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

AUSTRALIA – ANTI-DUMPING MEASURES ON A4 COPY PAPER
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to C to the Report of the Panel to be found in document

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

ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Interim Review 4

ANNEX A-1
INTERIM REVIEW
1 INTRODUCTION
1.1. This annex to the Panel Report sets out our responses to the parties' requests made at the
interim review stage, as foreseen in Article 15.3 of the DSU.
1.2. With regard to certain requests, we were guided by the consideration that the descriptions of
the parties' arguments in our Report are not intended to reflect the entirety of the
parties' arguments. Rather, they focus on the principal points we considered relevant to the
resolution of this dispute. In this respect, we recall that "a panel ha[s] the discretion to address only
those arguments it deems necessary to resolve a particular claim ".1 We further note that the
integrated executive summaries of the arguments of the parties are set out in Annexes B1-B4. Those
summaries have been prepared by the parties themselves and therefore have provided the parties
with the full opportunity to reflect their arguments as they see fit.
1.3. Furthermore, consistent with the approach of previous panels , we consider it not appropriate
for the parties to re-argue, at the interim review stage, arguments already put before a panel.2
1.4. Where appropriate, we have modified aspects of the Report in the light of the parties' requests
and comments. Due to changes as a result of our review, the numbering of paragraphs and footnotes
in the Final Report has changed from the Interim Report. The text below refers to the numbers in
the Interim Report, with the numbers in the Final Report in parentheses for ease of reference, if
different.
1.5. In addition to the modifications specified below, we have also corrected a number of
typographical and other non-substantive errors throughout the Report, including, where appropriate,
some identified by the parties.
2 INDONESIA'S SPECIFIC REQUESTS FOR REVIEW
2.1. Indonesia has not submitted any request for review of the Interim Report.
3 AUSTRALIA'S SPECIFIC REQUESTS FOR REVIEW
3.1 Paragraph 1.7
3.1. Australia notes that in addition to the dates listed in paragraph 1.7 of the Report, the timetable
was also revised on 7 June 2019 following a request from Indonesia. Indonesia does not object to
the revision proposed by Australia. Having reviewed the record of this dispute, we note that, in
response to Indonesia's request and having considered Australia's comments, the Panel informed
the parties of extending the due dates for the parties' submissions by email on 2 June 2019. This
has been reflected in paragraph 1.7 of the Interim Report. We therefore decline Australia's request
to modify paragraph 1.7.
3.2 Paragraph 7.10
3.2. Australia notes that the Final Report (Exh ibit IDN-4) referred to "domestic sales" rather than
"domestic market sales". In addition, Australia notes that the ADC's 23-page assessment of the
alleged market situation in Indonesia for A4 copy paper is set forth in Section A2.9 of Appendix 2 of
the Final Report, rather than Appendix 2 in its entirety. Indonesia does not consider the suggested
revisions of paragraph 7.10 are necessary, but Indonesia does not object to the revisions. We

2 Panel Reports, EU – Fatty Alcohols (Indonesia), para. 6.5; Japan – DRAMs (Korea), para. 6.2; US –

consider Australia's revisions more precisely describe the relevant portions of the ADC's Final Report
and have made changes to paragraph 7.10 to implement such revision.
3.3 Paragraph 7.35
3.3. Australia requests paragraph 7.35 be amended to clarify that Australia argued, in terms of
context, that the term "particular market sit uation" is co -located with the descriptions of two
conditions that comprise specific circumstances in respect of sales of the like products in the market
of the exporting country. Indonesia does not consider the suggested revisions of paragraph 7.35 are
necessary, but Indonesia does not object to the revisions. We consider that Australia's suggested
revisions more precisely describe Australia's referenced argumentation. We therefore accept
Australia's proposed revisions with some minor textual modifi cation. We have also included
references to additional submissions of Australia relevant to our understanding of
Australia's argumentation.
3.4 Paragraph 7.59
3.4. Australia requests a sentence of paragraph 7.59 be revised to elaborate conditions for its
argument that it is sufficient to determine the domestic sales are "not suitable" for use as the basis
for normal value. Additionally, Australia requests that the reference to Australia's submissions be
expanded to include additional paragraphs of Australia's first written submission. Indonesia objects
to the suggested revisions as not necessary for additional clarity or accuracy. We find that including
the elements of additional text suggested, while not inaccurate, does not help to clarify the meaning
of the sentence in question, and we, therefore, decline to make this revision. We do consider that
the expanded reference to certain paragraphs of Australia's submission is relevant, and we have
accepted the suggested revision to the references.
3.5 Paragraph 7.62
3.5. Australia requests that its argument be clarified in paragraph 7.62 to make clear that Australia
has not taken the position that distorted prices cannot be suitable for use as a basis for normal value
in all cases. Indonesia objects to the suggested revision, noting that Australia offers no reference to
its submissions to support the suggested revision. We note that the sentence in question references
Australia's response to question No. 19 following the first meeting of the Panel. We note also that
question No. 19 was specific to this particular case, as question No. 19 referred to the domestic
market sales in question, the Commission's determination, and the export sales. In Australia's
response to this question, however, it made an argument based on an interpretation of Article 2.2
in contrast to Articles 2.1 and 2.3 to support its assertion that the ADC did not need to examine
export sales in considering whether the domestic sales permitted a proper comparison. We consider
that Australia's response did not offer a case-specific argument, but the question and response were
nevertheless limited to addressing the domestic sales in question. We have, therefore, not accepted
Australia's suggested revision, and we have instead revised the sentence at issue to more accurately
reflect Australia's referenced submission.
3.6 Paragraphs 7.85 and 7.86 (7.85-7.87)
3.6. Australia takes issue with the summary of its argument in paragraph 7.85 (paragraphs 7.85
and 7.86), which characterized Australia's submissions as arguing that the applicable analysis in this
case was similar to the analysis that would be undertaken to determine whether domestic sales were
made in the ordinary course of trade. Australia proposes a revised summary of its argument in this
respect. Australia also requests a revision along the same lines to paragraph 7.86 (7.87), which
offers an assessment by the Panel of the ADC's determination in relation to the summary in the prior
paragraph of Australia's argumentation. Indonesia objects to the suggested revisio ns, arguing that
Australia's arguments were accurately described and that the proposed revisions are not necessary
for additional clarity or accuracy. We recall that the descriptions of the parties' arguments are not
intended to reflect the entirety of the parties' arguments, and that a panel has the discretion to
address only those arguments it deems necessary to resolve a particular claim . The integrated
executive summaries of the arguments of the parties are set out in Annexes B1 -B4. We consider
that certain portions of Australia's revised summary of its argument ation in paragraph 7.85
(paragraphs 7.85 and 7.86) offer a more precise and accurate summary of some of the relevant
points as made by Australia in its submissions, and we have, therefore, divided paragraph 7.85 into

two paragraphs and accepted portions of those suggested revisions with minor alterations and
additional references. We have not accepted the entirety of Australia's proposed revised summar y
where we considered that the points could be accurately further summarized more succinctly and
where we considered that the points made were redundant of the remaining summary already set
forth in paragraph 7.85 (paragraphs 7.85 and 7.86). We do not consider that Australia's proposed
revisions to the Panel's assessment made in paragraph 7.86 (7.87) contribute to the accuracy and
clarity of the paragraph. We have, however, made certain revisions to this paragraph for greater
clarity.
3.7 Paragraph 7.92 (7.93)
3.7. Australia takes issue with the Panel's summary of its argument in paragraph 7.92 (7.93):
"Australia argues that the ADC was entitled to reject the relevant costs because, according to
Australia, the first sentence of Article 2.2.1.1 envisages that properly recorded costs may be
disregarded where the circumstances are not 'normal and ordinary'". Australia submits that it did
not use the words "properly recorded costs" in its submissions. The use of these words by the Panel,
in Australia's view, gives the impression that Australia argued that an investigating authority must
confirm that the two conditions in Article 2.2.1.1 are satisfied before concluding that circumstances
are not normal and ordinary. Australia submits that it did not make such an argument. Australia
therefore requests that paragraph 7.92 (7.93) be amended to reflect more precisely Australia's
argument. Indonesia objects to Australia's proposed revision and considers that the Panel accurately
described Australia's argument. We consider that Australia's revision more precisely characterizes
Australia's argument and have made changes to paragraph 7.92 (7.93) and footnotes to that
paragraph to reflect that revision.
3.8 Paragraph 7.107 (7.108), footnotes 201 (209), 202 (210) and 208 (216)
3.8. Australia asks us to introduce changes to paragraph 7.107 and introduce an additional footnote
to that paragraph to reflect more precisely its argument that using Pindo Deli's and Indah Kiat's
recorded pulp costs "would not have resulted in a constructed normal value that was an 'appropriate
proxy for the price of the like product in the ordinary course of trade in the domestic market of the
exporting country when the normal value cannot be determined on the basis of domestic sales', as
required by the Appellate Body for the construction of costs under Article 2.2.1.1".3 Australia further
asks the Panel to provide more complete citations to its submissions in footnotes 201 (209),
202 (210) and 208 (216). Indonesia objects to the revisions proposed by Austral ia on the grounds
that the Panel accurately described Australia's arguments and provided adequate citations . In our
view, Australia's proposed revisions add clarity and precision to the cited arguments. We therefore
accept Australia's proposed revisions with some minor textual modifications.
3.9 Paragraph 7.114 (7.115)
3.9. Australia submits that the Panel's reasoning in paragraphs 7.114 (7.115) and 7.116 (7.117)
suggests that the Panel has found that the term "normally" does provide a separate legal basis to
disregard an exporter or producer's records. However, this is not explicitly stated in the Interim
Report. Australia requests that the Panel make its finding clear with respect to the legal question it
poses at paragraph 7.108 (7.109), as to whether the term "normally" in the first sentence of
Article 2.2.1.1 provides a separate basis to disregard an exporter's records. Indonesia objects to the
proposed revision and argues that Australia asks the Panel to make the finding which its reasoning
does not require. We agree with Australia that it follows from our reasoning in paragraphs 7.110 -
7.114 (7.111-7.115) that the term "normally" in the first sentence of Articl e 2.2.1.1 provides a
separate basis to disregard an exporter's records. We have therefore modified the last sentence of
paragraph 7.114 (7.115) to make this conclusion explicit.
3.10 Paragraph 7.162 (7.163) and footnote 317 (325)
3.10. Australia argues that paragrap h 7.162 (7.163), which states in part that "Indah Kiat's data
relating to the volume and value of woodchips consumed in the production of pulp was available on
the ADC's record", and footnote 317 (325) inaccurately describe the information available on record
of the ADC. Specifically, Australia argues that Exhibit IDN-28 (BCI), cited in footnote 317 (325),

3 Australia's request for review of the Panel Interim Report, paras. 22-24 (referring to Appellate Body

records only the value of woodchips (raw materials) consumed to produce pulp for the whole of the
investigation period and does not record the volume of woodchips consumed to produce pulp, for
the whole of the investigation period. Australia clarifies that the reference to "production" in
Exhibit IDN-28 (BCI) is the volume of pulp produced, not the volume of woodchips consumed in the
production of pulp. Australia argues that the ADC only had information available relating to the
volume of woodchips consumed to produce pulp for the month of November 2015 – not for the whole
investigation period. On this basis, Australia requests us to make modifications to paragraph 7.162
(7.163) to clarify that Exhibit IDN-28 (BCI) does not record the volume of woodchips consumed in
the production of pulp in 2015 and that the ADC had on its record data relating to the volume of
woodchips consumed in the production of pulp only for the month of November 2015.
3.11. Indonesia objects to Australia's request. Indonesia argues that Exhibit IDN-28 (BCI) contains
both the total value of woodchips consumed and the per -unit value of woodchips. In Indonesia 's
view, the total volume of woodchips can be derived by dividing the total value of woodchips by the
per-unit value of woodchips. For these reasons, Indonesia requests us to reject Australia's proposed
revision.
3.12. In light of the parties' arguments, we have re-examined Exhibit IDN-28 (BCI) providing cost
data for Indah Kiat's pulp-making in 2015, and specifically whether it provides both value and volume
of woodchips consumed in the production of pulp. We find helpful Australia's clarificat ion that the
word "production" in this Exhibit refers to the volume of pulp produced and not the volume of
woodchips consumed. Indonesia has not contested this clarification. In response to Australia's
comments, Indonesia has not pointed us to a number in this Exhibit which represents the volume of
woodchips consumed in the production of pulp. Rather, Indonesia argue s that this number can be
derived from the data contained in the Exhibit by dividing the total value of woodchips by the per -
unit value of woodchips. We understand that the per-unit amount in Exhibit IDN-28 (BCI) refers to
the value of woodchips required to produce one ton of pulp. By performing the calculation suggested
by Indonesia we arrive at the volume of pulp produced rather than the volume of woodchips
consumed by Indah Kiat . We are therefore not convinced by Indonesia's argument and accept
Australia's request to modify paragraph 7.162 so that it reflects that Exhibit IDN-28 (BCI) provides
the value of woodchips consumed in the production of pulp by Indah Kiat for the period of
investigation, but not the volume of woodchips consumed. We have introduced subsequent changes
to footnote 317 (325) reflecting the absence of volume data for woodchips in Exhibit IDN-28 (BCI)
and the implications of that fact.
3.13. With regard to the second part of Australia's request, we note that, in the course of this
proceeding, Australia argued that the ADC was able to determine the volume and value of pulpwood
consumed by Indah Kiat to make woodchips only for the month of November 2015. 4 At the second
meeting of the Panel, Australia explained in detail the difference between pulpwood (an input into
production of woodchips ) and woodchips (an input into production of pulp), and distinguished
the two.5 We explained in paragraph 7.162 (7.163) of the Interim Report that, in deciding whether
Indah Kiat's cost of woodchips could have been replaced, we do not consider it relevant whether the
ADC was only able to determine the cost data for pulpwood for one month. We therefore find that
our statement in paragraph 7.162 (7.163) responds to Australia's argument made in the course of
this proceeding. To the extent Australia now attempts to characterize its argument differently and
argues that it was only able to determine the volume of woodchips consumed in the production of
pulp for one month, we note that the interim review stage is not an opportunity for the parties to
re-open arguments already put before a panel. We therefore decline the second part of Australia's
request, i.e. to specify in paragraph 7.162 (7.163) that the ADC had on its record data relating to
the volume of woodchips consumed in the production of pulp only for the month of November 2015.

ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 First integrated executive summary of the arguments of Indonesia 9
Annex B-2 First integrated executive summary of the arguments of Australia 21
Annex B-3 Second integrated executive summary of the arguments of Indonesia 36
Annex B-4 Second integrated executive summary of the arguments of Australia 48

ANNEX B-1
FIRST INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF INDONESIA
EXECUTIVE SUMMARY OF INDONESIA'S FIRST WRITTEN SUBMISSION

I. AUSTRALIA'S FINDING THAT A PARTICULAR MARKET SITUATION EXISTED RE STS
ON AN INCORRECT INTERPRETATION OF ARTICLE 2.2 OF THE ANTI -DUMPING
AGREEMENT

A. A "Particular Market Situation" Is an Exceptional Set of Circumstances Affecting the
Domestic Market

1. Australia determined that a "particular market situation" existed based on GOI forestry policies
that allegedly resulted in a distorted price of hardwood timber, an input in the pulp production
process. Australia's interpretation of "particular market situation" is incorrect.

1. The Ordinary Meaning of "Particular Market Situation" Means it Is an Exceptional Set of
Circumstances Affecting Sales in a Geographic Region

2. "Particular market situation" is not defined in the Anti -Dumping Agreement. The term
"particular" is however defined in the Oxford English Dictionary as "[d]istinguished in some way
among others of the same kind; not ordinary; worthy of notice, remarkable; special" . A "market"
may be defined as "[a] geographical area of commercial activity ". A "situation" is defined as:
"[p]osition of affairs; combination of circumstances". Consequently, a "particular market situation"
is an exceptional combination of circumstances taking place in a geographic region.

2. The Context Provided by Other Prov isions of the Treaty Confirms a Particular Market
Situation Exists in Limited Circumstances Affecting Price Comparability

3. Article 2.2, itself, provides context for understanding the meaning of the "particular market
situation" provision. Article 2.2 provides two other limited exceptions to using domestic sales which
apply to the unusual situation where a producer has either no domestic market sales or very few
domestic market sales. Both exceptions also concern circumstances affecting sales in the domes tic
market, as a whole.

4. The Anti-Dumping Agreement, GATT Article VI and a number of other provisions of the GATT
also provide context relevant to interpreting Article 2.2 and the meaning of "particular market
situation". The fact that Article VI is an exception to Articles I and II indicates part of the context for
interpreting Article VI and the Anti -Dumping Agreement is the right of other Members not to have
their exports subjected to duties in excess of negotiated bound duties or to have their exports treated
less favorably than exports from other countries. Therefore, Article VI and the Anti -Dumping
Agreement represent a balance between a right to apply anti -dumping duties within certain limits
and a right not to be subjected to anti-dumping duties going beyond those limits.

5. The SCM Agreement is also relevant to an understanding of the meaning of the "particular
market situation" provision. The SCM Agreement is concerned with regulating government influence
of market prices, i.e. governments may not provide goods to producers for below market prices. In
contrast, the Anti -Dumping Agreement is concerned with international price discrimination by
individual producers or exporters. Reading the "particular market situation" as Australia does
impermissibly interjects the Anti -Dumping Agreement into the sphere of regulating government
behavior which is expressly regulated in the SCM Agreement.

3. Object and Purpose

6. By promulgating express rules, an overarching goal of the WTO Agreement was to libe ralize
trade by lowering tariff barriers and to ensure against arbitrary trade distorting measures as
succinctly stated in the Marrakesh Declaration.

7. Article 2 of the Anti -Dumping Agreement contains a number of additional rules on how
dumping margins mu st be calculated by an investigating authority, including Article 2.2,
Article 2.2.1, Article 2.2.1.1, Article 2.2.2, Article 2.3, Article 2.4, Article 2.4.1, Article 2.4.2, and
Article 2.5. The cited provisions demonstrate the Anti -Dumping Agreement expressly provides the
rules Members must follow before imposing an anti -dumping duty and support a narrow
interpretation of the "particular market situation" provision.

8. The Agreement, thus, manifests an object and purpose of liberalizing tra de, while permitting
Members to respond to dumping with anti -dumping measures and delineating the extent of a
permissible response by setting forth explicit rules and procedures that must be followed. A narrow
interpretation of "particular market situation " as an exceptional combination of circumstances
affecting the domestic market is consistent with the object and purpose of liberalizing trade and
balancing the rights of Members. A narrow reading of "particular market situation" is consistent with
the two other exceptions to using domestic prices found in Article 2.2, i.e., no sales in the ordinary
course of trade and a low volume of sales. Each of those exceptions is narrow and, "particular market
situation" should, likewise, be interpreted in a narrow manner. Australia's broad interpretation that
a "particular market situation" can include a situation where a produce obtains low price inputs for
the production of the merchandise under consideration is incorrect because it upsets the balance of
liberalizing trade by allowing Members to ignore domestic market prices whenever a producer
obtains and uses low price inputs. Nothing in the text or negotiating history supports a broad
interpretation of the term "particular market situation" and Members agreed not to regulate "input
dumping", which is similar to what Australia has interpreted the "particular market situation"
provision as permitting.

4. Negotiating History

9. The negotiating history confirms the ordinary meaning and context of the term "particular
market situation" was intended to be narrow in scope. The term "particular market situation" did not
appear in the GATT 1947. It was not until the 1967 Anti-Dumping Code that the phrase first appeared
but there does not appear to be any negotiating histor y indicating what the "particular market
situation" provision meant and subsequent negotiating history sheds little additional light on the
meaning of "particular market situation." The silence surrounding the term's sudden appearance in
the 1967 Anti-Dumping code supports Indonesia's narrow interpretation.

10. Using the "particular market situation" provision, as Australia does, to address an alleged
distortion in the cost of an input also conflicts with the idea that the parties did not intend for the
Anti-Dumping Agreement to regulate "input dumping" . The parties ultimately never included
provisions covering input dumping in the Anti-Dumping Agreement.

11. The discussion input dumping generated stands in stark contrast to the silence surrounding
introduction of the "particular market situation" provision and highlights why, if the provision had
the meaning Australia gives it, there would have been evidence in the negotiating history to that
effect. It defies common sense that there would have been no discussion about a provision with such
broad implications for disregarding actual domestic prices.

B. Australia's "Particular Market Situation" Finding Is Inconsistent with Article 2.2

12. The nature of the "particular market situation" the Australian Anti-Dumping Commission found
was due to purported GOI "influence" in the Indonesian timber and pulp industries. According to the
Commission, this meant hardwood timber prices in Indonesia were distorted and A4 copy paper
producers benefited from cheaper hardwood pulp prices. With respect to basing its "particular market
situation" finding based on distortions to an input price the Commissioner noted government
influence on prices or input costs could be one cause of artificially low pricing.

13. Indonesia argued Australia had no basis to make a "particular market situation" finding
because Australia had no evidence of inter alia an oversupply of timber or pulp in the Indonesian
market. Further, Indonesia disputed the relevance of various policies to whic h Australia cited as
insufficient to support the conclusion that such policies artificially lowered the price of inputs.

14. Australia's action is all the more egregious when considering Australia investigated allegations
of subsidization by the GOI and determined, to the extent there was subsidization, it did not rise to
actionable levels. Australia then mis -interpreted the "particular market situation" provision of the

Anti-Dumping Agreement to achieve what Australia acknowledged it could not do pursuant to the
SCM Agreement because Australia's subsidy investigation found there were no distortions.
Consequently, Australia's action is inconsistent with Article 2.2 of the Anti -Dumping Agreement
because it is based on an incorrect interpretation of "particular market situation".

II. AUSTRALIA ACTED INCONSISTENTLY WITH ARTICLE 2.2 OF THE ANTI -DUMPING
AGREEMENT BY DISREGARDING HOME MARKET SALES EVEN THOUGH A PROPER
PRICE COMPARISON WAS POSSIBLE

A. An Investigating Authority Cannot Disregard the Domestic Marke t Price When a
Proper Price Comparison Is Possible

15. Article 2.2 does not permit an investigating authority to disregard domestic market sales
prices if they are comparable to export prices even if a "particular market situation" exists.

1. When a "Particular Market Situation" Does Not Affect Price Comparability the
Investigating Authority Cannot Disregard Domestic Market Sales Pursuant to the
Ordinary Meaning of Article 2.2

16. An investigating authority may only disregard domestic market sales "[ w]hen ..., because of
the "particular market situation" ... in the domestic market of the exporting country, such sales do
not permit a proper comparison". The plain meaning dictates that an investigating authority can use
export sales to a third country o r can construct the normal value based on the cost of production
only when the "particular market situation" prevents a proper comparison.

17. The phrase "proper comparison" in Article 2.2 can only be understood in the context of the
comparison Article 2.1 describes of "the export price of the product exported from one country to
another" with "the comparable price in the ordinary course of trade, for the like product when
destined for consumption in the exporting country".

18. In order to consider when a comparison between prices of export sales and prices of domestic
sales would not be "proper", it is necessary to consider the meaning of the word "proper". The Oxford
English Dictionary defines "proper" as "[s]uitable for a specified or implicit purpose or requirement;
appropriate to the circumstances or conditions; of the requisite standard or type; apt; fitting;
correct, right". To determine why the comparison has to be "suitable" or "appropriate," one must
consider why the comparison between prices in export sales and prices in domestic sales is being
performed. Article 2.1 indicates that the reason for the comparison is to ascertain if a product is
being dumped by examining the export price against the domestic market price.

2. Several Provisions of the Anti -Dumping Agreement Provide Relevant Context and
Describe Dumping as International Price Discrimination by an Individual Exporter which
Is Consistent with Article 2.2's Emphasis on Price Comparability Over the Mere Existence
of a "Particular Market Situation"

19. The Anti -Dumping Agreement refers to "dumped", "dumping", "margin of dumping" or
"dumping margin". While the Agreement uses a variety of different terms, the Appellate Body in
US – Stainless Steel (Mexico) stated no significance attaches to that fact, the definition of "dumping"
in Article 2.1 is expressed to apply "for the purposes of this Agreement" or for the purposes of the
entire Agreement. The Appellate Body further stated that the concepts of "dumping" and "margin of
dumping" "are in terlinked and must be considered and interpreted in a coherent and consistent
manner for all parts of the Anti-Dumping Agreement", and that "dumping" and "margin of dumping"
have the same meaning throughout the Anti-Dumping Agreement".

20. Dumping, in tur n, is "international price discrimination" reflecting the pricing practice of an
exporting firm to charge a lower price for exported goods than it does for the same goods sold
domestically". Likewise, a WTO technical paper states "[d]umping is, in general, a situation of
international price discrimination, where the price of a product when sold in the importing country
is less than the price of that product in the market of the exporting country" . Indeed, Australia's
Senate Economics Legislation Committee e ndorsed this definition in a report on the Customs
Amendment (Anti-Dumping) Bill 2011.

21. Articles 2.1 through 2.5 address various aspects of what the investigating authority must do
to make an accurate comparison of domestic market prices to export pri ces. The purpose behind
ensuring an accurate comparison, as indicated above, is to ascertain if there is dumping, i.e., price
discrimination. The Anti-Dumping Agreement also makes clear that dumping is an exporter-specific
inquiry without relation to gover nment involvement which, as noted above, falls exclusively within
the province of the SCM Agreement.

22. The WTO Appellate Body has concluded that "dumping" and "margin of dumping" are "exporter
specific concepts" which arise from the pricing behavior of individual exporters, saying: "{d}umping
arises from the pricing strategies of exporters as both normal values and export prices reflect their
pricing strategies in home and foreign markets."

23. Therefore, dumping occurs when an individual exporter sell s at a lower price in the export
market than in its domestic market, and the margin of dumping is the difference or amount of
discrimination between the export sales prices and the domestic sales prices for that individual
exporter. It is important to note that the Anti-Dumping Agreement does not authorize the imposition
of anti-dumping duties in response to exporters selling at low prices in the export market. Instead,
the Anti-Dumping Agreement limits the imposition of anti-dumping duties to when an exporter sells
at export prices that discriminate, i.e., are at prices below the domestic market price.

3. The Object and Purpose of the Anti-Dumping Agreement is to Allow Members to Address
International Price Discrimination Subject to Specified Rules and Limits

24. As noted above, the object and purpose of liberalizing trade while permitting an exception for
the imposition of anti -dumping duties subject to specific rules and procedures is relevant for
interpreting Article 2.2. Another objective of the Anti-Dumping Agreement is to permit Members to
impose anti-dumping duties only in response to price discrimination and to prevent Members from
doing so when there is not price discrimination (or is not injury). Clear evidence of that objective is
found in Art icle 2.2 and several other provisions of Article 2 referencing "price comparability".
Indeed, the word "comparable" or "comparability" appears eight times in Article 2, including
Article 2.1, Article 2.2, Article 2.4, and Article 2.5. Price comparability i s so prominent in Article 2
because the purpose of the inquiry is to determine whether international price discrimination is
occurring. If the Anti -Dumping Agreement were designed to prevent exporters from selling at low
prices, there would be no need to examine price comparability.

4. GATT Case Law Confirms Article 2.2's Emphasis on Price Comparability

25. A relevant GATT panel decision exists which involved a dispute brought just before the entry-
into-force of the WTO, involving a nearly identical predecessor provision to Article 2.2. In EC –
Imposition of Anti - Dumping Duties on Imports of Cotton Yarn from Brazil, the respondent, EC,
determined the dumping margin using the prices of domestic sales in Brazil (the complainant) as
the normal value. The panel explained the key inquiry was not whether a "particular market
situation" existed but whether it affected price comparability.

26. The panel's reasoning that the relevant inquiry is whether the "particular market situation"
renders the domestic market sales unfit to compare to export sales is of direct relevance to this
dispute and confirms the ordinary meaning Indonesia has advanced above. In the action subject to
this dispute, Australia's investigating authority stopped the inquiry after determining a "particular
market situation" existed, despite the undeniable evidence that price comparisons were possible.

B. Australia Resorted to Constructed Value Based on Finding a "Particular Market
Situation" Existed and Not as Article 2.2 Requires on Whether a Proper Comparison
Could Be Performed

27. Australia acted inconsistently with Article 2.2 because Austral ia did not examine whether,
because of the alleged "particular market situation", the comparability of domestic market to export
price was affected. Australia's failure to do so renders its action inconsistent with Article 2.2 of the
Anti-Dumping Agreement.

28. Australia found a "particular market situation" existed based on GOI policies which allegedly
lowered the price of hardwood timber. The Indonesian producers argued the Commission had no
evidence domestic prices were distorted and unsuitable for comp arison with export prices because

the Commission had no evidence the alleged distortions impacted differently domestic and export
prices. Beyond acknowledging the argument had been made, the Commissioner's report does not
address whether those alleged situ ations involving government policies in the domestic market
actually made any difference to the determination of the margin of dumping that would arise from
a comparison between each individual Indonesian exporter's domestic prices and its export prices.
The Commissioner's report is confined to addressing the question of whether the exporter's domestic
prices are different from what they would have been in the absence of the government policies.
However, Article 2.2 does not permit deviation from using dome stic prices as the basis of normal
value if there is a situation in the market which merely makes domestic prices different to what they
would be in the absence of that situation. Article 2.2 only permits a deviation from using domestic
prices of a specifi c exporter as the basis of normal value for that specific exporter if there is a
situation in the domestic market which has the effect that a comparison between the prices of the
domestic sales with the prices of export sales of that export cannot accurately indicate whether the
individual exporter is price discriminating between domestic sales and export sales.

29. The nature of the A4 copy paper production process is such that even if input prices for
hardwood timber were distorted, the same inputs were used to manufacture the A4 copy sold to the
Indonesian domestic market and the A4 copy paper exported to Australia.

30. Australia has given no explanation as to why the allegedly distorted low -priced inputs would
not also affect export prices to Australi a. Indeed, evidence the Commission gathered in the injury
investigation showed imports from Indonesia were priced below those of the other imports
suggesting that to the degree Indonesian producers obtained low price inputs, they affected export
prices.

31. The Appellate Body in United States – Definitive Anti-Dumping and Countervailing Duties on
Certain Products from China found that a low-priced input will affect the export price as well as the
domestic price in the analogous context of domestic subsidie s in investigations involving market
economies like Indonesia. A domestic subsidy is a subsidy that is not an export subsidy. Australia's
"particular market situation" finding was equivalent to a finding that the GOI was providing a
domestic subsidy in the form of goods for less than adequate remuneration.

III. AUSTRALIA'S FAILURE TO USE THE INDONESIAN PRODUCERS' RECORDS TO
CALCULATE THE COST OF PRODUCTION IS INCONSISTENT WITH ARTICLES 2.2 AND
2.2.1.1 OF THE ANTI-DUMPING AGREEMENT

A. The Well-Established Meaning of Article 2.2.1.1 Requires an Investigating Authority
to Use the Producer's Costs if they Reasonably Reflect the Cost to Produce the
Merchandise Under Consideration, Not Whether the Costs, Themselves, Are
Reasonable

32. Article 2.2.1.1 limits h ow WTO Member countries may determine whether an exporter is
dumping and the size of the margin of dumping. Australia acted inconsistent with the well -
established meaning of Article 2.2.1.1 by disregarding the cost of pulp from the Indonesian
producer's records and substituting a benchmark pulp price.

1. The Established Ordinary Meaning of Article 2.2.1.1 Requires an Investigating Authority
to Use the Exporter's or Producer's Records if they Reasonably Reflect the Cost of
Producing the Merchandise Under Consideration

33. In EU – Biodiesel (Argentina ), the Appellate Body interpreted the ordinary meaning of
Article 2.2.1.1 in a dispute involving nearly identical facts with this dispute as Indonesia informed
Australia. The EU authorities determined that the prices of two inputs – soybeans and soybean oil –
in the Argentine market were distorted because of Argentine government tax policies. Based on that
distortion, the EU determined the Argentine producers' costs for the main raw material w ere not
reasonably reflected in the companies' records.

34. The Appellate Body explained that Article 2.2.1.1 sets forth rules for calculating the cost of
production for purposes of determining normal value as indicated by the reference to "paragraph 2"
in the opening phrase of the first sentence. The first sentence of Article 2.2.1.1 also specifies that
"costs shall normally be calculated on the basis of the records kept by the exporter or producer
under investigation". The Appellate Body noted records are defined as: "'[a]n account of the past; a

piece of evidence about the past; ... a written or otherwise permanently recorded account of a fact
or event; ... a document ... on which such an account is recorded'".

35. Article 2.2.1.1 then sets forth two c onditions that the exporter's or producer's records must
meet. The first condition to be met is the producer's or exporter's records must be kept in accordance
with the generally accepted accounting principles (GAAP) of the exporting country. The Indonesia n
producers' books and records were kept in accordance with Indonesian GAAP, so this condition is
not at issue in this dispute.

36. The second condition, the interpretation of which is of critical importance to this dispute, is
that the producer's or exp orter's records must "reasonably reflect the costs associated with the
production and sale of the product under consideration". The second condition is satisfied when the
records reasonably reflect the costs incurred and not, as Australia interprets the provision, whether
the costs, themselves, were reasonable.

37. The only plausible interpretation of Article 2.2.1.1 is evident from the construction of the first
sentence. In the phrase "reasonably reflect", "reasonably" is an adverb that precedes the verb
"reflect" and thereby modifies "reflect". "Reasonably" is not an adjective modifying the noun "costs".
Indeed, the drafters of Article 2.2.1.1 could have used the adjective "reasonable" to modify the noun
"costs". The fact the drafters did not do so must be seen as intentional.

38. As the Appellate Body reasoned, the phrase "costs associated with the production and sale of
the product under consideration" is preceded by the phrase "reasonably reflect" which means "to
mirror, reproduce, or correspond to something suitably and sufficiently". It is important to recall that
"reasonably" modifies "reflect" (not "costs") and that "such records," which refers to the records of
the exporter or producer under investigation, precedes "reasonably reflect" in the firs t sentence of
Article 2.2.1.1. Put together, the second condition of Article 2.2.1.1 means the exporter's or
producer's "records" need to "reasonably reflect" the "costs" of producing or selling the product
subject to the investigation. But the reasonableness of the "costs" is not at issue, just whether the
records report them in a suitable manner.

2. The Context Confirms Article 2.2.1.1 Is Focused on Whether the Records Reasonably
Reflect the Cost of Producing the Merchandise Under Consideration and Not Whether
Such Costs, themselves, Are Reasonable

39. As the Appellate Body noted, GAAP concerns general accounting and reporting practices and
the first condition is concerned with the producer's or exporter's records being in conformity with
general standa rds. The second condition is more specific and concerns "the records' reasonable
reflection of the costs associated with the production and sale of the product under consideration in
a specific anti-dumping proceeding".

40. The second and third sentences of Article 2.2.1.1 and footnote 6 of the Anti -Dumping
Agreement support the above interpretation of the second condition of Article 2.2.1.1. As the
Appellate Body has stated, those "provisions set out rules for an investigating authority's allocation
and adjustment of costs". Importantly, the Appellate Body noted those provisions "imply it may be
inappropriate to attribute certain company costs entirely to the production and sale of the product
under consideration".

41. The Appellate Body also fo und as relevant context Article 2.2 which refers to the "cost of
production in the country of origin". Article 2.2.1.1 expressly refers to Article 2.2 and the Appellate
Body found "costs" should be understood consistently in the two articles. The interpret ative
consequence of such an understanding is that Article 2.2.1.1 "should not be interpreted in a way
that would allow an investigating authority to evaluate the costs reported in the records kept by the
exporter or producer pursuant to a benchmark unrelated to the cost of production in the country of
origin".

42. Finally, the Appellate Body found as context that Article 2.2 relates to the establishment of
normal value through a proxy for domestic sales prices. The interpretation of the second condition
in the first sentence of Article 2.2.1.1 as relating to whether a company's costs reasonably reflect
the cost of making the merchandise subject to the investigation is consistent with that context.

3. Requiring an Investigating to Use the Producer's Records if they Reasonably Reflect the
Cost of Producing the Merchandise Under Consideration Is Consistent with the Object
and Purpose of the Anti-Dumping Agreement

43. While acknowledging the Anti -Dumping Agreement does not have a preamble to guide the
inquiry into object and purpose, the Appellate Body in EU – Biodiesel (Argentina) stated such things
could be discerned from the content and structure of the Agreement. The Appellate Body reasoned
the object and purpose "is to recognize the right of Members to ta ke anti-dumping measures to
counteract injurious dumping while, at the same time, imposing substantive conditions and detailed
procedural rules on anti-dumping investigations and on the imposition of anti -dumping measures".
The Appellate Body concluded that an interpretation of Article 2.2.1.1 in accordance with the ordinary
meaning of the terms in their context and in light of the object and purpose of the Anti -Dumping
Agreement of the second condition of the first is:

whether the records kept by the exporter or producer suitably and sufficiently
correspond to or reproduce those costs incurred by the investigated exporter or
producer that have a genuine relationship with the production and sale of the specific
product under consideration.
4. The Meaning of Article 2.2.1.1 as Requiring Use of a Producer's Actual Costs Is Well
Established by WTO Case Law

44. Several panels have addressed the proper interpretation of Article 2.2.1.1 and have agreed
with the Appellate Body's understanding as expressed in EU – Biodiesel (Argentina). In EU – Biodiesel
(Indonesia), the panel applied the interpretation of Article 2.2.1.1 made by the panel in EU –
Biodiesel (Argentina) , which the Appellate Body upheld, and went on to find that replacing the
producers' cost because an input allegedly was at a low price was inconsistent with Article 2.2.1.1.
In Ukraine – Ammonium Nitrate, the panel also followed the Appellate Body's interpretation of the
second condition in the first sentence of Article 2.2.1.1 and found the invest igating authority was
not warranted in rejecting Russian gas costs (an input into ammonium nitrate production) because
government regulation of gas prices meant the costs incurred by Russian producers was lower
compared to prices in other countries.

