KTC ' S USE OF FACTS AVAILABLE TO DETERMINE TJIWI KIMIA ' S DUMPING MARGIN

F. KTC ' S USE OF FACTS AVAILABLE TO DETERMINE TJIWI KIMIA ' S DUMPING MARGIN

1. Arguments of Parties

  (a)

  Indonesia 7.113 Indonesia contends that the KTC violated Article 6.8 of the Agreement and paragraph 7 of

  Annex II by relying exclusively on the information provided by the applicants in the calculation of Tjiwi Kimia's dumping margin and by failing to compare that information against data submitted by other investigated exporters. According to Indonesia, there can logically be a difference between Tjiwi Kimia's dumping margin and those of the other exporters, but the 51.61 per cent dumping margin which is four times higher than the highest dumping margin calculated for the other Indonesian exporters demonstrates that the KTC did not act in an unbiased and objective manner in its calculation of Tjiwi Kimia's dumping margin.

  7.114 According to Indonesia, since, contrary to what it did in the preliminary determinations, the KTC decided to treat the three Sinar Mas Group companies as a single exporter and calculated a single dumping margin for them in its final determinations, the calculation of Tjiwi Kimia's dumping margin on the basis of facts available materially affected the positions of Indah Kiat and Pindo Deli. In the absence of the effect of Tjiwi Kimia's dumping margin, there would have been no finding of dumping for Indah Kiat and Pindo Deli. It follows that the KTC should have provided Indah Kiat and Pindo Deli with an opportunity to submit further explanations and to rectify defects in the submitted information regarding Tjiwi Kimia pursuant to Article 6.8 of the Agreement and paragraph 6 of Annex II. By failing to do so, the KTC violated these provisions.

  (b)

  Korea 7.115 Korea submits that the Sinar Mas Group chose not to cooperate with the KTC in this

  investigation with respect to Tjiwi Kimia. It follows that the results of non-cooperation could become less favourable for Tjiwi Kimia pursuant to paragraph 7 of Annex II. With respect to Indonesia's argument about the KTC's alleged failure to use special circumspection in the use of facts available for Tjiwi Kimia, Korea submits that at the initiation stage of the investigation, the KTC checked, pursuant to Article 5.3 of the Agreement, the accuracy and adequacy of the information submitted by the applicants with respect to Tjiwi Kimia. The KTC found that the mentioned information came from independent and reliable sources. That, in Korea's view, also satisfied the requirements of paragraph 7 of Annex II. Furthermore, Korea asserts that in the course of the investigation at issue

  7.116 As to Indonesia's argument relating to paragraph 6 of Annex II, Korea submits that that paragraph applies in cases where information submitted by a responding party is not accepted by the IA. Since Tjiwi Kimia did not submit any information to the KTC in this investigation, it cannot logically argue a violation of that paragraph. Nothing in that paragraph, or in Article 6.8 of the Agreement, requires the IA to provide non-cooperating parties with a second chance to submit information.

2. Arguments of Third Parties

  (a)

  China 7.117 China submits that checking, in accordance with Article 5.3 of the Agreement, the accuracy

  and adequacy of the information submitted by the applicants at the initiation stage of an investigation does not release the IA from its obligation, under paragraph 7 of Annex II, to check against independent sources the information from secondary sources that is being used in the context of facts available. These are two distinct obligations that have to be respected at two different stages of an anti-dumping investigation.

  (b)

  United States 7.118 The United States argues that the obligation under Article 5.3 of the Agreement to verify the

  accuracy and adequacy of the information submitted in the application is distinct from the obligation under paragraph 7 of Annex II to compare the information from the secondary sources used as part of facts available against independent sources. According to the United States, meeting the first obligation may not necessarily amount to meeting the second one. The Panel, therefore, has to find as

  a matter of fact whether or not the KTC met its obligation under paragraph 7 of Annex II in the investigation at issue.

