT Musim Mas and ICOFS that has important consequences for the rest of the
Commission's analysis. If ICOFS were an independent "trading house", the Commission would
have used the price charged by PT Musim Mas to ICOFS "for further resale to the [Union]" as the
basis for the expor t price. Instead, the Commission drew the normal distinction "between
intermediate companies that are independent from the producer and those that are related to the
producer". The Commission treated the "related sales subsidiary" ICOFS as "an export sales
department of the producer" that was "performing the tasks of an export department" and used
ICOFS' price to the first unrelated customer as the starting point to determine the export price.
Again, put another way, the Commission treated PT Musim Mas and ICOFS as a single entity.
2.17. In the words of the description quoted above, ICOFS was treated as the export sales
department of the producer and the export price was determined on the basis of the prices
charged by the related company to the first independent customer in the EU. As a result,
PT Musim Mas and ICOFS were treated as a single "producer/exporter" or "seller" for the purposes
of determining dumping margins. Again, contrary to the EU's arguments, this necessarily involved
a determination by the Commission regarding the relationship between them.
2.18. To illustrate how all this works in practice, an investigating authority may be faced with
three distinct sales structure and processes that are relevant to this determination. In a
Scenario 1, the exporter sel ls to an independent trader, who then re -sells to the investigating
Member. In this case, the investigating authority will ask the producer to report all sales to the
independent trader for which the producer knows in advance that the destination is the
investigating Member. Clearly, the Commission found that this is not the structure or process used
by PT Musim Mas and ICOFS.
2.19. In a Scenario 2, the producer sells directly to customers in the importing Member, but pays
a commission to an independent trader fo r arranging the sales. Here, the producer (but not the
independent trader) would be the seller of the goods and would report its sales directly to the
customers in the importing Member. The starting price for determining the net export price would
be the price charged by the producer. The commission paid to the independent trader would be a
direct selling expense. Again, the Commission clearly found that this is not the structure or process
used by PT Musim Mas and ICOFS, as the starting price used was the price charged by ICOFS.

2 Anti-Dumping and Other Trade Protection Laws of the EC, Van Bael & Bellis, pp. 87-89 (italics added).
Exhibit IDN-69.

- C-21 -

2.20. Finally, in a Scenario 3, the producer sells to a related trader who then sells to the
importing Member. In this case, the investigating authority must determine whether the
relationship between the producer and the related trader i s such that the prices between them are
unreliable. Once it makes this determination, it will ask them to report the sales by the related
trader to the customer in the importing Member rather than the sales from the producer to the
related trader as the st arting point for the determination of the export price. Clearly, the
Commission found that this is the sales structure and process that exists with respect to
PT Musim Mas and ICOFS in this case. In effect, the related trader acts "as the export sales
department of the producer", and the two entities are, for all relevant purposes, a single economic
entity.
2.21. Contrary to the EU's assertion, therefore, there is a clear contradiction between the
Commission's determination to treat PT Musim Mas and ICOFS as a single entity for the purpose of
identifying the starting price for the calculation of dumping margins and for the purpose of
determining a single margin of dumping within the meaning of Article 6.10, on the one hand, and
deciding to treat them as if they o perated independently for the purpose of determining
adjustments to the export price, on the other. The Commission cannot, on the one hand,
determine that PT Musim Mas and ICOFS are, together, the producer/exporter or seller of the
goods and then, on the o ther hand, determine that their relationship is one of seller and
independent trading company. At a minimum, the Commission has failed to provide a reasoned
and adequate explanation of how this contradiction can be reconciled.
2.22. The EU has failed to address the implications of its finding – for this purpose at least – that
PT Musim Mas and ICOFS are a single entity. The EU has not explained how money transfers
between two pockets of a single producer/exporter – which PT Musim Mas and ICOFS undoubtedly
are for the purposes of this case – affect the ex works price received by the producer/exporter for
its export sales of the investigated producer.
2.23. Put another way, the "mark -up" represents part of the price that the seller, ICOFS and
PT Musim Mas, receives for the sale. Their decision, as closely intertwined parties, on how to
allocate that revenue between them, does not in any way affect the price received for the sale.
The price received by the seller – ICOFS and PT Musim Mas taken together – would not change
whether the amount of the "mark -up" were in a different amount or zero. To put this in practical
terms, assume the price charged by PT Musim Mas/ICOFS to the first unrelated customer was
increased by 20 %. PT Musim Mas /ICOFS could decide – for tax or other internal reasons – that
the additional 20% revenue would be split 50 -50 between them. They could decide that all of the
additional revenue could go to ICOFS. Or they could decide that it would all go PT Musim Mas. In
all of these three scenarios, the actu al price received by the seller remains the same, and the
expenses actually incurred by the seller remain the same. Similarly, the amount of the expenses
actually incurred by ICOFS and PT Musim Mas does not change regardless of whether the "mark -
up" is a different amount or zero. Thus, the "mark -up" does not affect the price and, hence, price
comparability.
2.24. However, under the Commission's approach, however, the choice between the 50 -50 and
the other options would have a decisive impact on the ex works price and on the dumping
margins. This lacks logic under any scenario.
2.4 The EU has made deductions for items that are normally not deducted from the ex
works price and that the EU did not deduct for the ex works price on the normal value
side
2.25. First, the EU has not addressed that the ex works price normally includes SG&A expenses
incurred by the seller in each of the domestic and export markets. The sole exception in this case
is the deduction the Commission made for the SG&A incurred by ICOFS and deducted from t he
export price as part of the contested adjustment. Where the Commission seeks to establish the net
price at an ex works level that normally includes the indirect selling expenses/SG&A incurred by
the seller, and it includes indirect selling expenses/SG&A in the normal value, there is no legal
basis to deduct any indirect selling expenses/SG&A of the seller from the export price. The same
applies to any revenue that could be considered as part of the profit of the seller.

- C-22 -

2.26. Secondly, the EU has not provided any justification for the deduction of any amount that is
the "profit" of the seller (or that serves as a proxy for that "profit"). The determination of price
discrimination involves a comparison of two prices (normal value and export price) in order to
identify whether the seller is obtaining a lower return on sales in the export market than on sales
in the domestic market. Deducting profit from the export price necessarily reduces the return
achieved by the seller on the export sales and distorts the com parison unfairly. To the extent that
the Commission purports to have deducted profits made by the seller, ICOFS, the EU has provided
no justification for this deduction. Moreover, unless the Commission can establish that the entire
amount it deducted represented an actual expense of the seller, Indonesia sees no legal basis for
the adjustment.
2.5 The differential treatment of PT Musim Mas and Ecogreen
2.27. The EU continues to mischaracterize Indonesia's arguments concerning the differential
treatment of PT Musim Mas and Ecogreen. Indonesia does not argue that the differential treatment
per se amounts to discrimination. Rather, Indonesia argues that the Commission's reasoning
explaining its differential treatment of the two companies is part and parcel of the Commis sion's
explanation for why it made the adjustment for PT Musim Mas and must be measured against the
benchmark of a "reasoned and adequate explanation".
2.28. Indonesia has previously explained that the three key criteria relied on by the Commission
to different iate between the PT Musim Mas/ICOFS and Ecogreen/EOS, respectively, are not
meaningful and provide no insight into whether the allocation of income between the producer and
the trading arm affected price comparability. The EU has failed to respond or explain why the three
sets of criteria – "direct" export sales; the existence of a written as opposed to a verbal
agreement; and third party sales – are relevant for determining whether a monetary transfer
between two related parties affects price comparability . In Indonesia's view, none of these criteria
has any relationship with the question at hand.
2.29. The Commission 's determination is also undermined by the fact that it examined the
existence of corporate and management links in the case of Ecogreen /EOS, but not in the case of
PT Musim Mas /ICOFS. The silence of the Commission on this point for PT Musim Mas cannot be
read – as the EU argues – that the Commission acknowledged that both companies were closely
related to their sales entity, but that this criterion was not of any further relevance. A panel cannot
take the defending Member at its word, but rather must find direct evidence in the record and in
the investigating authority's reasoning that a particular analysis was undertaken. Any ambiguity in
this regard must be interpreted to the detriment of the investigating authority, which is required to
provide a reasoned and adequate explanation.
2.30. The absence of any reference or explanation in this case is compounded by the fact that the
Amending Regulation does not make clear what weight the Commission attached to the "common
ownership/control" criterion, relative to the other criteria, in its analysis of Ecogreen /EOS. Thus,
even if the remaining criteria were meaningful and relevant , the Commission's reasoning woul d
still be deficient, because it remains entirely unclear how the Commission weighted, in relative
terms, the differences between the two producer/exporters versus the common, shared feature of
"common ownership/control".
2.31. The EU erroneously claims that it did not change its criteria in response to the Interpipe
judgment and that "[t]he only change that occurred was to examine the factual situation of the
interested parties in the light of the factual situation" in the Interpipe case.3
2.32. This appears to be nothing but semantics and merely another way of saying that indeed the
criteria did change . The criteria changed from those used in the Definitive Regulation to those
reflected in the Interpipe judgment and applied in the Amending Regulation. The Interpipe
judgment contained not merely a set of facts, but the Court's view as to how EU law should be
applied to those facts. In the Amending Regulation, the Commission purported to apply the
interpretation by the Interpipe court to the facts of the fatty alcohols investigation (and made
other changes below).

