KOREA – ANTI-DUMPING DUTIES ON IMPORTS OF CERTAIN PAPER FROM INDONESIA
Document: Recourse to Article 21.5 of the DSU by Indonesia Request for the Establishment of a Panel
Date: 4 January 2007
Document codes: WT/DS312/9
Complainant: Indonesia
Respondent: South Korea
Third parties: Canada, China, EU, Japan, U.S., Taiwan
Dispute stage: Panel
Agreements cited: Art. 5.4, 2.6, 3.1, 4.1, 5.2, 5.3, 5.7, 12.1.1, 6.5, 6.7, Annex I, Annex II, 6.8, 12.2, 2.1, 2.2, 2.4, 5.8, 9.3, 3.2, 3.4, 3.5, 3.7, 6.1, 6.4, 6.9  Anti-dumpingArt. VI:1, VI:2(a), VI:2(b), VI:6  GATT 1994

KOREA – ANTI-DUMPING DUTIES ON IMPORTS
OF CERTAIN PAPER FROM INDONESIA

Recourse to Article 21.5 of the DSU by Indonesia

Request for the Establishment of a Panel

 The following communication, dated 22 Decem ber 2006, from the delegation of Indonesia to
the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 21.5 of the DSU.

 On 28 November 2005, the Dispute Settle ment Body (the "DSB") adopted the
recommendations and rulings in (WT/DS312). At the meeting held on 20 December 2005, the Republic of Korea ("Korea")
informed the DSB that it intended to fully implemen t the recommendations and rulings of the DSB in
this matter within a reasonable period of time. Indonesia and Korea agreed under Article 21.3(b) of
the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU") that
Korea had until 28 July 2006 to implement those recommendations and rulings.

 On 27 July 2006, the Korean Trade Commissi on (the "KTC") publishe d its Implementation
Report (Public Notice No. 2006-105 of the Korean Ministry of Finance and Economy) (the
"Redetermination") in the Korean Gazette. The Redetermination leaves the underlying anti-dumping
measure and the rate of dumping duties unchanged. At the DSB meeting held on 1 September 2006,
Korea stated that by adopting the Redetermina tion it had fully complied with the recommendations
and rulings of the DSB. Indonesia did not agree.

 On 26 October 2006, Indonesia requested consu ltations with Korea under Article 21.5 of the
DSU and paragraph 1 of the Understanding between Korea and Indonesia of 17 August 2006
1
regarding the consistency of the Redetermination with Korea's ob ligations under the Agreement on
Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-
Dumping Agreement"). The request was circulated in document WT/DS312/8. Consultations were
held on 15 November 2006. These consultations failed to settle the dispute.

 Accordingly, Indonesia and Korea disagree as to the "existence or consistency with a covered
agreement of measures taken to comply with the recommendations and rulings" of the DSB. Pursuant
to Articles 6 and 21.5 of the DSU, Article 17.5 of the Anti-Dumping Agreement and paragraph 2 of
the Understanding between the Republic of Korea and the Republic of Indonesia of 17 August 2006,
Indonesia hereby requests the establishment of a pa nel to examine the measures described below.
Indonesia requests that this item be placed on the agenda of the next meeting of the DSB.

1 This Understanding related to the "sequencing" of proceedings under DSU Articles 21.5 and 22 and
was circulated as document WT/DS312/7.