B. Australia Disregarded Pindo Deli's and Indah Kiat's Costs Because they Did Not
Reflect "Competitive Market Costs" which Is Inconsistent with Article 2.2.1.1

45. The Australian investigating authority departed from using the information in the records of
Pindo Deli and Indah Kiat (hereafter "the Indonesian producers") to calculate the cost of production
of A4 copy paper based on the view that they did not reasonably reflect "competitive market costs"
associated with the production or manufacture of A4 copy paper because the cost of hardwood pulp
recorded in the companies' records did not reasonably reflect a competitive market cost.

46. Australia applied the phrase "competitive market costs" to mean the costs must, themselves,
be reasonable – the exact manner the Appellate Body and panels have ruled to be inconsistent with
Article 2.2.1. Indeed, Australia refused to reconcile its application of Australian domestic law with
Article 2.2.1.1 despite the Indonesian producers' express argument that Australia's dome stic law
was inconsistent with Article 2.2.1.1.

47. Instead of examining whether the actual costs recorded in the Indonesian producers' records
were, within acceptable limits, accurate and faithful records of the actual cost incurred to produce
A4 copy paper, as the Appellate Body and a number of panels have reasoned Article 2.2.1.1 requires,
the Commission examined whether the records reflected "competitive market costs". All of the record
evidence established that the Indonesian producers records reasonably reflected the cost to produce
A4 copy paper and Australia disregarded those costs because the input cost allegedly was distorted.

IV. AUSTRALIA DID NOT CALCULATE THE PRODUCER'S COST OF PRODUCTION IN
INDONESIA WHICH IS INCONSISTENT WITH ARTICLE 2.2 O F THE ANTI -DUMPING
AGREEMENT

A. Article 2.2 Requires an Investigating Authority to Calculate a Cost of Production in
the Country of Origin

48. Australia did not calculate the cost of production in Indonesia which is inconsistent with
Article 2.2.

1. The Ordinary Meaning of Article 2.2 and the Requirement to Calculate the Cost of
Production in the Country of Origin Is Well-Established

49. The Appellate Body and several panels have given careful thought to the interpretation of
Article 2.2 of the Anti-Dumping Agreement as it relates to the requirement to calculate the cost of
production in the country of origin. The uniform understanding stated by the Appellate Body EU –
Biodiesel (Argentina) and the various panels to have considered this issue has been Article 2.2
requires the investigating authority to calculate the cost of production in the country of origin.
Australia did not calculate a cost of production of A4 copy paper in Indonesia, and its action is
inconsistent with Article 2.2.

B. Australia Did Not Calculate a Cost of Production in Indonesia which Is Inconsistent
with Article 2.2 of the Anti-Dumping Agreement

50. Australia did not calculate a cost of production in Indonesia as Article 2.2 of the Anti-Dumping
Agreement requires but instead cal culated the cost of producing pulp in Brazil and South America.
Australia made certain adjustments to a benchmark, however, they all related to deriving an FOB
cost of production in Brazil or South America, not Indonesia.

V. AUSTRALIA CALCULATED AND IMPOSED ANTI-DUMPING DUTIES IN EXCESS OF THE
MARGIN DUMPING PERMITTED BY ARTICLE 2 WHICH IS INCONSISTENT WITH
ARTICLE 9.3 OF THE ANTI -DUMPING AGREEMENT AND ARTICLE VI:2 OF THE
GATT 1994

51. Australia calculated and imposed anti-dumping duties in excess of those permitted by Article 2
which is inconsistent with Article 9.3 which sets a ceiling on the anti -dumping duties that may be
imposed as the margin of dumping established in a manner consistent with Article 2.

A. Article 9.3 Sets a Ceiling on the Amoun t of Duties that May Be Imposed as the
Dumping Margin Calculated Consistently with Article 2

52. The Appellate Body in EU – Biodiesel (Argentina) has stated that to succeed in a claim under
Article 9.3, a complainant must show the anti-dumping duties were "imposed at a rate that is higher
than the dumping margin that would have been established had the authority acted consistently
with Article 2".

B. Australia Did Not Calculate Margins in a Manner Consistent with Article 2 which
Resulted in the Imposition of an Impermissibly High Anti-Dumping Duty

53. Australia calculated the preliminary dumping margin using the Indonesian producers' domestic
market and export sales prices. Australia calculated the revised preliminary dumping margin based
on constructed normal value, substituting the actual costs recorded by the Indonesian producers for
hardwood pulp with a benchmark price for Brazilian and South American producers. The difference
in the two margins speaks is clear evidence of the degree to which Australia calculated a margin
inconsistent with Article 2.

54. The preliminary antidumping duty margins Australia calculated using domestic market sales
prices were 2.7 percent for one producer and 18.8 percent for the other. In the revised preliminary
determination calculated using constructed normal value, th e margins were 80.5 percent for one
producer and 65.1 percent for the other. Consequently, Australia's inconsistencies with Article 2 led
to the imposition of anti-dumping duties in excess of the margin in violation of Article 9.3.

EXECUTIVE SUMMARY OF IND ONESIA'S OPENING ORAL STATEMENT AT THE FIRST
SUBSTANTIVE MEETING OF THE PANEL

I. AUSTRALIA'S FINDING THAT A PARTICULAR MARKET SITUATION EXISTED RESTS
ON AN INCORRECT INTERPRETATION OF ARTICLE 2.2 OF THE ANTI -DUMPING
AGREEMENT

55. To paraphrase Australia's view, a "particular market situation" is broad and is any condition
in the buying and selling that exists in the home market that is not general. However, Indonesia
established in its First Written Submission that the ordinary meaning of "particular market situation"
supported by the context, object and purpose, and negotiating history is limited in nature and is an
exceptional combination of circumstances taking place in a geographic region. Australia's
interpretation, therefore, is incorrect.

56. Indonesia also has established a "particular market situation" cannot relate to government
intervention because the SCM Agreement expressly regulates situations when a government
provides goods for less than adequate remuneration. In contrast, the Anti -Dumping Agreement is
concerned with international price discrimination by individual producers or exporters. Australia
responds by citing Article 2.7 of the Anti-Dumping Agreement and the second Ad note to Article VI:1
of the GATT 1994. The European Union refers t o the Ad Note to Article VI of the GATT 1994,
paragraphs 2 and 3 which refers to currency depreciation. But the two provisions to which Australia
and the European Union cite are the only two provisions in the Anti-Dumping Agreement that speak
to government intervention and they are express and detailed – unlike a "particular market situation"
which is not defined and has no negotiating history supporting Australia's interpretation.

57. Australia claims its "particular market situation" determination is not based on the price of an
input but every one of Australia's findings flows from that premise. The Commission did not cite a
single policy that related directly to the pulp or paper industries.

II. AUSTRALIA ACTED INCONSISTENTLY WITH ARTICLE 2.2 OF THE AN TI-DUMPING
AGREEMENT BY DISREGARDING HOME MARKET SALES EVEN THOUGH A PROPER
PRICE COMPARISON WAS POSSIBLE

58. Australia agrees with the interpretation of Article 2.2 Indonesia set forth in its First Written
Submission, but Australia applies it in a manner that renders the word "because" and the phrase
"do not permit a proper comparison" inutile. To paraphrase, Australia's definition of "proper
comparison", which is not vastly different from Indonesia's, is to allow a suitable and accurate
comparison to ascertain whether the product is considered dumped". Where Indonesia differs from
Australia is Australia's conclusory and unsupported interpretation of a "particular market situation"
renders home market sales unsuitable for comparison. Australia's interpretation is incorrect because
it effectively reads out of existence the word "because" and the phrase "such sales do not permit a
proper comparison". Australia seems to think Article 2.2 should be read as saying if there is a
"particular market situation" then a proper comparison is not possible. But what Article 2.2 says is
when "because" of the "particular market situation" "such sales do not permit a proper comparison",
then the investigating authority can resort to constructed normal value. In other words, the
"particular market situation" must be the cause of why a suitable and accurate comparison to
ascertain whether the product is dumped cannot be performed. And the purpose of the comparison
is to determine whether the export price is below the home market price.

59. Australia's view is in direct conflict with the GATT panel decision in EC – Cotton Yarn, What
the GATT panel was plainly saying was the "particular market situation" had to cause the sales to
be unsuitable to permit a proper comparison – it was not the mere existence of a "particular market
situation". Australia argues that the Appellate Body decision in US – Hot-Rolled Steel permits the
conclusion that prices fixed in a manner incompatible with normal commercial practice or not
according to criteria of the marketplace may be considered as not permitting a proper comparison.
But as Australia acknowledges, the Appellate Body was discussing circumstances when sales were
not made in the ordinary course of trade. Article 2.2 of the Anti-Dumping Agreement already covers
the situation when there are no sales in the ordinary course of trade.

60. The United States and the European Union argue in their third -party submissions that the
Anti-Dumping Agreement does not require the investigating authority to consider whether a situation
with an effect in the domestic market has a similar effect on prices to the export market. But this

reading is fundamentally flawed because it gives no meaning to the word "because" and the phrase
"such sales do not permit a proper comparison". The fact that Article 2.2 contains those words means
the investigating authority must consider whether because of the particular market situation a proper
comparison is no longer possible. The United States and the European Union argu e that the Anti -
Dumping Agreement permits comparisons that are not symmetrical. But this argument fails for the
same reason.

61. The European Union reads into the term "normal value" a meaning that simply is not supported
by ordinary meaning, context, ob ject and purpose, or negotiating history. The European Union
characterize the term "normal value" as undefined but that is not correct. Article 2.1 defines "normal
value" as "the comparable price, in the ordinary course of trade, for the like product when destined
for consumption in the export country." Article 2.2 provides two alternative bases for normal value:
1) the "comparable price of the like product when exported to an appropriate third country, provided
this price is representative" and 2) "the cost of production in the country of origin plus a reasonable
amount for administrative, selling, and general costs and for profits" . Normal value, thus, is a
shorthand reference to one of three defined possibilities for the price to be compared to the expor t
price, but it does not have an independent meaning as the European Union argues.

62. Australia cites to facts it alleges support distortions to the home market price but cites no
evidence that it considered whether those same factors flowed through to the export price.
Australia's sole rebuttal as to whether it considered whether the low -priced inputs equally affected
the domestic and export price was a purported lack of proof. Indonesia established, and it is
unrefuted, that the same inputs were used to manufacture the A4 copy paper sold to the Indonesian
domestic market and exported to Australia. Indonesia also established that its export prices were
lower than those of other countries demonstrating, to the extent the Indonesian producers received
low-priced inputs, it affected export prices.

III. AUSTRALIA'S FAILURE TO USE THE INDONESIAN PRODUCERS' RECORDS TO
CALCULATE THE COST OF PRODUCTION IS INCONSISTENT WITH ARTICLE 2.2.1.1 OF
THE ANTI-DUMPING AGREEMENT

63. Australia claims Indonesia's interpretation renders use of the word "normally" in Article 2.2.1.1
inutile, arguing that qualification of the verb "shall" by the adverb "normally" means an investigating
authority may use records, other than the producer's o wn, to determine costs even if the two
conditions in Article 2.2.1.1 are met. Australia's interpretation is incorrect.

64. As the panel indicated in EU – Biodiesel (Argentina), and the Appellate Body did not question,
the way in which the term "normally" is used is to indicate that the rule may be derogated from the
two conditions specified in the first sentence of Article 2.2.1.1. The use of "normally" in
Article 2.2.1.1 means the cost of production must, as a rule, be based on the exporter's or producer's
cost records and derogation from that rule is limited to the two specified exceptions in the first
sentence of Article 2.2.1.1.

65. The Appellate Body in US – Clove Cigarettes noted the ordinary meaning of "normally" is
"'under normal or ordinary con ditions; as a rule'" . The "Appellate Body has found that the
'qualification of an obligation with the adverb ''normally'' does not, necessarily, alter the
characterization of that obligation as constituting a ''rule'' ... [r]ather, the use of the term
''normally'' ... indicates that the rule ... admits of derogation under certain circumstances.'"

66. In China – Broiler Products, the panel in the compliance proceeding reasoned "'use of the term
'normally' in a legal obligation indicates a rule from which derogations are permitted subject to the
conditions set out in the legal provision'".

IV. AUSTRALIA DID NOT CALCULATE THE PRODUCER'S COST OF PRODUCTION IN
INDONESIA WHICH IS INCONSISTENT WITH ARTICLE 2.2 OF THE ANTI -DUMPING
AGREEMENT

67. Australia does n ot appear to disagree with Indonesia's argument that Article 2.2 requires
calculating the cost of production in Indonesia. Australia claims it calculated a cost of production in
Indonesia because it made certain adjustments. But none of the adjustments related to deriving the
cost of production in Indonesia. Instead, the adjustments were needed to convert certain elements
so that they were stated on an equivalent basis. Converting dry pulp to wet pulp was necessary not

to derive the cost of production in In donesia but to state the pulp in the same unit of measure. In
other words, it was no different than converting from short tons to metric tons. Removing SG&A,
ocean freight, and inland transport charges was done for the exact same reason. SG&A, ocean
freight, and inland transport charges were included in the benchmark the Commission used and
Australia had to remove them because they are not part of the cost production as specified by
Australia's own Anti-Dumping Manual.

V. AUSTRALIA CALCULATED AND IMPOSED ANTI-DUMPING DUTIES IN EXCESS OF THE
MARGIN DUMPING PERMITTED BY ARTICLE 2 WHICH IS INCONSISTENT WITH
ARTICLE 9.3 OF THE ANTI -DUMPING AGREEMENT AND ARTICLE VI:2 OF THE
GATT 1994

68. Indonesia established in its First Written Submission that Australia viola ted Article 9.3 by
calculating a constructed normal value and, in that calculation, replaced the Indonesian producers'
actual hardwood pulp costs. Both of Australia's actions were inconsistent with Article 2. Those
inconsistencies resulted in Australia imposing a higher anti-dumping duty than Australia would have
imposed had Australia calculated the margin consistent with Article 2. In so doing, Australia violated
its obligations under Article 9.3 and Australia has not argued to the contrary. Indonesia respectfully
asks the Panel to so find and to recommend Australia bring its measures into conformity with its
obligations.

EXECUTIVE SUMMARY OF INDONESIA'S CLOSING STATEMENT AT THE FIRST
SUBSTANTIVE MEETING

69. With respect to Indonesia's first claim, Indonesia believes that there are a number of key
points Indonesia has established which Australia has not effectively rebutted. The three exceptions
to using domestic prices are set forth in Article 2.2 of the Anti-Dumping Agreement and all concern
situations that require the existence of an effect on domestic but not export price. Article 2.2
provides an exception when there are no sales in the ordinary course of trade, which means the
"particular market situation" must relate to a different circumstance. Australia however confirmed it
was equating these two exceptions which Indonesia believes is incorrect. While we all are aware that
"particular market situation" is not defined, Indonesia notes that there is no neg otiating history
supporting Australia's interpretation. Indonesia has clarified that it does not agree with Australia's
view that "particular market situation" covers the Government of Indonesia's policies. This is based
on the fact that Australia's conclusive finding in its parallel anti-subsidy investigation disclosed that
the alleged subsidies were at a de-minimis level and not countervailable. This is more than sufficient
to prove that no "particular market situation" is present in Indonesia.

70. For its second claim, Indonesia has established that Article 2.2 requires an investigating
authority to determine whether "because" of a "particular market situation" a proper comparison of
domestic and export prices is not possible. Australia's interpretation in this regard is incorrect
because it reads out the word "because" and the phrase "such sales do not permit a proper
comparison" in Article 2.2. Indonesia has taken note from the meeting, however, that Australia
acknowledged that a proper price compariso n is an element to be fulfilled to apply Article 2.2 of
Anti-Dumping Agreement, but it stated that such comparison is not related to export price. In
Indonesia's view the position taken by Australia showed nothing other than to emphasize its incorrect
interpretation of Article 2.2 of the Anti-Dumping Agreement. With this position, not only has Australia
wrongly interpreted Article 2.2 of the Anti-Dumping Agreement but also failed to properly establish
and evaluate the facts.

71. Indonesia's third claim is based on nearly identical facts in the case law of EU – Biodiesel
(Argentina), EU – Biodiesel (Indonesia) , and Ukraine – Ammonium Nitrate (Russia) where the
respective panels and Appellate Body uniformly decided that Article 2.2.1.1 requires an investigating
authority to use the producer's actual costs, even when it determines that an input cost is distorted.
In this dispute, Australia decided not to use the producer's actual costs for no other reason than
because of an alleged distortion in the cost of pulp. Australia has not pointed to anything to dispute
that the records of certain Indonesian A4 copy paper producers is consistent with GAPP applied in
Indonesia, and reasonably reflect the production and sale of the product under investigation. As
such, Indonesia believes that the substitution of the actual cost of an input with an out -of-country
benchmark is not justified.

72. With respect to Indonesia's fourth claim, Australia does not dispute that it is required to
calculate the cost of production in Indonesia. But the adjustments Australia made did not result in
the calculation of a cost of production in Indonesia. Finally, b ecause Australia did not calculate the
anti-dumping margin in line with Article 2, Australia calculated a dumping margin in excess of what
is permitted, and this violates the chapeau of Article 9.3 of the Anti -Dumping Agreement and
Article VI:2 of the GATT 1994.

ANNEX B-2
FIRST INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF AUSTRALIA
I. INTRODUCTION

1. Indonesia's claims in this dispute are built on an inaccurate interpretation of the Anti-Dumping
Agreement and a misrepresentation of the facts of the investigation before this Panel. In particular,
Indonesia's case appears built on an assumption that the GATT 1994 and the Anti -Dumping
Agreement must be read in a manner which narrows the legitimate scope for investigating authorities
to remedy injurious dumping well beyond what is actually required by the texts. As such, its claims
must fail.

2. Australia's submissions demonstrate that the Anti-Dumping Commission properly determined
there was a "market situation" in the Indonesian A4 copy paper market such that sales in that
market were "not suitable for use in determining" the "normal value" (i.e. because of the "particular
market situation" such sales did not "permit a proper comparison" under Article 2.2 of the
Anti-Dumping Agreement). The Anti-Dumping Commission then correctly proceeded to determine
the "normal value" on the basis of a "constructed normal value" methodology (i.e. the "cost of
production in the country of origin plus a reasonable amount for administrative, selling and general
costs and for profits" under Article 2.2 of the Anti-Dumping Agreement and its subparagraphs).

3. Importantly, Indonesia does not challenge all of the Anti -Dumping Commission's findings in
relation to imports of A4 copy paper from Indonesia. The var ied findings by the Anti -Dumping
Commission with respect to Indonesia 1 is a clear illustration of the Anti -Dumping Commission's
proper establishment of the facts and its unbiased and objective evaluation of those facts, as
required by Article 17.6(i) of th e Anti -Dumping Agreement. The Panel cannot overturn such an
evaluation by the Anti -Dumping Commission, even though it might have reached a different
conclusion.

4. The Anti-Dumping Commission has undertaken a rigorous, unbiased and objective assessment
of the facts and evidence in its investigation and has, through the proper application of the
GATT 1994 and the Anti -Dumping Agreement, as implemented domestically through Australian
legislation, done so in a manner fully consistent with Australia's WTO obligations.

II. INTERPRETATION OF TREATIES, BURDEN OF PROOF, STANDARD OF REVIEW

5. Article 3.2 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU) directs a panel or the Appellate Body to clarify the provisions of the cov ered
agreements of the Marrakesh Agreement Establishing the World Trade Organization "in accordance
with customary rules of interpretation of public international law". The Appellate Body has confirmed
customary international law includes Articles 31 and 3 2 of the Vienna Convention on the Law of
Treaties (Vienna Convention).2

6. The general rule regarding the burden of proof is that a complaining party in a WTO dispute
must present sufficient evidence and argument to establish a prima facie case of a violation of a

1 The Anti-Dumping Commission found a negative dumping margin for one Indonesian exporter (Tjiwi
Kimia); and imposed anti-dumping duties on another Indonesian exporter (RAK) that Indonesia has not
challenged. To the extent that Indah Kiat and Pindo Deli had different results to the other exporters, it was due
to their individual circumstances, as properly determined by the Anti-Dumping Commission. The Anti-Dumping
Commission also terminated the countervailing duties investigation in respect of Indonesia, and rejected the
applicant's "particular market situation" claim made in respect of China. See Final Report, Exhibit IDN-04,
section 1.3, pp. 8-9; section 13, p 136; and Appendix 2.2, p. 146.
2 Appellate Body Reports, US — Gasoline, p. 17, DSR 1996:I, 3, at p. 16; and Japan — Alcoholic
Beverages II, p. 10, DSR 1996:1, 97 at p. 104.

covered agreement.3 The Appellate Body has stated that, "under the usual allocation of the burden
of proof, a responding Member's measure will be treated as WTO-consistent, until sufficient evidence
is presented to prove the contra ry."4 Thus, the burden of proof in this dispute falls squarely on
Indonesia. Australia's submissions demonstrate that the evidence and arguments set out by
Indonesia in its first written submission are insufficient to prove any inconsistency with the
GATT 1994 or the Anti-Dumping Agreement in regard to the measures at issue in this dispute.

7. The Anti-Dumping Agreement is a covered agreement listed in Appendix 1 of the DSU; the
rules and procedures of the DSU apply to disputes brought under it. Article 11 of the DSU sets out
the function of panels. A panel must make an objective assessment of the matter before it, including
the facts of the case, and the applicability of and conformity with the covered agreement at issue.

8. Articles 17.5 and 17.6 of the Anti-Dumping Agreement are listed as special or additional rules
and procedures in Appendix 2 of the DSU. Article 17.5(ii) of the Anti -Dumping Agreement provides
that the panel is to examine the matter based upon the facts that were before the investigati ng
authority of the importing Member when it made its determination. Article 17.6(i) provides that a
panel shall determine whether the national authorities' establishment of the facts was proper and
whether the authorities' evaluation of those facts was un biased and objective. If the establishment
of the facts was proper and the evaluation was unbiased and objective, a panel shall not overturn
that evaluation, even though the panel might have reached a different conclusion.

III. FACTUAL BACKGROUND

A. Overview of Australia's Anti-Dumping System

9. The "anti-dumping system" in Australia refers to the system which gives effect to Australia's
rights and obligations under Article VI of the GATT 1994, the Anti -Dumping Agreement and the
Agreement on Subsidies and Countervailing Measures (SCM Agreement). Australia's anti -dumping
system is based on four core principles: independence, transparency, evidence -based decision -
making, and access to review (both merits review and judicial review).

10. Australia's investigating authority is the Anti -Dumping Commission, which is headed by an
independent Commissioner and is responsible for administering Australia's anti -dumping system.
The organisational structure in Australia is not bifurcated, meaning t he Anti-Dumping Commission
investigates allegations of dumped and/or subsidised goods that have been imported into Australia,
and claims of material injury (or threat of material injury) to the Australian industry producing like
goods.

11. The Customs Act 1901 (Cth) and the Customs Tariff (Anti-Dumping) Act 1975 (Cth) provide
the statutory authority for the anti -dumping system. They contain the legal authority for the
responsible Minister and Commissioner to make decisions with respect to anti -dumping and
countervailing duties. The Customs (International Obligations) Regulation 2015 (Cth) (Customs
Regulation) sets out technical details, including matters to which the responsible Minister must have
regard when constructing the "normal value" in an anti-dumping investigation.

12. The Dumping and Subsidy Manual (Manual) provides a comprehensive guide to the policy and
practice for all operational activities conducted by the Anti -Dumping Commission. The purpose of
the Manual is to promote a consistent approach to investigation findings and decisions, but it does
not contain a mandatory set of instructions or constrain the decisions of the Commissioner.

13. The anti -dumping system in Australia is unique in that interested parties have access to
comprehensive merits review of decisions made by the Commissioner and the responsible Minister,
in addition to judicial review. Merits review is undertaken by the independent Anti-Dumping Review
Panel. After receiving a report containing recommendations from the Anti -Dumping Review Panel,
the responsible Minister is required to affirm or revoke the reviewable decision.

3 See, for example, Appellate Body Reports, US – Wool Shirts and Blouses, p. 14, DSR:1997:I, 323, at
4 Appellate Body Report, Canada – Dairy (Article 21.5 – New Zealand and US II), para. 66. (emphasis
original)

B. The Investigation Before This Panel

14. On 24 February 2016, a written application was received from Paper Australia Pty Ltd
(Australian Paper) seeki ng the publication of a dumping duty notice in respect of A4 copy paper
imported into Australia from Brazil, China, Indonesia and Thailand, and a countervailing duty notice
in respect of A4 copy paper imported into Australia from China and Indonesia. Austr alian Paper's
application claimed, inter alia, that a "particular market situation" existed in relation to both China
and Indonesia and that, as a result, domestic prices of A4 copy paper were not suitable for
determining normal values.5

15. A dumping and subsidy investigation, Investigation 341, was initiated on 12 April 2016.
Interested parties, including the Government of Indonesia and Indonesian exporters, were
individually notified in writing of the investigation and invited to complete a questionnair e, which
included requests for additional information relating to the claim of a "particular market situation".
Almost 150 submissions were received and considered by the Anti -Dumping Commission in the
course of its investigation, including 14 from the Government of Indonesia and 39 from Indonesian
exporters.6

16. The Anti-Dumping Commission's analysis of import data identified that imports of Indonesian
A4 copy paper were primarily through two groups of companies: the APRIL Group and the Sinar Mas
Group of companies (SMG). The Anti-Dumping Commission's investigation identified that:

• the APRIL Group exports were exported by PT Riau Andalan Kertas (RAK) through a related
trading company April Fine Paper Trading Pte Ltd (AFPT);7 and
• the SMG exports were predominantly exported through unrelated intermediaries by three
related companies: PT Indah Kiat Pulp & Paper Tbk (Indah Kiat); PT Pabrik Kertas Tjiwi Kimia
Tbk (Tjiwi Kimia); and PT Pindo Deli Pulp and Paper Mills (Pindo Deli)8 (the SMG exporters).

17. On 17 March 2017, the Commissioner terminated the countervailing duty investigation relating
to Indonesia, finding countervailable subsidies had been received in respect of A4 copy paper
exported to Australia from Indonesia during the investigation period, but that these were negligible
in value and/or volume.9 The Commissioner also terminated the dumping investigation in relation to
Tjiwi Kimia, one of the SMG exporters, on the basis that the goods exported by Tjiwi Kimia were not
dumped.10

18. On 17 March 2017, the Commissioner completed Final Report No. 341 in relation to
Investigation 341, finding, inter alia, dumped exports of A4 copy paper from Indonesia (with the
exception of exports from Tjiwi Kimia), and making, inter alia, the following recommendations to the
responsible Minister relevant to Indonesia:11

• that a particular market situation existed in Indonesia, such that domestic selling prices were
not suitable for determining normal values;
• that the normal values for Indah Kiat, Pindo Deli and RAK were to be determined as the sum
of the cost of production or manufacture of A4 copy paper in Indonesia; and the
administrative, selling and general costs associated with that sale and the profit on that
sale;12
• that anti -dumping dutie s be imposed in respect of certain A4 copy paper exports from
Indonesia.

19. On 18 April 2017, the responsible Minister signed a notice declaring that the goods under
investigation were subject to anti-dumping duties, and signed a public notice outlining the findings
in relation to the dumping investigation.

5 Final Report, Exhibit IDN-04, section 6.5, p. 36.
6 Australia's opening statement at the first substantive meeting with the Parties, para. 17.
7 Final Report, Exhibit IDN-04, section 6.9.7.1, p. 56.
8 Final Report, Exhibit IDN-04, section 6.9.4.1, p. 52; section 6.9.6.1, p. 55; and section 6.9.5.1, p. 54.
9 Final Report, Exhibit IDN-04, section 1.3, p. 9 and section 7.1.4, p. 76.
10 Final Report, Exhibit IDN-04, section 1.3, p. 8 and section 6.9.8.1.6, p. 63.
11 Final Report, Exhibit IDN-04, section 13, pp. 131-139.
12 This total was adjusted so as to ensure that the normal value was properly comparable with the
export price (Final Report, Exhibit IDN-04, section 13, p. 136).

20. Applications for independent merits review were received from, amongst others, the
Government of Indonesia, SMG, RAK and a successor company to AFPT. The Anti -Dumping Review
Panel subsequently recommended that the responsible Minister revoke the decisions in relation to
Indah Kiat and Pindo Deli, respectively, to not apply a downward adjustment to their respective
normal values for their domestic sales intermediary's sales margin; however it reject ed the other
grounds for appeal made by the Indonesian parties. 13 This recommendation was adopted by the
responsible Minister. The effect was to reduce the interim anti-dumping duty rate on Indah Kiat from
35.4% to 30% and to reduce the interim anti-dumping duty rate on Pindo Deli from 38.6% to 33%.

21. The Indonesian exporters and the Government of Indonesia have not made applications to
the Federal Court of Australia for judicial review of the decisions made by the Commissioner or the
responsible Minister.

IV. AUSTRALIA ACTED CONSISTENTLY WITH AR TICLE 2.2 IN DISREGA RDING
INDONESIAN DOMESTIC PRICES IN DETERMINING THE "NORMAL VALUE"

A. Anti-Dumping Duties are a Valid and Permissible Response to Injurious Dumping

22. Under Article VI of the GATT 1994 and the Anti-Dumping Agreement, anti-dumping duties are
a valid and permissible response to something that is to be condemned, being injurious dumping.

23. Indonesia appears to suggest that validly determined and levied anti -dumping duties
constitute some so rt of "exception" to Article I and Article II of the GATT 1994, 14 rather than a
legitimate response to injurious dumping. This incorrect characterisation underpins a number of the
fundamental legal errors contained in Indonesia's submissions, particularly t hose relating to the
correct legal interpretation of core terms in the Anti -Dumping Agreement. By invoking these
characterisations, Indonesia seeks to promote a more restrictive interpretation of those core terms
than is warranted by a good faith examinati on of the ordinary meaning of the actual treaty words,
viewed in context and in the light of the treaty's object and purpose.

B. Because of the "Particular Market Situation", Indonesian Domestic Sales of A4 Copy
Paper Did Not "Permit a Proper Comparison" with Export Prices

1. Australia properly established there was a "particular market situation" within
Article 2.2 of the Anti-Dumping Agreement

24. The proper interpretation of "particular market situation" – clear from its ordinary meaning,
interpreted in its context and in light of the object and purpose of the Anti-Dumping Agreement – is
any condition, state or combination of circumstances in respect of the buying and selling of the like
product (i.e. A4 copy paper) in the market of the exp orting country (i.e. Indonesia) that is
distinguishable and not general.15

25. This interpretation is fully consistent with the findings of EC – Cotton Yarn, in which the GATT
Panel found that a "particular market situation" was "relevant insofar as it had the effect of rendering
the sales themselves unfit to permit a proper comparison …. There must be something intrinsic to
the nature of the sales themselves that dictates they cannot permit a proper comparison".16

26. In accordance with this meaning, Australia properly established there was a "particular market
situation" within Article 2.2 of the Anti -Dumping Agreement. In summary, the Anti -Dumping
Commission found that:17

• programs and policies of the Government of Indonesia including the exp ort ban on logs
increased the supply of logs in Indonesia, lowering the cost and price of logs and hardwood
pulp in Indonesia;

13 Anti-Dumping Review Panel Report No. 55 (ADRP Report), Exhibit AUS-10, paras. 585 and 588-589.
14 Indonesia's first written submission, paras. 42, 48, 55 and 103.
15 Australia's first written submission, paras. 97-106.
16 GATT Panel Report, EC — Cotton Yarn, paras. 478.
17 Australia's first written submission, para. 115.

• the lowered cost and price of logs and hardwood pulp in Indonesia induced and allowed the
main Indonesian A4 copy paper producers (SMG and APRIL Group), which are integrated
A4 copy paper producers with their own upstream pulp facilities, 18 to supply more A4 copy
paper at each possible price point than they otherwise would have; and
• the resultant price of A4 copy paper in Indonesia w as the end result of the interactions
between those selling, and those buying, A4 copy paper in Indonesia. The resultant price of
A4 copy paper in Indonesia was artificially low, significantly below regional benchmarks, and
reflected the lowered cost and p rice of logs and hardwood pulp in Indonesia that resulted
from the programs and policies of the Government of Indonesia.19

27. Taken together, these factors clearly demonstrate a "particular market situation" within
Article 2.2 of the Anti-Dumping Agreement, being a condition, state or combination of circumstances
in respect of the buying and selling of A4 copy paper in Indonesia that was distinguishable and not
general. In addition, these factors were intrinsic to the nature of the sales of A4 copy paper
themselves.

2. Australia properly established that, because of the "particular market situation",
Indonesian domestic sales did not "permit a proper comparison" with export prices

28. The Appellate Body has stated that the effect of Article 2.2 is that a n alternative basis for
deriving the "normal value" must be relied upon by an investigating authority where sales in the
exporting country's market do not "permit a proper comparison" with the export price because of
the "particular market situation".20

29. The proper interpretation of "permit a proper comparison" – clear from its ordinary meaning,
interpreted in its context and in light of the object and purpose of the Anti-Dumping Agreement – is
to allow a suitable and accurate comparison to ascertain whether the product is to be considered as
being dumped; and determine the margin of dumping. 21 As such, the focus is the proper
determination of the "normal value", and not, as Indonesia asserts,22 whether the export price was
also affected by the same factors that affected the domestic price.

30. The Anti -Dumping Agreement does not explicitly identify the factors that will determine
whether or not using the domestic price as the basis for the "normal value" would allow an
investigating authority to conduct a suitable and accurate comparison to ascertain whether the like
product is to be considered as being dumped, and/or determine the margin of dumping. However,
the characteristics of such factors can be identified from the context provided by Articl e VI of the
GATT 1994, the second Ad Note to Article VI:1 of the GATT 1994, and Article 2 of the Anti -
Dumping Agreement.

(a) Government intervention (both in respect of the like product and in respect of inputs to
the like product) can result in the domestic price not being suitable to use as the basis for the
normal value

31. Indonesia asserts that "dumping is an exporter-specific inquiry without relation to government
involvement".23 That is incorrect. Government intervention is a factor that can result in the domestic
price not being suitable to use as the basis for the "normal value" because the affected domestic
sales do not permit a proper comparison with the export price.

32. For example, Article 2.7 of the Anti -Dumping Agreement and the second Ad Note to Article
VI:1 of the GATT 1994 recognise that one instance where the domestic price may not be suitable
for use as the basis for the "normal value" is where imports are "from a country which has a complete
or substantially complete monopoly of its tr ade and where all domestic prices are fixed by the
State."24 The Appellate Body findings in EC — Fasteners (China) 25 and EC – Fasteners (China)

18 Final Report, Exhibit IDN-04, section A2.9.3, p. 173.
19 Final Report, Exhibit IDN-04, section A2.9.2.2, p. 167; and section A2.9.4, pp. 173-174.
20 Appellate Body Report, EC — Tube or Pipe Fittings, para. 94.
21 Australia's first written submission, paras. 122-132.
22 Indonesia's first written submission, paras. 72 and 88.
23 Indonesia's first written submission, para. 93.
24 See the second Ad Note to Article VI:1 of the GATT 1994.
25 Appellate Body Report, EC – Fasteners (China), para. 285.

(Article 21.5 – China)26 clearly recognised that government intervention that distorts costs and
prices of inputs a nd the price of the like product in the domestic market of the exporting country
can preclude a "proper comparison" between domestic sales and the export price. Whether or not it
does so in a particular case will depend on the facts and circumstances and must be determined on
a case-by-case basis.

33. Australia is in no way alleging that Indonesia is a non -market economy - clearly, the nature
and degree of government intervention is different in the case of a non -market economy.
Nevertheless, as demonstrated by the Anti -Dumping Commission's findings, in the A4 copy paper
sector in Indonesia, the domestic price was not suitable to use as the basis for "normal value".

(b) Prices fixed in a manner incompatible with normal commercial practice or according to
criteria which are not those of the marketplace are not suitable to use as the basis for the
normal value

34. In US – Hot Rolled Steel, the Appellate Body recognised that a domestic price will not be
suitable to use as the basis for the "normal value" wher e it is the result of sales transactions
concluded on terms and conditions that are incompatible with normal commercial practice; or are
fixed according to criteria which are not those of the marketplace.27

35. While US – Hot-Rolled Steel considered a situation where the domestic sales were not in the
"ordinary course of trade" rather than a "particular market situation", both situations relate to
determining whether the domestic price is suitable to use as the basis for the "normal value". US –
Hot-Rolled Steel therefore suggests that, where there is a "particular market situation" (including
one arising from government intervention), a relevant factor for an investigating authority to
consider in determining whether the domestic sales "pe rmit a proper comparison" is whether the
"particular market situation" has resulted in the domestic price being fixed in a manner incompatible
with normal commercial practice; and/or fixed according to criteria which are not those of the
marketplace.