3 EU's response to Panel question No. 43, para. 17.

- C-23 -

2.33. In any event, it is simple logic that the criteria changed. In the Definitive Regulation,
Ecogreen and PT Musim Mas were treated identically . In the Amending Regulation, they were
treated differently. The facts had not changed. The EU's criteria must, therefore, have changed. It
is not clear why the EU feels compelled to suggest otherwise.
2.34. Although an investigating authority enjoys a certain degree of discret ion, which may also
entail a change in the analytical framework applied during the investigation , it must comply with
certain key principles.
2.35. First, the authority must provide a reasoned and adequate explanation for its determination.
Second, where the authority previously reach ed a certain conclusion on the basis of a given set of
facts; and then subsequently reaches the exactly opposite conclusion, without any change in the
underlying facts; the investigating authority must address this point in its explanation. In other
words, whether the second (amended) explanation is sufficient is determined, in no small
measure, on whether the authority has adequately explained why the authority chose to alter its
assessment criteria after the initial determination; how the new assessment criteria differ from the
old as sessment criteria; why the new assessment criteria are preferable to the old assessment
criteria; and how the amended conclusion is justified in the light of the new assessment criteria.
2.36. The Commission also failed to explain in the Amended Regulation how it viewed and
weighed its previous determination that the two producers/exporters were identically situated. The
investigating authority must also explain how it weighed the previously found similarities between
the producers/exporters, and its conclusion t hat the two producers/exporters were identically
situated and warranted identical treatment, against the new assessment criteria that point towards
differences between the producers/exporters.
2.37. The EU appears to consider that the Commission was entitled to radically change the
assessment criteria, and reach a diametrically opposite conclusion, simply because the European
Court decided that the new criteria were appropriate. However, the EU is not entitled to deference
simply because the Commission acted in the light of a decision of an EU court.
3 INDONESIA'S CLAIMS U NDER ARTICLES 3.5 AN D 3.1 OF THE ANTI -DUMPING
AGREEMENT
3.1. The EU has failed to rebut Indonesia's claims that the Commission's non -attribution analysis
of the factors "financial crisis" and "raw ma terials" is inconsistent with Articles 3.5 and 3.1 of the
Anti-Dumping Agreement.
3.2. As a general defence, the EU alleges that Indonesia seeks to heighten the standard under
Article 3.5, by imposing an obligation on investigating authorities to conduct a qua ntitative rather
than a qualitative analysis of the effects of other factors . However, Indonesia's arguments merely
reflect the well -established legal principle that investigating authorities must provide a reasoned,
adequate, and meaningful explanation for their injury and causation determination. Moreover, with
respect to the "raw materials" factor, it is useful to recall that the Commission did not provide any
analysis at all . It simply brushed aside PT Musim Mas ' extensive arguments and evidentiary
references as "unsubstantiated", without any explanation whatsoever.
3.3. Indonesia is not arguing that the Commission erred because it did not agree with
PT Musim Mas that poor raw material access for the EU domestic industry was a main cause (or
simply a cause) of the injury experienced by the domestic industry. W hatever the ultimate result
the Commission may have reached, at the very least, PT Musim Mas ' arguments and evidence
required some degree of analysis.
3.4. The EU's arguments draw on random, unconnected state ments and figures in sections of the
determinations that the Commission never intended to be part of its non -attribution analysis.
Indonesia is not arguing that the Panel cannot, as a matter of principle, look beyond the "non-
attribution" heading in analysing the Commission's findings. In Indonesia's view, however, the fact
that a particular statement is under a different heading is a good indication that the investigating
authority did not intend this statement to be part of its causation analysis.

- C-24 -

3.5. Measured against the well -established standard of review applicable in disputes involving
anti-dumping matters, all of the EU's ex post arguments must be rejected.
3.1 The Commission failed to conduct a proper non -attribution analysis of the factor
"financial crisis"
3.6. With respect to the "financial crisis" factor, the EU failed to explain why the Commission
refused to address the exporter's argument concerning the EU industry's profits in late 2009 and
early 2010. During that time period, imports from the countries co ncerned increased, but at the
same time the profit of some EU companies as a whole and for the care chemicals segment
improved considerably.
3.7. Furthermore, the Commission refused to address the issue of captive demand , raised by
PT Musim Mas in Exhibit IDN-35 in support of its argument that the injury to the EU industry was
caused by the factor "financial crisis", rather than by dumped impo rts. In a nutshell, the logic of
this argument was that the financial crisis led to reduced captive demand for fatty alcohols (FOH)-
downstream products, such as ethoxylate or surfactants. This , in turn, resulted in lower demand
for FOH itself, especially for premium branded products produced by EU companies. Before the EU
FOH-producers adjusted to this situation, their cont inued production at previous levels created an
oversupply of FOH , which led to a decrease in the price of FOH in the EU market . Subsequently,
there was lower capacity utilization by the EU companies. Both of these phenomena – price
decreases and/or lower c apacity utilisation – were relied upon by the Commission in its finding of
injury, but improperly attributed to imports.
3.8. In Indonesia's view , at the very least, the EU Commission had a duty to investigate and
analyse the EU industry's profits in late 2009 and early 2010, and the issue of captive demand. By
ignoring entirely PT Musim Mas 's arguments and evidence with respect to these issues, the EU
Commission acted inconsistently with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.
3.2 The Commission failed to conduct a proper non -attribution analysis of the factor
"raw materials"
3.9. With respect to the factor "raw materials", the EU alleges that Indonesia's entire case r ests
on a few paragraphs in PT Musim Mas 's comments on the Complaint, and that, i n all of t he
subsequent comments and communications, PT Musim Mas failed to repeat its arguments with
respect to this factor.
3.10. However, PT Musim Mas ' arguments and evidence constitute an extensive narrative
contained in PT Musim Mas' Comments on the Complaint, which Indonesia quoted and described in
its first written submission and its responses to Panel questions 20 and 24. Furthermore, as the EU
acknowledges, after setting out its detailed arguments in its initial submission, PT Musim Mas
referred consistently to t he "raw materials" factor as an independent "known factor" throughout
the remainder of the investigation, in particular in its Comments on the provisional determination.
3.11. The EU is also incorrect to suggest that, faced with the Commission 's silence in the
provisional determination, PT Musim Mas was somehow obliged subsequently to repeat in extenso
these arguments and e vidence in its comments on the provisional d etermination, and that the
company's failure to do so somehow limits the Panel' s analysis in this case. This argument is
untenable. On the contrary, it is established case law that the right of an exporting WTO Member
in a WTO dispute — Indonesia in this case — to raise particular arguments concerning a trade
remedy determination does not depend on whether an investigated company raised that argument
during the investigation. This applies, a fortiori, in a case where the argument was made by the
investigated company and merely was not repeated in subsequent stages of the investigation.
Finally, the EU 's argument has far -reaching systemic implications. It means essentially that, in
order to maintain their rights in a subsequent challenge to a dumping determination, investigated
companies would have to repeat all of their arguments throughout all of thei r submissions during
the entire investigation — simply because the investigating authority chooses not to address them
in a provisional determination. This makes no sense, and, moreover, would impose a high burden
on commercial operators, affecting in particular exporters from developing countries.