A. R
ESELLER SELLING EXPENSES
The Panel found that in calculating normal va lues based on constructed value for the
Indonesian exporters at issue, the KTC acted inc onsistently with the Anti-Dumping Agreement with
respect to its calculation of the amount of interest expenses to be included in the selling, general and
administrative expenses incurred by a related reselle r of the like product. In the Redetermination,
however, the KTC left unchanged the amount of inter est expenses it included in the reseller's selling
expenses in the original determination. Accordingl y, the Redetermination is inconsistent with the
provisions of the Anti-Dumping Agreement described below and fails to pr operly implement this
aspect of the DSB's recommendations and rulings for the following reasons:
(a) The KTC failed to properly calculate a "r easonable amount for administrative, selling
and general costs" to be included in the constructed value within the meaning of
Article 2.2 of the Anti-Dumping Agreemen t, and failed to rely on "actual data
pertaining to production and sales in the ordinary course of trade of the like product
by the exporter or producer under investigati on" within the meaning of Article 2.2.2,
in that, inter alia , it used expenses incurred by a production company, ignored
verified evidence that the reseller would not have incurred such interest expenses, and
imputed expenses that were unrelated to the production and sale of the like product.
By thus failing to properly determine the c onstructed value, the KTC also failed to
make a fair comparison between normal value and export price within the meaning of
Article 2.4 and failed to determine dumpi ng margins properly within the meaning of
Article 2.1.
(b) The KTC failed to comply with its obligation to utilise the "best information
available", failed to exercise "special circumspection" in its use of secondary sources
and failed to properly corroborate the secondary information used as facts available
as required by Article 6.8 of the Anti-Dumpi ng Agreement, read together with Annex
II, in particular paragraphs 3 and 7 thereof, in that, inter alia , it used the expenses
incurred by a production company, imprope rly ignored verified evidence regarding
the interest expenses incurred by a reseller affiliated to another producer, failed to
properly conduct a comparative assessment of or make a determination whether the
secondary information used could reasonably replace the missing information,
ignored verified evidence that the reselle r would not have incurred such interest
expenses in the resale of the like product, failed to provide an adequate explanation of
its determination and relie d on new, irrelevant, unr eliable and unverifiable
information regarding the reseller and regarding selling expenses incurred by
companies in other industries in Korea.
(c) The KTC failed to comply with its obligation to reach an unbiased, objective and
proper determination of dumping under Ar ticles 2.1, 2.2, and 2.4 of the Anti-
Dumping Agreement, as well as its obligations under Article 6.8 read together with
Annex II, in that, inter alia, it treated the reseller as a manufacturing company and in
arriving at this conclusion relied on faulty information and disregarded its previous
findings, verified evidence and the findings of the panel regarding the nature and
activities of the reseller.
(d) The KTC failed to comply with its obligations under Articles 2, 2.2, 2.2.2, 6.1, 6.2,
6.4, 6.6, 6.8, 17.6(i) and Annex II, in particular paragraphs 3 and 7 thereof, to make a
proper determination of norma l value and to provide the Indonesian exporters with
adequate opportunities to submit evidence a nd to defend their interests, in that, inter
alia,
it excluded evidence supplied during the implementation process by the
Indonesian exporters while accepting on the record new evidence from other sources

and failed to take into account direct a nd verifiable evidence regarding the selling
expenses incurred by the reseller.
B. FAILURE TO COMPLY WITH PROCEDURAL OBLIGATIONS
 During the implementation phase, the KTC provided the Indonesian exporters with disclosure
regarding the manner in which it intended to impl ement the DSB's rulings with respect to the
determination of dumping. However, the KTC faile d to provide the Indonesian exporters with any
disclosure regarding the manner in which it intended to implement the DSB's rulings with respect to
the determination of injury or with any oppor tunity to comment on issues relating to the re-
determination of injury and the causal link between dumping and injury. In particular, the KTC did
not disclose to the Indonesian exporters the facts on which it based its injury re-determinations.
Accordingly, in the Redetermination:

(a) The KTC failed to comply with its obligations under Articles 6.1, 6.2, 6.4, 6.5 and 6.9
of the Anti-Dumping Agreement, in that it failed to disclose the factual basis for its
injury re-determinations and failed to pr ovide the Indonesian exporters with any
opportunity to provide their views.
 Moreover, the KTC appears to have accepte d confidential submissions from the Korean
domestic industry and other sources without re quiring a showing of good cause, the submission of
non-confidential summaries or an explanation as to why such summarization is not possible. In
addition, information contained in these submissi ons was not provided to the concerned Indonesian
exporters. Accordingly, in the Redetermination:

(b) The KTC failed to comply with its obligations under Articles 6.1, 6.2, 6.4 and 6.5 of
the Anti-Dumping Agreement, in that it failed to require a party submitting
confidential information to show good cause for confidential treatment or to submit a
non-confidential summary thereof or an e xplanation as to why such summarization
was not possible.
(c) The KTC acted inconsistently with Articl es 6.1, 6.2 and 6.4 of the Anti-Dumping
Agreement, in that it failed to provide c opies of the submissions made by the Korean
domestic industry to the Indonesian exporters.
 Indonesia continues to reserve its rights in respect of all other aspects of Korea's purported
compliance with its obligations in this case.

 Indonesia requests that the Panel be established w ith the standard terms of reference set out in
Article 7 of the DSU.