(c) The findings of the Anti-Dumping Commission

36. Therefore, in deciding whether the price of A4 copy paper in Indonesia would allow a suitable
and accurate comparison to ascertain whether the A4 copy paper was to be considered as being
dumped and to determine the margin of dumping (i.e. whether the domestic price was suitable to
use as the basis for the "normal value") it was relevant for the Anti-Dumping Commission to consider
whether:

• the domestic price of A4 copy paper was affected by government intervention that distorted
costs and prices; and/or
• the "particular market situation" meant that the domestic price of A4 copy paper was fixed
in a manner incompatible with normal commercial practice; and/or
• the "particular market situation" meant that the domes tic price of A4 copy paper was fixed
according to criteria which were not those of the marketplace.

37. This is exactly what the Anti-Dumping Commission did. It concluded that:28

• "the policies and programs [of the Government of Indonesia] … have affected the structure
and development of Indonesia's forestry sector and increased the supply of timber";
• "an export ban imposed by the [Government of Indonesia] on logs distorts the domestic
supply of timber" and "the net impact of the export ban on Indonesian logs … [is] reduced
prices";
• "the cost of producing pulp was substantially less than a competitive benchmark… the actual
cost of pulp recorded by exporters in their records does not reasonably reflect a competitive
market cost";
• "pulp is proportionally the largest cost component for the production of the goods and like
goods";

26 Appellate Body Report, EC – Fasteners (China) (Article 21.5 – China), para. 5.207.
27 Appellate Body Report, US – Hot-Rolled Steel, paras. 140-141.
28 Final Report, Exhibit IDN-04, section 6.5, p. 36; section 6.9.1, p 51; and Appendix 2 at section A2.2,
p 146; section A2.5.1, p 150; section A2.9, p 165; and section A2.9.2 at pp 166-172. (emphasis added) See
also Australia's first written submission, para. 144.

• "the primary beneficiary of identified timber-related [Government of Indonesia] policies and
programs was the Indonesian pulp industry", "this finding is significant in assessing a market
situation in the Indonesian A4 copy paper market", and "Indonesian A4 copy paper producers
have benefited through access to cheaper pulp including from related parties for integrated
paper producers such as [SMG]";
• "the significant infl uence of the Government of Indonesia … within the forestry and pulp
industries has distorted prices in the paper industry and the paper market in Indonesia";
• "Indonesian domestic prices [of A4 copy paper] are artificially low";
• "[t]he domestic price of Indonesian A4 copy paper is significantly below comparable regional
benchmarks";
• "[t]he [Government of Indonesia] exerts significant influence over the Indonesian timber
and pulp industries through various programs and policies … [T]hese programs and policies
have rendered Indonesian domestic A4 copy paper prices unsuitable for determining normal
values";
• "[t]he [Government of Indonesia's] involvement in forestry and pulp industries through its
support for the development of timber plantations and its prohibition on the export of timber
logs has directly resulted in the distortion of the domestic price for A4 copy paper"; and
• "there is a market situation in the Indonesian A4 copy paper market such that sales in that
market are not suitable for use in determining [normal value]".

38. The Anti-Dumping Commission also took steps to assess the extent to which the low cost and
price of logs in Indonesia might be the result of lower timber growing costs in Indonesia as opposed
to government intervention. This examination showed, contrary to the claims of the Government of
Indonesia, that, "for Indonesia's primary pulpwood (acacia), it is more costly to produce timber in
Indonesia than in other Asian countries" and "growing costs for acacia pulpwood in Indonesia were
the highest in Asia".29

39. The Anti-Dumping Commission undertook a comprehensive assessment of the facts related to
whether the "particular market situation" resulted in domestic sales that were "not suitable"30 to use
as the basis for the "normal value" (i .e. such sales would not permit a proper comparison with the
export price). It found that there was government intervention. It found that this government
intervention materially reduced the cost and price of logs and hardwood pulp in Indonesia and
distorted the price of A4 copy paper in Indonesia such that the domestic sales were not suitable to
use as the basis for the "normal value". It found that the domestic price was distorted, artificially
low, below regional benchmarks, and reflected the lowered cost and price of logs and hardwood pulp
in Indonesia that resulted from the programs and policies of the Government of Indonesia.

40. The Anti-Dumping Commission therefore validly found that the domestic sales of A4 copy
paper did not permit a proper comparison with export prices.

3. Indonesia misrepresents the practice and findings of the Anti-Dumping Commission
in relation to "particular market situation" and "permit a proper comparison"

41. Indonesia's claims and arguments are predicated on incorrect descriptions of the practice and
findings of the Anti-Dumping Commission in respect of "particular market situation" and "permit a
proper comparison". In particular, Indonesia seeks to convince the Panel that:

• Australia finds a "particular market situation" exists every time an input price is distorted;
• having done so, Australia then doesn't examine whether the domestic sales would "permit
a proper comparison" with the export price; and
• rather, having found a "particular market situation", Australia simply proceeds directly to
determining a constructed normal value.

42. Australia's legislation, the Manual, the Statement of Essential Facts and the Final Report all
clearly show that the Anti -Dumping Commission engages in a two -step analysis in respect of
"particular market situation" and "permit a proper comparison". 31 Contrary to Indonesia's first

29 Final Report, Exhibit IDN-04, section A2.5.1, p. 150; and section A2.9.2.2, p. 166. (emphasis added)
30 Final Report, Exhibit IDN-04, section 6.5, p. 36.
31 The factors considered to determine a "particular market situation" and "permit a proper comparison"
are not necessarily mutual exclusive, and often overlap. This does not meant that there is not a separate
analysis of the two requirements (Australia's closing statement at the first substantive meeting with the
Parties, para. 15).

written submission, Australia does not simply proceed directly to determining a constructed normal
value. In particular, Australia demonstrably does not find that a "particular market situation" exists
every time that an input price is distorted – and, in the investigation that is before this Panel, the
Anti-Dumping Commission undertook a detailed and exhaustive consideration of whether a
"particular market situation" existed, which extended far beyond considering whether an input price
was distorted.

43. The Anti-Dumping Commission, in the s ame investigation that is before this Panel, rejected
the applicant's "particular market situation" claim in respect of China, even though it found the
Government of China exerted significant influence over the size and structure of the hardwood pulp
industry, that this intervention had likely distorted the domestic price of hardwood pulp in China,
and that Government of China subsidies had likely distorted the A4 copy paper market. 32 This is
because the Anti-Dumping Commission found that the influence and involvement of the Government
of China were "unlikely to have rendered Chinese domestic A4 copy paper prices unsuitable for
determining normal values".33

4. Indonesia's arguments with respect to "particular market situation" and "permit a
proper comparison" have no merit

44. Indonesia has not conducted a proper Vienna Convention interpretation of the term "particular
market situation". Building on its incorrect assertion that anti-dumping duties are an "exception" to
Articles I and II of the GATT 1994, Ind onesia misinterprets a "particular market situation" as an
"exceptional set of circumstances affecting comparability of domestic market prices in such a way
as to affect them unilaterally", 34 despite the terms "exceptional" and "unilateral" being entirely
absent from the phrase "particular market situation" or the dictionary definition of "particular".
Indonesia provides no references or support for its assertion that "silence in the negotiating
history"35 supports its narrow interpretation of "particular mar ket situation". The "Draft
Recommendation Concerning Treatment of the Practice Known as Input Dumping", cited by
Indonesia as evidence that WTO Members did not intend to include a provision in the Anti-Dumping
Agreement governing input dumping, was never adopted by the Committee on Anti -Dumping
Practices36 and, in any event, concerned a practice that is not before the Panel in this dispute. Finally,
it is simply incorrect that "government involvement" is exclusively covered by the SCM Agreement;37
Indonesia's refusal to say whether or not a government imposed price -ceiling or floor would
constitute a "particular market situation" is instructive in this regard.38

45. Similarly, Indonesia's arguments in respect of "permit a proper comparison" have no merit,
and are based on the incorrect assertion that the domestic price can only be discarded as the basis
for the "normal value" if the "particular market situation" affects the domestic price but not the
export price.39 These arguments are based on the incorrect assertion, made throughout Indonesia's
submissions, that "dumping" and the Anti -Dumping Agreement are solely concerned with
"international price discrimination."40 However this term does not appear in the GATT 1994 or Anti-
Dumping Agreement; and the Appellate Body has referred to the term only in the context of when
"normal value" is based on "domestic price", not when it is based on constructed normal value under
Article 2.2.

46. Indonesia's argument that in the other situations covered by Article 2.2 ("when there are no
sales in the ordinary course of trade and … when there is a low volume of sales"), "the effect is one-

32 Final Report, Exhibit IDN-04, section A2.2, p 146; section A2.8.1, p 153; and section A2.8.4, p 160.
33 Final Report, Exhibit IDN-04, section A2.2, p 146. The domestic price of A4 copy paper in China was
consistent with regional benchmarks.
34 Indonesia's first written submission, para. 72.
35 Indonesia's first written submission, para. 68.
36 The Draft Recommendation on Input Dumping was considered at five Meetings of the Committee on
Anti-Dumping Practices between 1985 and 1987: 21 & 24 October 1985, 23 April 1986, 30 October 1986, 5
June 1987, and 26 & 28 October 1987. The Minutes of these Meetings record that the Draft Recommendation
was never adopted by the Committee on Anti-Dumping Practices.
37 Indonesia's first written submission, para. 93.
38 Indonesia's written response to Panel Question 11 following the first substantive meeting with the
Parties; Australia's closing statement at the first substantive meeting with the Parties, para. 18.
39 Indonesia's first written submission, paras. 72 and 88.
40 Indonesia's first written submission, paras. 101 and 107.

sided and on the domestic market" 41 is incorrect. And it has provided no proof to support its
argument that the "low price inputs" equally af fected the domestic and export price of A4 copy
paper.42 Even if Indonesia were to provide such proof, there is nothing in the language of the
GATT 1994 or the Anti -Dumping Agreement that suggests that there must be some sort of
"asymmetrical" impact on the domestic prices vis-à-vis export prices in order to find that a "proper
comparison" was not permitted. Furthermore, US – Anti Dumping and Countervailing Duties (China)
– the only dispute that Indonesia refers to in relation to this issue – is not relevant to the application
of Article 2 of the Anti-Dumping Agreement.

C. Conclusion

47. The Anti-Dumping Commission provided a reasoned and adequate explanation as to how the
evidence supported its factual findings and how those findings supported its determin ation that
"there is a market situation in the Indonesian A4 copy paper market such that sales in that market
are not suitable for use in determining [normal value]".43 Indonesia has submitted no evidence that
the Anti-Dumping Commission's establishment of the facts was not proper or that the Anti-Dumping
Commission's evaluation was biased or not objective. Indonesia has also failed to show that an
"objective and impartial investigating authority could not properly have"44 made the determinations
above. Indon esia's legal interpretation of "particular market situation" and "permit a proper
comparison" are incorrect.

V. AUSTRALIA ACTED CONSISTENTLY WITH ART ICLES 2.2 AND 2.2.1. 1 OF THE ANTI -
DUMPING AGREEMENT IN ITS DETERMINATION O F THE CONSTRUCTED NO RMAL
VALUE OF A4 COPY PAPER

A. The Anti-Dumping Commission was Not Required to Calculate the Hardwood Pulp
Component of the Constructed Normal Value on the Basis of the Records of Indah
Kiat and Pindo Deli

48. Article 2.2.1.1 establishes that, in determining the constructed normal value, "costs shall
normally be calculated on the basis of records kept by the exporter or producer under investigation"
whenever the two conditions of Article 2.2.1.1 are satisfied.45

49. Indonesia submits that Australia acted inconsistently with Article 2.2.1.1 of the Anti-Dumping
Agreement because the Anti-Dumping Commission did not calculate the hardwood pulp component
of the constructed normal value for those exporters on the basis of the records of those exporters
even though the two conditions in Article 2.2.1.1 were satisfied. These arguments ignore the
presence of the word "normally" in the first sentence of Article 2.2.1.1 of the Anti -Dumping
Agreement – the inclusion of this word provides a legal ground, separate and distinct from the legal
ground of a failure to satisfy the two conditions in Article 2.2.1.1, for not calculating costs on the
basis of records kept by the exporter or producer under investigation.46

1. The qualification of the verb "shall" by the adverb "normally" in Article 2.2.1.1 must
be given meaning and effect

50. The meaning of the first sentence of Article 2.2.1.1 is clear from its ordinary meaning,
interpreted in its context and in light of the object and purpose of the Anti -Dumping Agreement.
Interpreting the first sentence of Article 2.2.1.1 in a way that requires that the "costs … be calculated
on the basis of records kept by the exporter or producer under investigation" whenever the two

41 Indonesia's first written submission, para. 40.
42 Indonesia's first written submission, paras. 118 and 121.
43 Final Report, Exhibit IDN-04, section 6.5, p. 36. See also section 6.9.1, p. 50; section A2.9.1, p. 165;
and section A2.9.6.8, p. 185.
45 Emphasis added.
46 Australia has not conceded that the records of Indah Kiat and Pindo Deli did satisfy the second
condition of the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement, and does not consider it
necessary for the Panel to consider this question (Australia's opening statement at the first substantive

conditions in Article 2.2.1.1 are satisfied – as Indonesia does47 – renders the word "normally" inutile
and redundant.

51. As stated by the Appellate Body in US – Clove Cigarettes: "[T]he ordinary meaning of the
term "normally" is defined as "under normal or ordinary conditions; as a rule".48

52. Accordingly, the proper interpretation of the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement, interpreted in its context and in light of the object and purpose of the
Anti-Dumping Agreement, and in a way that do es not render the word "normally" inutile or
redundant, is that, where the circumstances are not normal and ordinary, the investigating authority
is not required to calculate costs on the basis of records kept by the exporter or producer under
investigation, even if the two conditions in Article 2.2.1.1 are satisfied.49

53. This interpretation is fully consistent with the findings of panels and the Appellate Body in
relation to the meaning of "normally" in Article 2.2.1.1. 50 Notably, the panel and Appellate Body in
EU – Biodiesel (Argentina) left open the possibility of there being circumstances beyond a failure to
satisfy the two expressly stated conditions in Article 2.2.1.1 in which an investigation authority would
not be required to calculate costs on the basis of records kept by the exporter or producer under
investigation.51

2. The records of Indah Kiat and Pindo Deli in respect of hardwood pulp would not have
established an appropriate proxy for the domestic sales price and would have
rendered the resort to constructed normal value inutile, so the circumstances were
not normal and ordinary

54. The Appellate Body has stated that the purpose of determining a constructed normal value is
to "… establish[] … the normal value through an appropriate proxy for the price of the like product
in the ordinary course of trade in the domestic market of the exporting country when the normal
value cannot be determined on the basis of domestic sales. The costs calculated pursuant to
Article 2.2.1.1 of the Anti-Dumping Agreement must be capable of generating such a proxy".52

55. Not every "particular market situation" that results in domestic sales not permitting a "proper
comparison" would create circumst ances that were not normal and ordinary, and thus permit an
investigating authority to not calculate costs on the basis of the records of the exporter or producer
under investigation even though the two conditions in Article 2.2.1.1 were satisfied. The key question
in each case is whether those records were suitable to determine a constructed normal value that
was an "appropriate proxy for the price of the like product in the ordinary course of trade in the
domestic market of the exporting country when the normal value cannot be determined on the basis
of domestic sales".53 The answer to this question is necessarily dependent on the specific facts of
each case.

56. In the facts of the investigation before this Panel, the Anti -Dumping Commission was faced
with circumstances that were not normal and ordinary in respect of Indah Kiat and Pindo Deli. A
constructed normal value calculated on the basis of Indah Kiat's and Pindo Deli's records in respect
of hardwood pulp would not have been an "appropriate proxy for the price of the like product in the
ordinary course of trade in the domestic market of the exporting country when the normal value
cannot be determined on the basis of domestic sales",54 because, like the domestic sales price that

47 Indonesia's first written submission, paras. 124 and 136.
48 Appellate Body Report, US – Clove Cigarettes, para. 273. (emphasis added, footnote omitted)
49 Australia's first written submission, para. 194.
50 Panel Report, China – Broiler Products, para. 7.161; Panel Report, EU – Biodiesel (Argentina),
para. 7.227.
51 Panel Report, EU – Biodiesel (Argentina), footnote 380; Appellate Body Report, EU – Biodiesel
(Argentina), footnote 120. See also Panel Report, Ukraine – Ammonium Nitrate, para. 7.68.
52 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24 (footnote omitted). See also Panel
Reports, EU – Biodiesel (Argentina), para. 7.233; Thailand – H-Beams, para. 7.112; US – Softwood Lumber V,
para. 7.278.
53 Ibid.
54 Ibid.

had been found unsuitable to use as the basis of the "normal value", they would have reflected the
"particular market situation". This is clearly set out in the Final Report.55

57. Notably, for one of the other Indonesian exporters (RAK), the Anti -Dumping Commission
found that its transfer prices for purchases of hardwood pulp in Indonesia from a related company
were consistent with the benchmark prices used to derive the "pulp benchmark". The Anti-Dumping
Commission thus calculated the constructed normal value of A4 copy paper for RAK on the basis of
its records,56 because a constructed normal value calculated on the basis of those transfer prices
(and RAK's other costs) would have been an "appropriate proxy for the price of the like product in
the ordinary course of trade in the domestic market of the exporting country when the normal value
cannot be determined on the basis of domestic sales".57

B. The Anti-Dumping Commission Correctly Determined the Hardwood Pulp Component
of the Constructed Normal Value

1. The Anti-Dumping Commission correctly determined an appropriate benchmark

58. In Appendix 4 to the Final Report, the Anti -Dumping Commission identified that its
"preferences for choosing a replacement competitive market cost are, in descending order: private
domestic prices; import prices; and external benchmarks." 58 The Anti-Dumping Commission was
unable to identify any acceptable private domestic prices that could be used, and found there was a
lack of imports of hardwood pulp into Indonesia and that it was likely that the price of any such
imports would be similarly affected by the programs and policies of the Government of Indonesia.59

59. In the absence of its preferred private domestic prices and import prices, the Anti -Dumping
Commission developed a "pulp benchmar k" based on external sources which it used for the
hardwood pulp component of the constructed normal value of A4 copy paper produced by Indah Kiat
and Pindo Deli. The Anti-Dumping Commission explained that:60

• it had "derived a pulp benchmark" "consisting of quarterly import pulp prices into China and
Korea based on an average CIF price for [hardwood pulp] originating from Brazil and South
America"; 61, 62
• these pulp prices were obtained from data provided by RISI Inc. and Hawkins Wright Ltd;
• information from RISI Inc. "indicated that growing costs for acacia pulpwood in Indonesia is
not significantly less than growing costs for eucalyptus pulpwood from South America,
notably Brazil";
• "there is broad alignment of South American eucalyptus pulp and traded Indonesian acacia
pulp prices";
• "neither the [Government of Indonesia] nor any Indonesian pulp producer provided the
Commission with information or evidence to support claims that the cost of producing acacia
pulpwood in Indonesia is significantly less than in other Asian or South American countries";
and
• the pulp benchmark was "based on verified actual transaction prices collected through broad
systematic surveys of small, medium and large size participants, including both buyers and
sellers".

55 The Anti-Dumping Commission found that, reflecting the "particular market situation", the "actual
cost of pulp recorded by exporters in their records does not reasonably reflect a competitive market costs …
this renders this component of Indonesian producers' and exporters' records unsuitable for determining the
costs to make A4 copy paper for the purposes of constructing normal values" (Final Report, Exhibit IDN-04,
section 6.9.1, p. 51).
56 Final Report, Exhibit IDN-04, section 6.9.2.2, p. 52.
57 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24 (footnote omitted). See also Panel
Reports, EU – Biodiesel (Argentina), para. 7.233; Thailand – H-Beams, para. 7.112; US – Softwood Lumber V,
para. 7.278.
58 Final Report, Exhibit IDN-04, section A4.3, p. 230. (emphasis added)
59 Final Report, Exhibit IDN-04, section A4.3.2, p. 230-1.
60 Final Report, Exhibit IDN-04, section A4.1, p 230; section A4.2, p 230; section A4.3.3, p 231; and
section A4.5, pp. 232-233. See also Australia's first written submission, para. 228.
61 Final Report, Exhibit IDN-04, sections A4.1-A4.2, p. 230; see also section A4.3.3, p. 231. Note that
monthly import pulp prices were also used to derive the pulp benchmark.
62 China and Korea were Indonesia's two main destinations for exports of hardwood pulp (Final Report,
Exhibit IDN-04, section A2.9.2.3, p. 167).

60. The Anti-Dumping Commission also found that the benchmark prices used to derive the "pulp
benchmark" were consistent with the transfer prices in the records kept by one of the other
Indonesian exporters (RAK) for its purchases of hardwood pulp in Indonesia from a related
company.63

2. The Appellate Body has made it clear that an "out -of-country" benchmark can be
used for the purpose of determining the constructed normal value

61. The Appellate Body has made it clear that such an "out -of-country" benchmark can be used
for the purpose of determining the constructed normal value, but has cautioned that "whatever the
information that it uses, an investigating authority has to ensure that such information is used to
arrive at the "cost of production in the country of origin". Compliance with this obligation may require
the investigating authority to adapt the information that it collects."64

62. The Anti -Dumping Commission did not, as Indonesia alleges, "merely substitute[] the
Indonesian producers' actual cost fo r hardwood pulp with a benchmark price for hardwood pulp
manufactured in Brazil and South America". 65 Rather, it considered a number of options for a
benchmark and provided a reasoned and adequate explanation as to why it chose the benchmark
that it ultimately used. It checked whether there were suitable domestic prices or import prices that
could be used and concluded that there were not. It found that the benchmark prices used to derive
the "pulp benchmark" were consistent with the transfer prices in the r ecords kept by one of the
other Indonesian exporters (RAK) for its purchases of hardwood pulp in Indonesia from a related
company.66 It checked the alignment of South American eucalyptus pulp and traded Indonesian
acacia pulp prices, determined that growing costs for acacia pulpwood in Indonesia were not
significantly less than growing costs for eucalyptus pulpwood in South America, and noted that the
Government of Indonesia and the Indonesian hardwood pulp producers had provided no evidence
to support their claims that it was cheaper to produce acacia pulpwood in Indonesia than in other
Asian or South American countries.67

63. Significantly, the Anti-Dumping Commission also found no significant difference between the
price of hardwood pulp sourced by Asian importers from South America and the price of hardwood
pulp sourced by Asian importers from Indonesia.68 That is, the Anti-Dumping Commission found that
the export price of Indonesian pulp was not signifi cantly different to the export price of South
American pulp. Australia notes Indonesia has indicated that it would have been consistent with
Article 2.2 of the Anti -Dumping Agreement if Australia had derived the hardwood pulp component
of the constructed n ormal value by reference to the "export price of Indonesian pulp" – this is
effectively what Australia did do.69

3. The Anti-Dumping Commission properly adapted the pulp benchmark

64. Furthermore, the Anti -Dumping Commission then adapted the "pulp benchmark" specific to
the circumstances of Indah Kiat and Pindo Deli. With respect to Indah Kiat, the Anti -Dumping
Commission adapted the pulp benchmark so that it was the cost of slush hardwood pulp or dry
hardwood pulp as appropriate and using amounts incurred specifically by Indah Kiat. Indah Kiat
made its own hardwood pulp,70 so the Anti-Dumping Commission separately multiplied the quantity
of slush hardwood pulp and dry hardwood pulp consumed by Indah Kiat each month during the
investigation period with the c orresponding adapted pulp benchmark for that month. The Anti -
Dumping Commission also made deductions to the pulp benchmark based on Indah Kiat's own

63 Final Report, Exhibit IDN-04, section 6.9.2.2, p. 52. The Anti-Dumping Commission was prevented
from using these prices as the basis for the hardwood pulp component of the constructed normal value of A4
copy paper because they were confidential and could not be disclosed (Final Report, Exhibit IDN-04, section
A4.5.1, p 232).
64 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73. (footnote omitted)
65 Indonesia's first written submission, para. 155.
66 Final Report, Exhibit IDN-04, section 6.9.2.2, p. 52.
67 Final Report, Exhibit IDN-04, section A4.5.2, p. 233.
68 Final Report, Exhibit IDN-04, section A4.4, p. 231 and section A4.5.2 at p 233.
69 Indonesia's opening statement at the first substantive meeting with the Parties, para 49; Australia's
closing statement at the first substantive meeting with the Parties, para. 27.

records, including amounts for the cost of ocean freight and inland transport, for selling, general and
administrative expenses and for the cost to convert wet hardwood pulp to dry hardwood pulp.71

65. Pindo Deli did not manufacture hardwood pulp. Rather, it obtained the vast majority of its
hardwood pulp from other companies within SMG, including Indah Kiat. 72 Therefore, in respect of
Pindo Deli, the Anti-Dumping Commission made the same adaptations to the pulp benchmark that
it applied in respect of Indah Kiat. However, it did not deduct an amount for converting slush
hardwood pulp to dry hardwood pulp because the pulp benchmark already represented an amount
for dry hardwood pulp.

4. Indonesia's arguments in relation to the hardwood pulp component of the
constructed normal value have no merit

66. Indonesia claims that Australia should have used the amounts in the records of Indah Kiat
and Pindo Deli for the hardwood pulp component of the constructed normal value rather than the
"competitive market cost" that it used pursuant to subsection 43(2) of the Customs Regulation.73
But it simply cannot be the case that amounts that were validly rejected under Article 2.2.1.1 of the
Anti-Dumping Agreement must then be used to determine the constructed normal value under
Article 2.2.

67. Indonesia's arguments also fail to take into account the vertical integration and related-party
transactions that characterise Indah Kiat and Pindo Deli (which facilitated SMG and the APRIL Group
to "capture" the advantages of the cheap timber which resulted from the interventions of the
Government of Indonesia), and the analysis that the Anti-Dumping Commission undertook to ensure
the pulp benchmark was suitable to use to arrive at the cost of production of A4 copy paper in
Indonesia.74

C. Indonesia's Reliance on EU – Biodiesel (Argentina), EU – Biodiesel (Indonesia) and
Ukraine – Ammonium Nitrate is Misplaced

68. Indonesia asserts that the facts of this dispute are "almost identical" to the facts in
EU – Biodiesel (Argentina) and EU – Biodiesel (Indonesia), that "there is no factual or legal basis for
this Panel to interpret Article 2.2.1.1 in a manner at odds with" the decisions in EU – Biodiesel
(Argentina), EU – Biodiesel (Indonesia) and Ukraine – Ammonium Nitrate ; that there are no
"meaningful differences" between the dispute before this Panel and those disputes; and that "the
fact pattern [in the dispute before this Panel] is almost identical" to those disputes.75

69. All of these assertions are incorrect. There are obvious factual differences between the
investigations at issue in those disputes and the investigation before this Panel – including, with
respect to the investigation before this Panel, the existence of: a "particular market situation"; the
vertical integration of exporters within SMG and the non -arm's length transactions for the inpu t in
question; and the fact that a prevailing international export price was available for the input in
question.76 Further, the reasoning of the panels and Appellate Body in these cases was expressly
limited to the interpretation and application of the sec ond condition of Article 2.2.1.1, with no
detailed consideration of the meaning of the word "normally".

D. The Phrase "Competitive Market Costs" in Australia's Regulations Operated So as to
Ensure That the Anti -Dumping Commission Properly Calculated the C onstructed
Normal Value and Complied with Articles 2.2 and 2.2.1.1 of the Anti -Dumping
Agreement

70. Indonesia also focuses on the fact that subsection 43(2) of the Customs Regulation uses the
phrase "the records … reasonably reflect competitive market costs associated with the production or
manufacture of like goods" whereas Article 2.2.1.1 of the Anti-Dumping Agreement uses the phrase

71 Final Report, Exhibit IDN-04, section 6.9.8.1.3, p. 62.
72 Indonesia's first written submission, paras. 10, 117 and 167; see also footnote 70.
73 Indonesia's first written submission, paras. 2, 153 and 170
74 To paraphrase the Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73.
75 Indonesia's first written submission, paras. 142, 145, 155 and 162.
76 Australia's first written submission, para. 249.

"such records … reasonably reflect the costs associated with the production and sale of the product
under consideration".77

71. Australia notes, at the outset, that Indonesia is making an "as applied", rather than an "as
such", challenge,78 so Australia's regulations are relevant only insofar as how they were applied in
this dispute. Australia operates a dualist legal system under which treaty obligations are given effect
via domestic laws and regulations, which may or may not mirror the lan guage of the underlying
treaty but which are consistent with the relevant treaty obligations. Subsection 43(2) of the Customs
Regulations gives effect to both the second condition of the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement, and to the word "normally" in Article 2.2.1.1.

72. As applied in the investigation before this Panel, the phrase "competitive market costs"
facilitated the discarding of the distorted hardwood pulp component of the records of Indah Kiat and
Pindo Deli in circumstances that were outside the normal and ordinary circumstances envisaged by
the word "normally" in the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement. The
phrase "competitive market costs" then facilitated recourse to an appropriate alternative amount to
ensure the proper determination of the constructed normal value for those two exporters under
Article 2.2 of the Anti-Dumping Agreement.

73. In addition, the terms "actual cost" and "actual costs" – which Indonesia uses at least 11 times
to describe the "test" under the second condition of Article 2.2.1.1 – are nowhere to be found in
Article 2.2.1.1 of the Anti -Dumping Agreement. It is clear from the treaty that when the drafters
wanted "actual costs" to always be used, they incorporate d the word "actual" into the text of the
Anti-Dumping Agreement – see Articles 2.2.2(i) and 2.2.2(ii). It is simply not the case that
Article 2.2.1.1 of the Anti -Dumping Agreement requires the use of the records of an exporter
whenever those records reflec t the "actual costs" of that exporter. There are a large number of
qualifications and exceptions to the use of "actual costs".79

E. Conclusion

74. Australia has established that the Anti -Dumping Commission acted consistently with
Article 2.2 and Article 2.2.1.1 of the Anti-Dumping Agreement in its determination of the constructed
normal value of A4 copy paper for Indah Kiat and Pindo Deli. 80 The Anti -Dumping Commission
provided a reasoned and adequate explanation as to how the evidence supported its factual findings
and how those factual findings supported its determination that it was not required to calculate the
hardwood pulp component of the constructed normal value on the basis of the records of Indah Kiat
and Pindo Deli, and determination of the constr ucted normal value of their A4 copy paper by
reference to the "pulp benchmark".

75. Indonesia has submitted no evidence that the Anti -Dumping Commission's establishment of
the facts was not proper or that the Anti -Dumping Commission's evaluation was biase d or not
objective. Indonesia has also failed to show that an "objective and impartial investigating authority
could not properly have" 81 made the determination above. Indonesia's interpretations of
Article 2.2.1.1 of the Anti -Dumping Agreement and the phra se "costs of production in the country
of origin" in Article 2.2 of the Anti-Dumping Agreement are incorrect.

77 Emphasis added. See Indonesia's first written submission, para. 125.
78 Indonesia's first written submission, para. 27.
79 For example, the "actual costs" in the records may not be the costs that had a genuine relationship
with the production of the like product (see Appellate Body Report, EU – Biodiesel (Argentina), para. 6.26);
may reflect costs incurred in transactions involving inputs purchased in non-arm's-length transactions (Panel
Reports, Ukraine – Ammonium Nitrate, para. 7.70; EU – Biodiesel (Argentina), footnote 400; US – OCTG
(Korea), para. 7.197; and Appellate Body Report, EU – Biodiesel (Argentina), para. 6.41); or might understate
the actual costs incurred (Panel Report, EU – Biodiesel (Argentina), footnote 400).
80 Australia also acted consistently with Article VI:1(b)(ii) of the GATT 1994 in this regard.

VI. AUSTRALIA ACTED CONSISTENTLY WITH AR TICLE VI:2 OF THE GA TT 1994 AND
WITH ARTICLE 9.3 OF THE ANTI -DUMPING AGR EEMENT BY IMPOSING
ANTI-DUMPING DUTIES IN AN AMOUNT THAT DID NOT EXCEED THE MARGIN O F
DUMPING

76. Indonesia's claims under Article VI:2 of the GATT 1994 and Article 9.3 of the Anti -Dumping
Agreement are entirely dependent on this Panel finding that Australia acted inconsistently with
Articles 2.2 and 2.2.1.1 of the Anti -Dumping Agreement in its determination of the "normal value"
for Indah Kiat and Pindo Deli. Australia has demonstrated above that its determination of the "normal
value" for Indah Kiat and Pindo Deli was fully con sistent with Articles 2.2 and 2.2.1.1 of the Anti -
Dumping Agreement. Indonesia's claims under Article VI:2 of the GATT 1994 and Article 9.3 of the
Anti-Dumping Agreement must therefore fail.

VII. AUSTRALIA HAS NOT NULLIFIED OR IMPAIRED BENEFITS ACCRUING DIRECTLY OR
INDIRECTLY TO INDONESIA

77. No benefits accruing directly or indirectly to Indonesia under the GATT 1994 or the
Anti-Dumping Agreement have been nullified or impaired by Australia.

VIII. CONCLUSION

78. For the foregoing reasons, Australia respectfully requests that the Panel reject Indonesia's
claims in their entirety.

ANNEX B-3
SECOND INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF INDONESIA
EXECUTIVE SUMMARY OF INDONESIA'S SECOND WRITTEN SUBMISSION

I. Australia's Interpretation Of "Particular Market Situation" Is Incorrect

1. Australia's interpretation of "particular market situation" would wrongly expand the concept
and implementation of Article 2.2 of Anti -Dumping Agreement for Members to disregard dome stic
prices in market economies in almost any situation and would be a far broader grant than given in
cases of State set prices or nonmarket economies. Indeed, Australia's definition is overly broad such
that a large number of subsidy or government policy /intervention situations could potentially be
subject to a "particular market situation" finding.

2. Australia argues the meaning of "particular" is "'pertaining or relating to a single definite thing
or person, or set of things or persons, as distinguished from others; of or belonging to some one
thing (etc.) and not to any other, or to some and not to all ... special; not general'". However, the
Oxford English Dictionary notes that the definition of "particular" Australia relies upon is "{o}ften
preceded by a possessive adjective". Thus, the fact that "particular" is not preceded by a possessive
adjective suggests the definition of "particular" Australia relies upon is not appropriate in the context
of interpreting the meaning of "particular market situation".

3. Australia also argues Indonesia has no basis for relying on the silence in the negotiating
history. But Australia cannot otherwise cite to any negotiating history to support its interpretation
of an undefined treaty term. If "particular market situation" was as broad as Australia interprets it,
i.e. any situation that is not general, it is inconceivable that the term would not be defined or that
there would not have been some negotiating history supporting Australia's interpretation.

4. Australia further concedes that its "particular market situation" finding was based exclusively
on the price of an input but claims Indonesia offered no proof that the low price inputs equally
affected domestic and export prices.

5. First, Indonesia noted Aust ralia never reached a determination on whether domestic and
export prices were equally affected because the Commission did not address that question. Australia
now concedes that point. Second, Indonesia recalled the nature of the A4 copy paper production
process which involves using timber to produce pulp, and pulp as a direct input to produce paper.
Indonesia further argued the same inputs were used to make A4 copy paper sold to the Indonesian
domestic market and exported to Australia. Indeed, Australia, i tself, verified this fact during its
onsite visit. Third, Indonesia cited to evidence on the Commission's record establishing imports of
A4 copy paper from Indonesia into Australia had the lowest prices, suggesting any "particular market
situation" involving inputs affected both domestic and export prices.

6. It is important to recall that Article 2.2 specifies that it is "because of" the "particular market
situation" that the sales do not permit a proper comparison. Based on the facts in this dispute, th e
"particular market situation" did not cause or prevent domestic prices from being compared to export
prices to determine whether there was price discrimination. Australia failed to do so based on its
incorrect interpretation and application of its obligations under Article 2.2.

7. Whether the input price affected domestic and export prices is relevant under Indonesia's first
and second claims. Under Indonesia's first claim, a situation involving an input that affects prices of
domestic and export sales is not a "particular market situation" because, properly interpreted, a
"particular market situation" only affects sales in the domestic market. Under Indonesia's second
claim, even if a "particular market situation" exists, Article 2.2 still requires an e xamination of
whether the situation prevents the investigating authority from determining whether the domestic
price and the export price are comparable, and it is only when they are not that the investigating
authority may disregard domestic prices.

II. Dumping Is Price Discrimination And Australia's Attempt To Broaden The Meaning
Of The Term Impermissibly Rewrites The Anti-Dumping Agreement

8. Dumping is a defined term. As Indonesia established in its First Written Submission,
"dumped", "dumping", "margin of dumping", or "dumping margin" all refer to the same definition of
dumping defined by Article 2.1. Article 2.1 defines a product that is dumped as one that is
"introduced into the commerce of another country at less than its normal value" . Dumping,
therefore, is the act of an individual producer or exporter selling exports at prices below normal
value.

9. Pursuant to Articles 2.1 and 2.2, "normal value" is one of three possibilities: 1) domestic
prices, 2) constructed normal value, or 3) third country sales. By Australia's own definition, "proper"
means "'suitable and accurate'" and "comparison" means "'the action, or an act, of comparing, or
noting the similarities and differences of two or more things'". As explained in detail below,
Australia's justification for its interpretation fails because whether a product has been sold for less
than normal value in the export market (i.e. has been dumped) can suitably and accurately
ascertained when domestic and export prices are similarly affected.