- C-25 -

3.12. The EU's primary defence is that the factor "raw materials" is nothing but a part of the
factor "financial crisis", or t hat access to "raw materials" is relevant to the conditions of
competition between Indonesian and EU producers and, therefore, was analysed under a different
rubric. This is incorrect. PT Musim Mas listed the factor "raw materials" among "various other
factors" that injured the EU industry, separately from the factor "financial crisis" , and the
Commission itself treated it as an independent non-attribution factor in its final determination. The
fact that "raw materials" may indeed be an element within the competitive relationship between
the domestic and foreign producers does not preclude this fa ctor from being a non -attribution
factor in its own right within the meaning of Article 3.5. Indeed, several factors listed in Article 3.5
can be characterized as aspects of the conditions of competition.
3.13. The EU made a number of additional ex post arguments, all of which lack merit. For
instance, in its response to Panel q uestion 22, the EU alleged that EU FOH producers could easily
switch from one raw -material source to another, depending on their market price, as prices for
different raw materials do not develop in parallel. In its response to Panel question 45, the EU tried
to develop this argument by relying on a very general statement in the EU domestic industry's
Complaint that the EU producers have plants that use as inputs both synthetic and natural raw
materials. Importantly, however, this statement lacks any evidentiary support, and does not
explain whether a particular plant may use one or more types of raw materials. Indeed, it is clear
from a letter from one of the complainants (submitted as an exhibit in this dispute) that some EU
companies produce FOH based on natural oils, whereas others produce FOH products based on
synthetic inputs. These raw materials are not substitutable and producers relying on one of these
inputs cannot easily shift to the other raw material.
4 THE EU HAS FAILED TO REBUT INDONESIA'S CLAIMS UNDER ARTICLE 6.7
4.1. Indonesia claims that the EU acted inconsistently with Article 6.7 of the Anti -Dumping
Agreement, because it failed to make the results of the verification visit availa ble or to disclose
them pursuant to Article 6.9, as required by Article 6.7.
4.2. Article 6.7 requires the investigating authority to disclose the results of the verification either
in a separate report or as part of its disclosure of the essential fact s under Article 6.9 of the
Anti-Dumping Agreement. In this case, the EU did not provide any meaningful disclosure of the
results of the verification visits to the Indonesian exporters and their affiliates , either in the form
of a stand -alone disclosure document containing the results of the verification or as part of the
disclosure of the essential facts. Instead, i n the Provisional and Definitive D isclosures issued
pursuant to Article 6.9, the Commission stated only that verification had taken place and that
unspecified information had been verified, unspecified errors had been corrected and additional
unspecified information had been collected.
4.3. The EU's position in this dispute is, in essence, that these general boilerplate references —
that could apply to any a nti-dumping verification — satisfy the requirements of Article 6.7. Before
the Panel, the EU has also relied on a list of exhibits that it provided to the Panel as Exhibit EU -14
as part of the verification results. Beyond these two elements, the EU in esse nce denies that the
"results" of the verification are an independent concept, because it argues that the essential facts
under consideration under Article 6.9 are co -extensive with the "results" of the verification and
that, by disclosing essential facts u nder Article 6.9, the authority also complies with Article 6.7.
Finally, as evidenced in particular in its later submission in this dispute, the EU has relied on what,
in its view, the investigated company "knew", "should have known" or "must have known", that
the verification did not happen "behind closed doors" and that the company never complained
about insufficient information. As explained below, all these arguments are mistaken.
4.1 The "results" of the verification
4.4. In this dispute, Indonesia's primary legal argument is that the EU failed to make available the
"results" of the verification. Indonesia does not dispute that, as provided in Article 6.7, the
"results" may be provided in a separate document or in the disclosure of the essential facts.
4.5. It is c lear from the text of Article 6.7 and of Article 6.9 that the "results" of the verification
visits referred to in Article 6.7 are not the same as the "essential facts" referred to in Article 6.9.

- C-26 -

In its legal analysis, therefore, bearing in mind the ordina ry meaning, purpose, and context of the
terms, the Panel should take care to define the "results" separately from the "essential facts".
4.6. The EU, however, appears to conflate these terms. Under the EU's practice and arguments
before this Panel, the terms a re interpreted so as to provide no separate meaning to "results" as
compared to "essential facts". If endorsed by the Panel, this would render the obligation with
respect to the "results" essentially meaningless. In accordance with the doctrine of effet utile, the
Panel must ensure that its interpretation of these terms gives effect to the differences between
these terms and gives substance to the requirement in Article 6.7 to make the "results" of the
verification available.
4.7. Moreover, if the Panel agrees w ith Indonesia's legal interpretation that the term "results" in
Article 6.7 means something different than the "essential facts" referred to in Article 6.9, the Panel
should rule in Indonesia's favour. In its submissions to the Panel, the EU takes the posi tion that by
disclosing the essential facts it has necessarily disclosed the results of the verification. Hence, if
the Panel disagrees with this legal position adopted by the EU, it can immediately find that the EU
has acted inconsistently with Article 6.7.
4.8. Indonesia broadly agrees with the general definitions of the term "results" provided by the EU
in its answers to the Panel's questions following the first meeting of the Panel with the parties. For
example, the EU quotes the Appellate Body in US – Steel Safeguards to the effect that the
ordinary meaning of "result" is "an effect, issue, or outcome from some action, process or design".
4.9. Indeed, the "results" referred to in Article 6.7 are the "effect" or "outcome" of the verification
visit. As with the "result" of any activity, the "result" of a verification visit is closely linked to the
conduct, content and purpose of that verification visit. I n Korea – Certain Paper , the panel
explained that "results" of verifications include "adequate information regarding all aspects of the
verification, including a description of the information which was not verified as well as of
information which was verified successfully".
4.10. Although it provides a correct initial definition of the term "results", however, the EU errs
when it subsequently defines the "results" of a verification visit . The EU's position appears to be
that there is no practical difference between the results of the verification visit and the essential
facts under Article 6.9, such that there is no necessity for separate disclosure and that a disclosure
of essential facts automatically constitutes disclosure of the results of a verification visit. This
erroneous view appears to be premised on the notion that "the evaluation of the evidence by the
investigating authority is not part of the 'results' of the verification visit".4 This is incorrect.
4.11. Under the EU's view, the "results" of the verification consist of nothing more than any facts
that end up in the essential facts and a listing of the evidence collected during the verification. This
is inconsistent with the definition of the word "results" to include the "effect" or "outcome", as
noted above. It is also inconsistent with the purpose of the verification visits, as set out in
Article 6.7, which is "to verify information or to obtain further information". It is axiomatic that
information is not verified simply because the investigating authority collects additional exhibits
during a verification visit. The dictionary definitions of "to verify" include " show to be true or
correct by demonstration or evidence; confirm the truth or authenticity of; substantiate" and
"ascertain or test the accuracy or correctness of, esp. by examination or by comparison of data
etc". A mere list of exhibits collected does no t indicate whether those documents served to
establish that an issue was "shown to be correct by demonstration or by a comparison of data" or
even what the issue was.
4.12. The results of the verification visit are different than the essential facts because the y are
known before the essential facts are decided upon. 5 At the end of the verification visit, the results
of the verification visit are known, even if the essential facts are not. This means that the results
of the verification visit are different than the essential facts — even the investigating authority may
later decide that some of the results of the verifications are also "essential facts", while other
results of the verification may not, in the investigating authority's view, amount to "essential
facts".

4 EU's response to Panel question 26, p. 28.
5 See Indonesia's Opening Statement at the first meeting of the Panel with the parties, para. 98.