3. Evaluation by the Panel

  7.119 We note that facts relating to this claim are relatively straightforward. Tjiwi Kimia intentionally chose not to submit information in response to the KTC's questionnaire. In its preliminary dumping determinations, the KTC treated the three Sinar Mas Group companies separately. In its final determinations, however, it treated them as a single exporter and assigned to them one single margin of dumping. In its final margin calculations, the KTC first calculated individual normal values and export prices for each company and then weighted them in order to come up with a final normal value and export price figure. These final figures were then used to

  calculate the final (single) margin of dumping. 178 In this process, normal value and export price figures for Tjiwi Kimia were obtained from the information submitted by the applicants in the

  application. 7.120 Indonesia's claim is premised on two arguments. Firstly, Indonesia argues that the KTC acted

  inconsistently with Article 6.8 of the Agreement and paragraph 7 of Annex II by relying exclusively on the data submitted by the applicants in the calculation of Tjiwi Kimia's dumping margin without corroborating them against independent sources. Secondly, Indonesia asserts that the KTC acted inconsistently with Article 6.8 of the Agreement and paragraph 6 of Annex II by not providing Indah Kiat and Pindo Deli with an opportunity to submit further explanations and to rectify defects in the submitted information regarding Tjiwi Kimia.

  (a)

  Alleged Violation of Article 6.8 of the Agreement and Paragraph 7 of Annex II

  "If the authorities have to base their findings, including those with respect to normal value, on information from a secondary source, including the information supplied in the application for the initiation of the investigation, they should do so with special circumspection. In such cases, the authorities should, where practicable, check the information from other independent sources at their disposal, such as published price lists, official import statistics and customs returns, and from the information obtained from other interested parties during the investigation. It is clear, however, that if an interested party does not cooperate and thus relevant information is being withheld from the authorities, this situation could lead to a result which is less favourable to the party than if the party did cooperate."

  7.122 Paragraph 7 states that when an IA uses facts available in accordance with Article 6.8 of the Agreement, and in that context bases its determinations on information obtained from a secondary source, it has to do so with special care. It also provides that, to the extent possible, that information should be compared against information from other independent sources, including information obtained by the IA about other investigated companies in the same investigation. However, paragraph 7 also acknowledges that as long as special circumspection is exercised in the use of information from a secondary source, the results of the investigation may be less favourable for the non-cooperating interested party than had it chosen to cooperate.

  7.123 Turning to the investigation at issue, we note that in the process of calculating the single margin of dumping for the three Sinar Mas Group companies, the KTC based Tjiwi Kimia's normal value and export price on the information submitted by the applicants in the application. Korea does

  not dispute this fact. 179 However, parties' views diverge regarding whether or not that information was later on corroborated by the KTC against information from other independent sources. In this

  context, Korea generally argues that in certain cases, the fulfilment of the obligation under Article 5.3 may also suffice to meet the requirements of paragraph 7 of Annex II. Based on this view, Korea asserts that in the investigation at issue, there was no need to corroborate the normal value and export price data obtained from the application because these data came from independent and reliable sources such as the Korean government customs statistics ("KOTIS") and the Korea Trade-Investment Promotion Agency ("KOTRA"). Furthermore, Korea asserts that because these data were obtained

  from such sources, they were deemed to have been corroborated. 180 7.124 We consider the obligations set forth under Article 5.3 and paragraph 7 of Annex II to be

  different. Firstly, these two sets of obligations apply at different stages of an investigation: Article 5.3 concerns the quality of the evidence that would justify the initiation of an investigation whereas paragraph 7 of Annex II has to do with the evidence on which the IA's final determination may be based. Secondly, the standards of these two obligations are different. The standard under Article 5.3 is that evidence be "adequate and accurate" so as to justify initiation whereas paragraph 7 of Annex II requires that information from secondary sources be compared against that from other independent sources. We therefore do not agree with the view that the fulfilment of the obligation under Article 5.3 of the Agreement may in some cases also satisfy the requirements of paragraph 7 of Annex II. It may be the case that the obligation to corroborate under paragraph 7 may entail little substantive analysis in addition to the analysis carried out under Article 5.3 at the initiation stage. However, that does not make these two obligations the same from a procedural and substantive point of view. They are two distinct obligations that have to be observed by the IA at different stages of an investigation. We therefore disagree with Korea's contention that in certain cases, the fulfilment of the obligation under Article 5.3 may also suffice to meet the requirements of paragraph 7 of Annex II.