10. Whether a price comparison is "proper" pursuant to Article 2.2 must be determined in view of
the purpose of the comparison. Australia does not dispute this and recognizes the purpose of the
comparison is to ascertain whether the product is being dumped an d to determine the margin of
dumping. As the Russian Federation notes, "the word 'proper' in Article 2.2 of the Anti -Dumping
Agreement relates to the correct determination of the pricing behavior of {an} individual exporter
or foreign producer". China, likewise notes the purpose of the proper comparison in Article 2.2 is to
reveal price discrimination of an individual producer.

11. Indonesia recalls the definition of dumping is selling at export prices that are below normal
value. The definition of dumping remains exactly the same no matter which basis is used for normal
value. When domestic sales are the basis for normal value, the product is dumped if the domestic
price is above the export price. When constructed normal value is used, the product is dumpe d if
the constructed normal value is above the export price. When third country sales are used, the
product is dumped if the third country sales price is above the export price. In every instance,
whether dumping exists is defined based on whether the pric e in the domestic market, whether
actual or surrogate, is above the price in the export market. In other words, the purpose of every
comparison remains the same – to determine whether there is price discrimination.

12. Australia and a number of third parties argued that the Anti-Dumping Agreement never uses
the term "price discrimination" and seem to imply that dumping is something other than price
discrimination. Members considered dumping to be price discrimination when they were drafting the
"particular market situation" provision in what is now Article 2.2 of the Anti-Dumping Agreement.

13. The idea that dumping is price discrimination was a central premise during the Kennedy
Round, which eventually produced an Anti -Dumping Code which included the "pa rticular market
situation" provision. As part of the negotiations, the Group on Anti -Dumping Policies circulated an
"Anti-Dumping Checklist" for comment. The first item on the agenda is "Concept of dumping" and
subheading A is titled "Price discrimination criteria". Several governments submitted comments and
notably, not one voiced an objection about use of the term "price discrimination" in connection with
"concept of dumping". Indeed, several governments expressed views that are practically
synonymous with those advanced by Indonesia in this dispute.

14. The European Economic Community explained:

Pursuant to Article VI of the General Agreement, dumping is deemed to be the sale of
merchandise of one country in the market of another country at less than normal value
of such merchandise, such value being not the price in the market of the importing
country, but the price of a like product when destined for consumption in the exporting
country or, in the absence of such domestic price, the price for ex port to any third
country or the cost of production in the country of origin. Consequently, dumping is a
practice of price discrimination in external trade.

Indonesia has advanced the exact interpretation above, noting irrespective of the basis for normal
value, the definition of dumping remains unchanged throughout the Anti -Dumping Agreement and
seeks to determine whether price discrimination is occurring.

15. Japan expressed views nearly identical to the European Economic Community in its comments
on the Anti-Dumping Checklist:

The price discrimination should be taken to mean the difference between the export
price and the price of the like product in the domestic market of the supplier ... When
there are no comparable domestic prices, e.g., when there a re no open sales in the
domestic market, price discrimination should be determined by comparison with either
of the alternatives provided for in Article VI:1(b)(i) and (ii) of the GATT.
Again, Indonesia has advanced the exact points made by Japan in this dispute, i.e., dumping is price
discrimination no matter what basis is used for normal value.

16. In response to the same Anti -Dumping Checklist, Canada stated "{t}his concept of price
discrimination between export and domestic market is the basic definiti on of dumping in Article VI
of the GATT" . The United States noted "{p}rice comparisons for the purpose of determining the
existence of price discrimination or of assessing an anti -dumping duty should be based on a
comparison of different sales of an specif ic seller – the firm accused of dumping – and never by
averaging sales of several sellers in the home market or in export". The points made by the United
States are consistent with two points Indonesia advances in this dispute: 1) dumping is price
discrimination and 2) dumping is specific to a firm.

17. Two points concerning the well -accepted idea of dumping as price discrimination during the
Kennedy Round are of particular importance. The first is there is no mention by any of the parties
of government involvement in the dumping inquiry, the entire discussion of dumping concerns the
pricing behavior of individual producers and exporters. Second, dumping as price discrimination by
individual producers and exports was the view held when the "particular market situation" provision
was negotiated and included in the 1967 Anti-Dumping Code which eventually became Article 2.2 of
the Anti -Dumping Agreement. The Panel should give more weight to the statements about the
meaning of dumping made by the go vernments at the time the "particular market situation"
provision was negotiated than on the new found and self -serving interpretation advanced by
Australia and certain third parties in the context of a particular dispute.

18. Indonesia established in its First Written Submission that an investigating authority must
examine whether the comparability of domestic to export prices was affected, even if there was a
"particular market situation" and established Australia had not examined whether there was any
effect on domestic and export prices. As both China and Korea have indicated, a situation that
equally affects export prices is not a "particular market situation". The reason Australia did not do
so is based on its interpretation and application of Article 2.2 as not requiring an examination of
whether export prices are equally affected by a "particular market situation", such that whether
there is dumping, nevertheless, can be determined. As Australia explained, the Commission found
domestic sales were not suitable to use because of government intervention that allegedly led to
distorted domestic prices for A4 copy paper. Australia concedes that it did not examine export sales.

19. Indonesia established in its First Written Submission that the three situat ions described in
Article 2.2 all concern situations that unilaterally affect prices in the domestic market meaning that
a situation, such as one involving an input that affects domestic and export prices, cannot be a
"particular market situation". Australia attempted to rebut Indonesia's argument claiming when an
exporter sells at below cost prices or low volumes to both domestic and export markets, the Anti -
Dumping Agreement permits discarding the domestic price but keeping the export price. Indonesia
rebutted the relevance of Australia's point because it did not refute the point Indonesia was making
about the two other exceptions described in Article 2.2 as situations that only affect the home
market. However, at no point has Indonesia claimed Article 2.2 does not require export sales to be
considered. To the contrary, Indonesia has argued the only correct interpretation of Article 2.2 is
that the investigating authority must undertake an evidentiary analysis of whether a proper
comparison of domestic to export prices can be performed.

20. Australia and certain third parties note that the "proper comparison" is focused only on
establishing normal value and the "proper comparison" is not related to the export price. However,

as China notes, what needs to be "proper" is not the domestic price, per se, but its comparison with
the export price. Korea, similarly states the determination of normal value must be made in light of
the export price, otherwise the requirement to ensure a proper comparison would be mea ningless.
China and Korea both support this argument with reference to the "low volume of sales" provision
in Article 2.2.

21. In summary, when there is a low volume of sales in the domestic market, Article 2.2 requires
the investigating authority to compare the volume of sales in the domestic market to the volume of
sales in the export market to determine whether they constitute five percent or more of sales. The
"proper comparison", therefore, is between the domestic sales and the export sales. Consequently,
the same is true of the "proper comparison" when there is a "particular market situation". The
"proper comparison" when a "particular market situation" exists is between the domestic sales price
and the export sales price.

22. Australia argues Indon esia has not offered any proof that domestic and export prices were
equally affected by the allegedly distorted price of timber. This simply is not correct. Indonesia has
argued from the outset that the nature of the A4 copy paper production process involv es using
timber to produce pulp, and pulp to produce paper. Indonesia further argued the same inputs were
used to make A4 copy paper sold to the Indonesian domestic market and exported to Australia.
Indeed, Australia, itself, verified this fact during its onsite visit.

23. Indeed, additional evidence corroborated the conclusion that domestic and export prices were
equally affected even if a "particular market situation" existed. As Indonesia noted in its First Written
Submission, the Australian Anti-Dumping Commission gathered evidence in the injury investigation
showing the price of imports into Australia from Indonesia were below the Australian domestic price
and all other imports.

24. Ultimately, Australia concedes it did not even consider whether dome stic and export prices
were equally affected. This means that if the Panel finds Article 2.2 requires an investigating
authority to examine whether a proper comparison of the domestic price to the export price is
required even if there is a "particular market situation", Australia's interpretation and application of
Article 2.2 in this dispute was inconsistent.

25. Australia argues that a "particular market situation" is analogous to situations involving state
controlled economies and nonmarket economies. Australia ignores a number of critical differences.
First, the discretion to disregard domestic prices in both the state controlled economy and nonmarket
economy context was not granted on an ad hoc basis. Second, the grants of authority giving
discretion to disregard domestic prices were made in express provisions. Third, the second Ad note
to Article VI:1 of the GATT 1994 only applies when the State sets prices.

26. Australia also argues a "particular market situation" is analogous to situations involvi ng
nonmarket economies, referring to China's Accession Protocol. But again, Australia's interpretation
of the "particular market situation" provision would render it far broader than application of the
provisions in China's Accession Protocol.

27. As the Russian Federation and China noted, the need for the second Ad Note to Article VI:1
of the GATT 1994 and for Article 15 of China's Accession Protocol demonstrate Australia's
interpretation of the "particular market situation" provision is incorrect. If th e "particular market
situation" covered government influence or interference on market prices, there was no need to
have a separate provision for State controlled economies or as China described, the "painful
negotiations to introduce provisions for this p urpose". Because Australia's interpretation of the
"particular market situation" is so broad, it actually reaches more government behavior than applies
in either the context of a State controlled economy or a nonmarket economy.

28. In this dispute, Austr alia determined a proper comparison was not possible by comparing
Indonesian domestic A4 copy paper prices to a benchmark. As Indonesia has established, the proper
comparison is between the individual producer's domestic prices and export prices as set for th in
Article 2.1. Even if Australia's comparison was not inconsistent with Article 2.2, Australia's
interpretation and application of Article 2.2 is still incorrect because Australia based its "particular
market situation" finding on the same basis it used to determine a proper comparison could not be
made.

29. If Australia had found Indonesian domestic A4 copy paper prices were above or consistent
with the benchmark, Australia would not have found a "particular market situation" existed. This is
why Australia found there was not a "particular market situation in China.

30. Australia's and certain third parties' interpretation and application renders the following
phrases in Article 2.2 without meaning: "because of" and "such sales do not permit a proper
comparison" because it renders "particular market situation" and "proper comparison" the same
thing. Interpreting Article 2.2 to mean that a "particular market situation" automatically means
constructed normal value or third country sales will be used makes the phrases "because of" and
"such sales do not permit a proper comparison" unnecessary. In this dispute, Australia's
interpretation equated the "particular market situation" with the inability to perform a proper
comparison which renders several treaty t erms superfluous. As the Russian Federation notes, "the
words actually used ... must give meaning and effect to all its terms". The Russian Federation further
quotes from the Appellate Body which noted the " duty of any treaty interpreter is to 'read' all
applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously'".
Australia's interpretation, which fails to give meaning to all of the terms in Article 2.2, is incorrect.

III. Australia's Interpretation Of Article 2.2.1.1 As Permitting An Investigating Authority
To Reject A Producer's Costs Any Time A Situation Exists That Is Not "Normal" Is
Incorrect

31. Australia's interpretation of Article 2.2.1.1 is that an investigating authority may disregard a
producer's rec ords when circumstances are "'outside the normal and ordinary'" such as when a
"particular market situation" exists. Australia claims the Appellate Body in EU – Biodiesel (Argentina)
"explicitly left open the possibility" that other circumstances might exi st that would allow the
investigating authority to disregard a producer's records. Indonesia first addresses the flaws in
Australia's textual analysis and then responds to Australia's claim that disregarding a producer's
costs for reasons other than the two express exceptions in Article 2.2.1.1, i.e. if a "particular market
situation" exists is an open question.

32. Australia's sole textual argument is that "normally" must be given meaning. While Australia
emphasized the "normal" and "ordinary conditions" portion of the definition, the Appellate Body
concluded in US – Clove Cigarettes that "qualification of an obligation with the adverb 'normally'
does not, necessarily, alter the conclusion of that obligation as constituting a 'rule'".

33. Not only does Australia ignore that "normally" can be defined "as a rule", Australia also ignores
Article 2.2.1.1's use of the conjunction "provided" in the first sentence. "Provided" means "with the
provision or condition (that)"; "it being provided, stipulated, or arra nged (that); "on the condition,
supposition, or understanding (that)". By including the word "provided" the drafters intentionally
were conditioning application of the rule in Article 2.2.1.1, i.e., costs shall, as a rule, i.e., "normally",
be calculated using the producer's records, to the two conditions that followed, i.e., the records are
kept in accordance with GAAP and suitably and sufficiently reproduce the costs incurred to produce
the merchandise under consideration.

34. Australia also argues the Appellate Body in EU – Biodiesel (Argentina) left open the possibility
there might be reasons for disregarding a producer's records other than those found in
Article 2.2.1.1. This is not an accurate characterization of what the Appellate Body said or did. The
Appellate Body merely recalled that the EU was relying on the second condition in the first
sentence of Article 2.2.1.1.

35. Australia argues that to require the records kept by Indah Kiat and Pindo Deli, which according
to Australia, reflected the "particular market situation" would render resorting to constructed normal
value inutile. But this issue already has been settled by the Appellate Body in EU – Biodiesel
(Argentina), and the fact that Biodiesel was based on sales outside of the ordinary cou rse of trade
is a distinction without a difference. The crucial similarity, however, is even if an input is distorted
by government influence and normal value is based on constructed normal value, the investigating
authority must still use the input price recorded in the producer's records if the two conditions
specified in Article 2.2.1.1 are satisfied.

36. It is important to recall, rejecting a producer's records based on the reasonableness of the
costs, themselves, is not an open question. The Appellate Body in EU – Biodiesel (Argentina) was
clear in ruling the costs must reflect the costs incurred that have a genuine relationship with the

production and sale of the product under consideration. As China notes, interpreting "normally" as
incorporating a s tandard of the reasonableness of the costs makes including the two conditions
specified after the word "provided" in the first sentence of Article 2.2.1.1 unnecessary.

37. In this dispute, Australia rejected Indah Kiat's and Pindo Deli's costs because they were not
reasonable. It does not matter whether Australia now characterizes this as a situation that was not
normal because of a "particular market situation", the basis given in the determination for Australia
disregarding the cost of pulp re corded in Indah Kiat's and Pindo Deli's records was because it was
less than a benchmark price of pulp which meant, in Australia's view, it did not reflect a competitive
market cost. That is a reasonableness test, the same as the one the EU applied and the
Appellate Body rejected in EU – Biodiesel (Argentina).

IV. Australia Did Not Calculate The Cost Of A4 Copy Paper Production In Indonesia

38. Australia does not appear to disagree with Indonesia's argument that Article 2.2 requires
calculating the cost of production in Indonesia. Australia claims it calculated a cost of production in
Indonesia because it made certain adjustments. But none of the adjustments related to deriving the
cost of production in Indonesia. Instead, the adjustments were needed to convert certain elements
so that they were stated on an equivalent basis. Australia's removal of those elements had nothing
to do with calculating the cost of production of pulp in Indonesia. The adjusted cost Australia used
was the FOB cost of producing pulp in South America and Brazil not Indah Kiat's or Pindo Deli's cost
of producing pulp in Indonesia.

V. Australia Has Not Rebutted Indonesia's Claim That A Violation Of Article 2 In The
Calculation Of The Dumping Margin Violates The Chapeau Of Article 9.3 Of The Anti-
Dumping Agreement And Article VI:2 Of The GATT 1994

39. Indonesia established in its First Written Submission as inconsistent with the chapeau of
Article 9.3 of the Anti -Dumping Agreement and Article VI:2 of the GATT 1994 because Australia
calculated and imposed anti -dumping duties in excess of those permitted by Article 2. Australia's
sole rebuttal was the claim is dependent on establishing an inconsistency with Article 2.
Consequently, if the Panel finds Australia acted inconsistently with Ar ticle 2, it should also find
Australia acted inconsistently with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the
GATT 1994.

EXECUTIVE SUMMARY OF INDONESIA'S OPENING STATEMENT AT THE SECOND
SUBSTANTIVE MEETING

I. Indonesia Has Demonstrated Australia's Actions Violate Article 2.2 Because They
Are Based On An Incorrect Interpretation Of "Particular Market Situation"

40. Indonesia's first claim is that Australia has based its application of the anti -dumping duties
upon an incorrect interpretation of "particular market situation" in Article 2.2 of the Anti -Dumping
Agreement, one that does not conform to any correct interpretation of "particular market situation".
In applying anti-dumping duties on imports of A4 paper from Indonesian exporters, Australia wrongly
found that there was a "particular market situation" within the meaning of Article 2.2 of the Anti -
Dumping Agreement, even though there was no situation in the domestic market which could impact
the dumping margin calculated b y deducting the prices in export sales from the prices in domestic
sales. To succeed on its first claim, it is only necessary for Indonesia to establish that no correct
interpretation of "particular market situation" could include any situation in the mark et which is
incapable of making any difference to the dumping margin arrived at by comparing prices in export
sales with prices in domestic sales.

41. Australia takes issue with Indonesia's use of the word "exceptional", which Indonesia used to
summarize the various dictionary definitions of "particular". Australia is making a distinction without
a difference because the Panel could substitute any of the following definitions of "particular" from
Indonesia's First Written Submission and still reach the sa me result: "distinguished in some way
among others of the same kind"; "not ordinary"; "worthy of notice, remarkable"; or "special".

42. Australia also takes issue with Indonesia's use of the word "unilateral" but confuses the issue
by categorizing it as one of Indonesia's ordinary meaning arguments. Indonesia, however, argued
that a "particular market situation" must be interpreted as being "unilateral", i.e., only affecting

domestic sales, based on the context including the context given by the other two exceptions in
Article 2.2 that permit departing from domestic prices. Indonesia has never argued the "unilateral"
nature of a "particular market situation" was based on an ordinary meaning analysis, and Australia's
claim in that regard is incorrect and misleading.

43. Finally, Australia argues against Indonesia's references to the silence in the negotiating history
on the meaning of "particular market situation" and how that stands in stark contrast to the
extensive discussion generated by input dumping. Indonesia did not offer a definition of "particular
market situation" based on the silence in the negotiating history, the existence of which, notably,
Australia has not refuted. Whether or not the alleged government intervention in this dispute could
be characterized as a form of input dumping, Indonesia's point was that the attempt to regulate
such behavior generated a significant amount of discussion.

44. Indonesia notes that while Australia claims it relied on the regional benchmark price of A4
copy paper and not just the low input price of timber to support its "particular market situation"
finding, yet Australia acknowledged in response to the Panel's questions following the First
Substantive Meeting that the finding was not based on any government p rogram or policy that
affected the A4 copy paper market other than those that lowered the cost and price of logs and
hardwood pulp.

45. Australia further incorrectly claims in its Second Written Submission that Indonesia has
changed the arguments relating to its first and second claims. To the contrary, Indonesia has argued
from the outset in claim 1 that Australia's interpretation of the treaty term "particular market
situation" is incorrect, and even if a "particular market situation" existed, in its cl aim 2 Indonesia
argues that Australia misinterpreted Article 2.2 because a proper comparison of domestic price to
export price was possible.

46. In arguing against Indonesia's interpretation, Australia reaffirms its mistaken view that if a
"particular market situation" exists, domestic sales, per se, do not permit a proper comparison. As
Indonesia has argued, the Panel must reject Australia's proposed interpretation because it reads the
word "because" and the phrase "such sales do not permit a proper comparison" out of Article 2.2.

47. Australia also argues Indonesia has conflated the phrases "particular market situation" with
"not permit a proper comparison". Again, Australia confuses Indonesia's argument which was that
the meaning of "particular marke t situation" can be understood in the context of the remainder of
Article 2.2, including the phrase "not permit a proper comparison". Indonesia has established based
on an analysis that is fully consistent with the VCLT that a "particular market situation" is "an
exceptional combination of circumstances taking place in a geographic region". Such a situation
affects the market for the exporter's domestic sales and, thus may prevent a proper comparison by
rendering domestic sales unfit to permit a proper comparison but it does not, per se, mean a proper
comparison cannot be performed.

II. Indonesia Has Demonstrated That Australia's Actions Violate Article 2.2 Because
They Are Based On An Incorrect Interpretation Of That Provision

48. Indonesia has establishe d in its second claim that Australia's overall interpretation of
Article 2.2 of the Anti -Dumping Agreement as it relates to rejecting domestic prices because of a
"particular market situation" is incorrect. Australia attempts numerous justifications in its Second
Written Submission, none of which are availing.

49. The GATT Group on Anti -Dumping Policies during the Kennedy Round negotiation, which
created the Anti-Dumping Code which first contained the 'particular market situation' exception, was
clear tha t dumping was price discrimination. This included views of the European Economic
Community, Canada, the United States and, Japan.

50. In particular, the delegation of Japan to the Group on Anti-Dumping Policies neatly explained
that all of the three met hods of determining normal value set out in GATT Article VI are related to
determining the existence of price discrimination, whether the existence of price discrimination is
determined by assessing the difference between the export price and the domestic price, or by
assessing the difference between the export price and one of the two alternatives to domestic price
"provided for in Article VI:1(b)(i) and (ii) of the GATT" . Indonesia's combined analysis of the
negotiating history and the context provided in various other provisions of the Anti -Dumping

Agreement and of the object and purpose of the Agreement show the whole agreement is directed
to ensuring a reliable and accurate determination of whether exporters are price discriminating
between domestic sales and export sales.

51. When one understands the essential point that dumping is price discrimination, then it also
becomes clear that the purpose of making the comparison between an exporter's domestic prices
and export prices is to determine whether that exporter is price discriminating between the domestic
and export markets and if so by what margin, and that a "proper comparison" is one that can serve
that purpose. When the price received by the exporter from domestic sales arises from transactions
that are in the ordinary course of trade, being compatible with normal commercial practice and fixed
according to criteria of the market place but are nevertheless complicated by some situation affecting
how the exporter makes sales into the domestic market, which has the effect that the formal contract
price of those domestic sales does not properly represent the value received by the exporter from
the sale, then comparing the formal contract price of the domestic sales with the export prices will
not serve the purpose of determining whether the exporter is price discriminating and, if so, by what
margin so it makes sense to use an alternative price which is likely to be a better estimation of what
the domestic price would be in the absence of that "particular market situation".

52. One can reduce this concept to its simplest form, by recognizing that the proper determination
of whether an exporter is dumping and of the margin of dumping involves a simple subtraction
equation which is the domestic price minus the export price equals the margin of price discrimination
or margin of dumping. If a situation affects the number on both sides of the minus sign in the
equation, then there is no change in the Difference arrived at by the Subtraction of the
second number from the first number. If a situation affects only the starting number (Minuend) and
not the number being taken away (Subtrahend) then the presence of the situation does change the
Difference arrived at by the Subtraction of the second number from the first number.

53. Australia claims it does consider whether the domestic price would permit a proper comparison
with the export price. This is misleading because Australia does not actually consider the "particular
market situation" effects on the domestic price relative to the ef fects on the export price. In other
words, Australia is not considering whether or how the "particular market situation" affects the
equation – Australia is making a per se determination that the domestic price is not suitable for
comparison because of the alleged "particular market situation".

54. Australia insists Indonesia has not proven low priced inputs equally affected domestic and
export sales prices. However, the evidence shows that import prices of A4 copy from one or more
Indonesian producers into Australia were lower than import prices from every other import source,
save a single exporter, and even then, imports from one or more Indonesian producers still were
cheaper than from this single Thai exporter in 7 out of 12 months of the investigation period.

55. Basis economics support Indonesia's position on the equal effects. This proposition of
economic theory, that a domestic subsidy or the availability of low prices inputs would have the
same effect on the costs of exporters in relation to thei r domestic sales as it has on their costs in
relation to their export sales was accepted by the panel and the Appellate Body in United States –
Definitive Anti-Dumping and Countervailing Duties on Certain Products from China. In that case, the
Appellate Body had to decide whether the concurrent application of a countervailing duty offsetting
a domestic subsidy and an anti-dumping duty offsetting a dumping margin based on a normal value
using surrogate country cost method, without making any adjustment for d ouble counting was a
violation of the obligation in Article 19.3 of the SCM Agreement to levy countervailing duties "in the
appropriate amounts". The question necessitated an analysis of the effects of domestic subsidies.
The panel noted a domestic subsidy would lower the production cost for all units of production and
would allow the producer to lower prices in both the domestic and export market. The Appellate Body
agreed.

56. The only difference is, in this dispute, rather than a domestic subsidy, there is a low priced
input, which has the same effect on the exporter's costs for all merchandise, regardless of whether
A4 copy paper is sold in export sales or domestic sales. Since the reduction in costs is received by a
producer for all units of production regardless of whether they are ultimately sold to the domestic
market or to the export market, then the reduction in cost lowers the costs and the minimum price
at which the producer is willing to supply. Consequently, the existence of low -priced pulp will have
the same impact on the A4 copy paper producer's behavior with respect to domestic sales as it has
with respect to export sales: it reduces the amount that the supplier is willing to take in exchange

for supplying an additional unit. In the presence of a domestic subsidy affecting both sides of the
dumping margin equation, a comparison of domestic to export prices to determine whether price
discrimination was occurring, thus, can properly be performed.

57. Australia argues Indonesia reads the word " proper" out of the phrase "permit a proper
comparison". However, Australia's claim is based on a premise, which Indonesia already has
established is flawed, which is that a "particular market situation", per se, means domestic prices
cannot be compared to export prices. As Indonesia also has demonstrated, and Australia agrees,
the word "proper" refers to the comparison specified in Article 2.1. As discussed earlier, where the
parties diverge is on whether the Anti -Dumping Agreement defines "dumping" as some thing other
than price discrimination. Indonesia has established that the definition and concept of "dumping" in
the Anti-Dumping Agreement is limited to price discrimination.

58. Australia argues that the phrase "proper comparison" relates to the suitabi lity of using
domestic sales and prices alone, and this interpretation is confirmed by the other two situations in
Article 2.2 that permit domestic sales to be disregarded. Australia is incorrect. The first situation
described in Article 2.2 is when there are no sales in the ordinary course of trade. There are no sales
to compare because they all have been found outside of the ordinary course of trade by operation
of Article 2.1. Article 2.2 simply takes as a given that there are no sales in the ordinary co urse of
trade, which is why the phrase "no sales in the ordinary course" is not connected grammatically to
the phrase "such sales do not permit a proper comparison". There is no possibility of a comparison
to export sales because there are no domestic sale s to compare. However, if Australia's
interpretation were correct, i.e. that "proper comparison" means the domestic sales are "unsuitable",
the phrase "no sales in the ordinary course" would be linked to the phrase "such sales do not permit
a proper comparison". Article 2.2 would then say sales outside of the ordinary course do not permit
a proper comparison. But that is not what Article 2.2 says. Indeed, the use of "proper comparison"
in Article 2.2 does not mean sales outside the ordinary course are unsuitable and, likewise, it cannot
be correctly interpreted as saying sales made when there is a particular market situation, or sales
made in low volumes are, necessarily, unsuitable. Instead, "proper comparison" refers to the ability
of the investigating aut hority to determine whether dumping is occurring, as Indonesia has
established.

59. By claiming the only consideration in a situation involving a low volume of sales is the volume
of domestic sales, Australia wrongly ignores footnote 2 to Article 2.2, whi ch specifies whether
domestic sales are at a sufficient volume to permit a proper comparison is an evidentiary question.
The only plausible evidentiary question is whether the domestic sales volume is of a sufficient volume
to be comparable to export sales . In other words, the evidentiary consideration requires a
comparison of domestic sales to export sales.

60. Australia mistakenly interprets and applies Article 2.2 in a manner that when a "particular
market situation" exists, those sales, per se, are not to be used as the basis for normal value. This
is evident from Australia's statement that the phrase "such sales do not permit a proper comparison"
defines when domestic sales should or should not be used.

61. Australia incorrectly claims Indonesia argued the possibility of making comparisons makes
them proper. Australia is incorrect. Indonesia has argued under its first claim that the government
policies in this dispute that allegedly result in a low priced input do not constitute a "particular market
situation". Indonesia has argued under its second claim that price discrimination can be determined
in this dispute because the same input is used to produce A4 copy paper for sale in Indonesia and
Australia and, thus, a "proper comparison" is possible. Indonesia has never taken the position that
a proper comparison is not possible if a "particular market situation" (as defined by Indonesia in its
first claim) exists. Likewise, Indonesia has not claimed the possib ility of making price comparisons
automatically makes them proper. Indeed, Indonesia's position, which is consistent with Article 2.2.,
is that whether a proper price comparison is possible requires considering the effects of a "particular
market situation" on domestic and export costs.

62. Australia acknowledges the term "proper comparison" in Article 2.2 refers to Article 2.1, but
Australia argues in its Second Written Submission that the term "proper comparison" should be
understood to mean "unsuitable ", despite the fact this term does not appear in the text of any of
the provisions Australia cites as context , and is in direct contradiction with Australia's own dictionary
definitions of "proper comparison". Article 2.2's drafters did not use the word " unsuitable", which
they easily could have done but, instead, they used the term "proper comparison" – an explicit

reference to the comparison between normal value and export price specified in Article 2.1. Australia
claims two circumstances render domestic prices unsuitable and, thus, incapable of providing a
"proper comparison".

63. The first circumstance, according to Australia, is government intervention that distorts costs
and prices, which Australia argues is evident from the context provided by the second Ad note to
Article VI:1 of the GATT 1994. But that note is exceptional and should be treated as such, and should
not be interpreted in a manner that would fundamentally change the meaning of the Anti -Dumping
Agreement, as Australia invites the Panel to do.

64. The second circumstance Australia offers is Article 2.2's purpose, which according to Australia
is to "set out when the domestic price is to be considered as not a 'comparable price, in the ordinary
course of trade'". Article 2.2 does not contain any provision specifying when domestic prices are not
in the ordinary course of trade, that is done solely by operation of Article 2.2.1. Article 2.2 sets out
two situations that may or may not permit authorities to use third country sales or construct ed
normal value, depending on whether a proper comparison between domestic sales and export sales
is possible. Again, Article 2.2 does not specify when the domestic price is not considered comparable.

65. Australia is not correct in its interpretation of Articles 2.1 and 2.2 of the Anti -Dumping
Agreement as having a purpose of identifying when there is an absence of "the comparable price, in
the ordinary course of trade, for the like product when destined for consumption in the exporting
country". Rather, Articles 2.1 and 2.2 of the Anti -Dumping Agreement are a more precise
specification of when it is or is not permissible to depart from using domestic sales prices as the
basis for normal value. After the addition of the Anti -Dumping Agreement to the rules , the rule in
GATT Article VI must be interpreted and implemented within the limits specified by the codification
in Article 2.2.

66. Australia relies on the Appellate Body's reasoning in US – Hot Rolled Steel concerning the
characteristics of sales that are outside the ordinary course of trade and, thus, unsuitable for normal
value. In other words, Australia's interpretation relies on the exact same factors to determine
whether to exclude sales made outside the ordinary course and sales made in a "particular market
situation".

III. Indonesia Has Demonstrated That Australia's Actions Violate Article 2.2.1.1 Because
They Are Based On An Incorrect Interpretation Of That Provision

67. Indonesia's third claim cha llenges Australia's interpretation of Article 2.2.1.1 of the Anti -
Dumping Agreement as incorrect because it allowed Australia to substitute a benchmark pulp price
for the actual price of pulp recorded in the producer's books and records despite the fact th at the
records were in accordance with Indonesian GAAP and reasonably reflected the cost to produce A4
copy paper. Australia responds that the word "normally" in the first sentence of Article 2.2.1.1 gives
it such authority.

68. In response, Indonesia h as established that "normally", as used in combination with
"provided" in the first sentence of Article 2.2.1.1 means the drafters intended to emphasize that the
rule that costs shall be based on the producer's records can only be deviated from in two
circumstances – they were not kept in accordance with GAAP or they did not sufficiently reproduce
the costs incurred to produce the merchandise under consideration. It simply is not correct that
Indonesia has read "normally" out of Article 2.2.1.1 or ignored that "normally" is an adverb qualifying
the verb "shall". Indonesia's interpretation gives full meaning to the words and grammatical
structure of the first sentence of Article 2.2.1.1.

69. Australia argues the drafters could have omitted "normally" and ach ieved the same result.
This reading is incorrect because the drafters included "normally" along with "provided" to emphasize
Article 2.2 was setting forth a rule. Indeed, other provisions of the Anti-Dumping Agreement use the
same structure and, like Article 2.2.1.1, the use of "normally" highlights the rule cannot be deviated
from other than as specified. Footnote 2 to Article 2.2 is drafted in a similar manner to Article 2.2.1.1.
Footnote 2 uses the phrase "shall normally" to introduce the five percent or more rule for an
investigating authority to use domestic sales. However, Article 2.2 qualifies this rule by stating it is
subject to an exception, which is introduced by the word "provided". Likewise, the structure of
Article 5.8 of the Anti -Dumping Agree ment, which governs negligibility, is similar to both
Article 2.2.1.1 and footnote 2 to Article 2.2, by stating the three percent rule for negligibility

(introduced by the term "shall normally") followed by the exception for investigations involving
multiple countries that would be negligible individually (introduced by the word "unless").

70. Other than to say it was not based on the meaning of "normally", which is not in dispute,
Australia cannot explain why the Appellate Body's reasoning in EU – Biodiesel (Argentina) is not
analogous in interpreting Article 2.2.1.1 as requiring an investigating authority to use the input cost
recorded in a producer's records even though the input price was distorted and all of the domestic
sales were outside the ordinar y course of trade. Likewise, the panel's reasoning in EU – Biodiesel
(Indonesia) and Ukraine – Ammonium Nitrate is equally relevant because in both disputes, the panel
found Article 2.2.1.1 requires an investigating authority to use the producer's records despite a
distorted input cost. Australia also fails to detract from the relevance of the reasoning in US – Clove
Cigarettes and China – Broiler Products.

71. In US – Clove Cigarettes, the issue was whether a period of less than six months was sufficient
because, as the United States argued as Australia does in this dispute, presence of the word
"normally" meant the six month period was not a rule. The Appellate Body rejected that view and
determined the six month rule could only be deviated from based o n the exception specified in the
same provision. In other words, the presence of "normally" did not create a separate, open -ended
exception to the rule as Australia argues it does in the first sentence of Article 2.2.1.1.

72. Australia claims Indonesia's reliance on China – Broiler Products is misplaced because the
panel was considering the second sentence of Article 2.2.1.1 and the panel did not say the failure to
consider one or both conditions in the second sentence is the only instance in which an investigating
authority can disregard the producer's records. But it is impossible to reconcile Australia's reading
with what the panel actually said. The panel considered the use of "normally" in the first sentence
of Article 2.2.1.1 and then concluded it meant the only two exceptions permitted by Article 2.2.1.1
are those set out under the provision.

IV. Indonesia Has Demonstrated Australia's Actions Violate Article 2.2 Of The Anti -
Dumping Agreement Because Australia Did Not Calculate A Cost Of Production In
The Country Of Origin, That Is, In Indonesia.

73. Indonesia's fourth claim established Australia's use of the price for hardwood pulp produced
in Brazil and South America, stated on a free on board (or F.O.B.) basis Brazil/South America, is
inconsistent with Article 2.2, which requires the cost of production to be calculated in the country of
origin, i.e., Indonesia. As an initial matter, Indonesia has argued for the Panel to reject Australia's
belated attempt to put new evidence on the record of this d ispute with its Second Written
Submission. Indonesia also has challenged the evidence, on its face, as unreliable.

74. In addition, Indonesia has challenged the consistency with Article 2.2 of Australia using the
price "hardwood pulp originating in South America and Brazil" as a substitute for the cost of
production in Indonesia. Indonesia has also challenged the consistency with Article 2.2 of Australia
ignoring the fact that the Indonesian producers are integrated or affiliated with pulp producers by
failing to remove profit from the pulp benchmark.

V. Indonesia Has Demonstrated Australia Violated Article 9.3 Of The Anti -Dumping
Agreement And GATT Article VI:2 By Imposing Anti -Dumping Duties In Excess Of
Legally And Justifiable Rates

75. Indonesia has established multiple violations of Article 2 which means Australia has violated
Article 9.3 and VI:2 and that benefits accruing to Indonesia under the Anti-Dumping Agreement and
under GATT 1994 including Australia's relevant tariff bindings thereunder are being nullified and
impaired as a result of the failure of Australia to carry out its obligations under the Anti -Dumping
Agreement and Article VI of the GATT 1994.

EXECUTIVE SUMMARY OF INDONESIA'S CLOSING STATEMENT AT THE
SECOND SUBSTANTIVE MEETING

76. Australia acknowledged a number of points during the Second Substantive Meeting that
confirm its action is inconsistent with Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement. First,
Australia agrees that its interpretation of "particular market situation" applies to any situation in a
market that is not acceptable. The range of situations covered by such a definition has no limit and

is inconsistent with Article 2.2 of the Anti-Dumping Agreement. Second, Australia agrees that it does
not have to compare or even consider whether the export price is affected by the "particular market
situation". If Australia's over expanded interpretation is accepted, it is only a matter of time before
the exception of using a surrogate, in the form of const ructed normal value, instead of the actual
domestic price becomes the rule.

77. Australia argues the Panel must rule in its favor to respond to instances of government
intervention that affect the domestic price of a good that may not come within the SCM Agreement
or the provisions in the Anti-Dumping Agreement that refer to government actions. But if Members
did not agree to regulate government intervention in either the SCM Agreement or the Anti-Dumping
Agreement, then it is incorrect to argue it should, nevertheless, be covered.

78. Australia's interpretation of "normally" in Article 2.2.1.1 is similarly disturbing. No one,
including Australia, can argue with the fact that Article 2.2.1.1 contains two conditions for not using
a producer's costs. The first is if they are not kept in accordance with generally accepted accounting
principles. The second is if they do not reasonably reflect the cost of producing the merchandise
being investigated. Australia argues that the word "normally" means there is a th ird exception for
not using a producer's costs, yet one that is broader and far less defined than the other two reasons
and it applies any time something in the market is not "normal".