- C-27 -

4.13. Indonesia has previously provided the Panel with practical examples of results of the
verification visits and of how these results may differ from the essential facts.6 The EU has failed to
address these examples or explained how the logic of Indone sia's analysis is inconsistent with the
text of Article 6.7.
4.14. To give a further example, a situation that occurs with some frequency in practice during
verifications is whether an exporter has cooperated within the meaning of Article 6.8 of the
Anti-Dumping Agreement. As the Panel is aware, a determination by the investigating authority
that an exporter has not cooperated within the meaning of Article 6.8 can lead to the exporter's
information being rejected and determinations being made on the basis of the facts available, with
adverse consequences for the exporter.
4.15. The question of whether an exporter actually cooperated to the best of its ability is
frequently hotly contested. When controversies arise with respect to what occurred in the course
of a verifi cation visit, it can become a drawn -out "he said/she said" dispute between the
investigating authority and the exporter as to what really happened at the verification visits: What
did the investigating authority ask for? Did the exporter make its best effo rts to provide
documents and answers? Were there any problems with the documents — were they sourced from
the company's ledgers or financial statements or could they otherwise be authenticated? Did the
investigating authority fairly acknowledge the export er's efforts to provide documents or, if
requested documents were not realistically available, to provide reasonable alternative
documents? These and other questions about the verification are relevant both to the investigating
authority's decision as to w hether the exporter was cooperative within the meaning of Article 6.8
as well as the exporter's ability to challenge that decision. Thus, while the essential fact may be
that the investigating authority has determined that the exporter was not cooperative, the results
of the verification would include the circumstances that gave rise to the investigating authority
making that determination. In order to challenge that determination in either domestic courts or in
WTO dispute settlement, the exporter or its g overnment must have access to a record of what
happened at the verification and the reasons relied on by the investigating authorities to deem
that the exporter had been uncooperative.
4.16. Other potential "results" of the verification would include an explanation of issues that arose
during the verification which the investigating authority might need to resolve on the verification
team's return to capital. For example, an issue could arise during verification as to whether the
exporter had properly allocated its freight expenses between investigated and non -investigated
products. Based on the information reviewed during the verification, the verification team may
have questions as to whether this allocation of expenses between investigated and non -
investigated products should be accepted or revised.
4.17. In that scenario, the results of the verification would necessarily include the facts relating to
how the freight expenses were incurred and the evidence both for and against the exporter's
allocation of the expenses, as reviewed by the investigating authority and the exporter during the
verification visit. In contrast, the essential facts would consist of the investigating authority's
decision as to what freight expenses it intended to use in its calculation.
4.18. As the above examples demonstrate, it is necessary to distinguish between the results of
the verification, on the one hand, and the essential facts, on the other hand. These examples also
demonstrate that the EU's approach of collapsing the difference between these two concepts is
incorrect.
4.19. It is also important to keep in mind the due-process purpose of the disclosure requirement
under Article 6.7 . This purpose further underlines the need to keep separate the two concepts
"results of the verification" and "essential facts". As noted by the panel in Korea – Certain Paper:
The purpose of the disclosure requirement under Article 6.7 is to make sure that
exporters, and to a certain extent other interested parties, are informed of the

6 Indonesia's Opening Statement, paras. 106-108. Indonesia's response to Panel question 26,
paras. 1.106–1.115.

- C-28 -

verification results and can t herefore structure their cases for the rest of the
investigation in light of those results.7 (emphasis added)
4.20. In other words, the purpose of Article 6.7 is, inter alia, to enable exporters to safeguard
their rights in an anti -dumping investigation and "structure their cases for the rest of the
investigation in light of those results ".8 For this purpose, exporters must know what information
was not verified — so that they can make further efforts to put the investigating authority in a
position to ultimately verify that information — as well as what information was verified. This
information is important for the exporter given that verified information must in principle be used
by the investigating authority , and the exporter thus need not any longer devote i ts scarce
resources to convincing the authority about the reliability of that information.
4.21. There is yet another factor that supports the need for giving separate meaning to the terms
"results of the verification" and "essential facts". This factor has to do with what kinds of decisions
are or are not taken during a verification visit. Specifically, t he verification team normally cannot
or does not take any final decisions on how the verification will affect the investigating authority's
determinations of dumping and injury in the investigation until they have returned home and had
the opportunity to consult with their superiors and other colleagues on any issues arising during
the verification. The verification is, therefore, in essence a fact -gathering and a fact -checking
exercise. The results of this exercise, therefore, relate to what facts have been gathered and
checked and, by implication, what facts have not been gathered or checked. However , the results
of the verification do not include any subsequent determinations by the investigating authority as
to how to use the results of the verification, and other items in the record, to calculate dumping
margins for the exporter in accordance wi th the Anti -Dumping Agreement. The subsequent
decision how to determine the dumping margins is the result of the investigation — and disclosed,
inter alia, in the disclosure under Article 6.9. It is not the result of the verification that must be
disclosed under Article 6.7.
4.22. WTO case law - such as Korea – Certain Paper and Mexico – Steel Pipes and Tubes -
demonstrates that information contained in the disclosure of the verification results (whether
through a verification report or with the disclosure of essential facts) plays an important role for a
panel's ability to ex amine whether the investigating authority complied with Article 17.6(i) of the
Anti-Dumping Agreement. This may include information concerning the type of information
verified; the authority's decision whether the information was verifiable and whether it was
actually verified, as well as any attendant circumstances, such as behaviour of the investigated
firm. The case law reveals that a failure to disclose the results of the verification, or an incomplete
disclosure, will significantly undermine a panel's ability to examine, in a "critical and searching "
fashion, the establishment and evaluation of the facts by the investigating authority. In addition,
only a proper reporting of the results of the verification visit will enable the appropriate judicial
review within a WTO Member's domestic legal system, as required by Article 13.
4.23. Moreover, the EU's interpretation of Article 6.7 in this case, if accepted, would automatically
give rise to violations of Articles 6.2 and 6.4, at least in the circumstances in whi ch the
investigating authority chooses to disclose the verification results simultaneously with the essential
facts. Specifically, conflating the verification "results" with the "essential facts" in the manner
advocated by the EU would mean that the invest igating authority would not disclose all those
verification "results" that did not find their way into the "essential facts". This would be contrary to
Article 6.2, which requires that all interested parties have a "full opportunity for the defence of
their interests", as well as Article 6.4, which requires authorities, whenever practicable, to "provide
timely opportunities for all interested parties to see all information that is relevant to the
presentation of their cases … that is used by the authorities … and to prepare presentations on the
basis of this information ". This inevitable conflict with the requirements of Articles 6.2 and 6.4 is
yet another reason why the EU's proposed interpretative approach, and the Commission's actions
in this investigation, under Article 6.7 cannot be correct.9
4.24. In this case , the EU argue s that the Commission provided the results of the verification
visits as part of the disclosure of th e findings of the investigation. However, these efforts were, at

7 Panel Report, Korea – Certain Paper, para. 7.192.
8 Panel Report, Korea – Certain Paper, para. 7.192.
9 See Indonesia's Opening Statement at the first meeting of the Panel with the parties, para. 108.
Indonesia's first written submission, paras. 6.46–6.48.

- C-29 -

best, cursory and canno t be considered to have met the standa rd required under Article 6.7. For
instance, assuming that the General Disclosure document was indeed intended to be the vehicle to
disclose the "results" of the investigation, the Commission failed to set out:
 which s pecific types of information, documents, or issues were addressed in the
verifications;
 which particular documents (e.g. sales invoices, rebate notes, etc.) were examined; and
 what questions were asked by the Commission officials or what answers were pro vided
by the exporters.
4.25. The extent of the Commission's failure to disclose the results of the verification is clearly
visible from a reading of the contemporaneous notes taken by PT Musim Mas' counsel during the
verifications at that exporter's premises i n Singapore, Medan, and Hamburg . These notes contain
the kinds of basic information that are entirely absent from the Commission's purported disclosure
of the verification results, such as who attended the verifications, what documents were reviewed,
what questions were aske d, and what answers were given. There are several issues of critical
importance to the Commission 's subsequent adjustment of PT Musim Mas ' export price and to
Indonesia's related claim under Article 2.4 of the Anti -Dumping Agreement. A s the counsel notes
demonstrate, the issues at hand were discussed during verification, but were not subsequently
disclosed by the Commission.
4.26. These issues include: the close corporate, management, organizational and operational links
between PT Musim Mas a nd ICOFS; transfer pricing policy; the so -called "direct" export sales by
PT Musim Mas; the manner in which ICOFS and PT Musim Mas co -operate on such export sales as
well as for domestic sales; and the involvement of ICOFS in PT Musim Mas' sales, including Exhibit
PTM-18.
4.27. The Commission's conclusion that ICOF S is not the sales department of PT Musim Mas, but
rather stands in a commission-agent relationship with PT Musim Mas is in direct contradiction with
this information.
4.28. The EU states that "the Commission underlined that during the verification visit mistakes
and errors were corrected in agreement with the company". 10 This is, of course, a wholly generic
assertion that could be made with respect to any verification in any investigation. It hardly
constitutes the "results" of the specific verifications in this investigation, which involved specific
companies, with their own features, data, and specific matters that were addressed during the
respective verification visits. Presumably, the Commission officials, when they report back to their
superiors after the verification, provide more detail than simply stating that "mistakes and errors
were corrected". To the extent that the officials' reports to their colleagues and superiors address
whether the verification team was able to verify information — to "ascertain or test the accuracy or
correctness of, esp. by examination or by comparison of data etc." — those reports could be said
to contain "results" of the verification.
4.29. In arguing that the Commission disclos ed the results of the verification visit, the EU also
repeatedly refers to actions that occurred prior to the visits. However, events occurring prior to a
verification visit cannot be relevant for assessing whether the Commission subsequently
communicated the "results" of the verification exercise. Neither the exporter, nor a reviewing
domestic court or WTO panel, can glean from a list of information that the investigating authority
announces it will/may verify – but may end up not verifying – whether that information was
successfully verified or not; whether additional information was requested; and what discussion
around that information took place between the company and the investigating authority. Claiming
that results of a verification visit can be dis closed by something that occurred prior to the visit is
comparable to arguing that the investigating authority can satisfy its disclosure obligation under
Article 6.9 by pointing to information requests contained in a blank questionnaire response.