  7.125 We have no specific reason to question that the information about Tjiwi Kimia, submitted by the applicants in the application, may have been reliable as it came from independent institutions, i.e. KOTIS and KOTRA. The fact remains, however, that the KTC was under the obligation to take the procedural step, under paragraph 7 of Annex II, to confirm the reliability of that information for purposes of its determinations in the investigation. The issue, therefore, is whether or not the KTC took that step to satisfy the requirements of paragraph 7.

  7.126 Korea argues that in the course of the investigation at issue, the KTC did in fact compare the information obtained from the application against information from other independent sources. In this context, Korea submits that the export price was compared against data from KOTIS. The record

  supports this proposition. 181 Korea also argues that the normal value was compared against normal values established with respect to the other investigated companies in the same investigation. We

  note, however, that there is no indication of such corroboration on the record. Korea submitted an affidavit from a KTC investigator to prove this assertion. 182 We are left in a position where there is

  evidence on the record that demonstrates that the KTC did corroborate export price information from the data of KOTIS, but no evidence as to whether or not the same was done with respect to the normal value. It is for a party asserting a fact to provide proof thereof. 183 We therefore consider that Korea

  has not established as a matter of fact that the KTC compare the normal value figure for Tjiwi Kimia against other independent sources. It follows that Korea has not rebutted the prima facie case made by Indonesia in this regard. We therefore conclude that the KTC acted inconsistently with Article 6.8 of the Agreement and paragraph 7 of Annex II by failing to fulfil its obligation to corroborate information obtained from secondary sources for purposes of calculating Tjiwi Kimia's dumping margin against other independent sources at its disposal.

  7.127 Regarding Indonesia's argument that the magnitude of the margin of dumping calculated for Tjiwi Kimia also demonstrates that the KTC failed to exercise special circumspection, we are of the view that the magnitude of the margin of dumping may not have a bearing on the WTO-consistency of the KTC's calculation as long as the calculation conforms to the relevant provisions of the Agreement. We therefore disagree with Indonesia in this regard.

  (b)

  Alleged Violation of Article 6.8 of the Agreement and Paragraph 6 of Annex II 7.128 Indonesia argues that since the KTC decided to treat the three Sinar Mas Group companies as

  a single exporter with respect to its dumping determinations, it should have treated these three companies as a single exporter for purposes of the procedural requirements of the Agreement as well. It follows that the single exporter should have been given "an opportunity to cure defects in submitted

  information." 184 Korea disagrees. According to Korea, since Tjiwi Kimia did not submit any information to the KTC, there may be no violation of paragraph 6 vis-à-vis this company. Similarly,

  Korea submits that the fact that the KTC treated the three Sinar Mas Group companies as single exporter for purposes of its dumping margin determinations did not alter the implications of paragraph 6.

  7.129 We note that paragraph 6 of Annex II reads:

  "If evidence or information is not accepted, the supplying party should be informed forthwith of the reasons therefore, and should have an opportunity to provide further explanations within a reasonable period, due account being taken of the time-limits of the investigation. If the explanations are considered by the authorities as not being "If evidence or information is not accepted, the supplying party should be informed forthwith of the reasons therefore, and should have an opportunity to provide further explanations within a reasonable period, due account being taken of the time-limits of the investigation. If the explanations are considered by the authorities as not being

  7.130 Paragraph 6 provides that in cases where the IA declines to accept information submitted by an interested party, that party has to be informed of the IA's decision and has to be given an opportunity to provide further explanations regarding that decision. If the IA finds such explanations as being unsatisfactory, then the information can be disregarded, in which case the IA has to explain, in its published determinations, why the information has been rejected.

  7.131 In this case, it is undisputed that Tjiwi Kimia chose not to submit any information to the KTC. Thus, no submission of information was made on behalf of this company. Our understanding of the obligation set out in paragraph 6 is that submission of information is a prerequisite to invoke this paragraph. In other words, we consider that an interested party that chooses not to submit any information to the IA cannot logically claim a violation of paragraph 6. We are therefore of the view that the KTC did not act inconsistently with Article 6.8 and paragraph 6 of Annex II in not giving either Tjiwi Kimia or the Sinar Mas Group another opportunity to submit information which had

  already been withheld from the KTC. 185