79. The interpretations Australia advances of Article 2.2. and 2.2.1.1 in this dispute are nothing
short of an attempt to rewrite the Anti -Dumping Agreement to permit an investigating authority to
disregard a producer's domestic sales and then the domestic producer's costs at will.

80. Australia's defense of how it calculated the hardwood pulp replacement cost, which relies on
information Australia only placed on the record in its Second Written Submission, fails to show
Australia calculated the cost of production in Indonesia for the producers under investigation which
violates Article 2.2. Australia claims it only did so in response to a statement in Indonesia's Opening
Statement at the First Panel Meeting. But this is incorrect. Australia relied on this information in its
First Written Submission in paragraph 228 and in the investigating authority's decision, yet failed to
place it on the record until much later. Finally, Australia's violations of Article 2 result in a violation
of Article 9.3 because Australia imposed anti -dumping duties in excess of what the Anti -Dumping
Agreement allows.

ANNEX B-4
SECOND INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF AUSTRALIA
I. AUSTRALIA ACTED CONSISTENTLY WITH ARTICLE 2.2 IN DISREGARDING
INDONESIAN DOMESTIC PRICES IN DETERMINING THE "NORMAL VALUE"

A. Australia Properly Established There Was a "Particular Market Situation"

1. The proper Vienna Convention interpretation of "particular market situation" is any condition,
state or combination of circumstances in respect of the buying and selling of the li ke product
(i.e. A4 copy paper) in the market of the exporting country (i.e. Indonesia) that is distinguishable
and not general.1

2. Indonesia is incorrect to argue that the Anti -Dumping Commission's finding in respect of the
"particular market situation" was "limited to hardwood timber and pulp"2 and was "based exclusively
on the price of an input.3 Rather: (a) the lowered cost and price of logs and hardwood pulp, alone,
were not the "particular market situation";4 (b) an integral part of the "particular market situation"
finding was that the price of A4 copy paper in Indonesia was artificially low,5 was significantly below
regional benchmarks, 6 and reflected the lowered cost and price of logs and hardwood pulp in
Indonesia that resulted from the programs and policies of the Government of Indonesia; 7 (c) the
Final Report expressly stated that "low input costs, of themselves, are not determinative of a market
situation",8 that "a market situation assessment primarily concerns the domestic market for like
goods",9 and that "conditions in a significant input market that do not distort the market for like
goods will not found a market situation finding". 10, 11 It is thus also not the case that the Anti -
Dumping Commission found that the fact that "a low-priced input [was] used equally to produce A4
copy paper for the domestic and export markets constitute[d] [the] "particular market situation"".12

B. Australia Properly Found That, Because of the "Particular Market Situation",
Domestic Sales Did Not "Permit a Proper Comparison"

3. The phrase "such sales do not permit a proper comparison" in Article 2.2 is not defined in the
Anti-Dumping Agreement, and no particular methodology is prescribed for determining whether
domestic sales do, or do not, permit a proper comparison with the export price. An investigating
authority therefore has discretion with respect to the methodology it employs, provided that the
methodology rests upon a proper interpretation of Article 2.2.13 Interpreting the phrase "such sales
do not permit a proper comparison" is a contextual exercise. The immediate context establishes that
"such sales do not permit a proper comparison" – that is, they are "not suitable" to use as the basis
for the normal value – where the resultant prices would not al low an investigating authority to

1 Australia's first written submission, paras. 97-106.
2 Indonesia's second written submission, para. 3.
3 Indonesia's second written submission, para. 13.
4 Australia's written response to question 6 following the first substantive meeting with the Parties,
footnote 29.
5 Final Report, Exhibit IDN-04, section A2.7.4, p. 153 and section A2.9.2.2, p. 167.
6 Final Report, Exhibit IDN-04, section A2.9.4, p. 173.
7 Final Report, Exhibit IDN-04, section A2.9.4, p. 174; see also Australia's first written submission,
paras. 114-115.
8 Final Report, Exhibit IDN-04, section A2.8.6.3, p. 165.
9 Final Report, Exhibit IDN-04, section A2.8.5.2, p. 162.
10 Final Report, Exhibit IDN-04, section A2.8.5.2, p. 162. See also Australia's opening statement at the
first substantive meeting with the Parties, para. 31 and Australia's written response to question 13 following
the first substantive meeting with the Parties, para. 84.
11 Australia's second written submission, para. 37.
12 Indonesia's written response to question 5 following the first substantive meeting with the Parties,
p. 11.
13 Australia's written response to question 5 following the second substantive meeting with the Parties,
para. 36.

conduct a suitable and accurate comparison to: (a) ascertain whether the like product is to be
considered as being dumped; and (b) determine the margin of dumping.14

4. The broader context identifies the relevant characteristics of unsuitability in this investigation,
including where domestic prices are affected by government intervention that distorts costs and
prices, where they are fixed in a manner incompatible with normal commercial practice, and where
they are fixed according to criteria which are not those of the marketplace. 15 Those characteristics
were present and were evident in the price of A4 copy paper in Indonesia. The domestic sales did
"not permit a proper comparison" to the export price. The lowered domestic price was quite properly
relevant to the "particular market situation" analysis and to the "permit a proper comparison"
analysis.16

C. Indonesia Continues to Misrepresent the Practices and Findings of the Anti-Dumping
Commission in Relation to "Particular Market Situation" and "Permit a Proper
Comparison"

5. Indonesia's claims and arguments are predicated on incorrect descriptions of the practice and
findings of the Anti-Dumping Commission in respect of "particular market situation" and "permit a
proper comparison". Contrary to Indonesia's submissions: (a) Australia does not find that a
"particular market situation" exists every time that an input is distorted – and, in this case, the Anti-
Dumping Commission undertook a detailed and exhaustive asse ssment of whether a "particular
market situation" existed, which extended beyond considering whether an input price was distorted;
(b) the Anti-Dumping Commission's finding in respect of "particular market situation" was not "based
exclusively on the price of an input";17 (c) Australia does consider whether the domestic price would
"permit a proper comparison" with the export price – and, in this case, the Anti-Dumping Commission
established and concluded that the domestic price was not suitable to use as the basis for the "normal
value" i.e. that the domestic sales did not "permit a proper comparison" with the export price; (d)
Australia demonstrably did not simply proceed directly to determining a constructed normal value;18
(e) Australia does not interpret the term "particular market situation" to mean "any situation that is
not normal";19 and (f) Australia's interpretation does not provide for a "broad grant of authority to
Members for disregarding domestic prices any time the investigating authority determines something
about prices is not "normal"".20

6. Indonesia is incorrect in arguing that Australia's interpretation of the phrase "particular market
situation" would "turn the provision into a grant of authority for Members to disregard domestic
prices in market economies in almost any situation".21 Contrary to Indonesia's argument, Australia's
definition of "particular market situation" is in no way akin to "any situation".22 Furthermore, in order
to discard domestic sales in determining the "normal value", an investigating authority must also
find that, because of that "particular market situation", domestic sales "did not permit a proper
comparison". And, before an investigating authority can impose anti -dumping duties based on a
finding of a "particular ma rket situation", it must also find that: (a) the export price is below the
third country export price or below the cost of production in the country of origin plus a reasonable
amount for administrative, selling and general costs and for profits; and (b) the resultant "dumping"
has caused injury to the domestic industry.23

14 Australia first written submission, paras. 118-132; Australia's written response to question 15
following the first substantive meeting with the Parties, paras. 95-103; Australia's second written submission,
paras. 168, 170 and 172; Australia's opening statement at the second substantive meeting with the Parties,
para. 12; and Australia's written response to question 5 following the second substantive meeting with the
Parties, para. 36.
15 Australia's second written submission, paras. 172-181 and Australia's opening statement at the
second substantive meeting with the Parties, para. 13.
16 Australia's opening statement at the second substantive meeting with the Parties, paras. 14-15.
17 Indonesia's second written submission, para. 13.
18 Australia's first written submission, para. 155.
19 Indonesia's written response to question 2(b) following the first substantive meeting with the Parties,
p. 8.
20 Indonesia's written response to question 10(b) following the first substantive meeting with the
Parties, p. 14.
21 Indonesia's second written submission, para. 9.
22 Indonesia's second written submission, para. 9.
23 Australia's opening statement at the second substantive meeting with the Parties, paras. 60-64.

D. Indonesia's Arguments with Respect to "Particular Market Situation" and "Permit a
Proper Comparison" Have No Merit

7. In order to satisfy the requirements of Article 2.1, and hence be suitable to use as the basis
for the "normal value", the "domestic price" must be of the correct nature and quality. The Appellate
Body in US – Hot-Rolled Steel made this clear when it said: "The text of Article 2.1 expressly imposes
four conditions on sales transactions in order that they may be used to calculate normal value: first,
the sale must be "in the ordinary course of trade"; second, it must be of the "like product"; third,
the product must be "destined for consumption in the exporting country"; and, fourth, the price
must be "comparable"".24 The aim of the exercise is to derive a valid foundation on which to base
the "normal value", which is then compared to the export price. The entire focus of Article 2.2 is on
the domestic sales and their suitability to use as a basis for the "normal value".25

8. In all situations where an investigating authority can discard domestic prices – sales outside
of the ordinary course of trade, low volume of sales, command economy, non -market economy
conditions, incom patibility with normal commercial practice, and non -marketplace criteria – the
analysis as to whether the domestic price is a "comparable price, in the ordinary course of trade, for
the like product when destined for consumption in the exporting country" c oncentrates on the
conditions in the domestic market for the like product . Contrary to Indonesia's arguments, the
analysis is not concerned at all with the export price or the comparison between the domestic price
and the export price.26

9. Indonesia is co nflating the steps of the dumping investigation. As Indonesia itself has
recognised: (a) "Article 2 first describes what sales should be in the dataset for normal value and
export price and then defines how those datasets are to be evaluated";27 (b) "determining whether
a proper comparison is possible [is not] equivalent to calculating a dumping margin"; 28 (c) the
evaluation of whether the domestic sales "permit a proper comparison" "is performed in the stage
that is still determining what sales [, if any,] a re in the [normal value] dataset";29 (d) at the stage
of evaluating whether the domestic sales "permit a proper comparison" "the dumping margin
analysis is not yet being performed";30 and (e) if the result of that "evaluation" is that there are no
"remaining above cost domestic sales", then the "normal value" is determined on the basis of "third
country sales … or constructed normal value".31, 32

10. Despite this recognition, Indonesia continues to advocate that "as long as it is possible to
examine whether price discrimination is occurring by comparing domestic [sales] to export sales ,
then such sales permit a proper comparison"33 and that "a proper comparison is possible when the
investigating authority can determine whether price discrimination is occurring [by comparing the
actual domestic prices to the actual export prices]". 34 However, the stage of the dumping
investigation when an investigating authority determines whether, because of the "particular market
situation", domestic sales "permit a proper comparison" is different from the stage of the dumping
investigation when an investigating authority determines the appropriate "dataset" to use for th e
"export price". Indonesia recognises this when it states that "Article 2 also contains a provision

24 Appellate Body Report, US – Hot-Rolled Steel, para. 165.
25 Australia's opening statement at the second substantive meeting with the Parties, paras. 75-76.
26 Australia's written response to questions 22 and 23 following the second substantive meeting with the
Parties, para. 120.
27 Indonesia's written response to question 26 following the second substantive meeting with the
Parties, para. 58.
28 Indonesia's written response to question 24 following the second substantive meeting with the
Parties, para. 64.
29 Indonesia's written response to question 24 following the second substantive meeting with the
Parties, para. 64.
30 Indonesia's written response to question 24 following the second substantive meeting with the
Parties, para. 64.
31 Indonesia's written response to question 24 following the second substantive meeting with the
Parties, para. 65.
32 Australia's comments on Indonesia's response to question 24 following the second substantive
33 Indonesia's written response to question 26 following the second substantive meeting with the
Parties, para. 80. (emphasis added)
34 Indonesia's written response to questions 22 and 23 following the second substantive meeting with
the Parties, para. 52.

(Article 2.3) specifying how the export price dataset is to be established"35 and that "the export price
dataset can be based on one of three possibilities".36 It is illogical for Indonesia to argue that, at the
stage of the dumping investigation that determines the "dataset" for the "normal value", an
investigating authority should be considering whether comparing the actual domestic prices and the
actual export prices would show the extent of "price discrimination". This is because at that stage of
the dumping investigation the "dataset" for the "export price" has not yet been established.37, 38

11. There are three separate and distinct tests set out in the An ti-Dumping Agreement: (a) the
"normal value" dataset is determined under Article 2.1 and Article 2.2; (b) the "export price" dataset
is determined under Article 2.1 and Article 2.3; and (c) the resulting dataset for the "export price"
is compared with the resulting dataset for the "normal value" under Article 2.4. Indonesia's argument
ignores this by advocating that, under Article 2.2, the actual domestic prices should form the basis
of the "normal value" whenever comparing those actual domestic prices to t he actual export prices
would show whether "price discrimination" (and, hence, dumping) is occurring. But an investigating
authority has not yet established whether the actual export prices should form the basis of the
"export price" that it will subsequently use to determine the margin of dumping under Article 2.4.
The actual export prices cannot be relevant to determining whether the domestic sales "permit a
proper comparison" to the "export price" under Article 2.2 because, under Article 2.3, that "expor t
price" may not even be based on the actual export prices.39 Thus, contrary to Indonesia's arguments,
the fact that the Anti -Dumping Commission "did not take the export price into consideration" 40 in
deciding whether or not to discard the domestic sales und er Article 2.2 does not mean that "its
interpretation and application of Article 2.2 [is] inconsistent with its WTO obligations".41

12. Indonesia is also incorrect when it argues that "[i]f a producer sells at the same low price in
the domestic market and export market, that is not dumping and it is not regulated by the Anti -
Dumping Agreement"42 and is also incorrect when it argues that "if a producer sells at the same low
price in sales in the ordinary course of trade in the domestic market and in sales in the export
market, that is not dumping". 43 The GATT 1994 and the Anti -Dumping Agreement define dumping
as being when the export price is below the "normal value". Thus, the fact that the export price and
the price of domestic sales (or the price of domesti c sales in the ordinary course of trade) are the
same does not necessarily mean that there is no dumping. If the domestic price is not a "comparable
price, in the ordinary course of trade, for the like product when destined for consumption in the
exporting country", then an investigating authority must not use it as the "normal value". Indonesia
ignores that there will not be a "comparable price" if, "because of the particular market situation",
domestic sales "do not permit a proper comparison".44

13. Furthermore, "dumping" extends beyond the situation where an exporter is "selling for less in
the export market than in the domestic market". 45 This argument of Indonesia ignores the
alternative bases for "normal value (being third country export prices and constructed normal value)
that are available: (a) if there are "no sales of the like product in the ordinary course of trade"; and
(b) if, "because of the particular market situation or the low volume of the sales in the domestic

35 Indonesia's written response to question 26 following the second substantive meeting with the
Parties, para. 74.
36 Indonesia's written response to question 26 following the second substantive meeting with the
Parties, para. 74.
37 See also Indonesia's written response to question 26 following the second substantive meeting with
the Parties, paras. 71-75.
38 Australia's comments on Indonesia's written response to question 24 following the second substantive
meeting with the Parties, paras. 114-116.
39 Australia's comments on Indonesia's written response to question 24 following the second substantive
meeting of the Parties, paras. 117-119.
40 Indonesia's second written submission, para. 38.
41 Indonesia's second written submission, para. 38.
42 Indonesia's first written submission, para. 102.
43 Indonesia's written response to question 3 following the second substantive meeting with the Parties,
para. 5. (emphasis added)
44 Australia's comments on Indonesia's written response to question 3 following the second substantive
meeting with the Parties, paras. 7-12.
45 Indonesia's written response to question 15 following the first substantive meeting with the Parties,
p. 17.

market of the exporting c ountry, such sales do not permit a proper comparison to the export
prices".46

14. As clearly set out in Article 2.1 of the Anti -Dumping Agreement and Article VI:1 of the
GATT 1994, "dumping" occurs when the export price is below the "normal value", not merely when
"the pricing practice of an exporting firm [is] to charge a lower price for exported goods than it does
for the same goods sold domestically". 47 And, as clearly set out in Article 2.2 of the Anti -Dumping
Agreement and Article VI:1(b) of the GATT 19 94, there are certain circumstances where an
investigating authority is required to not use the domestic prices of the like product as the basis for
the "normal value". One of those circumstances is where, "because of the particular market
situation … such sales do not permit a proper comparison" with the export price. This is the
circumstance before the Panel in this dispute.48

E. Government Intervention Can Result in the Domestic Price Not Being Suitable to Use
as the Basis for the Normal Value

15. There is nothing in the text of the GATT 1994 or the Anti-Dumping Agreement to support
Indonesia's argument that "government involvement … falls exclusively within the province of the
SCM Agreement"49 or that "the Anti-Dumping Agreement is concerned solely with the behaviour of
individual producers or exporters absent express language indicating otherwise".50 Furthermore, the
basis of Australia's "particular market situation" finding was not that the Government of Indonesia
provided goods for less than adequate remuneration.51

F. Footnote 2 of Article 2.2 of the Anti -Dumping Agreement Provides No Support for
Indonesia's Arguments

16. Indonesia argues that "the "proper comparison" when a "particular market situation" exists is
between the domestic sales price and the export sales price".52 But the comparative examination
discussed in footnote 2 only addresses the relative magnitudes of the domestic sales and the export
sales – it certainly does not consider the price of the domestic sales in comparison to the price of
the export sales. Furthermore, the overarching question under footnote 2 is whether the domestic
sales were of a sufficient magnitude "to provide for a proper comparison" – the focus remains on
the attributes of the domestic sales. 53 Indonesia recognised this when it suggested that domestic
sales might "not permit a proper comparison" in the context of a "low volume of … sales" if: (a) they
are "not … representative of how the exporter would behave over a larger volume of sales ";54
(b) there are " unusual transactions";55 or (c) "the evidence establishes" that "the sales are …
unsuitable".56

17. Thus, Indonesia appears to have recognised that in order to be suitable to use as the basis
for the "normal value", the "domestic price" must be of the correct na ture and quality, even if the
sale is in the ordinary course of trade.57 This is a key shift in Indonesia's argument because Indonesia
acknowledges that there may be something inherent in the "domestic sales" that make them
"unreliable" – or, as Australia h as explained, "unsuitable" – for use as the basis for the "normal
value", even if they are in the ordinary course of trade. And, crucially, whether or not the domestic

46 Australia's second written submission, para. 161.
47 Indonesia’s first written submission, para. 91. (footnote omitted)
48 Australia's second written submission, para. 163.
49 Indonesia's first written submission, para. 93.
50 Indonesia's written response to question 10(b) following the first substantive meeting with the
Parties, pp. 13-14.
51 Australia's second written submission, paras. 111-122.
52 Indonesia's second written submission, para. 37. (emphasis added)
53 Australia's written response to question 5 following the second substantive meeting with the Parties,
para. 32.
54 Indonesia's written response to question 21 following the second substantive meeting with the
Parties, para. 46. (emphasis added)
55 Indonesia's written response to question 21 following the second substantive meeting with the
Parties, para. 46. (emphasis added)
56 Indonesia's written response to question 21 following the second substantive meeting with the
Parties, para. 49. (emphasis added)
57 See Australia's opening statement at the second substantive meeting with the Parties, para. 74.

sales are "[un]representative", "unusual" or "unsuitable" has nothing to do with the "co mparison"
between the actual domestic price and the actual export price.58

G. Indonesia has Admitted That Domestic Prices and Export Prices Were Not
"Equally Affected" by the Low-Cost Inputs

18. Indonesia argued that domestic prices and export prices were "equally affected" because "the
same inputs were used to make A4 copy paper sold to the Indonesian domestic market and exported
to Australia".59 It argued that this meant there was no "particular market situation" 60 and that this
meant that the d omestic sales permitted a "proper comparison". 61 It argued that "[w]hether the
input price affected domestic and export prices is relevant under Indonesia's first and second
claims".62

19. Indonesia states that, in respect of its first and second claims, it is presenting the Panel "with
narrow questions that do not require [the Panel] to offer a definitive interpretation of "particular
market situation" or "proper comparison"". 63 In the words of Indonesia, these "narrow questions"
are "whether a low-price input used identically to produce merchandise for the domestic and export
market constitutes a "particular market situation" within the narrow meaning of Article 2.2 of the
Anti-Dumping Agreement (claim 1) or prevents a proper comparison (claim 2)". 64 Indonesia's
assertion that the "low -price input" equally affected the domestic price and the export price is
integral to Indonesia's argument as to why such a "low-price input" could not result in a "particular
market situation" and would not prevent a "proper com parison". However, Indonesia admitted at
the second substantive meeting with the Parties that the domestic price and the export price were
not "equally affected" by the lowered cost and price of logs and hardwood pulp. Thus, the "narrow
questions" that Indonesia poses must both be answered in the positive – that is, even on Indonesia's
arguments, the "low-price input" can lead to a "particular market situation" and the "low-price input"
does prevent a "proper comparison".65

20. On Indonesia's argument, the crucial question is "whether [the] alleged situations involving
government policies in the domestic market actually made any difference to the determination of
the margin of dumping that would arise from a comparison between each individual Indonesian
exporter's domestic prices and its export prices". 66 Indonesia has admitted that the domestic price
and the export price were not "equally affected" by the lowered cost and price of logs and hardwood
pulp. Thus, Indonesia has admitted that the government interv ention would have changed the
margin between the domestic price and the export price of A4 copy paper, so that margin would not
show the exporter's "international price discrimination". Thus, even on Indonesia's argument, this
would mean that the domestic sales did "not permit a proper comparison" and the Anti -Dumping
Commission was required to discard the domestic prices as the basis for the "normal value".67

21. Australia questions whether Indonesia has made out a prima facie case in respect of its first
and second claims. Even if the Panel accepted all of Indonesia's arguments on Indonesia's first and
second claims, the Panel could not as a matter of law rule in favour of Indonesia on those claims.68
This is because Indonesia has admitted that an integral part of its argument in respect of those
claims – the alleged fact that the domestic price and the export price were "equally affected" by the

58 Australia's comments on Indonesia's written response to questions 5 and 21 following the second
substantive meeting with the Parties, paras. 35-36.
59 Indonesia's second written submission, para. 15.
60 Indonesia's second written submission, paras. 3, 13-14, and 32.
61 Indonesia's first written submission, paras. 115-122; Indonesia's second written submission,
paras. 15-16 and 39-42; Indonesia's opening statement at the second substantive meeting with the Parties,
para. 32; and Indonesia's closing statement at the second substantive meeting with the Parties, para. 6.
62 Indonesia's second written submission, para. 19.
63 Indonesia's written response to question 20(a) following the second substantive meeting with the
Parties, para. 38.
64 Indonesia's written response to question 2(b) following the first substantive meeting with the Parties,
p. 8.
65 Australia's comments on Indonesia's written response to question 20 following the second substantive
meeting with the Parties, paras. 99-100.
66 Indonesia's first written submission, para. 116.
67 Australia's response to question 4 following the second substantive meeting with the Parties,
para. 20.
68 Appellate Body Report, EC – Hormones, para. 104.

reduction in the cost and price of the logs and hardwood pulp – is not true.69 Australia recalls, in this
regard, that the Panel "cannot make the case for a complainant".70, 71

II. AUSTRALIA ACTED CONSISTENTLY WITH ARTICLES 2.2 AND 2.2.1.1 OF THE ANTI -
DUMPING AGREEMENT IN ITS DETERMINATION OF THE CONSTRUCTED NORMAL
VALUE OF A4 COPY PAPER

A. Australia was Not Required to Calculate the Hardwood Pulp Component of the
Constructed Normal Value on the Basis of the Records of Indah Kiat and Pindo Deli

1. Indonesia's interpretation of the first sentence of Article 2.2.1.1 reads out the word
"normally"

22. Indonesia argues that the word "normally" appears in the first sentence of Article 2.2.1.1 of
the Anti-Dumping Agreement in order to specify that the exporter's records must be used unless
one (or both) of the conditions in the first sentence of Article 2.2.1.1 are not satisfied.72 But, if that
had been the intention of the provision, the word "normally" would not have been included.
Indonesia's interpretation strips the word "normally" of any effect at all. Indonesia's interpretation
is that the first sentence of Article 2.2.1.1 means the same thing with the word "normally" included
as it would mean without the wo rd "normally" included. But the qualification of the verb "shall" by
the adverb "normally" must be given meaning and effect. Interpreting the first sentence of
Article 2.2.1.1 in a way that requires that the "costs … be calculated on the basis of records kept by
the exporter or producer under investigation" whenever the two conditions in Article 2.2.1.1 are
satisfied – as Indonesia does73 – renders the word "normally" inutile and redundant.74

23. The proper Vienna Convention interpretation of the first sente nce of Article 2.2.1.1 is that
where the circumstances in respect of the records are not normal and ordinary, the investigating
authority is not required to calculate costs on the basis of records kept by the exporter or producer
under investigation, even if the two conditions in Article 2.2.1.1 are satisfied. 75 Australia's
interpretation is fully consistent with the findings of panels and the Appellate Body in relation to the

69 Australia also notes that in the Request for the Establishment of a Panel by Indonesia, Indonesia
stated that the legal basis of its first claim was that Australia's finding of a "particular market situation" was
"incorrect and inconsistent with Article 2.2". In developing this claim in its submissions, Indonesia argued that
the use of the same hardwood pulp in A4 copy paper sold domestically and A4 copy paper exported to Australia
meant that the domestic price and the export price were "similarly affected" (Indonesia's second written
submission, para. 2), that "domestic and export prices were equally affected by [the] situation" (Indonesia's
second written submission, para. 3), that the Anti-Dumping Commission should have "examine[d] whether the
situation affects domestic and export prices", and that Indonesia had provided "proof the low price inputs
equally affected domestic and export prices" (Indonesia's second written submission, paras. 13-14; see also
para. 15). In its response to question 4 following the second substantive meeting with the Parties, Indonesia
conceded that, in fact, the domestic price and the export price were not "equally affected".
Australia also notes that in the Request for the Establishment of a Panel by Indonesia, Indonesia stated
that the legal basis of its second claim was that "Australia did not properly consider that such domestic sales
price permitted a proper comparison with the Indonesian producers' export price of A4 copy paper to Australia
since Indonesian A4 copy paper producers used the same raw material of the same cost to produce A4 copy
paper for domestic, Australian and other export markets". In developing this claim in its submissions,
Indonesia argued that the use of the "same raw material" meant that the domestic price and the export price
were "equally affected", which is why a "proper comparison" was permitted (see, for example, Indonesia's first
written submission, paras. 115-122; Indonesia's second written submission, paras. 39-42; Indonesia's opening
statement at the second substantive meeting with the Parties, para. 32; and Indonesia's closing statement at
the second substantive meeting with the Parties, para. 6). In its response to question 4 following the second
substantive meeting with the Parties, Indonesia conceded that, in fact, the domestic price and the export price
were not "equally affected".
70 Appellate Body Report, Canada – Renewable Energy, para. 5.215.
71 Australia's comments on Indonesia's written response to question 4 following the second substantive
meeting with the Parties, paras. 26-29.
72 Indonesia's first written submission, para. 131; Indonesia's opening statement at the first substantive
meeting with the Parties, para. 44; Indonesia's written response to question 20(a) following the first
substantive meeting with the Parties, p. 20; and Indonesia's second written submission, paras. 56-59.
73 Indonesia's first written submission, paras. 124 and 136.
74 See, for example, Australia's second written submission, paras. 197-203 and 226.
75 Australia's first written submission, para. 194.

meaning of "normally" in Article 2.2.1.1.76 Notably, the panel and Appellate Body i n EU – Biodiesel
(Argentina) left open the possibility of there being circumstances beyond a failure to satisfy the two
expressly stated conditions in Article 2.2.1.1 in which an investigation authority would not be
required to calculate costs on the basis of records kept by the exporter or producer under
investigation.77, 78

24. The Anti -Dumping Commission was faced with circumstances that were not "normal and
ordinary" with respect to the hardwood pulp component of the records of Indah Kiat and Pindo Deli.
Even if the two conditions in Article 2.2.1.1 were satisfied, a constructed normal value calculated on
the basis of the records kept by Indah Kiat and Pindo Deli in respect of hardwood pulp would not
have been an "appropriate proxy for the price of the li ke product in the ordinary course of trade in
the domestic market of the exporting country when the normal value cannot be determined on the
basis of domestic sales",79 because, like the domestic sales price that had been found unsuitable to
use as the basis of the "normal value", it would have reflected the "particular market situation".80 If
the Anti-Dumping Commission had used the amounts for hardwood pulp in the records kept by Indah
Kiat and Pindo Deli then the resultant "normal value" for A4 copy paper would simply have reflected
the unsuitability of the domestic sales. Such a result would have been inconsistent with a harmonious
interpretation of the applicable provisions.81

2. The Anti-Dumping Commission did not base its decision to discard the hardwoo d
pulp component of the record of Indah Kiat and Pindo Deli on the second condition
of Article 2.2.1.1

25. Indonesia argues that the Anti -Dumping Commission's finding that "the actual cost of pulp
recorded by exporters in their records does not reasonably reflect a competitive market cost" was
"unmistakably made pursuant to the second condition of Article 2.2.1.1 of the Anti -Dumping
Agreement".82 But subsection 43(2) of the Customs Regulation – which requires consideration of
whether the records "reasonably reflect competitive market costs associated with the production or
manufacture of like goods" – gives effect to both the second condition of the first sentence of
Article 2.2.1.1, and to the word "normally" in Article 2.2.1.1. 83 The Anti -Dumping Commission 's
reasoning in support of its decision to discard the hardwood pulp component of the records of Indah
Kiat and Pindo Deli was consistent with a reliance on the word "normally" in Article 2.2.1.1, rather
than a reliance on the second condition of Article 2.2.1.1 not being satisfied.84

3. Australia's interpretation does not make the second Ad Note and the NME provisions
in Accession Protocols redundant

26. Indonesia argues that Australia's interpretation of the "particular market situation" provision
of Article 2.2 permits the discarding of domestic prices in situations beyond those covered by the
second Ad Note to Article VI:1 of the GATT 1994 and the NME p rovisions in certain Accession

76 Panel Report, China – Broiler Products, para. 7.161; Panel Report, EU – Biodiesel (Argentina),
para. 7.227. See also Australia's first written submission, paras. 195-199.
77 Panel Report, EU – Biodiesel (Argentina), footnote 380; Appellate Body Report, EU – Biodiesel
(Argentina), footnote 120. See also Panel Report, Ukraine – Ammonium Nitrate, para. 7.68.
78 Australia's second written submission, para. 231.
79 That is, they were not suitable to fulfil the basic purpose of determining a constructed normal value
under Article 2.2 – see Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24 (footnote omitted) and
Panel Report, EU – Biodiesel (Argentina), para. 7.233. See also Panel Report, Thailand – H-Beams,
80 See Australia's first written submission, para. 215; Australia's written response to question 20(c)
following the first substantive meeting with the Parties, para. 141; and Australia's second written submission,
para. 219.
81 Australia's opening statement at the second substantive meeting with the Parties, para. 21.
82 Indonesia's written response to question 21 following the first substantive meeting with the Parties,
p. 21.
83 See Australia's written response to Panel questions 20(c) and 23 following the first substantive
meeting with the Parties, paras. 132-142 and 169-171; and Australia's second written submission, para. 209.
84 Australia's written response to question 20(c) following the first substantive meeting with the Parties,
paras. 130 and 138-142.

Protocols.85 Indonesia goes so far as to suggest that adopting Australia's interpretation would make
the second Ad Note and those NME provisions "unnecessary"86 and that such a result is "absurd".87

27. However, in making this argument, Indonesia (and China 88) ignore the fact that the
investigating authority's discretion in determining the "normal value" is materially different under
Article 2.2 than it is under the second Ad Note and the NME provisions in the Accession Protocols. If
the domestic price is discarded as the basis for the normal value under Article 2.2, the methodology
that an investigating authority must use to determine the "normal value" must be either: (a) the
"comparable price of the like product when exported to an appropriate third country, provided that
this price is representative"; or (b) "the cost of production in the country of origin plus a reasonable
amount for administrative, selling and general costs and profits". The requirement that a
"representative" export price or the "cost of production in the country of origin" 89 be used as the
basis for the alternative "normal value" is not present in the second Ad Note or the NME provisions
in the Accession Protocols. Rather, they have been interpreted to permit the "normal value" to be
based on prices and costs in a market economy third country. Article 2.2 does not allow for the use
of such a "surrogate" or "analogue" country methodology. Thus, the effect on the margin of dumping
(and hence the anti -dumping duties) of a finding under Article 2.2 is materially different from a
finding under the second Ad Note or the NME provisions in the Accession Protocols.90

4. Indonesia's arguments with respect to the Anti -Dumping Commission's decision to
discard the hardwood pulp component of the records of Indah Kiat and Pindo Deli
are incorrect

28. Indonesia argues that if Australia had not "improperly linked a "particular market situation"
to a producer's input cost" then "there would not be a problem using the producer's costs to construct
the normal value" .91 Bur, as stated in the Final Report, "low input costs, of themselves, are not
determinative of a market situation",92 that "a market situation assessment primarily concerns the
domestic market for like goods", 93 and that "conditions in a significant input market that do not
distort the market for like goods will not found a market situation finding".94

29. Indonesia argues that the "problem" is that the Anti -Dumping Commission found that the
amounts for hardwood pulp in the records of Indah Kiat and Pindo Deli were unsuitable to use as
the hardwood pulp component of the cost of production of A4 copy paper in Indonesia. But
Indonesia has effectively conceded that the "pulp benchmark" that the Anti -Dumping Commission
instead used – which was different to the amounts for hardwood pulp in the records of Indah Kiat
and Pindo Deli – was the proper amount to use for the hardwood pulp component of the cost of
production of A4 copy paper in Indonesia.95

30. This is because Indonesia has acknowledged that the prevailing export price of hardwood pulp
was the proper amount to use for the hardwood pulp component of the "co st of production of
[A4 copy paper] in Indonesia". 96 And Australia has demonstrated that the "pulp benchmark" was
virtually identical to that prevailing export price. 97 Using the amounts for hardwood pulp that were
in the records of Indah Kiat and Pindo Deli would have been the real "problem" because: (a) contrary
to the findings of the Appellate Body in EU – Biodiesel (Argentina), those records would not have

85 Indonesia's second written submission, paras. 5, 9, 12 and 43-52.
86 Indonesia's second written submission, para. 5. See also Indonesia's second written submission,
para. 52.
87 Indonesia's second written submission, para. 5.
88 See China's written response to question 4 to the third parties following the first substantive meeting
with the Parties, paras. 37-42.
89 "[P]lus a reasonable amount for administrative, selling and general costs and for profits" as per
Article 2.2.
90 Australia's opening statement at the second substantive meeting with the Parties, paras. 105-108.
91 Indonesia's second written submission, para. 68.
92 Final Report, Exhibit IDN-04, section A2.8.6.3, p. 165.
93 Final Report, Exhibit IDN-04, section A2.8.5.2, p. 162.
94 Final Report, Exhibit IDN-04, section A2.8.5.2, p. 162.
95 Australia's second written submission, paras. 241-249.
96 See, for example, Indonesia's opening statement at the first substantive meeting with the Parties,
para. 49, Australia's closing statement at the first substantive meeting with the Parties, paras. 26-29, and
Australia's second written submission, paras. 241-249.
97 Australia's second written submission, paras. 241-249.

resulted in the constructed normal value being an "appropriate proxy for the price of the like product
in the ordinary course of trade in the domestic market of the exporting country when the normal
value cannot be determined on the basis of domestic sales",98 and (b) contrary to Article 2.2 of the
Anti-Dumping Agreement, they would not have resulted in t he derivation of the proper "cost of
production of [A4 copy paper] in [Indonesia]".99

B. The Anti-Dumping Commission was Correct to Use the "Pulp Benchmark" for the
Hardwood Pulp Component of the Constructed Normal Value

1. The use of the "pulp benchmark" resulted in a proper determination of the "cost of
production in the country of origin" under Article 2.2

31. The Anti-Dumping Commission's use of the "pulp benchmark" yielded a "cost of production in
the country of origin" under Article 2.2 wh ich properly included the full costs of production of the
like product in the country of origin, including those costs that were not incurred, in whole or in part,
as a cash cost to specific entities producing the like product. Those full costs of production continued
to exist notwithstanding the "particular market situation" – but they were not all incurred as a cash
cost by Indah Kiat and Pindo Deli, and hence were not reflected in their records.100

32. Indonesia improperly equates the cash costs incurred by Indah Kiat and Pindo Deli to produce
and acquire the hardwood pulp, respectively, with the hardwood pulp component of the "cost of
production [of A4 copy paper] in [Indonesia]" under Article 2.2.101

33. But the cost of producing hardwood pulp and the co st of acquiring hardwood pulp are not
necessarily the same as the cost of consuming hardwood pulp in the production of A4 copy paper.102
As Australia has established, and as Indonesia itself has acknowledged, the prevailing export price
of hardwood pulp was a proper amount to use for the hardwood pulp component of the "cost of
production of [A4 copy paper] in [Indonesia]" in this case. 103 Australia has demonstrated that: (a)
the "pulp benchmark" used by the Anti-Dumping Commission was virtually identical to that prevailing
export price;104 and (b) Indah Kiat's cost to produce hardwood pulp and Pindo Deli's cost to acquire
hardwood pulp were both different to the "pulp benchmark". 105 Clearly, and as found by the Anti -
Dumping Commission, the amounts in the records of Indah Kiat and Pindo Deli for hardwood pulp
were not suitable to use for the hardwood pulp component of the "cost of production of [A4 copy
paper] in [Indonesia]". Rather, the proper amount to use was the "pulp benchmark", which was
determined in an entirely appropriate manner and based on suitable benchmark prices.106

34. By contrast, for one of the other Indonesian exporters (RAK), the Anti -Dumping Commission
found that its transfer prices for purchases of hardwood pulp in Indonesia from a related company
were consistent with the benchmark prices used to derive the "pulp benchmark". The Anti-Dumping
Commission thus calculated the constructed normal value of A4 copy paper for RAK on the basis of
its records,107 because a constructed normal value calculated on the basis of those transfer prices
(and RAK's other costs) would have been an "appropriate proxy for the price of the like product in
the ordinary course of trade in the domestic market of the exporting country when the normal value
cannot be determined on the basis of domestic sales".108

98 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24. (footnote omitted) See also Panel
Reports, EU – Biodiesel (Argentina), para. 7.233; Thailand – H-Beams, para. 7.112; and US – Softwood
Lumber V, para. 7.278.
99 Australia's opening statement at the second substantive meeting with the Parties, para. 102.
100 See Australia's second written submission, paras. 259-260.
101 Australia's opening statement at the second substantive meeting with the Parties, para. 25.
102 Australia's opening statement at the second substantive meeting with the Parties, para. 26.
103 See, for example, Indonesia's opening statement at the first substantive meeting with the Parties,
para. 49, Australia's closing statement at the first substantive meeting with the Parties, paras. 26-29, and
Australia's second written submission, paras. 241-249.
104 Australia's second written submission, paras. 241-249.
105 Australia's opening statement at the second substantive meeting with the Parties, paras. 23-24.
106 Australia's opening statement at the second substantive meeting with the Parties, para. 29.
107 Final Report, Exhibit IDN-04, section 6.9.2.2, p. 52.
108 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24 (footnote omitted). See also Panel
Reports, EU – Biodiesel (Argentina), para. 7.233; Thailand – H-Beams, para. 7.112; US – Softwood Lumber V,
para. 7.278.