- C-30 -

4.2 Alleged knowledge or awareness by the companies is not a workable standard for
assessing an investigating authority's compliance with Article 6.7
4.30. The EU relies, as a crucial part of its argument, on alleged awareness on the part of the
exporters of what information the Commission wanted to inspect; what information it did inspect;
and what it concluded with respect to that information; and that the investigating parties never
protested or complained about lack of information. This argument is flawed at a number of levels.
4.31. It is virtually impossible to verify or to ascertain what the companies were or were not
aware of at the time of verification or subsequently. The EU would have the Panel guess, infer and
rely entirely on the Commission's view as to what the Comm ission thinks the investigated parties
knew or should have known. This is not a proper workable standard on which to conduct a
coherent enquiry at the multilateral level. If adopted, it would leave less experienced or less
sophisticated exporters at the me rcy of what investigating authorities think they knew or should
have known. This is precisely one of the reasons why the Anti -Dumping Agreement requires a
proper disclosure of the results of the verification that can be examined by a WTO panel. In any
event, even if the companies were aware of what the EU claims they were aware of, the EU has a
duty also to the reviewing courts and WTO panels, as well as WTO Member governments, including
Indonesia. Compliance with its WTO obligations vis -à-vis these other M embers cannot depend on
whether different entities – private investigated companies – were or were not aware of some fact
that cannot be subsequently verified in domestic court or WTO proceedings.
4.3 The results of the verification must be "made available" or disclosed
4.32. In response to the Panel's question to the parties as to meaning of "make available", the EU
quotes the Appellate Body in EC and certain member States – Large Civil Aircraft to the effect that
to "make available" is part of the ordinary meaning of the verb "to provide" and, therefore, in the
EU's words, the results of the verification may be made available to the relevant firms either
"directly by sending them a report or by making the results available as part of the file or as an
additional alternative through the disclosure of the outcome of the verification visit as part of the
general obligation to disclose 'essential facts'". Indonesia agrees. 11 This, of course, does not
address the key issue at hand — the failure of the Commission to actuall y convey the required
information about the results of the verification visit, whatever the chosen procedural conduit.
4.4 The list of exhibits is not sufficient to satisfy Article 6.7
4.33. As a final issue concerning Indonesia's claim under Article 6.7, Indonesia addresses the list
of exhibits. In its questions following the first meeting, the Panel asked the EU to provide the list of
exhibits referred to in the first substantive meeting and asked Indonesia whether PT Musim Mas
received this document. In its answer s to questions, the EU provided certain lists of the exhibits
collected by the Commission at the verifications as Exhibit EU-14.
4.34. Indonesia notes that the EU's exhibit is an undated and unsigned document that contains
only a title of each exhibit without a ny indication of the content or purpose of each exhibit.
Indonesia understands that PT Musim Mas was not provided with or asked to agree as to the
content of these lists, although, however, PT Musim Mas agrees that these lists reflect the
documents collected by the verification teams. Indonesia disagrees, however, that these lists of
exhibits, either separately or read in conjunction with the disclosure documents, satisfy the
requirements of Article 6.7.
4.35. First, the list of documents does not explain what t opics were discussed at the verification
visit or how the listed documents served to verify those topics. For example, as noted above, the
EU asserts that the results of the verification were contained in the statement that "mistakes and
errors were correc ted in agreement with the company". However, the lists of exhibits, by
themselves, shed no light whatsoever on what mistakes and errors were corrected or why. There
is no indication that the unspecified "mistakes and errors" had anything to do with the con tent of
the documents collected.

11 See Indonesia's response to Panel question 27, paras. 1.116-1.122.

- C-31 -

4.36. Second, the EU asserts that "the relevant results of the discussion reflected [in the counsel's
notes submitted by Indonesia] are all included in the list of exhibits". The EU then argues that the
relevant "result" of the verification is simply that the agreements were provided and that this is
reflected fully in the list of exhibits. However, if the agreements were provided and reviewed at the
verification "to provide further information on the relationship between PT Musi m Mas and
ICOF-S", the result of the verification must include some discussion of what the agreements
actually said about the relationship between the two companies, whether the Commission team
had any further questions about the companies' explanation of the relationship, and whether the
Commission team was satisfied with the explanations provided by the company. A mere reference
to the documents provided contains no information as to whether the Commission had to
"ascertain[ed] or test[ed] the accuracy or correctness of [the information and explanations
provided by the company], by examination or by comparison of data etc" on this point.
4.37. In addition, the list of documents does not indicate whether there were other topics
addressed during the visit for which no additional documents were collected.
4.38. Moreover, the "results" of the verification must include also the purpose for which a
particular document was provided or particular information requested.12 The EU's list of documents
does not specify this purpose. It is not obvious, from the face of the EU's list, what the purpose of
providing each document was. For instance, a reader of the list would have had to be physically
present at the verification to know the purpose for which the S&P Agreement was submitte d.
Moreover, the S&P Agreement was subsequently relied upon by the Commission for multiple
purposes. Hence, a mere listing of the evidence as in the EU's list is entirely insufficient adequately
to disclose the "results" of the verification visit.
4.39. Similarly, the EU notes that the counsel's notes refer to the Commission team examining
the role of ICOFS in domestic sales in Indonesia and that PT Musim Mas provided "an email as
alleged evidence that ICOFS is also involved in providing services for domestic sales of PTMM". The
EU states that "the provision of this email was a result of the verification". Indonesia disagrees.
Again, the mere provision of this email is only at most only a small part of the result of the
verification. To the extent that the Commiss ion was verifying the role of ICOFS in domestic sales,
the result of the verification is whether the Commission was satisfied that the corroborating
evidence provided by the company was consistent with the company's explanations. To the extent
that it was not, the Commission should have requested additional information or explained how
the explanations provided by the company were not satisfactory.
4.40. Finally, Indonesia rejects the EU's argument that PT Musim Mas should have urged the
Commission to provide it with more detailed information about the results of the verification.
Indonesia notes that nothing in Article 6.7 imposes on the investigated producers/exporters an
obligation to request further information on the results of the verification from the inve stigating
authority. Article 6.7 imposes a mandatory obligation on the investigating authority to make the
results of the verification available. It cannot be a defence to a violation of this requirement that
the producer/exporter did not push the investigating authority to comply.
4.41. To conclude, the EU has failed to show how the Commission disclosed the actual results of
the verification in this case. The stand -alone obligation of Article 6.7 cannot be satisfied by a grab
bag of generic and separate referen ces sprinkled throughout the essential facts disclosures or by
reference to lists of exhibits that contain nothing more than imprecise references to the documents
examined during the verifications.
4.5 Conclusion
4.42. For these reasons, Indonesia respectfully reque sts that the Panel find that the EU has acted
inconsistently with Article 6.7 by failing to make the results of the verifications available or
otherwise provide disclosure thereof as required under Article 6.7.

12 See Indonesia's first written submission, para. 6.42.

- C-32 -

5 CONCLUSION AND REQUEST FOR FINDINGS
5.1. For all of the above reasons, Indonesia reiterates its request to the Panel that the Panel find
that the European Union:
 Acted inconsistently with Articles 2.3 and 2.4 of the Anti -Dumping Agreement, by
making an improper deduction for a factor that did not affect price comparability;
 Acted inconsistently with Articles 3.1 and 3.5 of the Anti -Dumping Agreement, by failing
to conduct a proper non -attribution analysis with respect to the factors
"financial/economic crisis" and "issues related to the European Union's d omestic
industry's access to raw materials"; and
 Acted inconsistently with Article 6.7 of the Anti -Dumping Agreement, by failing to
disclose to either of the investigated Indonesian exporters the results of the verification
visit.
5.2. Indonesia once again thanks the Panel and the Secretariat team for their hard work and
dedication to this dispute.

- D-1 -

ANNEX D
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of Turkey D-2
Annex D-2 Integrated executive summary of the arguments of the United States D-5

- D-2 -

ANNEX D-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF TURKEY
I. INTRODUCTION
1. The Republic of Turkey (hereinafter referred to as "Turkey") welcomes this opportunity to be
heard and to prese nt its views as a third party in this case. Turkey 's objective to make this third
party submission is to contribute to the correct and consistent interpretation of the Agreement on
the Implementation of Article VI of GATT 1994 (hereinafter referred to as "ADA" or
"Anti-Dumping Agreement").

2. Turkey will not elaborate on the particular facts presented by the Parties, rather, underlining
her systematic interest, Turkey would like to limit her third party submission to the discussion on
the rights and obligation of an investigating authority within the legal context of Article 2.3 and 2.4
of the ADA.

II. LEGAL INTERPRETATION OF ARTICLE 2.3 AND 2.4 OF THE
ANTI-DUMPING AGREEMENT
3. At the outset Turkey would like to underline that the structure of the "fair co mparison"
between normal value and export price of the product under consideration is as significant as the
methodology used by the investigating authority to calculate the normal value or export price
itself. In this vein, the components of the fair compa rison do have a potential to alter the outcome
of the dumping margin calculation profoundly. Therefore, accurate interpretation of the Article 2.3
and 2.4 of the ADA is highly important in this regard.

4. Article 2.3 and 2.4 of the ADA reads as follows:

2.3 In cases where there is no export price or where it appears to the authorities
concerned that the export price is unreliable because of association or a compensatory
arrangement between the exporter and the importer or a third party, the export price m ay
be constructed on the basis of the price at which the imported products are first resold to
an independent buyer, or if the products are not resold to an independent buyer, or not
resold in the condition as imported, on such reasonable basis as the auth orities may
determine.
2.4 A fair comparison shall be made between the export price and the normal value. This
comparison shall be made at the same level of trade, normally at the ex -factory level, and
in respect of sales made at as nearly as possible the same time. Due allowance shall be
made in each case, on its merits, for differences which affect price comparability, including
differences in conditions and terms of sale, taxation, levels of trade, quantities, physical
characteristics, and any other diff erences which are also demonstrated to affect price
comparability. In the cases referred to in paragraph 3, allowances for costs, including
duties and taxes, incurred between importation and resale, and for profits accruing, should
also be made. If in thes e cases price comparability has been affected, the authorities shall
establish the normal value at a level of trade equivalent to the level of trade of the
constructed export price, or shall make due allowance as warranted under this paragraph.
The authorities shall indicate to the parties in question what information is necessary to
ensure a fair comparison and shall not impose an unreasonable burden of proof on those
parties.
5. Turkey understands that the existence of two conditions is imperative to reso rt to
constructed export price within Article 2.3 of the ADA. First, the presence of an association or
compensatory arrangement between exporter and importer or a third party and second, the
outcome of unreliable export prices due to this association or co mpensatory arrangement. Under
this reading, the mere existence of an association or compensatory arrangement is not enough to
conclude that the export prices between the exporter and importer or any other third party is
unreliable. Equally, the fact that t he provisions of the arrangement do not point out any kind of
distortions of export price should not overshadow the possibility that the export prices can be

- D-3 -

unreliable due to de-facto reasons. In light of these explanations, the investigating authority ma y
undertake both a de-jure and de-facto examination to determine whether this arrangement
warrants the use of constructed export prices.

6. The word "appear", however, indicates that the investigating authority is not under a strict
obligation to reach an undisputable conclusion that the distortion of export prices is a direct
outcome of the arrangement between the exporter and importer or a third party. Turkey
understands that the drafters tended to keep the wording flexible considering the often loose
nature of the arrangements between exporter and importer or trader. Nevertheless, Turkey
understands that the investigating authority is still burdened to present an explanation on why the
arrangement appeared to render the export prices unreliable.

7. The reference made in the second sentence of Article 2.4 requires the investigating authority
to consider allowances for costs including but not limited to duties, taxes (incurred between
importation and resale) and profits accrued by the trader and importer o f the product under
consideration. Similar to the comparison between the normal value and the ordinary export price,
the investigating authority is obliged to make due allowances or to equal the level of trade if the
price comparability is affected.

8. As rightly underlined by the EU 1, the investigating authority is obliged to evaluate and, if
applicable, alter the elements of the normal value and (constructed) export price if the differences
in components in these two data sets adversely affect the compar ability of the normal value and
export price.

9. In that context, as stressed in the panel report of US -Sheet/Plate form Korea "…[t]he
requirement to make due allowances for differences that affect price comparability is intended to
neutralize differences in a transaction that an exporter could be expected to have reflected in his
pricing".2Thus, the analysis required in Article 2.4 of the ADA di splays a fact based and
case-by-case nature taking into consideration that the elements of due allowance may dif fer based
on the merits of each case.3

10. As matter of legal interpretation , the interested party claiming that the legal discipline in
Article 2.4 was violated by the investigating authority has to pass through three steps to bring a
viable assertion. I t has to show that (1) there was a difference between the elements of normal
value and export price which (2) affected the price comparability between these data (3) that was
not accepted by the investigating authority as an element of due allowance. 4 Turkey understands
that the word "demonstrate" at the end of the first sentence of Article 2.4 of the ADA introduces a
positive obligation vis-à-vis the interested parties requesting modification. The interested parties
must bring their requests of fair compar ison to the attention of the investigating authority by
indicating the elements to be considered and to what extent these elements influence the
comparability of the normal value and export price.

11. Turkey considers the elements listed in Article 2.4 to illustrate, inter alia , the possible
examples of due allowance (conditions and terms of sale, taxation, levels of trade, quantities,
physical characteristics) are equally subject to the above -mentioned obligation incumbent on the
interested parties requesting due allowance.

12. Turkey is in the same line with the case law that the investigating authority has discretion to
reject the request of due allowance if it concludes that the difference is not affecting price
comparability or such an adjustment lack s merits.5 Furthermore, she equally agrees with the case
law that the investigating authority cannot be legally compelled to conduct an ex-officio inquiry to
identify non-requested elements of due allowance6.

1 EU's first written submission, para. 59 and 60.
2 Panel Report, US-Sheet/Plate from Korea, para. 6.77.
3 Panel Report, Egypt-Rebar, para. 7.352; Panel Report, EC-Pipe Fittings, para. 7.138.
4 Panel Report, Korea-Certain Sheet, para. 7.138.
5 Panel Report, EC-Fasteners, para. 7.298; Appellate Body Report, EC-Fastener, para. 488 and 528;
Panel Report, EC-Tube or Pipe Fittings, para. 7.158.
6 Panel Report, EC-Fastener, para. 7.298; Appellate Body Report, EC-Fastener, para. 517; Panel Report,
China-HP-SSST, para. 7.77.

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13. Finally as underlined in the Panel Report of Egypt-Rebar the dialogue between the interested
parties and the investigating authority concerning the context of Article 2.4 is central to ensure
that the dumping margin is calculated with necessary components compared in a fair manner.7

III. CONCLUSION
14. With these comments, Turkey expects to contribute to the legal debate of the parties in this
case, and would like to express again its appreciation for this opportunity to share its points of
view on this relevant debate, regarding the interpretation of the ADA Agreement.

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ANNEX D-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES
I. U.S. VIEWS ON THE EUROPEAN UNION'S PRELIMINARY RULING REQUEST

1. While sympathetic to certain practical concerns expressed by the European Union, th e
United States respectfully disagrees with the understanding of Article 12.12 that underlies the
European Union's PRR. The United States submits that the European Union wrongly interprets the
relevant terms of Article 12.12, including its interpretation o f "panel," and what it means in the
context of this provision for a panel to "suspend" its "work."