35. Indonesia does not argue t hat there were export taxes or other export restrictions on
hardwood pulp. It does not deny that, unlike the situations in EU – Biodiesel (Argentina) and
Ukraine – Ammonium Nitrate, the input in this case – hardwood pulp – could be exported at its
prevailing competitive export price, which was virtually identical to the "pulp benchmark" used by
the Anti-Dumping Commission. Thus, the "pulp benchmark" reflects the amount foregone when the
hardwood pulp was consumed in the production of A4 copy paper in Indonesia rather than being
exported.109 Furthermore, the benchmark prices used to derive the "pulp benchmark" were
consistent with the confidential transfer prices in RAK's records for its purchases of hardwood pulp
in Indonesia from a related company.110

36. The use of the "pulp benchmark" is also consistent with the Appellate Body's observation that
"the scope of the obligation to calculate the costs on the basis of the records in the first sentence of
Article 2.2.1.1 is narrower than the scope of the obligation to determine the cost of production in
the country of origin in Article 2.2".111, 112

2. Contrary to Indonesia's arguments, the "pulp benchmark" was not the cost of
producing hardwood pulp in South America or Brazil or the sales price of hardwood
pulp in South America or Brazil

37. Indonesia argues that the "benchmark pulp price Australia substituted for the costs recorded
in the Indonesian producers' records represents the cost of producing pulp in South America and
Brazil";113 that it represents the "pulp price in Brazil and South America";114 and that it was "the free
on board South America and Brazil price".115 All of these statements are incorrect.

38. Rather, the "pulp benchmark": (a) consisted of monthly and quarterly import pulp prices into
China and Korea based on an average c.i.f. price for hardwood pulp originating from Brazil and South
America;116 (b) was "based on verified actual transaction prices collected through broad systematic
surveys of small, medium and large size participants, including both buyers and sellers";117 (c) was
the price at which hardwood pulp originating in South America and Brazil was sold in Indonesia's
primary export markets, namely China and Korea ; (d) was virtually identical to the average of the
four price series that Indonesia says the Anti-Dumping Commission could have used to "derive[] the
cost of pulp and, ultimately, paper production in Indonesia", consistent with Article 2.2; 118 and (e)
was virtually identical to the prevailing competitive export price of hardwood pulp from I ndonesia,
as represented by those four price series.119

3. No further adaptation of the pulp benchmark was required

39. Indonesia argues that Australia did not "make any adjustments to [the "pulp benchmark"] to
derive the cost of production in Indonesia". 120 It dismisses the adjustments for dry to wet pulp
conversion, and the removal of SG&A, ocean freight and inland transportation charges, arguing that
they were not relevant to deriving the cost of production of A4 copy paper in Indonesia.121

109 Australia's second written submission, para. 256.
110 Australia's opening statement at the second substantive meeting with the Parties, para. 28.
111 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73. (emphasis added)
112 Australia's opening statement at the second substantive meeting with the Parties, para. 30.
113 Indonesia's opening statement at the first substantive meeting with the parties, p. 24. See also
Indonesia's first written submission, para. 168.
114 Indonesia's written response to question 28(a) following the first substantive meeting with the
Parties, p. 22.
115 Indonesia's written response to question 35 following the second substantive meeting with the
Parties, para. 97.
116 Australia's first written submission, para. 228 and footnote 241.
117 Australia's first written submission, para. 228 and footnote 247.
118 Indonesia's opening statement at the first substantive meeting with the Parties, para. 49.
119 Australia's second written submission, para. 249.
120 Indonesia's opening statement at the first substantive meeting with the Parties, para. 46. (footnote
omitted)
121 Indonesia's opening statement at the first substantive meeting with the Parties, para. 48 and
Indonesia's written response to Panel question 29 following the first substantive meeting with the Parties,
p. 24.

40. The Anti-Dumping Commission adapted the "pulp benchmark" specific to the circumstances
of Indah Kiat and Pindo Deli. The Anti-Dumping Commission carefully considered submissions of the
Government of Indonesia and the exporters in respect of the "pulp benchmark" and th e required
adaptations.122 Contrary to Indonesia's arguments, the adjustments made by the Anti -Dumping
Commission were necessary to adapt the "pulp benchmark" so as to ensure the proper derivation of
the cost of production in Indonesia specific to the circumstances of Indah Kiat and Pindo Deli.123

41. Indonesia argues that additional adaptation of the pulp benchmark was required. 124 This is
incorrect. Australia notes the following: (a) "50 to 60 per cent of total [pulp] production" in Indonesia
is consumed in Indonesia125 – the rest is exported; (b) there was no significant difference between
the price of hardwo od pulp sourced by Asian importers from South America and the price of
hardwood pulp sourced by Asian importers from Indonesia;126 (c) the prevailing competitive export
price (i.e. the "pulp benchmark") would have been obtained for the Indonesian hardwood pulp if it
had been exported from Indonesia rather than being consumed in the production of A4 copy paper,
because there were no export tariffs or export quotas on hardwood pulp in Indonesia; 127 (d) the
prevailing competitive export price (i.e. the "pulp bench mark") was therefore a cost of production
of A4 copy paper in Indonesia, because it was given up when the hardwood pulp was consumed in
the production of A4 copy paper in Indonesia rather than being exported; (e) the benchmark prices
used to derive the pulp benchmark were consistent with the confidential transfer prices in the records
kept by one of the other Indonesian exporters (RAK) for its purchases of hardwood pulp in Indonesia
from a related company; 128 (f) the growing costs for acacia pulpwood in Indon esia were not
significantly less than growing costs for eucalyptus pulpwood in South America; 129 and (g) the
Government of Indonesia and the Indonesian hardwood pulp producers provided no evidence to
support their claims that it was cheaper to produce acacia pulpwood in Indonesia than in other Asian
or South American countries.130, 131

42. These circumstances and facts clearly establish that the "pulp benchmark" reflected the
hardwood pulp component of the cost of production of A4 copy paper in Indonesia. Therefore, it was
not necessary for the Anti -Dumping Commission to take additional steps beyond those taken to
adapt the "pulp benchmark" when determining the hardwood pulp component of the constructed
normal values for Indah Kiat and Pindo Deli.132

43. Indonesia is therefore simply incorrect when it argues that "the hardwood pulp price the
Commission used had no connection whatsoever to Indonesia";133 that "Australia did not attempt to
calculate a pulp price in Indonesia"134 and that, by using the "pulp benchmark", "Australia failed to
calculate the cost of production in the country of origin, i.e. Indonesia".135, 136

44. The "cost of production in the country of origin" must include the full costs of production of
the like product in the country of origin, including tho se costs that are not incurred, in whole or in
part, as a cash cost to specific entities producing the like product, as is the case in this dispute.137

122 Final Report, Exhibit IDN-04, section A4.4, p. 231 and section A4.5, pp. 232-233.
123 Australia's second written submission, para. 254.
124 Indonesia's first written submission, para. 168; Indonesia's opening statement at the
first substantive meeting with the Parties, para. 48; and Indonesia's written response to question 29 following
the first substantive meeting with the Parties, p. 24.
125 Final Report, Exhibit IDN-04, section A2.9.2.3, p. 167. (footnote omitted)
126 Final Report, Exhibit IDN-04, section A4.4, p. 231.
127 See Australia's first written submission, para. 114 and Final Report, Exhibit IDN-04,
section A.2.9.2.6, p. 170.
128 Final Report, Exhibit IDN-04, section 6.9.2.2, p. 52 and section A4.5.1, p. 232.
129 Final Report, Exhibit IDN-04, section A4.5.2, p. 233.
130 Final Report, Exhibit IDN-04, section A4.5.2, p. 233.
131 Australia's second written submission, para. 256.
132 Australia's second written submission, para. 257.
133 Indonesia's first written submission, para. 166.
134 Indonesia's written response to question 28(a) following the first substantive meeting with the
Parties, p. 22.
135 Indonesia's first written submission, para. 2. See also Indonesia's first written submission,
paras. 164-169.
136 Australia's second written submission, para. 258.
137 Australia's second written submission, para. 259.

45. It has been accepted by panels and the Appellate Body that a non -arm's-length cost (i.e. a
non-competitive market cost) in the records of a producer can be discarded and replaced by the
arm's-length cost (i.e. the competitive market cost), even though nobody in the transaction incurs
that arm's-length cost (i.e. the competitive market cost) as a cash cost. This is clear recognition of
the rejection of recorded cash costs and their replacement with higher non -cash costs in the
determination of the "cost of production in the country of origin" pursuant to Articles 2.2 and 2.2.1.1
of the Anti -Dumping Agreement. Those higher non -cash costs equal the amount that the input
supplier would have received for the input if that input supplier had sold the input at an arm's-length
price (i.e. a competitive market price) rather than the non -arm's-length price
(i.e. the non-competitive market price) reflected in the records of the producer. It is also the amount
that the producer would have received for the input if that producer had sold the input at an arm's-
length price (i.e. the competitive market price) rather than consuming it in the production of the
product.138

46. Australia's use of the "pulp benchmark" – as adapted to the specific circumstances of Indah
Kiat and Pindo Deli – ensured that the full amount of the hardwood pulp component of the "cost of
production [of A4 copy paper] in [Indonesia]" was used to determine the constructed normal value,
not just the amounts included in the records of Indah Kiat and Pindo De li (which were merely the
(lower) cash costs they respectively incurred to produce and acquire hardwood pulp).139

4. Indonesia has no basis to resile from its admission that the prevailing export price
was a proper amount to use as the hardwood pulp compone nt of the constructed
normal value

47. Indonesia has no legal or logical basis for its attempt to completely reverse its position that
the prevailing export price of hardwood pulp was the proper amount to use for the hardwood pulp
component of the "cost of production of [A4 copy paper] in [Indonesia]". Australia's submission of
the evidence and information regarding the RISI and Hawkins Wright data was not "untimely" 140 –
rather, it was "necessary for purposes of rebuttal" within paragraph 5(1) of the Working Procedures
and it was submitted by Australia at the first opportunity that Australia had to do so following the
submission of the Parties' written responses to the Panel's questions following the first substantive
meeting with the Parties. The data itself was "reliable"141 and the Government of Indonesia had full
knowledge during the investigation of the methodologies utilised by RISI to collect data. There was
no need for the Anti -Dumping Commission to "remove profit" 142 or to adjust for any "mark up". 143
Contrary to Indonesia's arguments, the evidence on the record indicates that integrated paper
producers in Indonesia do, in fact, "export pulp", and that they do so in significant quantities.
Furthermore, hardwood pulp is a tradeable commodity, not "merely an intermediate stage in the
paper production process" – Indonesia itself concedes that Indah Kiat provides hardwood pulp to
Pindo Deli. 144 Furthermore, the prevailing export price of hardwood pulp is a key factor145 that
determines how much hardwood pulp is devo ted to paper production as opposed to being sold on
the open market and is a key factor146 that determines whether a producer will expand, contract, or
abandon paper production.147

138 Australia's written response to questions 14 and 15 following the second substantive meeting with
the Parties, paras. 97-98.
139 Australia's second written submission, para. 260.
140 Indonesia's written response to question 9 following the second substantive meeting with the Parties,
para. 24.
141 Indonesia's written response to question 9 following the second substantive meeting with the Parties,
para. 24.
142 Indonesia's written response to question 9 following the second substantive meeting with the Parties,
para. 26.
143 Indonesia's written response to question 30(b) following the second substantive meeting with the
Parties, para. 92.
144 Indonesia's first written submission, footnote 70.
145 With all other things held equal.
146 With all other things held equal.
147 See, for example, Australia's written response to question 33 following the second
substantive meeting with the Parties, paras. 158-177 and Australia's comments on Indonesia's written
responses to questions 9, 10, 29 and 30 following the second substantive meeting with the Parties,
paras. 44-59 and 130-139.

48. Indonesia's arguments appear to be driven solely by the fact that Indonesia has realised that
its acknowledgement that the prevailing export price of hardwood pulp was the proper amount to
use for the hardwood pulp component of the "cost of production of [A4 copy paper] in [Indonesia]"
is fatal to its third, fourth and fifth claims.148

5. Indonesia's reliance on EU – Biodiesel (Argentina), EU – Biodiesel (Indonesia) and
Ukraine – Ammonium Nitrate is misplaced

49. Indonesia asserts that the facts of this dispute are "almost identical" to the facts in
EU – Biodiesel (Argentina) and EU – Biodiesel (Indonesia),149 that "there is no factual or legal basis
for this Panel to interpret Article 2.2.1.1 in a manner at odds with" the decisions in EU – Biodiesel
(Argentina), EU – Biodiesel (Indonesia) and Ukraine – Ammonium Nitrate,150, 151 that there are no
"meaningful differences" between this dispute and those disputes,152 that "the fact pattern [ in this
dispute] is almost identical" to those disputes, 153 and that "the facts [in this dispute] are
indistinguishable in any meaningful way from" the facts in those disputes.154

50. All of these assertions are incorrect. Firstly, none of those disputes considered the
determination of a constructed normal value in circumstances where, because of a "particular market
situation", domestic sales did not permit a proper comparison. Rather, they were all concerned with
a situation where the domestic sales were found not to be in the ordinary course of trade. Secondly,
all of those disputes concerned the interpretation and application of the second condition of
Article 2.2.1.1, which is not bef ore the Panel in this dispute. Thirdly, those disputes focussed on
whether or not the second condition of Article 2.2.1.1 permitted an examination of the
"reasonableness" of the costs recorded by the exporters in their records. But the "reasonableness"
of the recorded costs was simply not part of the Anti-Dumping Commission's consideration. Fourthly,
in relation to the main input to production, and in comparison to the hardwood pulp in the dispute
that is before this Panel, neither the soybeans in EU – Biodiesel (Argentina), the crude palm oil in
EU – Biodiesel (Indonesia) or the gas in Ukraine – Ammonium Nitrate could be exported at the
prevailing competitive export price by the producers of the like product. Fifthly, the "pulp
benchmark" was not a hypothet ical figure that might have been incurred under different
circumstances155 or an amount that would have been incurred under "normal circumstances". 156
Unlike the soybean benchmark used by the European Union investigating authority in EU – Biodiesel
(Argentina), the "pulp benchmark" was not chosen precisely because it did not represent the relevant
cost of hardwood pulp in Indonesia.157, 158

III. INDONESIA HAS FAILED TO DEMONSTRATE THAT AUSTRALIA ACTED
INCONSISTENTLY WITH ARTICLE VI:2 OF THE GATT 1994 AND WITH ARTICLE 9.3
OF THE ANTI-DUMPING AGREEMENT

51. Indonesia's has acknowledged that its claims under Article VI:2 of the GATT 1994 and
Article 9.3 of the Anti-Dumping Agreement are entirely dependent on this Panel finding that Australia
acted inconsistently w ith Articles 2.2 and 2.2.1.1 of the Anti -Dumping Agreement in its
determination of the "normal value" for Indah Kiat and Pindo Deli. 159 Australia has demonstrated

148 Australia's comments on Indonesia's responses to questions 9, 10 and 29 following the second
substantive meeting with the Parties, para. 62.
149 Indonesia's first written submission, para. 142.
150 Indonesia's first written submission, para. 145.
151 Australia notes that the panel decision in Ukraine – Ammonium Nitrate has been appealed and the
panel's report has thus not been adopted by the DSB.
152 Indonesia's first written submission, para. 155.
153 Indonesia's first written submission, para. 162. Also, in Indonesia's closing statement at the first
substantive meeting with the Parties, it stated that "Indonesia’s third claim is based on nearly identical facts in
the case law of EU – Biodiesel (Argentina), EU – Biodiesel (Indonesia) and Ukraine – Ammonium Nitrate
(Russia)" (para. 5).
154 Indonesia's opening statement at the first substantive meeting with the Parties, para. 41.
155 Panel Report, EU – Biodiesel (Argentina), para. 7.242 (see also Appellate Body Report, EU – Biodiesel
(Argentina), paras. 6.8 and 6.41) and Panel Report, EU – Biodiesel (Indonesia), paras. 7.22-7.26.
156 Panel Report, Ukraine – Ammonium Nitrate, para. 7.89.
157 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.81.
158 Australia's second written submission, paras. 262-269.
159 Indonesia's written response to questions 31(a) and 31(b) following the first substantive meeting
with the Parties, p. 24.

that its determination of the "normal value" for Indah Kiat and Pindo Deli was fully consistent with
Articles 2.2 and 2.2.1.1 of the Anti -Dumping Agreement. Indonesia's claims under Article VI:2 of
the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement must therefore fail.160

IV. AUSTRALIA HAS NOT NULLIFIED OR IMPAIRED BENEFITS ACCRUING DIRECTLY OR
INDIRECTLY TO Indonesia

52. No benefits accruing directly or indirectly to Indonesia under the GATT 1994 or the
Anti-Dumping Agreement have been nullified or impaired by Australia.161

V. CONCLUSION

53. Australia has conclusively rebutted the arguments that Indonesia has made in the course of
this dispute – including those it has made in its responses to the questions from the Panel following
the second substantive meeting with the Parties. Furthermore, Australia has conclusively shown that
the measures challenged by Indonesia are consistent with those provisions of the GATT 1994 and
the Anti-Dumping Agreement that Indonesia alleges Australia has violated. Indonesia has failed to
establish that Australia's action violated the GATT 1994 or the Anti-Dumping Agreement and, in fact,
Australia has demonstrated that its actions were entirely WTO -consistent. In addition, the
submissions and evidence before the Panel establish that the Anti -Dumping Commission: (a)
properly established the facts; (b) evaluated them in an unbiased and objective manner; and (c)
provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported
its factual findings; and (ii) how those factual findings supported the overall determination.

54. Given the above – and recalling the level of deference accorded to an investigating authority
under Article 17.6 of the Anti -Dumping Agreement – Australia respectfully requests that the Panel
dismiss all of Indonesia's claims.

ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of China 64
Annex C-2 Integrated executive summary of the arguments of the European Union 67
Annex C-3 Integrated executive summary of the arguments of Japan 72
Annex C-4 Integrated executive summary of the arguments of the Republic of Korea 77
Annex C-5 Integrated executive summary of the arguments of the Russian Federation 82
Annex C-6 Integrated executive summary of the arguments of Thailand 87
Annex C-7 Integrated executive summary of the arguments of the United States 89

ANNEX C-1
INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF CHINA
1. This executive summary integrates the Third Party Written Submission, Oral Statement and
Responses to the Panel's Questions by China.

The meaning of "because of the particular market situation, such sales do not permit a
proper comparison" in Article 2.2 of the Anti-Dumping Agreement

2. The general rule for the calculation of normal value is to use the domestic price of like product.
The "particular market situation", together with the other two circumstances provided for in
Article 2.2 of Anti-Dumping Agreement and the circumstance in second Ad Note to Article VI:1 in
GATT 1994, are circumstances because of which alternative "exceptional methods" for the calculation
of normal value shall be used. Exceptions to the general rule should be interpreted narrowly.

3. The markets other than that of the domestic market of the like product in the exporting
Member are not directly implicated in the phrase "particular market situation".

4. Article 2.2 provides that only when the domestic sales impacted by the particular market
situation "do not permit a proper comparison", would the domestic sales prices be disregarded for
the determination of normal value. The purpose of such compariso n is for the determination of
dumping and dumping margins. Thus, the features of the market that do not have impact on the
domestic price of like product in a way that affects its comparison with the export price could not
reasonably be interpreted as "par ticular" under Article 2.2, even they might be special or
distinguishable in one way or another.

5. The word "proper" modifies the word "comparison", not the individual variables per se of
"comparison", i.e., the domestic price or the export price. It follows that the investigating authority
is required to examine, not whether the "particular market situation" resulted in the domestic price
being proper or accurate, but its comparison with export price being proper or accurate.

6. Whether a "comparison" is "proper" would need to be assessed as to whether it is apt to reveal
"dumping", i.e., different pricing strategy by an individual exporter or producer in its domestic
market and export market, in order to determine if there is "international price discrimination" that
warrant the application of antidumping measure. Any government behavior that does not affect the
different pricing strategy by individual exporter or producer in the domestic market and export
market would not affect the "proper comparison" for the purpose of revealing "dumping".

7. The purchase price of the inputs are generally destination -neutral and the same input prices
constitute the bases of costs for both domestic sale and export sales, and the rise or fall of the input
price, whether it is due to market force or government involvement, would have the same effect on
the domestic price and export price. Such situation in the market equally affects both domestic
market and export market, and do not affect the proper comparison between the domestic price and
export price for the purpose of the determination of dumping and dumping margin. Therefore,
regardless of the alleged government intervention in the input market, the symmetric comparison
of domestic price and export price would sti ll be capable of revealing the pricing strategy of the
export or producer in different markets for the purpose of determination of dumping.

8. Further, the impact of the "particular market situation" needs to amount to a degree that
makes the proper compa rison of the domestic price to the export price not "allowed" to disregard
the domestic price for the determination of normal value. Even if the "particular market situation"
might have some different impact on the domestic price and the export price so th at they are not
directly comparable in all aspects, if it does not lead to such proper comparison impermissible, it
would not qualify for method alternative to using the domestic price for the calculation of the normal
value.

9. The normal value establis hed under Article 2.2 would need to provide a foundation for "fair
comparison" with export price under Article 2.4. Even though Article 2.2 provides for the
determination of normal value, this does not mean normal value under Article 2.2 could be properly
established without regard to its comparability with export price. Support could be found in the
parallel circumstance in Article 2.2 that due to the low volume of domestic sales, "such sales do not
permit a proper comparison". Footnote 2 clearly demonstrated that the impact on proper comparison
between domestic sales and export sales is considered when whether the volume of domestic sales
is "low" is analyzed, since it is not the absolute volume of domestic sales that is considered, but its
relationship with the export volume.

10. It is also noticeable that, "outside the ordinary course of trade" and domestic sales that "do
not permit a proper comparison" are two distinct bases for the possible disregard of domestic market
sales for the determination of no rmal value under Article 2.2. These two terms should not be
interpreted by incorporating the same legal criteria because this would make one of them redundant.
Therefore, it is not correct to introduce the criteria of "normal commercial practice" for "ordi nary
course of trade" into "particular market situation" that "do not permit a proper comparison".

11. The "particular market situation" in Article 2.2 could not be interpreted as already
incorporating a condition of general market economy principle of s upply and demand or normal
commercial principles, and warrant the use of third country surrogate values for normal values.
Otherwise, Members would not have considered it necessary to adopt special rules for use of third
country normal value in the Accessi on Protocols for some Members or to adopt Ad Note 2 to
GATT 1994.

12. The Anti -Dumping Agreement addresses issues of pricing behavior of individual foreign
exporters or producers, and, in contrast, the SCM Agreement addresses financial contribution by
government which confers benefit. There are legally distinct disciplines applicable to a Member's use
of anti-dumping duties and its use of countervailing duties. A Member does not have discretion to
interpret a provision in one of the Agreements to address the subject issue of the other.

DISREGARDING THE RECORDS OF THE EXPORTER IN THE CALCULATION OF COSTS

13. First sentence of Article 2.2.1.1 imposes a positive obligation on an investigating authority to
normally use the books and records of the respondents if two conditions are met: (i) the books and
records are consistent with the generally accepted accounting principles (GAAP) of the exporting
country, and (ii) they reasonably reflect the costs associated with the production and sale of the
product under consideration.

14. Article 2.2.1.1 of Anti-Dumping Agreement provided for specific situations for the derogation
of the positive obligation of the investigating authority to calculate the costs based on the records
kept by the exporter or producer, when one of the two conditions in the first sentence is not satisfied.
It is reasonable to interpret that the word "normally" in the first sentence of Article 2.2.1.1 refers to
the absence of the exceptions already specified. "Normally" does not provide a legal ground separate
and distinct from the legal ground of a failure to satisfy the two conditions in the first sentence of
Article 2.2.1.1 to disregard the costs in the producers' records.

15. If the costs in the records of the respondent satisfy both condit ions in the first sentence of
Article 2.2.1.1, such costs would be "costs that have a genuine relationship with the production and
sale of the product under consideration", and would be capable of generating an appropriate proxy
to the domestic prices.

16. Since the facts in EU-Biodiesel (Argentina) and those in the current dispute are both
concerning domestic input price influenced by government policies, the finding of the panel and
Appellate Body in EU-Biodiesel (Argentina) directly informs the current dispute.

17. The Appellate Body has found that the domestic input prices influenced by government policies
is not a sufficient basis under Article 2.2.1.1 for concluding that the producers' records do not
reasonably reflect the costs of inputs associated with the production and sale of subject merchandise,
or for disregarding those costs when constructing the normal value.

18. The panel in EU-Biodiesel (Argentina) explained that an investigating authority is "certainly
free to examine the reliability an d accuracy of the costs recorded in the records of the

producers/exporters". The purpose of the examination of the "reliability and accuracy" of the costs
referenced by the panel is to determine whether the "reflection" of the costs in the records is
"reasonable", not the whether costs themselves are "reasonable".

19. The issue of the costs based on an affiliated party transfer price is not whether the costs per
se are "reasonable" or reflect so-called market-based conditions, but whether the "reflection" of the
costs in the records of the producer/exporter under investigation is "reasonable". In contrast, even
if the inputs prices are affected by government policies, as long as the producer/exporter reflects
the actual input prices of its purchase in its records, the "reflection" of the costs would be
"reasonable".

20. When the domestic input price influenced by government policies forms the basis for the
construction of normal value as appropriate proxy to the domestic price, it would be incoherent to
allege that the same input prices would constitute "particular market situation" that "do not permit
a proper comparison", and warrant the rejection of the domestic price for the determination of
normal value in the first place.

CONSTRUCTING NORMAL VALUE W ITH THE COST OF PRODUCTION IN THE COUNTRY OF
ORIGIN

21. The Appellate Body in the EU – Biodiesel (Argentina) observed that the phrase "cost of
production […] in the country of origin" in Article 2.2 "do not limit the sources of information or
evidence that may be used in establishing the costs of production in the country of origin to sources
inside the country of origin", but cautioned that this "does not mean that an investigating authority
may simply substitute the costs from outside the country of orig in for the cost of production in the
country of origin".

22. The Appellate Body did not recognize an "out -of-country" benchmark can be used for the
purpose of determining the constructed normal value, but merely observed that "sources of
information or evidence" not within the country of origin, in limited circumstances, after necessary
adaption, might be used to arrive at the "cost of production in the country of origin".

23. It follows that the adaptations by the investigating authority of the informati on it collects
outside of the country of origin would need to ensure that such information, after the adaptions,
represent the cost of production in the country of origin. If, although some kind of adaptions were
made, the using of information outside of the country of origin still aims at removing the "perceived
distortion" in the costs in the country of origin, such adaption won't help to adapt the information to
satisfy the requirement that "such information must be apt to or capable of yielding a cost of
production in the country of origin".

24. It should be noticed that the Appellate Body stated that its interpretation of Article 2.2 of the
Anti-Dumping Agreement "is without prejudice to our interpretation of Article 2.2.1.1 of the Anti -
Dumping Agreement". Therefore, if the conditions in first sentence of Article 2.2.1.1 are satisfied,
the cost of production shall be calculated based on the records of the respondent, and the use of
sources of information other than the records of the export or producer, including those not inside
of the country of origin, would not arise.

ANNEX C-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE EUROPEAN UNION
I. THE EXISTENCE OF A "PARTICULAR MARKET SITUATION" AND ITS IMPLICATIONS

1. A "particular market situation" within the meaning of Article 2.2 of the Anti-Dumping
Agreement is a set of circumstances, additional to the other two sets of circumstances envisaged in
that provision, that affects the use of the price of sales of the like product in the domestic market of
the exporting country for the purpose of determining the normal value of the product under
investigation. It is not to be excluded that there may be some overlap between all of these types of
situations: for example, the same set of facts might be capable of supporting either a determination
of the absence of the ordinary course of trade; or a determination of a "particular market situation";
or both.

2. Where a "particular market situation" exists, the domestic sales price does not reflect the
normal value of the like product that would result from the normal operation of the forces of supply
and demand in the domestic market of the country of origin, but rather a value that is "abnormal"
due to distortions in the formation of the domestic sales price.

3. By contrast, the export price of a product is simply the price at which the product is introduced
into the commerce of another country, which must be compared with its normal value in order to
determine if a product is being dumped for the purpose of the Anti-Dumping Agreement.

4. Government intervention may create a "particular market situation" where the price of
domestic sales of the like product does not reflect its normal value and therefore does not permit a
proper comparison with the export price. Public policies and programmes aimed a t encouraging or
supporting a particular domestic industry can lead to price distortions in markets both upstream and
downstream of the encouraged industry, depending on the intensity of the government intervention
and the extent to which room is left for market forces to operate normally and in an undistorted
manner, within the framework established by the government.

5. The fact that certain types of government intervention may be disciplined under the
SCM Agreement does not preclude Members who apply an ti-dumping measures in accordance with
the provisions of the Anti -Dumping Agreement from finding that the same intervention by the
government gives rise to a "particular market situation" within the meaning of Article 2.2. This is
also true when the government intervention does not meet the conditions of an actionable subsidy.

6. The finding that a "particular market situation" exists in the country of origin does not imply
that the product is being dumped or that anti-dumping duties must be imposed. That remains to be
ascertained during the course of the investigation and the determinations may vary in respect of
different exporters.

7. In case a "particular market situation" is found to exist in the country of origin, so that a
proper comparison with the export price is not possible, the consequence is that the normal value
of the products under investigation will be determined either on the basis of "the price of the like
product when exported to an appropriate third country" or "the cost of production in the country of
origin plus a reasonable amount for administrative, selling and general costs and for profits".

8. Since Article 2.2 does not impose a hierarchy for using either a third country export price or
a constructed normal value to proceed with the comparison with the export price, an investigation
authority is free to choose and may resort to a constructed normal value.

II. A "PROPER COMPARISON" WITH THE EXPORT PRICE

9. There is no basis in the Anti -Dumping Agreement for asserting that, in o rder to exclude a
"proper comparison" of the normal value with the export price, the "particular market situation"
identified by an investigating authority must affect exclusively the price or cost of a product when

sold in the domestic market of the expor ting country. That distinction is not made in Article 2.2 of
the Anti-Dumping Agreement and it cannot be inferred either from Article 2.1, which requires the
export price of a product to be compared with its normal value.

10. In fact, even if a "particula r market situation" affects symmetrically both the domestic price
and the export price by a similar amount, such a comparison would be incapable of providing a
meaningful answer to the question: is there dumping as that term has been defined by Article VI:1
of the GATT (including the Ad Notes) and the relevant provisions of the Anti-Dumping Agreement?

11. A "proper comparison" is not simply an arithmetical comparison of the domestic sales price
with the export price, but rather a comparison of the export price of a product with its normal value
or, in other words, a value that is normal.

12. It is possible to draw up a long list of abnormal situations in which the prices or costs of
the exporters are, in whole or in part, incapable of forming the basis for the calculation of a normal
value, or a value that is normal, in a way that ensures comparability.

13. In each of these abnormal situati ons, it is permissible and may be required that an
investigating authority concludes that the data is unreliable and unsuitable for use as the basis for
the calculation of a normal value with which the export price can be meaningfully compared. In
other words, an investigating authority may be required to reject such data, in whole or in part,
and/or to replace the rejected data with information from some other source, and/or to adjust the
data in a manner that ensures comparability or a "proper comparison" between the export price of
a product and its normal value.

14. A lack of comparability can result from a distortion that affects only one side of the comparison,
asymmetrically, that is, which affects the domestic price or cost but not the export price or the costs
underlying the export price, or vice versa. However, a lack of comparability can also result from a
distortion that affects both sides of the comparison, symmetrically, that is, a distortion that has as
a consequence that the data no longer permit a meaningful comparison between the putative normal
value on the one hand and the export price on the other hand.

III. DISREGARDING COSTS UNDER ARTICLE 2.2.1.1

15. An investigating authority may disregard the records of costs kept by the exporter or producer
under investigation even if the two conditions in Article 2.2.1.1 of the Anti-Dumping Agreement are
satisfied. Consequently, an investigating authority is permitted, and may even be required, to reject,
replace or adjust the costs of production i n the records of the investigated firm if those costs are
unsuitable to serve as the basis for calculating a constructed normal value due to a "particular market
situation".

IV. CALCULATING COSTS IN THE COUNTRY OF ORIGIN

16. The Appellate Body in EU – Biodiesel (Argentina) agreed as a general matter that, under
Article 2.2 of the Anti-Dumping Agreement, in certain circumstances, an investigating authority may
have recourse to data or evidence from a third country, as a proxy, duly adjusted when necessary.

17. The Appellate Body also made clear that such "out-of-country" data serves as proxy for costs
of production in the country of origin. However, the case-law of the Appellate Body makes it equally
clear that the data from outside the country of origin does not need to be adjusted back to an amount
that is the same as the amount that would result from use of the very data rejected as unreliable or
distorted.

18. This guiding principle in respect of the scope of adjustments must also apply to cases where,
because of a "particular market situation" identified by the investigating authority, domestic data in
the country of origin was first rejected as a basis for determining the normal value of the products
concerned and then also rejected as a basis for establishing the cost of production when determining
a constructed normal value under Article 2.2.1.1. The obligation to arrive at "the cost of production
in the country of origin" does not require the investigating authority to revert to the distorted
domestic data that masked that cost of production and resulted in artificially low domestic sales
prices.

V. THE NOTION OF "PARTICULAR MARKET SITUATION"

19. A "particular market situation" does not need to affect all market participants , but can
be limited to just some of them. Whilst Article VI of the GATT 1994 and the Anti-Dumping Agreement
do envisage circumstances in which the dumping calculation, and specifically the determination of
normal value, may reflect the situation in the relevant "market" as a whole, they equally envisage a
calculation grounded in the circumstances of individual producers

20. An investigating authority is entitled to take into account a situation in which the normal
operation of the market forces of supply and demand has been d istorted, such that the resulting
price and cost data is unreliable as a basis for determining normal value, or a value that is normal.
This is so irrespective of the source of the distortion , that is, whether it is private or public:
what matters is wheth er market power is inappropriately used to smother or distort the normal
operation of the market forces of supply and demand. Whether or not this has occurred is something
that can only be assessed on a case-by-case basis, having regard to all the facts.

21. The term "situation" refers to the situation in the domestic market. It does not refer to a
situation external to the domestic market, which is affecting that domestic market. The term
"particular market situation" is not circumscribed by a rule accord ing to which there must be an
asymmetrical impact on normal value and export price in order for a "particular market situation" to
arise.

22. In this respect, there is a fundamental difference between export price and normal value.
Export price is the object of the investigation. The investigating authority is not generally concerned
with why the export price is what it is: it is just concerned with accurately determining what the
export price is, and with making a fair and proper comparison between the no rmal value and the
export price. By contrast, the normal value is the benchmark against which the export price is to be
compared. It must be established in accordance with Article 2. In particular, it must be based on
price or cost data that permits the es tablishment of a normal value, or a value that is normal, as
opposed to price or cost data that is distorted and unreliable.

23. Distinguishing between the "particular market situation" and the individual circumstances that
may be combining in order to create a "particular market situation" is something that would need to
be done on a case-by-case basis.

24. Article 17.6(ii) of th e Anti-Dumping Agreement concerns interpretation, not application.
There are very many situations in which the same set of facts in a given Member could be assessed
differently by two different investigating authorities in two different Members. Each authority would
generally be applying their own municipal legislation, which in turn would generally be aligned and
consistent with the Anti -Dumping Agreement. This process is governed by Article 17.6(i), which
expressly envisages the possibility of different c onclusions. According to the terms of
Article 17.6(i), if the Panel would conclude that the facts were properly established and the
investigating authority's assessment of those facts, in reaching the determination that there was a
"particular market situa tion", was unbiased and objective, then the Panel must reject Indonesia's
claims and arguments on that point, even if the Panel might have reached a different interpretation.

25. At the interpretative level, there is no requirement that the municipal laws and investigating
authorities of all WTO Members interpret the Anti -Dumping Agreement in exactly the same way.
Rather, the question is always simply whether or not the municipal law, or instances of its
application, are consistent with the balance of righ ts and obligations set out in the Anti -Dumping
Agreement.

VI. PROPER COMPARISON AND FAIR COMPARISON

26. The term "proper comparison" in Article 2.2 is a specific expression of the concept of
"comparability", which flows from Article VI of the GATT 1994. It is a fundamental concept that lies
at the heart of Article VI and the Anti-Dumping Agreement. Comparability is achieved when normal
value and export price have been established and if necessary adjusted in such a manner that
comparing them can give a me aningful answer to the question: is there dumping as that term is
defined in Article VI and the Anti-Dumping Agreement?

27. The idea behind the reference to a "low volume of the sales in the domestic market" in
Article 2.2, as further detailed in footnote 2, is that the relationship between the volume of domestic
sales and the volume of export sales should permit a proper comparison. This may not be the case,
in particular, where the volume of domestic sales falls below 5% of the volume of export sales.

28. If one has a weighted-average export price based on a very large number of data points then
one knows that it should be relatively representative. On the other hand, if one has only very few
data points for the establishment of a weighted -average norma l value, then one might be
legitimately concerned about the risk that it would not be representative, or that it might be
susceptible to manipulation. In such circumstances, an investigating authority might reach the
conclusion that such a relatively low volume of sales would not permit a proper comparison.

29. There is no necessary bright line distinction between the concept of a "particular market
situation" on the one hand and other concepts, such as, for example, "ordinary course of trade", or
the circumstances referred to in the Second Ad Note to Article VI:1, or the concept of "non -market
economy" referred to in some accession protocols. These concepts may overlap and in some cases
may even be co -extensive. In some circumstances, these concepts may operate together to
support a particular conclusion.

30. In Article 2.4, the focus is on the manner in which both normal value and export price have
been established and adjusted, and the manner in which they may need to be further adjusted, in
order to ensure a fair comparison. In particular, Article 2.4 is focussed on differences affecting the
comparison between normal value and export price. The terms "proper comparison" in Article 2.2
and footnote 2 and "fair comparison" in Article 2.4 are both specific expressions of the fundamental
principle of comparability, which finds expression throughout Article 2.

VII. RECOURSE TO OUT-OF-COUNTRY DATA

31. The Appellate Body's findings in EC – Fasteners (China) (Article 21.5 – China) support the
basic observation that if a domestic price has been found unsuitable as a basis for establishing
normal value because of a "particular market situation", which has also distorted the underlying cost
data, then an investigating authority is also permitted to reject such distorted cost data when making
its determination of a constructed normal value.

32. Furthermore, if a particular item of data has been lawfully rejected as distorted and unreliable,
and if it has been replaced by other data to be used as a proxy, such other data must surely be
adapted as necessary to the case at hand, but does not need to be adjusted back to the very data
that has already been lawfully rejected. This basic proposition is also well -supported by the
Appellate Body Report in China – HP-SSST.

33. The term "normally" supports the proposition that the two conditions in Article 2.2.1.1 do not
exhaust the circumstances in which the recorded costs may be rejected as distorted and unreliable.
However, it is not the only treaty term that supports that conclusion. Article 2.2.1.1 states expressly
that it controls for the "purpose" of paragraph 2. The purpose of paragraph 2 is to establish a normal
value (which is not a defined term ), that is, a value that is normal. A value is normal when it
results from the normal operation of the market forces of supply and demand. Therefore, in any
situation in which a particular item of data has been lawfully rejected as distorted and unreliable
because it does not result from the normal operation of the market forces of supply and demand,
such item of data does not need to be brought back into the calculation pursuant to Article 2.2.1.1.

34. Out-of-country data to which an investigating authority lawfully has recourse should be
adjusted to reflect the circumstances in the country of origin, but not back to the data initially and
lawfully rejected as distorted and unreliable.

35. In other words, the adjustments to be made do not cover differences between the country
of origin and the third country which result from the distortions in the market of the country of origin
that have been duly identified by the investigating authority. Any other significant difference
affecting comparability, duly demonstrated, should be adjusted for.

36. The statements referred to in Question 9 of the Panel are not, in themselves, "interpretations"
of any provision of WTO law. They do not involve the use of the customary rules of interpretation of
public international law as tools to resolve apparent tensions in the terms of the treaty.

37. There is no bar to this Panel taking guidance from the prior Appellate Body Report (referring
with approval to the prior panel report) on this point. Although there is no formal system of precedent
in WTO law, there is a reasonable expectation of consistency, and particularly a reasonable
expectation that a panel will follow prior Appellate Body reports on the same point.

38. However, these statements are not particular ly important for this Panel's analysis. Further,
the exhibited documents referred to by the panel in DS379 are not currently on the record of these
panel proceedings and if that remains the case could not be relied upon by this Panel. In any event,
Indonesia's representations are incomplete and therefore technically incorrect. Indonesia omits the
qualification that the reasoning holds when normal value is based on domestic prices.

VIII. RELATIONSHIP WITH THE SCM AGREEMENT

39. According to Indonesia, if something attributable to the State would give rise to an adjustment
under the Anti-Dumping Agreement, this would somehow represent a circumvention of the definition
of a subsidy under the SCM Agreement, and an unlawful extension of the reach of the anti -subsidy
disciplines. Indonesia's argument is not merely that a subsidy cannot give rise to an adjustment
under the Anti-Dumping Agreement, but that anything attributable to the State cannot give rise
to an adjustment under the Anti-Dumping Agreement.

40. In fact, Article VI:5 of GATT 1994 expressly and precisely confirms that there may be
situations in which the Anti -Dumping Agreement and the SCM Agreement apply concurrently.
Moreover, other provisions of the GATT 1994 and the Anti -Dumping Agreement expressly confirm
that Indonesia is wrong. For example, the second paragraph of the Ad Note to Article VI refers to "a
country" having "a complete or substantially complete monopoly of its trade and where all domestic
prices are fixed by the State ". The Ad Note on multiple currency practices refers expressly to
"practices by governments or sanctioned by governments ". Article 2.4 of the Anti -Dumping
Agreement refers to "taxation". And so forth.

41. Therefore, Indonesia's assertion that it somehow results from the e xistence of the
SCM Agreement that a "particular market situation" can never be attributable to the State is entirely
without merit. The Anti-Dumping Agreement is agnostic as to the identity of the causal agent giving
rise to the "particular market situation", and other provisions of Article VI of the GATT 1994 and the
Anti-Dumping Agreement confirm that the causal agent may be the State.

ANNEX C-3
INTEGRATED EXECUTIVE SUMMARY OF THE
ARGUMENTS OF JAPAN
I. INTRODUCTION

1. The Government of Japan has joined as a Third Party in this dispute to address some key
issues of systemic importance that are before the Panel in relation to the interpretation of the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the
"ADA") and Article VI:1 of the General Agreement on Tariffs and Trade 1994 (the "GATT 1994"),
including its Ad Note.

II. GATT ARTICLE VI:1 AND ARTICLES 2.2 AND 2.2.1.1 OF THE ADA

2. The first sentence of GATT Article VI:1 defines "dumping" as imports of products "at less than
the normal value", but does not explicitly define "normal value" nor require the use of any specific
methodology to determine "dumping" of subject imports.

3. On the other hand, the second sentence of Arti cle VI:1 provides a price comparison
methodology to determine what constitutes "dumping" (i.e. whether the subject imports are
introduced into the commerce of another country "at less than the normal value"). The second
sentence provides that imports at pr ices below the three types of "comparable" prices and costs
listed therein are "to be considered" to constitute "dumping". The second sentence does not,
however, state that these three prices and costs are the only permissible bases for "normal value",
and it expressly presumes that these prices and costs are, in fact, "comparable" (i.e. capable of
being compared) to the export price.

4. In fact, "normal value" under both sentences is a concept that is distinct from the enumerated
"prices" or "costs" in th e second sentence. "Normal value" therefore may encompass something
more than or different from the "comparable" prices or costs enumerated in the second sentence of
Article VI:1. If the domestic prices or costs specified in the second sentence had been in tended to
limit the interpretation of "normal value", the second sentence would have stated that the "prices"
or "costs" listed therein were "normal value", and that comparisons between these actual
"comparable" prices and costs and export prices were the sole means of determining "dumping".
Instead, the second sentence illustrates only the relationship of "normal value" (and therefore
dumping) to three alternative domestic transaction prices and costs. In short, the phrasing of the
second sentence shows that the two provisions therein are examples of ways to determine what is
less than normal value, but does not exclusively limit the acceptable ways.

5. Articles 2.1 and 2.2 of the ADA do not contradict this interpretation. The provisions dictate
how dumping may be determined by further elaborating on GATT Article VI:1. They do not (i) change
the relationship between the first and second sentences of Article VI:1; (ii) strictly define "normal
value"; or (iii) alter the definition of "dumping". In fact, Artic le 2.1 restates the definition of
"dumping" as products being "introduced into the commerce of another country at less than its
normal value". It further provides that a product is "to be considered" as being dumped if imports
are introduced at less than t he home market sales price, which corresponds to the price provided
for in the second sentence of GATT Article VI:1. Similarly, Article 2.2 provides certain circumstances
in which two other options (third country export prices and constructed values) may b e compared
to export prices – the same options that appear in the second sentence of GATT Article VI:1.

6. Finally, the use of price comparison methodologies specified in the second sentence of GATT
Article VI:1 and in Articles 2.1 and 2.2 of the ADA are not required where the domestic economy of
the exporting Member does not operate under market economy conditions. In such a case, the use
of the Member's domestic prices and costs for price comparison purposes is not required to identify
dumping. Accordingly, pursuant to the first sentence of GATT Article VI:1, investigating authorities
may use a third country price as a reasonable estimate of the "normal value" in order to determine
"dumping", and they are not required to use adjusted prices or costs in the domestic market of the
exporting Member. Moreover, jurisprudence relating to "non -market economy" producers is not

relevant to the issues before the Panel, insofar as the exporting Member at issue here is not a "non-
market economy".

III. PARTICULAR MARKET SITUATION

7. With respect to "particular market situation" in Article 2.2 of the ADA, which has never before
been interpreted by a WTO panel or the Appellate Body, Japan offers several pieces of interpretive
guidance.

8. First, the "particular market situation" refers to a "situation" of the market of the exporting
country that is "particular" (i.e. "special; not general" 1), and that is therefore not the "normal" or
"common" market situation but rather a "special" one. This is confirmed also by the Spa nish
language version of this provision, which refers to "una situacion especial del mercado".

9. Second, the application of a "particular market situation" under Article 2.2 is limited to
"market" situations, as is the rest of Article 2.2, and these prov isions do not necessarily apply to
imports from "non -market economy" Members. Based on the above understanding of "normal
value", the use of price comparison methodologies specified in the second sentence of GATT
Article VI:1 and Articles 2.1 and 2.2 of the ADA are required under the assumption that the domestic
economy of the exporting Member operates under market economy conditions. Where the domestic
economy of the exporting Member does not operate under market economy conditions, such
Member's domestic prices and costs cannot be used for price comparison purposes to identify
dumping.

10. Third, for "market economy" Members, what constitutes a "particular" situation will differ from
Member to Member. Thus, rather than seeking to develop a general definition of a "particular market
situation", the determination should be made on a case-by-case basis according to the specific facts
and circumstances at issue. Applying this principle to the current case, the Panel may wish to
examine carefully the facts on which Australia relied in support of its determination, with a view to
determining in this specific case whether the facts support a finding of a "particular market situation".

11. Along similar lines, even if Members interpret the phrase "particular marke t situation" in the
same way, one Member's finding of "particular market situation" may be different from another
Member's finding, depending on the factors and evidence that are taken into consideration. Thus, in
the case of two Members' investigating authorities assessing the same subject imports of the same
exporter, one authority could find that a "particular market situation" exists, while the other finds
no such "particular market situation" under the same circumstances, and both findings could be
consistent with Article 17.6(i) of the ADA because an investigating authority's exercise involves fact-
finding, the consequences of which may differ from one Member to another.

12. Fourth, there is no textual basis in Article 2.2 of the ADA for excluding government influence
from being a cause of a "particular market situation". Even in a market economy Member, there
may be a special circumstance in a market that affects price comparability, regardless of whether
that circumstance is due to government influence.

13. Fifth, there is no textual support in the GATT 1994 or the ADA for the view that Article 2.2
requires a "symmetrical comparison", i.e. that an investigating authority must exclude factors
affecting both the domestic price and export price from the scope of a "particular" situation. Instead,
such a factor might still distort the market, and thus prevent a "proper comparison" under Article 2.2.
Furthermore, requiring an authority to demonstrate that the relevant factor affects domestic prices
and export prices "differently" also lacks textual support and would be an inappropriately heavy
burden for an importing Member.

14. Finally, Japan sees nothing in the text of Article 2.2 that precludes the possibility that the
"particular market situation" affects some, but not all, market participants.

IV. "PROPER COMPARISON"

15. Japan also offers the following interpretive guidance with respect to a "proper comparison"
under Article 2.2 of the ADA.

1 Shorter Oxford Dictionary, p. 2110.

16. First, the word "proper" modifies, and is therefore directly related to, the subsequent noun
"comparison". Article 2.2 sets forth the methodology to follow for the determination of "dumping".
Thus, the definition of "dumping" in the first sentence of GATT Article VI:1 (i.e. "products of one
country are introduced into the commerce of another country at less than the normal value of the
products") ultimately dictates the "proper" comparison.

17. Second, "normal value" requires "a proper comparison" or "comparability", and prices or costs
that are not market-determined cannot be considered as "comparable" because comparability is only
ensured when the comparison between the normal value and the export price is capable of producing
a meaningful answer to the question of whether there is dumping, as defined by GATT Article VI and
the ADA. Accordingly, where there is only a low volume of like product in the domestic market, and
thus insufficient interaction of supply and demand in the market of the like product, such prices and
costs may be incapable of permitting a "proper comparison" because they may not substantially
reflect market-determined prices and costs.

18. Third, all bases for discarding domestic market sales (i.e. "proper comparison", "no sales … in
the ordinary course of trade", "centrally planned", and "non-market economy") are based upon the
concept of price comparability under GATT Article VI. However, the "centrally planned" and "non -
market economy" provisions relate to non-market economies where the comparison methodologies
under the second sentence of GATT Article VI:1 do not apply. In that situation, pursuant to the first
sentence of GATT Article VI:1, investigating authorities may use a third country price as a reasonable
estimate of the "normal value" to determine "dumping".

19. On the other hand, the provisions "do not permit a proper comparison" and "no sales … in the
ordinary course of trade" under Article 2.2 of the ADA reflect sub -paragraph (b) of the second
sentence of GATT Article VI:1, and are therefore predicated on the prem ise that the exporting
Member is a "market economy" where the second sentence applies. In such a case, the use of a
third country price is allowed only as "an appropriate proxy for the price of the like product in the
ordinary course of trade in the domestic market of the exporting country", which may require certain
adjustments depending on the specific circumstances of each case.

20. Fourth, while both "proper comparison" in Article 2.2 and "fair comparison" in Article 2.4 of
the ADA relate to comparison methodologies, the terms "proper" and "fair" deal with different phases
of, and conduct of the different investigating authority in, the determination of dumping. The text of
Article 2.4 indicates that is concerned with the investigating authority's adjus ting the differences
between the export price and the normal value when comparing them. On the other hand,
Article 2.2, together with Article 2.1, is concerned with the definition of dumping (i.e. what is the
normal value used to determine dumping).

V. ASSERTION THAT "DUMPIN G" IS LIMITED TO INT ERNATIONAL PRICE
DISCRIMINATION HAS NO VALID BASES

21. Japan disagrees with the view that dumping is limited to the concept of "international price
discrimination", and that any distortions that equally affect domes tic and export prices must be
exclusively governed by the SCM Agreement. First, there is a telling lack of textual basis for
recognizing the concept of "dumping" as a form of private behaviour in the form of "international
price discrimination", which neit her GATT Article VI nor the ADA mentions. The first sentence of
GATT Article VI:1 defines "dumping" as imports of a product at less than its "normal value"; it does
not refer to the concept of price discrimination and certainly does not require that normal value
always be determined based on the prices in the exporting country.

22. Nor is there any provision providing that anti-dumping remedies cannot counteract "dumping"
made possible by subsidies or other government actions. Indeed, GATT Article VI:5 con firms that
anti-dumping duties can remedy dumping caused by government actions, as it explicitly provides
that anti-dumping duties and countervailing duties should not "compensate for the same situation
of dumping or export subsidization". As such, anti -dumping duties can be imposed on dumping
caused by government actions, but, where both anti -dumping and anti -subsidy remedies are
imposed simultaneously on the same imports, adjustments are required to avoid double remedies
for the same situation (e.g. subsi dies). Appellate Body decisions in US – Offset Act (Byrd
Amendment) are not relevant in any way to the current dispute, which relates to an entirely different
factual situation and a separate legal question under the ADA.

23. Second, Appellate Body references to "international price discrimination" or "the pricing
behavior of exporters or foreign producers" also are not particularly relevant here. In US – Stainless
Steel (Mexico), the Appellate Body mentioned "international price discrimination" when concluding
that GATT Article VI:1 and Article 2.1 of the ADA address the pricing practice of an exporter, not
that of an importer.2 The Appellate Body did not suggest, however, that dumping should be reduced
to the notion of "international price discrimination" by an exporter, even when the prices and costs
in the relevant mark et of the exporting country are not market -determined due to a "particular
market situation". The Appellate Body was never asked to examine this matter when it made its
statement about dumping as a form of "international price discrimination".

VI. ALTERNATIVE METHODOLOGIES UNDER ARTICLES 2.2 AND 2.2.1.1

24. With respect to the alternative dumping methodologies set forth in Article 2.2, the Appellate
Body has confirmed that this provision is intended to generate an "appropriate proxy" for the price
of the like product in the ordinary course of trade in the home market. The Appellate Body added
that the costs calculated pursuant to Article 2.2.1.1 must also be "capable of generating such a
proxy".3 Accordingly, the proper interpretation of Articles 2.2 a nd 2.2.1.1 should take into account
the role of Article 2.2 to provide "an appropriate proxy" for "the price of the like product in the
ordinary course of trade in the domestic market".4

25. An investigating authority is required, when constructing norma l value under Article 2.2, to
use the cost of production in the country of origin and not the cost in some other place. The source
of the cost information may in certain circumstances be obtained from outside the country of origin,
but the Appellate Body h as explained that "an investigation authority has to ensure that such
information is used to arrive at the 'cost of production in the country of origin'" including by adjusting
the information collected, where required by the specific circumstances of each case.5

26. What adjustments are required will depend on the type of information that is used to calculate
the cost of production in the country of origin. The investigating authority has some discretion to
undertake adjustments, provided that it (i) ensu res that the calculated cost represents the cost in
the country of origin; and (ii) adequately explains its adjustments. For example, the investigating
authority may use out-of-country evidence to calculate the cost of production in the country of origin
if the actual costs in the country of origin are found to be unreliable. However, in such a case, the
investigating authority should (i) take into consideration the differences in the market conditions
between the country of origin and the third country that affect the prices of the cost items; and (ii)
provide a proper explanation of why an adjustment was adequate under the circumstances.

27. Moreover, Article 2.2.1.1 of the ADA requires the use of recorded costs that "reasonably reflect
the costs associated with the production and sale of the product under consideration". According to
the Appellate Body, this means that the records must be used "if they suitably and sufficiently
correspond to or reproduce those costs incurred by the investigated exporter or producer that have
a genuine relationship with the production and sale of the specific product under consideration". 6
The Appellate Body also clarified that this condition does not allow an authority to consider which
costs would pertain to the productio n and sale of the product under consideration "in normal
circumstances, i.e. in the absence of the alleged distortion", as this would "add words to the condition
at issue that are not present in Article 2.2.1.1, namely, the costs that 'would pertain' and 'in normal
circumstances'".7

28. In other words, there is no separate reasonableness test that applies to those costs that
accurately reflect the actual costs that relate specifically to the production and sale of the product
under consideration and not some other product.8 The Appellate Body in EU – Biodiesel (Argentina),
for example, found that the fact that domestic prices of inputs are lower than international prices
due to a government regulation "was not, in itself, a sufficient basis for concluding t hat the
producers' records did not reasonably reflect the costs of soybeans associated with the production

2 Appellate Body Report, US – Stainless Steel (Mexico), paras. 83-95, fn. 208.
3 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24.
4 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.24.
5 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73.
6 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.26.
7 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.30.
8 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.37.

and sale of biodiesel, or for disregarding the relevant costs in those records when constructing the
normal value of biodiesel".9

29. This is not to say, however, that any costs as recorded in the records of the producer/exporter
must always be used: for example, an investigating authority may examine the reliability and
accuracy of the record costs to determine "whether all costs incurred are captu red; whether the
costs incurred have been over- or understated; and whether non-arms-length transactions or other
practices affect the reliability of the reported costs".10

30. Finally, the term "normally" in Article 2.2.1.1 has been interpreted to mean "under normal or
ordinary conditions; as a rule".11 Thus, the use of the term "normally" suggests that even where the
two conditions contemplated in the "provided" clause of the first sentence of Article 2.2.1.1 ( "in
accordance with the generally accepted acc ounting principles" and "reasonably reflect the costs
associated with the production and sale of the product under consideration") are met, the use of an
exporter/producer's records is not necessarily mandatory in every case, and an investigating
authority may consider other available evidence in certain circumstances. Indeed, if the drafters of
the first sentence of Article 2.2.1.1 had intended otherwise, they would have had no need to insert
the word "normally". The meaning of "normally" in Article 2.2.1.1 should instead be explored in the
overall context of determining normal value and price comparability under Articles 2.2.1.1 and 2.2,
as well as other relevant provisions.

VII. CONCLUSION

31. Japan respectfully requests the Panel to consider Japan's po sitions on the interpretive issues
set out above.

9 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.56.
10 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.41.
11 Appellate Body Report, US – Clove Cigarettes, para. 273 (citing Shorter Oxford English Dictionary,
6th ed., A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 2, p. 1945); see also Panel Report, China –
Broiler Products, para. 7.161.

ANNEX C-4
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE REPUBLIC OF KOREA
I. Proper Interpretation of Article 2.2 of the Anti -Dumping Agreement within the
Context of a Finding of a "Particular Market Situation"

1. Article 2.1 of the Anti-Dumping Agreement defines dumping as the introduction of a product
into the commerce of another country at less than its normal value and establishes that the domestic
sales price of the product under investigation (the "like product") is the primary basis for determining
the "normal value." Article 2.2 then identifies certain circumstances in which an investigating
authority may calculate the normal value on a basis other than the dome stic sales price, i.e.,
third country sales or constructed value. One of these circumstances is the existence of a "particular
market situation" that prevents a proper comparison. Article 2.2 requires three conditions to be
present for an investigating authority to disregard domestic sales prices on this basis: (1) there must
be a "particular market situation" in the domestic market of the exporting country; (2) this situation
must have an effect on the sales of the like product in the domestic market of the exporting country;
and (3) the effect must be such that a "proper comparison" with the export price cannot be made.

2. With respect to the first condition, Korea agrees with Indonesia's description of the ordinary
meaning of a "particular market situati on" as requiring an exceptional set of circumstances that
takes place in a single market, which is the exporting country.1 In Korea's view, the term "market"
within the meaning of Article 2.2 of the Anti-Dumping Agreement depicts a geographical area. Korea
also considers a "market" to be characterized by commercial activity that is controlled by supply and
demand. In this respect, Korea considers that a "particular market situation" would not include
circumstances that arise normally in an economy that is operating on the basis of the market forces
of supply and demand.

3. Korea also agrees that the "situation" can be interpreted to mean a "combination of
circumstances".2 However, in order to avoid the possibility of abuse, Korea considers that an
investigating authority must clearly articulate how the situation, whether singular or in combination,
is "particular" to the market such that a "proper comparison" is prevented. Thus a finding of a
"particular market situation" must be based on an examination of the exceptional circumstances that
take place in the market as a whole. Korea considers that such examination could consider relevant
market characteristics and that it should focus on the market as a whole, rather than the effect of
the situation on specific market participants.

4. In Korea's view, the rules of treaty interpretation do not permit multiple interpretations of the
term "particular market situation". Thus, the interpretation of the term is covered under the first
sentence of Article 17.6(ii) and recourse to the second sentence is unnecessary. However, Korea
notes that one investigating authority might find a "particular market situation" whereas another
authority might reach a different conclusion based on the same facts, a situation that appears to be
covered under Article 17.6(i). So long as the authority's establishment of the facts was proper and
its evaluation of those facts was unbiased and objective, a panel should defer to the evaluation of
the authority in determining whether the authority's application of Article 2.2 (as properly interpreted
under the customary rules of interpretation) was appropriate.

5. With respect to the second condition, Korea considers that the structure of Articles 2.1 and 2.2
confirm that the focus of the "particular market situation" is to identify circumstances that affect the
domestic sales price of the like product to such an extent that it is rendered unusable for the purpose
of comparing it with the export price. Moreover, Article 2.2 provides for two other situations in which
an investigating authority is authorized to disregard the domestic sales as the basis for
determining the normal value, both of which concern sales in the "exporting country" – i.e., sales in
the domestic market. This further confirms that Article 2.2 only permits deviation from the domestic
sales price when there is a circumstance that affects sales in the domestic market of the like product

1 Korea’s third party submission, para. 8.
2 Korea’s third party submission, para. 8.

such that the price of these sales cannot be used as the normal value.

6. With respect to the third condition, given that the very definition of dumping rests on a
comparison between the normal value and the export price, Korea considers it critical that the
investigating authority engage in an examination of whether, as a r esult of the "particular market
situation", a "proper comparison" between the normal value and export price is not permitted.

7. As to the meaning of the term "proper comparison", Korea agrees with Indonesia that an
examination of whether a comparison is "proper" 3—and thus, "suitable" or "appropriate"—requires
consideration of the purpose for which the comparison is being made. In Korea's view, the purpose
of the "comparison" is to determine whether the subject merchandise is sold in the export market
at a price that is lower than the normal value such that factors that affect the normal value and
export price differently should be excluded. In this regard, Article 2.2 should be read together with
Article 2.1 and the phrase "proper comparison" should be u nderstood to mean that a price
comparison conducted in an anti -dumping investigation should be for the purpose of determining
whether the subject merchandise is sold in the export market at a price lower than normal value.
Korea considers that the phrase " permit a proper comparison" should be interpreted and applied
uniformly both in the context of "particular market situation" and "low volume of sales" given that
the phrase appears in connection with both situations. Indeed, footnote 2, which clarifies tha t a
volume that would normally be considered insufficient would nonetheless be appropriate if such sales
can nonetheless provide for a proper comparison confirms that the purpose of examining the volume
of sales is to determine whether such volume would permit a proper comparison.

8. A comparison cannot be "proper"—that is "suitable" or "appropriate"—if it is tainted by factors
that affect the normal value and export price differently. For example, if there is a situation that
distorts the domestic market of a product but not the export market, an appropriate comparison
between prices in the two different markets would not be possible. On the other hand, if there is a
situation that affects both the domestic price and export price equally, it cannot be sai d to prevent
a proper comparison. This is because a situation that uniformly affects the price of an input that is
incorporated equally into products for domestic sales and products for export would be reflected on
both sides of the dumping margin calculat ion. Such a situation would not impact the gap between
the domestic sales price and the export price, which comprises the margin of dumping.

9. It is Korea's view that circumstances affecting the cost of production will not usually prevent
a "proper comparison," to the extent that the circumstances do not distinguish between products
destined for the domestic market and those destined for export. In this respect, Korea agrees with
Indonesia that the Anti -Dumping Agreement does not authorize the imposition of anti -dumping
duties in response to exporters simply selling at low prices in the export market.4 Korea notes that
Australia's investigating authority, by examining only the effect of the alleged government
intervention on the domestic sales price, appears to have ended up comparing two values that were
based on different costs of production. The normal value was calculated on a constructed value basis
using an out -of-country benchmark, while the export price was based on the actual cost of
production incurred in Indonesia. Korea questions whether a comparison of the normal value and
export price that is based on different costs of production can be considered to constitute a "proper
comparison" for the purpose of determining whether the export price was below the normal value.

10. Korea further notes that there is nothing in the text of Article 2.2 that prohibits consideration
of government influence in the domestic market in determining whether a particular market situation
exists. Therefore, Korea does not consider that government influence is a priori excluded from the
scope of a particular market situation. However, Korea considers that the key issue would be whether
the "particular market situation" prevents a "proper comparison," and not whether the government
created those circumstances. For example, in Korea's view, a dual pricing system, in which the price
of raw material or energy is regulated by the government, is one example that might fit the
description of a "particular market situation". Price floors or ceilings may also meet the definition of
a "particular market situation" depending on the circumstances of the government intervention. A
dual pricing system draws a distinction between the domestic sales price and export price by its
design, seeks to benefit the domestic market by suppressing the price of the product sold there, and
would affect the domestic sales price and export price differently. It therefore might qualify as a
"particular market situation". In the case of a government-imposed price floor or ceiling, a "particular

3 Indonesia’s first written submission, para. 88.
4 Indonesia’s first written submission, para. 101.

market situation" could be found if the price ceiling is limited to the domestic market, allowing
exporters to sell the product at any price in foreign markets.

11. Finally, Korea notes that the general principle of ensuring a proper comparison is also present
in Article 2.4 of the Anti-Dumping Agreement, which requires that an investigating authority ensure
a "fair comparison" between the normal value and the export price by making adjustments for
"differences which affect price comparability". Korea thus considers that, while there are differences
in the application of Articles 2.2 and 2.4, Article 2.4 confirms that the Anti -Dumping Agreement
seeks to exclude from the comparison factors that affect the normal val ue and export price
differently.

II. Government Intervention Under the Anti-Dumping and SCM Agreements

12. Korea considers that there is a fundamental dichotomy between anti-dumping measures and
measures against government subsidization. As Indonesia notes, the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement") is concerned with regulating government influence on
market prices, while the Anti -Dumping Agreement is concerned with international price
discrimination by individual exporters or producers.5

13. Moreover, the text of the SCM Agreement makes clear that the sole remedies for government
subsidies are those that are provided for under the provisions of the SCM Agreement, and not any
other agreement, including the Anti -Dumping Agreement. In particular, Article 32.1 of the
SCM Agreement provides that "no specific action against a subsidy of another Member can be taken
except in accordance with the provisions of GATT 1994, as interpreted by this Agreement" . Korea
considers this provision to mean that a government subsidy must be remedied through permitted
measures under the SCM Agreement (such as countervailing duties) and not through the imposition
of anti-dumping duties. Therefore, if an investigating authority is examining possible government
subsidization within the context of the "particular market situation" provision of Article 2.2 of th e
Anti-Dumping Agreement, it must first find that the situation is not properly governed by Article 32.1
of the SCM Agreement; in other words, that the situation is neither "specific" to nor "against"
subsidization. If an investigating authority does take "specific action against" a subsidy, it will be in
violation of Article 32.1 if the measure taken does not fall into one of the enumerated remedies
(countervailing duties, provisional measures or price undertakings, or multilateral sanctions).

14. Korea notes that the footnote to Article 32.1 provides that the article "is not intended to
preclude action under other relevant provisions of the GATT 1994, where appropriate" . Korea does
not consider that the footnote provides a basis for an investigating auth ority to take anti-dumping
action against a subsidy that falls within the scope of the SCM Agreement. It would not be
"appropriate" to permit remedies to government subsidization under the Anti -Dumping Agreement
because the disciplines that apply to a Memb er's use of anti -dumping duties and its use of
countervailing duties are legally distinct. 6 Korea considers that the footnote simply allows for
measures outside of those specified in the SCM Agreement that relate to subsidization, but are not
inextricably linked, or strongly correlated, to the constituent elements of subsidization. Where the
investigating authority's actions are "specific" to the subsidy, the footnote would not apply and any
actions by the investigating authority must fall with in one of the enumerated remedies provided
under the SCM Agreement.

15. Korea recognizes that in the present case, the Australian investigating authority did not
impose countervailing duties for the same programs that formed the basis of its "particular m arket
situation" finding in the anti -dumping investigation. Korea understands, however, that the
investigating authority's decision not to impose duties was, at least in part, based on the negligible
margin of subsidization, and not because the government action failed to meet the constituent
elements of a subsidy under Article 1.1. 7 The fact that the Australian investigating authority
conducted a countervailing duty investigation of these government programs implies that the
authority did consider the gove rnment intervention at issue to constitute a subsidy that met the
constituent elements under Article 1.1. Therefore, Korea considers that it might be necessary to
examine whether the investigating authority's actions in the anti -dumping investigation might
nonetheless constitute "specific actions" relating to a subsidy. It might also be necessary to assess

5 Indonesia’s first written submission, para. 46.
6 See Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 570.
7 Indonesia’s first written submission, para. 17.

whether the design and structure of these measures are such that they create an incentive to
terminate the subsidization. If so, the Australian investiga ting authority's actions might fall under
the scope of Article 32.1 of the SCM Agreement.

III. Proper Interpretation of Article 2.2.1.1 within the Context of Conditions to Disregard
Records Maintained By The Exporter Or Producer

16. When calculating th e normal value on the basis of constructed value, Article 2.2.1.1 of the
Anti-Dumping Agreement establishes rules for the calculation of the cost of production that is to be
used. Specifically, for the purpose of Article 2.2, "costs shall normally be calcu lated on the basis of
records kept by the exporter or producer under investigation …". Article 2.2.1.1 then provides for
two specific situations in which the investigating authority may deviate from those records: (1) when
the records are not in accordance with the generally accepted accounting principles ("GAAP") of the
exporting country; and (2) when the records do not reasonably reflect the costs associated with the
production and sale of the product under consideration.

17. Korea does not agree with Australia's argument that the word "normally" provides a separate
legal ground under Article 2.2.1.1. Korea understands the use of the term "normally" to establish
the presumption that, absent the specific conditions proscribed in the first sentence of Article 2.2.1.1,
8 the source for calculating cost of production must "as a rule" be the records maintained by the
exporter or producer under investigation. 9 Derogation from that rule is permitted only under
specified circumstances; as explained by the panel in China – Broiler Products, those circumstances
are limited to those proscribed in the first sentence of Article 2.2.1.1.10 In Korea's view, even if the
term "normally" could be interpreted to permit deviation from cost records for reasons other than
the two conditions provided in Article 2.2.1.1, such situations should be construed narrowly. For
example, Korea considers that an investigating authority should demonstrate that it cannot use
available cost records to properly calculate the normal value before i t is permitted to use an
alternative methodology.11

18. Finally, even when using an alternative methodology, Korea notes that the investigating
authority remains constrained by Article 2.2, which mandates that the cost of production must reflect
the country of origin. Korea submits that benchmark adjustments are fact - and case-specific, and
the calculation of cost in any given investigation must be determined based on the merits, in light
of the particular facts of that investigation. 12 An investigating au thority must properly adapt the
chosen benchmark based on a consideration of all of the facts on the record before it. To the extent
that an investigating authority must use an out -of-country benchmark, such a benchmark must
reflect the situation as it exi sts in the country of origin, and not as the investigating authority
considers that it should be, either based on a perceived distortion in the domestic market, or based
on international reference prices.13

IV. Treatment of Non -Market Economies Under Art icle 2.2 of the Anti -Dumping
Agreement

19. Korea considers that Ad Article VI and Article 15 of China's Accession Protocol to constitute
limited exceptions to the general rule provided in Articles 2.1 and 2.2 of the Anti -Dumping
Agreement. This general ru le is that the margin of dumping must be determined through a
comparison of the export price with the domestic sales price, or alternatively, with a third country
sales price or constructed value if one of three circumstances described in Article 2.2 exist s. The
"particular market situation" provision constitutes one of the circumstances in which the
investigating authority may disregard domestic market sales and determine normal value either
through third country sales or constructed value. China's Accession Protocol specifically provides for
deviation from the methods described in Articles 2.1 and 2.2, permitting a WTO Member to use a
different methodology that is not based on a strict comparison with domestic prices or costs in China
under specified circumstances.14

8 Korea’s third party submission, paras. 40-49.
9 Appellate Body Report, US – Clove Cigarettes, para. 273.
10 Panel Report, China – Broiler Products, para. 7.164; Panel Report, China – Broiler Products
(Article 21.5 – US), para. 7.29.
11 See e.g. Panel Report, China – Broiler Products, para. 7.161.
12 Panel Report, Egypt – Steel Rebar, para. 7.393.
13 See Appellate Body Report, EU – Biodiesel (Argentina), para. 6.81.
14 Protocol on the Accession of the People’s Republic of China, WT/L/432.