2. Pursuant to DSU Article 11, the Panel's "function" is to assist the DSB by making an
objective assessment of the matter before it, including the applicab ility of and conformity with the
relevant covered agreements. DSU Article 3.2 establishes that such an assessment of the existing
provisions of those covered agreements shall be made in accordance with customary rules of
interpretation of public international law.

3. The ordinary meaning of "panel" (or "the panel ") is not in dispute by either party. The
United States agrees with the European Union that there is no express limitation imposed in the
text of the DSU on the meaning of the term "panel," and that in some instances, "panel" may refer
to a panel that has been composed and in others, it may refer to a panel that has been established
but not composed. The United States also agrees with Indonesia, however, that it is precisely
because "panel" refers to both circumstances in various places in the DSU that interpretation of
"panel" as used in Article 12.12 does not end with a facial inquiry into the ordinary meaning of the
term.

4. The last sentence of Article 12.12 describes a circumstance in which the work of the panel
"has been suspended for more than 12 months. " The first sentence sets out how such a
suspension may arise: "at the request of the complaining party for a period not to exceed 12
months." The request is made to, and would be acted upon in its discretion, by the panel ( "[t]he
panel may suspend its work "). The second sentence confirms the "suspension" is one the panel
decides upon at the complaining party's request ( "[i]n the event of such a suspension"). Thus, the
circumstance in Article 12.12 arises only when there is a panel to which the complaining party may
direct its "request," and only if the panel has decided to exercise its discretion to accede to that
request. Neither can occur before a panel has been composed.

5. The context of Ar ticle 12 as a whole also is instructive. The articles of the DSU proceed
sequentially from the initial phases of the dispute settlement process to the final stages of that
process. Depending on the stage of the process and the content of the relevant rules , the term
"panel" in the various provisions may be interpreted differently.

6. Article 6, for example, governs the "establishment of panels, " including the timing of their
establishment and the method by which their establishment must be requested. As a matter of
both timing and logic, these actions necessarily would precede the composition of a panel and
therefore would refer to an uncomposed panel. Article 7, on the other hand, may refer to both
composed and uncomposed panels when it describes the "terms of reference of panels. " For
example, Article 7.1 states that "[p]anels shall have the following terms of reference unless the
parties to the dispute agree otherwise within 20 days from the establishment of the panel. "
Therefore, whether or not a panel h as been composed, within 20 days of establishment the terms
of reference are determined and govern thereafter the scope of the dispute for purposes of any
panel that has been "established," including one that has subsequently been composed.
Article 7.2, however, provides that "[p]anels shall address the relevant provisions in any covered
agreement or agreements cited by the parties to the dispute. " By requiring panels to "address"
certain provisions of the covered agreements, the use of the term "panel" in Article 7.2 necessarily
refers to a panel that has been composed, for the obvious reason that a panel that has been
established only cannot "address" anything.

7. With respect to the interpretation of "panel" in Article 12 as well, both the stage of the
process and the specific rules it provides assist in interpreting the terms contained in Article 12.12.

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Article 8, for example, which deals with panel composition, precedes Article 12, which deals with
panel procedures. Therefore, given where it is situated in the DSU, Article 12 contemplates that, in
the normal course, a panel already would have been composed when the "panel procedures" would
apply. For example, Article 12.1 establishes that a panel shall follow the Working Procedures in
Appendix 3 unless the panel decides otherwise after consulting the parties; a panel could neither
"follow" those Procedures nor decide otherwise nor consult if it has not been composed.
Article 12.3 even more explicitly refers to "panelists" when it describes a process and schedule for
fixing the timetable during the panel process. Logically, there would be no "panelists" fixing the
timetable if the panel had not yet been composed.

8. Based on the above, the "work" of the panel in the context of Article 12.12 refers to the
examination by the panel, once composed, of the matter referred to it by the DSB under the
procedures established in Article 12. Therefore, Indonesia's request to the Secretariat to suspend a
meeting to compose the panel would not constitute a request to the panel that it "suspend its
work" pursuant to Article 12.12. Nothing in the text of the DSU, or in the email correspondence
from Indonesia to the Secretariat, supports the European Union's position to the contrary.

9. The European Union also raises a co ntextual argument regarding the interpretation of the
term "panel" in Article 12.12 based on its relationship with Article 12.9. To bolster its argument
that reference to the "panel" in Article 12.12 means only a panel that has been established, not
necessarily composed, the European Union notes that Article 12.9 (governing timeframes to
submit the panel report) and 12.12 both refer to the "establishment," not composition, of a panel.
Because "composition" is used elsewhere in the DSU, the European Union ar gues, the use of
"establishment" alone is significant.

10. The United States agrees that use of the term "establishment" in Article 12.12 is
meaningful. Because a panel is established by the DSB (Article 6.1) to assist the DSB in
discharging its responsibilities to make recommendations (Articles 7.1, 11, 19.1) through issuance
of findings in a written report (Article 15), to terminate a panel's authority to undertake that work,
the DSU removes the legal basis for the panel's establishment. That this legal authority relates to
whether a panel is established does not imply that a panel that has not been composed may
undertake any "work," much less "suspend" that work.

11. Second, with respect to the contention that the time limit in Article 12.9 would be rendered
meaningless were the twelve month limitation in 12.12 read to apply only to composed panels, the
United States observes that the language regarding the time limit imposed in Article 12.9 is
precatory, not binding, providing that in no case "should" the proceedings exceed nine months.
Therefore, the premise for the European Union's arguments in this respect – that in no case may
the proceedings, including any 12 month suspension, exceed 21 months – fails. It is simply not the
case that such a mandatory time limit is imposed by the DSU on panel proceedings.

12. For these reasons, the situation described in the last sentence in DSU Article 12.12 arises
only once a panel has been composed, the complaining party makes a request to the panel to
suspend i ts work, and the panel decides to exercise its discretion to accept that request and
suspends its work accordingly.

13. The European Union raises several policy concerns which it considers support its
interpretation of Article 12.12, including considerati ons relating to the reputational consequences
of unresolved proceedings for a responding Member and the limited resources both Members and
the Secretariat have to dedicate to a given dispute. While such policy considerations cannot lead to
a different inte rpretation and application of DSU Article 12.12, the United States nonetheless
considers that the proper interpretation and application of Article 12.12 lead to a desirable policy
outcome.

14. There does not seem to be any serious cause for concern about a "reputational stain "
somehow adhering to a responding Member as a result of a dispute brought before the WTO. If
Members have not, through consultations or other means, managed to resolve a trade issue
between them, parties regularly request the establi shment of panels in an effort to achieve formal
resolution of the dispute. Not all of these disputes proceed to the circulation of a final panel report.
Often, disputes are successfully resolved only after the establishment of a panel. Therefore, the
European Union's suggestion that in all cases it would be in a responding party's interest to

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expedite the panel process so that accusations against it can be resolved does not reflect the
nature of dispute settlement under the DSU.

15. Regarding resource constraints and the burden imposed on Members and the Secretariat to
devote resources indefinitely to a dispute, the United States understands the dilemma to which the
European Union refers. However, we do not consider that dissolving the panel process would
address these concerns. To the contrary, the likelihood that the same issue might be raised
multiple times as formally "new" disputes would seem to risk exacerbating the strains on limited
WTO resources rather than easing them. And should the European Union believe it is prejudiced by
the length of time taken to compose a panel, the United States respectfully suggests that an
adequate remedy may be found under the DSU. Pursuant to Article 12.4, the European Union
could explain those circumstances to the Panel and, in light of those circumstances, the Panel must
provide the parties with sufficient time to prepare their written submissions to the panel.

16. Finally, the United States considers that reading into Article 12.12 a limitation on the ability
of a co mplaining party to pause in its use of dispute settlement procedures would undermine the
aim of the dispute settlement system to secure a positive solution to the dispute (Article 3.7).
Where a party may be actively engaged in trying to resolve a dispute t hrough alternative means,
even after panel establishment, such action would be consistent with the preference expressed
under the DSU. Indeed, under DSU Article 11, a panel is charged with giving the parties an
adequate opportunity to develop a mutually sa tisfactory solution. The understanding of
Article 12.12 proposed in the PRR would rather appear to limit such opportunities.

II. INDONESIA'S CLAIMS REGARDING ARTICLE 2 OF THE AD AGREEMENT

17. Indonesia claims that the European Union acted inconsistently with Article 2.4 of the
AD Agreement by failing to make allowances for differences affecting price comparability – namely,
by subtracting sales commissions from the constructed export price for one of the participating
producers.

18. Article 2.4 of the AD Agreement requires investigating authorities to conduct a comparison
between the export price and normal value. As Indonesia correctly observes, such comparison "is
typically made at the ex -factory level…a practice envisaged explicitly by Article 2.4. " It appears
that both the European Union and Indonesia share the U.S. view that the essential requirement for
any adjustment under Article 2.4 is that a factor must affect price comparability. Thus, under
Article 2.4, making a "fair comparison" requires a con sideration of how differences in conditions
and terms of sale, taxation, levels of trade, quantities, and physical characteristics impact price
comparability.

19. In this respect, the Appellate Body has stated that under Article 2.4, the obligation to ensure
fair comparison lies on the investigating authorities, and not the exporters. Although the
investigating authority has the burden to ensure a fair comparison, the interested parties also
have the burden to substantiate any requested adjustments for di fferences that affect price
comparability. As the Appellate Body has found, an investigating authority does not have to accept
a request for an adjustment that is unsubstantiated.

20. Indonesia and the European Union appear to agree that a sales commissio n can affect price
comparability within the meaning of Article 2.4 because it may reflect a difference in conditions
and terms of sale. However, the parties disagree on whether it is necessary to determine that a
single economic entity ( "SEE") does not exi st in order to make a downward adjustment to export
price for sales commissions.

21. While the United States agrees with the European Union that an analysis of whether an SEE
exists is not required under Article 2.4, it may sometimes be relevant to consid er the relationship
between two entities as part of an evaluation of price comparability. In this respect, it would not
be inappropriate to consider the various factors discussed by the panel in Korea – Certain Paper
and referenced by the Appellate Body in EC-Fasteners (China). While we recognize that, as stated
by the European Union, the analyses in those cases arose in a different context – i.e., for purposes
of determining whether related companies should be assigned a single dumping margin – these
factors may nonetheless be relevant to determining what, if any, adjustment should be made
under Article 2.4.

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22. In reviewing the investigating authority's determination, the Panel may wish to consider
whether the evidence and explanation provided – regardless of the specific methodology applied –
supports a finding that the sales entity did not form part of a single entity with PTMM and that,
therefore, an adjustment was necessary to ensure a fair comparison under Article 2.4. If the Panel
concludes that the facts support a finding that the producer and the trading company are not
affiliated, there is no dispute that an adjustment for a commission paid to the trader was
appropriate.

23. Finally, the United States considers that it is permissible for an invest igating authority to
make a price adjustment to address circumstances of sale, if the facts on the record support it. An
investigating authority must ensure price comparability regardless of whether affiliated or
non-affiliated parties are involved. As exp lained earlier, a comparison between normal value and
export price is usually made at the ex factory level. If, for example, the producer sells in the home
market directly to its customers, but sells through a trading company (affiliated or not) to its
export market, the differences in the circumstances of sale may warrant an adjustment to ensure
that comparison is made at the ex-factory level in both markets.

24. The views expressed by the United States in relation to Indonesia's claims under Article 2.4
are relevant to the substance of Indonesia's Article 2.3 claim. The United States agrees with the
European Union that Indonesia's Article 2.3 claim is purely a consequential claim.

III. INDONESIA'S CLAIMS REGARDING ARTICLE 3 OF THE AD AGREEMENT

25. The third sentence of Article 3.5 provides that, in addition to examining the effects of the
dumped imports, an authority must examine other known factors which at the same time are
injuring the domestic industry. As the Appellate Body has found, if a known fa ctor other than
dumped imports is a cause of injury, the third sentence requires the authority to engage in a non -
attribution analysis to ensure that the effects of that other factor are not attributed to the dumped
imports.

26. The Appellate Body has further stated that the AD Agreement does not specify the particular
methods and approaches an authority may use to conduct a non -attribution analysis. In this
regard, the United States disagrees with Indonesia that only a particular kind of analysis – e.g.,
quantitative analysis – meets the requirements of Article 3.5. The question of whether an
investigating authority's analysis is consistent with Article 3 should turn on whether the authority
has in fact evaluated these factors and whether its evaluation i s supported by positive evidence
and reflects an objective examination, as required by Article 3.1.

27. Article 3.5 further requires that "[t]he demonstration of a causal relationship between the
dumped imports and the injury to the domestic industry shal l be based on an examination of all
relevant evidence before the authorities. " Hence, the authorities are obliged to consider all
relevant evidence in the record. While the United States does not take a view on the weight the
European Union gave to certain evidence, the European Union must demonstrate that it examined
these factors in its analysis. Whether or not, as Indonesia claims, the European Union was
required specifically to consider these factors under the third sentence of Article 3.5 would depend
on whether these factors were known to the investigating authority and whether they were in fact
contributing at the same time as the imports to any difficulties experienced by the domestic
industry.

28. Thus, the panel must determine if the investigating authority demonstrated that it examined
other "known factors " within the meaning of Article 3.5 of the AD Agreement, and based its
causation analysis on an examination of all relevant evidence.

IV. INDONESIA'S CLAIM UNDER ARTICLE 6 OF THE AD AGREEMENT

29. Article 6.7 of the AD agreement requires investigating authorities conducting verification to
"make the results of any such investigations available, or shall provide disclosure thereof pursuant
to paragraph 9 to the firms which they pertain and may ma ke such results available to the
applicants." Article 6.9 in turn provides that an investigating authority "shall, before a final
determination is made, inform all interested parties of the essential facts under consideration
which form the basis for the d ecision whether to apply definitive measures. " The United States
agrees with both Indonesia and the European Union that under its ordinary meaning, the term

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"results" in Article 6.7 refers to "outcomes" of the verification process. The United States agree s
with the European Union that Articles 6.7, 6.8, and 6.9 form a continuum of obligations under
Article 6, and that each obligation is grounded in the context of the specific provision.

30. While the United States does not believe that trivial or immater ial aspects of what occurred
at the verification must be included in the report, at a minimum the report should include
discussion of information that was verified, not verified, or corrected with respect to essential facts
referenced in Article 6.9. The U nited States agrees with the European Union that the text of
Article 6.7 contains no requirements on form or format. Articles 6.7 and 6.9 do require disclosure
of verification "results" and the "essential facts under consideration. " To the extent the Europ ean
Union characterizes the lack of disclosure of results and essential facts as a question of form, not
substance, the United States disagrees with that characterization. For example (without opining on
the factual issues presented in this dispute), the U nited States believes that the term "essential
facts," as defined in Article 6.9, relates necessarily to the determination of normal value and
export prices, as well as to the data underlying those determinations. Accordingly, the
United States believes t hat information verified or corrected at verification relating to these
"essential facts" should be disclosed pursuant to Article 6.7 and Article 6.9.

31. These provisions of the AD Agreement promote transparency and procedural fairness by
ensuring that "disclosure…take[s] place in sufficient time for the parties to defend their interests. "
Failure to provide such disclosure could prevent an interested party from effectively defending its
interests in the proceeding, and potentially, before national courts . In this respect, the
United States agrees with the panel in Korea – Certain Paper, which noted that disclosing both
verified and unverified information could "be relevant to the presentation of the interested parties'
cases."

32. Similarly, a basic tene t of the AD Agreement, as reflected in Article 6, is that the
investigating authority "must provide timely opportunities for all interested parties to see all
information … relevant to the presentation of their cases that is not confidential as defined in
paragraph 5, and that is used by the authorities in an anti -dumping investigation," and "shall, on
request, provide opportunities for all interested parties to meet those parties with adverse
interests…[and these opportunities] must take account of the nee d for confidentiality." Articles 6.4
and 6.2 have specific obligations which may apply to the disclosure of verification results.
Therefore, bearing in mind the obligations of Article 6.5, the United States agrees with Indonesia
that failing to disclose in formation under Article 6.7, particularly as it relates to the "essential
facts" of an investigation under Article 6.9, would deprive parties of the full opportunity to defend
their interests.