20. As exceptions to this general rule, Korea considers that the circumstances described in Ad
Article VI and Article 15 of China's Accession Protocol must be viewed as distinct from the
circumstances described in Article 2.2. The rules applicab le to NMEs are based on the particular
influence and intervention of the government that exists in such NMEs rather than individual factors
that may affect the comparability between the export price and domestic sales price. On the other
hand, a "particula r market situation" deals with specific circumstances that affect the domestic
market that render domestic sales prices incomparable to export prices, which might include
government influence or intervention. In order to find a particular market situation for government
influence or intervention, however, the investigating authority must find that such government
involvement disturbs the proper comparison between normal value and export value.

21. Korea considers the jurisprudence relating to costs of NME producers under Article 2.4 of the
Anti-Dumping Agreement provides limited guidance in this Panel's consideration of Indonesia's cost
of production under Article 2.2.1.1. The Panel should be cautious in applying findings relating to
non-market economy producers in cases involving market economy producers.

V. Interpretive Value of US – Anti-Dumping and Countervailing Duties (China)

22. Lastly, Korea notes that Indonesia cites statements of the panel and Appellate Body in US –
Anti-Dumping and Countervailing Duties (China) which in turn refer to evidence not on the record in
this proceeding. Korea does not necessarily consider those state ments to constitute "legal
interpretations". Nonetheless, Korea considers these statements to hold authoritative value in that
they represent statements and observations adopted by the Dispute Settlement Body in interpreting
the provisions at issue. Accordingly, Korea considers that the Panel should give weight to these
observations in conducting its interpretive analysis.

ANNEX C-5
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE RUSSIAN FEDERATION
I. Introduction

1. In this executive summary, the Russian Federation summa rizes its views presented to the
Panel in its oral statement at the third party session of the first substantive meeting with the Panel
and answers to the Panel's questions following this meeting.

2. The Russian Federation provides comments on certain is sues on the interpretation of
Articles 2.2 and 2.2.1.1 of the Agreement on Implementation of Article VI of the General Agreement
on Tariffs and Trade 1994 (hereinafter – "Anti-Dumping Agreement") which are determinative for
the maintenance of the balance o f rights and obligations of the WTO Members with regard to anti -
dumping disciplines.

II. Neither Article 2, nor any other provisions of the Anti-Dumping Agreement mention
the term "input" or "input prices"

3. The Russian Federation would like to stress that neither Article 2, nor any other provisions of
the Anti-Dumping Agreement mention the term "input" or "input prices". According to Article 2.1 a
product is being dumped when it is "introduced into the commerce of another country" at an export
price that is "less than its normal value". As the Appellate Body explained, "dumping" and "margin
of dumping" can only be established for the product under consideration as a whole. 1 The term
"normal value" of the product refers to "the comparable price, in the o rdinary course of trade, for
the like product when destined for consumption in the exporting country".2

4. Article 2.2 of the Anti-Dumping Agreement provides for alternative methods for determination
of the normal value of the like product. This provision allows, in particular, construction of normal
value, but only with respect of the like product as a whole and not for the input involved. Also, the
other alternative method provides for comparison with a comparable price of the like product when
exported to an appropriate third country and not for the input involved. In case of injurious dumping
an anti-dumping duty is imposed on the product that is considered and found to be dumped, i.e. not
on the input of that product.

5. Thus, the focus of the analysis is on the investigated exporter or producer of the product under
consideration, i.e. not on the producer of the input used for manufacturing the product under
consideration.

III. It is exporter, not the government that engages in practices that result in situations
of dumping

6. Dumping arises from the pricing behavior of an exporter of the product under consideration.3
An individual margin of dumping is to be established for each investigated exporter, and the amount
of anti-dumping duty levied in respect of the investigated exporter shall not exceed its margin of
dumping.4

7. In US – Anti-Dumping and Countervailing Duties (China) the Appellate Body confirmed that
the existence of dumping is determined by comparing the p rices set by the individual exporter and
examining the choice of the behavior of that exporter in setting these prices. 5 It follows that the
investigated exporter or producer can be responsible only for its pricing policies, but not for
government regulation.

1 Appellate Body Report, US – Softwood Lumber V, para. 99.
2 Anti-Dumping Agreement, Article 2.1. (emphasis added)
3 Appellate Body Report, US – Stainless Steel (Mexico), para. 94. (See also Appellate Body Report, US –
Zeroing (Japan), para. 156 (referring to Appellate Body Report, US – Zeroing (EC), para. 129)).
4 Appellate Body Report, US – Stainless Steel (Mexico), para. 94.
5 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 568.

IV. The interpretation of the term "proper comparison" in Article 2.2 of the Anti-
Dumping Agreement

8. Drafters of Articles 2.2 of the Anti-Dumping Agreement did not provide a specific definition for
the term "proper comparison". This fact suggests that drafters did not intend to assign to this term
a special meaning that would be different from the one established through the application of
customary rules of interpretation of public international law.

9. The Russian Federation recalls that the meaning of the term "proper" is elaborated, in
particular, in the context of Article 17.6(i) of the Anti -Dumping Agreement. According to the
Appellate Body the ordinary meaning of "proper" suggests "accurate" or "cor rect".6 The
interpretation of the word "proper" in the context of Article 2.2.1.1 of the Anti-Dumping Agreement
(the second sentence) confirms this understanding.7

10. Based on this ordinary meaning, "a proper comparison" is an accurate, correct compariso n.
The phrase "proper comparison" is part of the expression "such sales do not permit a proper
comparison" in Article 2.2 of the Anti-Dumping Agreement. In its turn the phrase "such sales" refers
to sales of the like product in the domestic market of the exporting country. Article 2.2 of the Anti-
Dumping Agreement concerns the determination of the normal value. The phrase "the margin of
dumping shall be determined by comparison with "either" a comparable price of the like product …"
or constructed normal value (i.e. "the cost of production in the country of origin plus a reasonable
amount for administrative, selling and general costs and for profits") indicates that an investigating
authority needs to compare the export price with the normal value in order t o evaluate the pricing
behavior of the exporter or producer under the investigation.

11. It follows that the word "proper" in Article 2.2 of the Anti -Dumping Agreement relates to
correct determination of the pricing behavior of individual exporter or producer.

12. The use by the drafters of different wordings in different obligations ("proper comparison" in
Article 2.2 and "fair comparison" in Article 2.4 of the Anti -Dumping Agreement) with different
requirements should be respected. The structure of Arti cle 2 of the Anti-Dumping Agreement and
interconnection of its provisions support the understanding that the obligation to ensure fair
comparison arises after the normal value and the export price are established. According to the WTO
jurisprudence, "the subject-matter of Article 2.4, i.e. differences affecting the comparability of the
normal value and the export price, can be contrasted with that of Articles 2.1, 2.2 – including its
subparagraphs – and 2.3 which pertain to the methodology for determining t he normal value and
the export price".8

V. The SCM Agreement is not applicable for the determination of dumping

13. The Russian Federation strongly disagrees with the proposition to blur the line between
obligations under the Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing
Measures (hereinafter – "SCM Agreement") by including the terms "government regulation" 9 into
the scope of application of the Anti-Dumping Agreement.

14. Anti-Dumping Agreement addresses issues of pricing beha vior of foreign exporters or
producers. In contrast, the SCM Agreement addresses conferring benefit to the subsidy recipient by
government.10 Therefore, Anti-Dumping Agreement and SCM Agreement regulate different issues.
Article 1 of the Anti-Dumping Agreement and Article 10 of the SCM Agreement clearly support this
understanding.

15. It is inappropriate to include in the scope of one agreement the scope and definitions used in
the other agreement. This understanding has been confirmed by the Appellate Bod y. The
Russian Federation recalls that in US – Anti-Dumping and Countervailing Duties (China) the
Appellate Body clarified that the SCM Agreement is not applicable for the determination of

6 Appellate Body Report, Thailand – H-Beams, para. 116. (footnote omitted)
7 Panel Report, China – Broiler Products (Recourse to Article 21.5 of the DSU by the United States),
paras. 7.34-7.37.
8 Panel Report, EU – Biodiesel (Argentina), para. 7.296.
9 Australia's First Written Submission, paras. 135-139.
10 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 568.

dumping.11 The Appellate Body underlined the major difference between dumping and a subsidy as
two different phenomena which shall be determined under distinct rules: dumping – under the Anti-
Dumping Agreement and subsidy – under the SCM Agreement.

16. In case the difference between the subject issues of the Anti-Dumping Agreement and
SCM Agreement is blurred, the line between distinct obligations under the distinct agreements will
also be blurred. If that happens, the scope of Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement
will be changed. Therefore, the object and purpose of the Anti-Dumping Agreement focused on the
pricing behavior of the foreign exporters or producers would be inadmissibly expanded. Such an
approach is contrary to the intention of drafters to treat different problems differently with different
instruments.

VI. Article 2.2 of the Anti-Dumping Agreement provides mandatory rule for constructing
normal value on the basis of the cost of production of the like product in the country
of origin

17. The Russian Federation wishes to draw t he Panel's attention to the terms used in Article 2.2
of the Anti-Dumping Agreement and in Article VI:1(b)(ii) of the General Agreement on Tariffs and
Trade 1994 (hereinafter – "GATT 1994") and then to what the Appellate Body said in EU – Biodiesel
(Argentina) with respect to the use of information or evidence from outside the country of origin.

18. The phrases "the cost of production in the country of origin" in Article 2.2 of the Anti-Dumping
Agreement and "the cost of production of the product in the co untry of origin" in Article VI:1(b)(ii)
of the GATT 1994 concern "the" cost of production of "the" product in "the" country of origin,
informing investigating authorities what specific cost shall be used in the construction of the normal
value of the produ ct under consideration. These phrases clearly provide that the basis for the
construction of the normal value must be the cost of production of the product under consideration
in the country of origin.

19. The Appellate Body has clarified that if an inves tigating authority relies on information other
than the records of investigated exporters and producers, it "has to ensure that such information is
used to arrive at the 'cost of production [of the like product] in the country of origin'". 12 According
to the Appellate Body, this may require the investigating authority to adapt that information "in
order to ensure that it represent[s] the cost of production" of the like product in the country of
origin. The purpose of adaptation is to obtain the amount reflecting the cost of production of the like
product in the country of origin, i.e. the cost of production available to domestic producers during
the period of investigation. This is the key consideration to determine whether an investigating
authority has properly adapted the out-of-country information to arrive at the cost of production in
the country of origin.

20. The costs of production in no circumstances can be adjusted, established or refuted with a
reference to information that does not have a genuine relation with the product under consideration
produced in the country of origin.

21. Thus, Article 2.2 of the Anti -Dumping Agreement does not provide for any possibility to
construct an input price. Just the opposite – there is mandatory obligation to construct normal value
on the basis of the cost of production in the country of origin as it is.

VII. Only explicit derogations in the Anti-Dumping Agreement or an Accession Protocols
of certain Members can provide the legal basis for an investigating authority to use
prices or costs other than those in the country of origin of the product under
consideration

22. Recalling the Appellate Body's guidance that "provisions of the Anti -Dumping Agreement are
explicit regarding the permissibility of disregarding certain matters", 13 the Russian Federation
stresses that there is a limited number of the explicit provisions that would allow investigating
authorities when determining the normal value to disregard costs reflected in investigated producers'
and exporters' records (in case both conditions of the first sentence of Article 2.2.1.1 of the Anti -

11 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 568.
12 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.73. (emphasis added)
13 Appellate Body Report, US – Continued Zeroing, para. 286 (referring to the Appellate Body Report,

Dumping Agreement are satisfied). Only the second Ad Note to Article VI:1 of the GATT 1994 (which
is incorporated by reference into the Anti-Dumping Agreement through Article 2.7 thereof), and the
protocols of accession of certain Members can provide the legal basis for an investigating authority
to use prices or costs other than those in the country of origin of the product under consideration.
These provisions suggest "that their drafters considered explicit derogations to be needed in order
to allow investigating authorities to use prices or costs other than those prevailing in the country of
origin".14 Only with respect to these provisions an investigating authority may rely on the expression
"normally" in Article 2.2.1.1 of the Anti-Dumping Agreement.

23. There is no other legal basis in the Anti-Dumping Agreement for an investigating authority to
reject records kept by investigated producers and exporters when the tw o conditions in
Article 2.2.1.1 of the Anti-Dumping Agreement are satisfied, and substitute them with prices outside
the country of origin in determination of dumping. As the Appellate Body in US – Carbon Steel15
explained, the fact that a particular treaty is silent on a specific issue must have some meaning.
Words that are not in the text of Article 2.2.1.1 of the Anti -Dumping Agreement must not be
incorporated there.

24. The same applies to the construction of the normal value on the bas is of Article 2.2 of the
Anti-Dumping Agreement. Any attempts to reject domestic prices and costs and substitute them in
constructed normal value with prices outside the country of origin through the application of
provisions other than Article 2.7 of the Anti-Dumping Agreement or provisions on dumping
enshrined in the protocols of accession of certain Members are illegal.

VIII. The term "the particular market situation" does not allow a broad interpretation

25. A number of the WTO Members involved in this proceeding promote a broad interpretation of
the term "particular market situation". They use indefinite article "a" to show that there may be
indefinite number of such situations.16

26. To sustain such a broad interpretation of the term "particular market situation", specific treaty
language is required.17 However there is no such treaty language in the Anti -Dumping Agreement.
Thus, a broad interpretation of the term "the particular market situation" should fail.

27. The Russian Federatio n considers that what constitutes "the particular market situation"
should be defined in accordance with Article 31 of the Vienna Convention on the Law of Treaties by
considering the ordinary meaning of this term in its context, i.e. the operation of the s pecific rules
of the Anti -Dumping Agreement governing the determination of normal value. The proper
interpretation is a textual interpretation. As the Appellate Body explained, "the words actually used
in the Article provide the basis for an interpretation that must give meaning and effect to all its
terms".18

28. With the term "particular market situation" in Article 2.2 of the Anti-Dumping Agreement the
definite article "the" is used. Significantly, the terms "like product", "ordinary course of trade",
"domestic market", "exporting country", "margin of dumping", "cost of production in the country of
origin" are also used with the definite article "the". Thus, according to the text of the Anti-Dumping
Agreement there is only one like product, only one ordin ary course of trade, only one domestic
market, only one exporting country, only one margin of dumping, only one cost of production in the
country of origin.

29. Further, both words "market" and "situation" in the term "the particular market situation" are
used in Article 2.2 of the Anti-Dumping Agreement in the singular form. The word "particular" takes
the position of an adjective in Article 2.2 of the Anti -Dumping Agreement and refers to the noun
"situation". Moreover, the text of Article 2.2 of the Ant i-Dumping Agreement clearly indicates that
the term "the particular market situation" refers to domestic market of the exporting country . The
text does not refer to a sector of the domestic market or some market participants.

14 Panel Report, EU – Biodiesel (Argentina), para. 7.241.
15 Appellate Body Report, US – Carbon Steel, para. 65.
16 Japan's Third Party Submission, paras.11-12.
17 Appellate Body Report, EC – Hormones, para. 165.
18 Appellate Body Report, Japan – Alcoholic Beverages II, para. 37.

30. Article 2.2 of the Anti-Dumping Agreement does not include any textual indication of an ability
of the investigating authority to take into account government influence on the domestic market for
the product under consideration, in particular such as imposing price floors or ceil ings. Neither the
term the "particular market situation" can be interpreted to mean a combination of circumstances.

31. The existence of "the particular market situation" does not give carte blanche to investigating
authorities. Even in cases when sales of the like product in the ordinary course of trade do not permit
a proper comparison because of the particular market situation and an investigating authority resorts
to the second alternative method to construct the normal value, the latter shall be based on the
cost of production in the country of origin. There is no way to reject costs in the country of origin
and substitute them with prices outside the country of origin in constructing the normal value.

32. Far-reaching interpretation of the term "th e particular market situation" as unlimited list of
circumstances is contrary to the intention of the drafters as expressed in the text in the Anti -
Dumping Agreement. Entitling an investigating authority to disregard domestic sales of the like
product in a broad set of circumstances would lead to a change in the scope of the rights and
obligations of the WTO Members. Such change is contrary both to Article 2.2 of the Anti -Dumping
Agreement and to the requirements of Article 3.3 of the DSU prescribing the maintenance of a proper
balance between the rights and obligations of the Members.

33. This interpretation in accordance with Article 31 of the Vienna Convention on the Law of
Treaties is the only legitimate interpretation of the term "the particular market situation". There are
no other permissible interpretations of this term within the meaning of Article 17.6(ii) of the Anti -
Dumping Agreement. If an investigating authority finds that a situation constitutes "the particular
market situation", but this finding is not based on legitimate interpretation of this term, such finding
would be inconsistent with Article 2.2 of the Anti-Dumping Agreement.

IX. Conclusion

34. In sum, the text of the Anti-Dumping Agreement does not allow an investigating authority to
examine the effect of a governmental measure of the exporting country on input, and, as a result,
whether such effect influences the prices of the product under investigation.

35. Such terms as "government regulation", "effect of government regulation", "input" are not in
the legal text of the Anti -Dumping Agreement. Any interpretations of the anti -dumping disciplines
based on these words would effectively undermine WTO Members' rights under the Anti -Dumping
Agreement.

ANNEX C-6
INTEGRATED EXECUTIVE SUMMARY OF
THE ARGUMENTS OF THAILAND
I. INTRODUCTION

1. This executive summary contains comments made by Thailand in response to the Panel's
questions at the third party session on 19 December 2018 pertaining to the interpretation of the
Agreement on the Implementation of Article VI of GATT 1994 ("Anti-Dumping Agreement").
Thailand's views focus on legal questions without taking a position on the facts presented by the
parties to the dispute.

II. THE USE OF THE PARTICULAR MARKET SITUATION PROVISION

2. Thailand expresses its systemic concerns on the increasing frequency of using the particular
market situation provision by investigating authorities. In this regard, Thailand notes the following.

3. First, resorting to the particular market situation provision should be confined to specific
circumstances envisaged in Article 2.2 of the Anti -Dumping Agreement. An investigating authority
may depart from the usual method in calculating normal value as a result of the particular market
situation only if it necessarily finds that the situation in question prevents a proper comparison of
domestic sales price to export sales price. In Thailand's view, Article 2.2 of the Anti -Dumping
Agreement does not address any market situation, but only th e particular situation that does not
permit a proper comparison in revealing dumping.

4. Second, the particular market situation does not and should not cover government influence
in the form of subsidies within the context of the Agreement on Subsidies a nd Countervailing
Measures ("SCM Agreement"). Thailand urges the panel to exercise caution in interpreting the
provisions of the Anti-Dumping Agreement so as not to allow circumvention of the rules under the
SCM Agreement, or to condemn government subsidies which are not meant to be condemned under
the SCM Agreement.

III. A PARTICULAR MARKET SITUATION REQUIRES A CASE-SPECIFIC ANALYSIS

5. A factual analysis on a case -by-case basis is required in order to determine whether the
particular market situation in the sense of Article 2.2 of the Anti -Dumping Agreement exists. To
constitute a "particular market situation" under Article 2.2 of the Anti-Dumping Agreement, the key
issue is not how many market participants are being affected by the situation in question; rather, it
is whether the existence of the situation has an impact on domestic sales price in such a way that it
renders the proper comparison with export sales price impermissible for the purpose of dumping
determination.

6. In considering whether dome stic sales of the product under consideration warrant a proper
comparison to export prices, an investigating authority may take into account government influence
on the market of the exporting country. However, given the fact that a government in a regulat ory
capacity may always have certain influence on the market, e.g. by imposing minimum wages or
environmental standards, the particular market situation provision should not be interpreted to
capture any government actions that may have an effect on the fo rmation of domestic sales price.
A particular market situation may exist only if the investigating authority finds that, based upon the
facts and evidence before it, domestic sales price of the product under consideration has been
distorted by government i nterference. Thailand considers that the determination as to whether
government influence would amount to interference in the sense that gives rise to a "particular
market situation" requires a case-specific analysis.

IV. THE PROPER COMPARISON IS DISSIMILAR FROM THE FAIR COMPARISON

7. Thailand notes that the "fair comparison" under Article 2.4 of the Anti -Dumping Agreement
seeks to ensure that a comparison between the normal value and the export price is fair by adjusting
differences which may affect price comparability. The proper comp arison under Article 2.2 of the
Anti-dumping Agreement, on the other hand, relates to the step before the adjustment occurs when
considering if the domestic sales price may be used as a basis for deriving normal value in order to
ensure that the comparison to the export price is proper for the purpose of the determination of
dumping.

ANNEX C-7
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE UNITED STATES
EXECUTIVE SUMMARY OF U.S. THIRD PARTY SUBMISSION

I. CLAIMS REGARDING "PARTICULAR MARKET SITUATION" IN ARTICLE 2.2

1. Article 2.2 of the Anti -Dumping Agreement establishes certain alternatives for determining
normal value when, "because of the particular market situation … such sales do not permit a proper
comparison". Article 2.2, which includes the phrase "proper comparison," links back to the dumping
definition in Article 2.1. If a particular market situation affects price comparability, i.e., if a particular
market situation indicates that sale prices of the like product do not reflect market-based conditions,
such sale prices need not be used as a basis for normal value because they would not "permit a
proper comparison".

2. The phrase "particular market situation" as it appears in Article 2.2 addresses a spec ific
condition or set of circumstances taking place in the domestic market. It is the position of the
United States that an investigating authority may find that a "particular market situation" exists
when the evidence of record demonstrates that a specific condition or set of circumstances renders
the comparable price, in the ordinary course of trade, for the like product, unfit as a proper
comparison. The United States therefore agrees with Australia that "the ordinary meaning of the
term 'particular market situation' … is broad" and that "there is no support for Indonesia's argument
that a 'particular market situation' is an 'exceptional' situation." The United States also agrees with
Australia that a "particular market situation" may include "any condit ion, state or combination of
circumstances in respect of the buying and selling of the like product … in the market of the exporting
country … that is distinguishable and not general".

3. The findings of an investigating authority in a countervailing duty investigation do not
otherwise prohibit the investigating authority from finding in an antidumping duty investigation that
certain actions by a government give rise to a "particular market situation" . Article 2.2 contains no
textual language which prohibits an analysis of State interference in assessing whether a particular
market situation exists that precludes a proper comparison. As a result, an investigating authority
may find it appropriate to further analyze whether a particular market situation exis ts based on
State interference. If State interference causes domestic market conditions, including in respect of
the domestic market for inputs, to be materially different than market -based conditions (such as
those reflecting normal commercial principles) , this could result in artificial sales prices of the like
product that are not fit for a proper comparison. The United States thus agrees with Australia's
statement that State interference "is a factor that can result in the domestic price not being suitable
to use as the basis for the 'normal value' because the affected domestic sales do not permit a proper
comparison with the export price".

4. Further, since the determination of normal value, by definition, must exclude all transactions
not made in the ordinary course of trade, the comparison between normal value and export value
is, similarly by definition, an asymmetrical comparison because the determination of export price
does not exclude all transactions not made in the ordinary course of trade. As the Appellate Body
has explained, "the duties of the investigating authorities, under Article 2.1 of the Anti-Dumping
Agreement, are precisely the same, … irrespective of the reason why the transaction is not 'in the
ordinary course of trade'. Investigatin g authorities must exclude, from the calculation of normal
value, all sales which are not made 'in the ordinary course of trade'. To include such sales in the
calculation … would distort what is defined as ' normal value'". Accordingly, the United States
disagrees with Indonesia that an investigating authority may not disregard domestic sales prices
pursuant to a "particular market situation" whenever the identified situation affects both domestic
and export sales.

5. It is also nonsensical to assert that t he pre-Uruguay Round discussions of an Ad Hoc Group
about "input dumping" have a bearing on the meaning of "particular market situation" . The Ad Hoc
Group did not discuss input dumping in the context of a particular market situation, nor did it mention

particular market situation in its report. Besides, the issue in this dispute does not involve the
question of whether State interference results in input dumping. The issue here involves the question
of whether State interference in the marketplace has resulted in a domestic price or cost that does
not reflect marked-based conditions. An input does not need to be dumped before an investigating
authority concludes that domestic price does not reflect market -based conditions. Indeed, a
particular market situati on may exist where State interference results in a domestic price or cost
that is higher than it would have been absent such interference. Therefore, the United States
disagrees with Indonesia that statements made by an Ad Hoc Group in 1984 should be viewe d by
the Panel as demonstrating that a "particular market situation" cannot address State interference in
the market for an input used to produce the like product.

6. Finally, nothing in the text of GATT 1994 Article VI, the Anti -Dumping Agreement, or oth er
relevant texts, indicates that dumping reflects only discriminatory pricing strategies of individual
producers or exporters. The WTO agreements reflect that "dumping" is a price difference. Article 2.1
of the Anti -Dumping Agreement states that "a produc t is considered as being dumped, i.e.
introduced into the commerce of another country at less than its normal value, 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" .
GATT 1994 Article VI:1 uses almost identical language. On the other hand, the phrase "international
price discrimination" does not appear in the text of the GATT 1994 or the text of the Anti -Dumping
Agreement. Instead, dumping relates to a price difference – where export price is lower than normal
value – irrespective of any motivation of the producer or exporter.

II. CLAIMS REGARDING THE SECOND CONDITION OF ARTICLES 2.2.1.1 AND ARTICLE 2.2

7. The introductory phrase "[f]or the purpose of paragraph 2" indicates that Article 2.2.1.1 should
be read together with Article 2.2. The costs calculated pursuant to Article 2.2 must be capable of
generating "an appropriate proxy for the price of the like product in the ordinary course of trade in
the domestic market of the exporting country when the normal value cannot be determined on the
basis of domestic sales" . Given that the use of costs under Article 2.2.1.1 must be capable of
generating an appropriate proxy for the prices of sales in the ordinary course of trade, the term
"cost" must be understood as referring to costs that reflect market-based conditions associated with
producing the like product in the exporting country.

8. The United States disagrees with Indonesia that the second condition of Article 2.2.1.1 of the
Anti-Dumping Agreement obligated Australia to accept without question the costs recorded in the
respondents' records. Article 2.2.1.1, properly interpreted, does not mean that the costs reported in
the records kept by the exporter or producer under investigat ion must always be used absent any
consideration. To the contrary, an investigating authority may examine such records. That
examination may include, among other considerations, a substantive inquiry into whether the costs
kept by the exporter or producer under investigation do not "reasonably reflect" objectively real,
economically meaningful data associated with the production and sale of the product under
consideration. The United States agrees then with Australia that in such a situation, an unbiased and
objective investigating authority would have a basis under the Anti-Dumping Agreement to reject or
adjust a cost that does not reflect market-based conditions, so long as its determination was based
on a reasoned and adequate explanation.

9. The United States further disagrees with Indonesia's assertion that "the Appellate Body and
panels have rejected the argument that [Article 2.2.1.1] relates to whether the costs, themselves,
are reasonable". The Appellate Body in EU – Biodiesel (Argentina) specifically rejected the argument
that "'no matter how unreasonable the production (or sale) costs in the records kept by the
investigated firm would be when compared to a proxy or benchmark consistent with a normal market
situation, there is nothing an investigating authority can do'". As the Appellate Body explained, "an
investigating authority is 'certainly free to examine the reliability and accuracy of the costs recorded
in the records of the producers/exporters' to determine, in particular, whether all costs incurred are
captured; whether the costs incurred have been over - or under-stated; and whether non -arm's-
length transactions or other practices affect the reliability of the reported costs".

10. For example, both the panel and Appellate Body in EU – Biodiesel (Argentina) confirmed that
a cost based on an affiliated party transfer price should not be used under Article 2.2.1.1, even if
that transfer price is reflected in the investigated firm's records. Such a non -arms-length sale is
exactly the type of transaction for which an investigating authority may look beyond the four corners

of an investigated firm's records and determine whether the transaction does not reasonably reflect
real economic costs involved in producing the product in the exporting country , especially because
the reported transfer price may fail to accurately and reliably reflect the interaction between
independent buyers and sellers. The authority under Article 2.2.1.1 to reject a non -arms-length
transaction makes clear that "costs" that are "associated with" the production and sale of a product
must be understood as costs that "suitably and sufficiently correspond to or reproduce the costs that
have a genuine relationship with the production and sale of the specific product under consideration".

11. The concept that underlies the well -established concern regarding related, affiliated,
associated, or non-independent party transactions is that such transactions may not reflect market-
based conditions where "buyers and sellers come together voluntarily to decide on what products to
produce and sell and buy, and how resources such as labour and capital should be used". The same
concept also underlies concerns that may arise for other types of transactions. The question of
whether the records of the exporters or producers reasonably reflect the costs associated with
production and sale of the product under consideration is a question which needs to be assessed on
a case-by-case basis, taking into account the evidence before the investigating auth ority, and the
determination that it makes.

12. The focus of the Panel's inquiry in this matter should be on whether Australia's findings for
rejecting input costs, based on the facts and circumstances of its investigation, is one that could
have been reached by an objective and unbiased investigating authority. An investigating authority
may examine whether a respondent's recorded costs "suitably and sufficiently correspond to or
reproduce the costs that have a genuine relationship with the production and sale of the specific
product under consideration" . Australia had a sufficient basis to examine whether input prices
distorted by State interference resulted in a particular market situation that rendered domestic
market paper prices unfit for a proper com parison under Article 2.2. It would be incongruous to
consider that Australia was prohibited from examining whether those same recorded pulp costs
reasonably reflect the costs associated with the production and sale of the product under
consideration for purposes of constructing normal value under Article 2.2.1.1. As explained, those
costs, to be used, must be capable of generating an "appropriate proxy" for the price of the like
product "in the ordinary course of trade".

13. Finally, Article 2.2 does not prohibit the use of out-of-country information to evaluate recorded
costs, or to adjust or replace recorded costs, when formulating the appropriate cost for an individual
producer. Article 2.2 also does not require an investigating authority to adapt an ou t-of-country
source for an input price back to the cost that it just rejected as incapable of generating an
appropriate proxy for the price of the like product, in the ordinary course of trade, in the domestic
market of the exporting country. The United St ates agrees with Australia that "it simply cannot be
the case that amounts that were validly rejected under Article 2.2.1.1 of the Anti -Dumping
Agreement must then be used to determine the constructed normal value under Article 2.2 of the
Anti-Dumping Agreement". Therefore, contrary to Indonesia's position, an investigating authority
does not need to adapt an out -of-country source for an input price under Article 2.2 to match the
rejected cost for that input.

EXECUTIVE SUMMARY OF U.S. THIRD PARTY ORAL STATEMENT

14. Just as one could "envis[ion] many reasons for which transactions might not be 'in the ordinary
course of trade'," it is possible to envision many reasons for which transactions might not permit a
proper comparison because of a "particular marke t situation" . An investigating authority would
therefore need to determine on a case-by-case basis, based on the facts and circumstances before
it, whether domestic market conditions constitute a "particular market situation". If those facts and
circumstances indicate that a "particular market situation" exists because of government
interference in the marketplace, nothing in the WTO agreements requires an investigating authority
to ignore this situation and find that the sales of the like product subject t o the "particular market
situation" permit a proper comparison. If government interference causes domestic market
conditions to be materially different than market-based conditions (such as those reflecting normal
commercial principles), this could result in artificial sales prices of the like product that are not fit
for a proper comparison.

15. Likewise, if the facts and circumstances indicate that a "particular market situation" affects
both sales of the like product and sales of the product under consi deration, nothing in the
WTO agreements requires an investigating authority to ignore the "particular market situation" and

find that sales of the like product subject to such a situation permit a proper comparison. As the
European Union noted, under Artic le 2.3 of the Anti -Dumping Agreement, the export price of the
product under consideration is the price of the product as exported to the importing country. An
investigating authority generally is not concerned with why the export price is what it is. Indee d,
unlike normal value, the export price may include sales that are not in the ordinary course of trade
because the prices are below the product's costs of production. Unlike normal value, the export price
may include sales that do not reflect normal commercial principles. Unlike normal value, the export
price may include sales in which the domestic cost of an input used in the manufacture of product
as exported does not reflect a non-arm's length transaction.

16. Article 2.2 describes two specific conditions or sets of circumstances for when these "such
sales" do not permit a "proper comparison" for the calculation of "normal value" . A low volume of
these sales is one set of circumstances. Here, a problem does not exist with respect to the sales
themselves, just with how many there are and whether, from a illustrative standpo int, sufficient
data points exist to determine whether "a product is to be considered as being dumped,
i.e. introduced into the commerce of another country at less than its normal value".

17. A "particular market situation" is another set of circumstances for when "such sales" do not
permit a "proper comparison". Here, a problem does exist with respect to the sales themselves, such
that they cannot be used to determine whether "a product is … introduced into the commerce of
another country at less than its normal value". As the Appellate Body explained in US – Hot-Rolled
Steel, investigating authorities must exclude, from the calculation of normal value, all sales which
are not made 'in the ordinary course of trade'. To include such sales in the calculation … would distort
what is defined as 'normal value'".

18. The duties of an investigating authority are the same under Article 2.1 of the Anti -Dumping
Agreement with respect to transactions of the like product subject to a "particular market situation".
An investigating authority must exclude all such sales from the calculation of normal value if they
do not permit a proper comparison, because to include such sales in this calculation would distort
what is defined as "normal value". The phrase "proper comparison" as set out in Article 2.2 therefore
reinforces the requirement that, before an investigating authority can determine if the "product is
to be considered as being dumped," it must first exclude from the calculation of normal value all
transactions of the like product in the domestic market that are subject to the "particular market
situation".

19. Finally, the adverb "normally" moderates the obligation established in the first sentence of
Article 2.2.1.1, because while "normally" confirms that "under normal or ordinary conditions" costs
should be calculated on the basis of the records kept by the ex porter or producer under
investigation," it also directs that where conditions are demonstrated to be not normal or not
ordinary, costs should not be calculated on the basis of these records. The adverb "normally" thus
anticipates the two conditions to the first sentence of Article 2.2.1.1 introduced by the conjunction
"provided that," as well as reflects that certain costs may be deemed unsuitable through the
introductory phrase "[f]or the purpose of paragraph 2" . It provides for a degree of flexibility an d
expressly contemplates that there will be instances when the evidence demonstrates that an
investigating authority should not calculate costs on the basis of the records kept by the exporter or
producer, even when these records satisfy the two conditions that follow the conjunction "provided
that".

EXECUTIVE SUMMARY OF U.S. THIRD PARTY RESPONSES TO QUESTIONS

20. A "particular market situation" could affect all market participants, or its impact could be
limited to some market participants. The definitio n of a market "situation" would be the "condition
or state of" the market – which may relate to one, some, or all participants. This suggests that what
constitutes a particular market "situation" should be evaluated on a case -by-case basis, based on
the fa cts and circumstances before the investigating authority. An investigating authority is
permitted to take into account government influence in the domestic market under the particular
market situation provision. Also, a situation that equally affects both domestic and export markets
can constitute a particular market situation.

21. The phrase "proper comparison" in Article 2.2 of the Anti-Dumping Agreements relates to the
comparison that reveals whether a "product is to be considered as dumped" , which star ts with
ascertaining the "normal value" of a product (Article 2.1). The normal value necessary for a dumping

comparison requires a comparable price, in the ordinary course of trade, preferably based on the
like product in the domestic market of the exporti ng country (again, Article 2.1). Article 2.2 then
reinforces that a suitable normal value is necessary for a "proper comparison". If there are no sales
in the ordinary course of trade, resort may be made to a suitable proxy for the comparable price, in
the ordinary course of trade, in the domestic market. Alternatively, if the particular market situation
or the low volume of sales in the domestic market do not result in a suitable normal value (for
example, because the sales do not generate a comparable, ma rket-determined price), Article 2.2
also provides for resort to a proxy for the comparable price, in the ordinary course of trade. Thus, a
"proper comparison" is one that starts with a normal value reflecting a comparable price, in the
ordinary course of trade, that can start to answer the question whether a product is to be considered
as dumped.

22. The phrase "proper comparison" in Article 2.2 and the phrase "fair comparison" in Article 2.4
are aimed at different lines of inquiry. Article 2.2 establishes certain alternatives for establishing
normal value, when there are no domestic sales in the ordinary course of trade or when, because of
a "particular market situation" or a "low volume of ... sales in the domestic market of the exporting
country", "such sales do not permit a proper comparison" . In contrast, the text of Article 2.4
presupposes that an investigating authority has established a normal value pursuant to Articles 2.1
and 2.2 and an export price pursuant to Article 2.3 and obligates an investigating authority to make
a "fair comparison" between normal value and export price when determining the existence of
dumping and when calculating a margin of dumping.

23. The Panel otherwise should not rely on the statements of the panel and Appellate Body in US –
Anti-Dumping and Countervailing Duties (China), discussed by Indonesia at paragraphs 119-121 of
its first written submission, as legal interpretations because Articles 2.2 and 2.2.1.1 of the Anti -
Dumping Agreement, which are the basis of the Panel's terms of reference in this dispute, were not
the object of a legal interpretation by the panel in US – Anti-Dumping and Countervailing Duties
(China) and were not raised on appeal. The statements of the panel and Appellate Body are therefore
in the nature of obiter dicta – statements not necessary to resolve the legal issues before the panel
or raised on appeal.

24. Finally, Article VI:5 of the GATT 1994 is the only provision of the covered agreements that
pertains to the interrelationship between the Anti-Dumping Agreement and the SCM Agreement. As
the only provision linking the remedy in an anti -dumping proceeding with the remedy in a
countervailing proceeding, Article VI:5 demonstrates that Members agreed only to co nstrain
concurrent application of anti -dumping and countervailing duties where imposing anti -dumping
duties would compensate for "the same situation of dumping or export subsidization". If the
Members intended to constrain concurrent application in other situations, they would have provided
so explicitly.