THIRD PARTY WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES

E. THIRD PARTY WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES

  5.39 The following summarizes the European Communities arguments in its third party written submission.

1. The interpretation of “each known exporter” under Article 6.10 of the Agreement

  5.40 As regards the text of Article 6.10 of the Agreement, the term “each known exporter or producer” is not directly defined. It accordingly bears an autonomous meaning, and there is a certain margin for the investigating authorities to interpret this term. The EC notes that the term “exporter” is different from the term “corporation”. It agrees with Korea that the corporate law of Indonesia cannot determine the matter. Rather, the text of the Agreement allows an investigating authority to consider separate corporate entities that are related as constituting one single “exporter”. The EC also observers that Article 6.10 of the Agreement uses the alternative “exporter or producer”, and thus leaves a certain flexibility to the investigating authority to take due account of the economic circumstances of

  a given case, when deciding on whom to impose the anti-dumping duty.

  5.41 Seen in its context, Article 6.10 of the Agreement first sentence establishes, “as a rule”, the duty to determine individual margins of dumping for each known exporter. The second sentence provides for the exception, namely that under certain conditions sampling is allowed. The Indonesian conclusion in the present case that the second sentence provides for the “only one circumstance where

  a departure from determining individual margins is allowed” is, however, flawed. It is based on the assumption that “each known producer” refers to each single legal entity and deduces from this that not granting an individual rate to each single legal entity is in breach of Article 6.10 of the Agreement, first sentence, unless the conditions under the second sentence of that provision are met.

  5.42 However, the present debate is not about the relationship between the first and second sentences of Article 6.10 of the Agreement, but about the interpretation of the notion “exporter” within the meaning of the first sentence. In short, the argument derived by Indonesia out of the second sentence of Article 6.10 of the Agreement is based on what it is supposed to demonstrate, and is thus without merit. Treating related companies as one “exporter” does not deprive the provisions concerning “sampling” under the second sentence of their effect.

  possible to come to the opposite conclusion: because Article 4.1 (i), footnote 11 and Article 2.3 of the Agreement take account of economic affiliations other provisions of the Agreement may be interpreted in line with their economic rationale as well.

  5.44 Rather than the provisions just cited, Article 9.5 of the Agreement may be more relevant context. Under this provision, an investigating authority shall promptly carry out a review for the purpose of determining individual margins of dumping for any exporters or producers in the exporting country in question who have not exported the product to the importing Member during the period of investigation, “provided that these exporters or producers can show that they are not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product”. If the relationship between exporters and producers is decisive for the revision of individual margins of dumping, the same relationship may also be considered in the initial determination.

  5.45 In accordance with Art. 31 (1) third head of the Vienna Convention, Article 6.10 of the Agreement shall also be interpreted in the light of its object and purpose. In the EC’s view, the investigating authorities should determine an individual dumping margin for an exporter or producer that reflects its real economic structure, duly delineated in legal terms. If companies are related, this relationship would give them a possibility to channel exports through an affiliate with the lowest dumping margin, thus rendering the anti-dumping measures ineffective. In short: the object and purpose of the provision is to allow fair treatment of the exporter or producer by the investigating authority, and to ensure the effectiveness of the anti-dumping measures by preventing possibilities of manipulation by the exporter or producer.

  5.46 It follows that a determination of individual dumping margins for each legal entity regardless of whether they are economically related to each other would be contrary to the object and purpose of Article 6.10 of the Agreement. Rather, the investigating authorities should be allowed to determine one dumping margin for related companies as a whole.

  5.47 Such interpretation reflects the subsequent practice of the Community institutions. The European Commission and the Council of the European Union have consistently held with respect to related companies that calculating individual dumping margins would create the likelihood of manipulation of anti-dumping measures (thus rendering them ineffective) by enabling the related producers to channel their exports to the Community through the affiliate with the lowest dumping margin. In EC practice, related companies would normally be treated together where they belong to the same group, or share directors and facilities, or have other significant financial or economic links. In conclusion, the EC submits that a group that is composed of several legal entities which are related may be treated as one “exporter or producer” in the sense of Article 6.10 of the Agreement.

2. The use of “facts available” under Article 6.8 of the Agreement in conjunction with Annex II of the Agreement

  5.48 The EC submits that the division of the “facts available” issue into two claims is questionable. As has been explained in Section II of this written submission, an investigating authority is entitled under the Agreement to treat separate legal corporations as one “exporter or producer”, provided that they are related. It follows that they, as a whole, bear the rights and obligations vis-à-vis the investigating authority during the anti-dumping procedure. Therefore, either cooperation or non- cooperation by any part of it may be attributed to the group as a whole. Accordingly, an investigating authority may use “facts available” with regard to an exporter if one of its legal corporations has not cooperated and thereby prevented an investigating authority from obtaining or verifying the necessary information relating to the determination of dumping.

  5.50 The EC emphasizes that a fair balance must be struck between the interests of an investigating authority to conduct its investigation expeditiously, and the interests of an exporter to be heard.

  5.51 First, it goes without saying that submission of evidence within a deadline set by the investigating authority should be considered as timely. As the setting of deadlines creates important legitimate expectations on the side of exporters, the investigating authority bears a certain responsibility to ensure that, when deadlines are set, with legal consequences if they are missed, they are clearly denoted as such. The EC submits that the legal consequences for any ambiguity whether a deadline has been set or revised should be borne by the investigating authority.

  5.52 Second, the categorical approach under Korean law not to accept any new evidence after closure of the verification period does not seem to be in line with the above stated duty of an investigating authority to take into account all relevant factors when determining that a document was produced in good time or not. Hence, a practice that shuts off any evidence produced by an exporter after the verification, may well be in breach of Article 6.8 of the Agreement in conjunction with paragraph 3 of Annex II of the Agreement. The KTC must show in the case at hand, why reliance on a document submitted after the closure of the verification would compromise its ability to conduct the investigation expeditiously.

  5.53 Third, the Indonesian argument that the two legal entities had difficulties to obtain relevant information from CMI, is without merit since such difficulties arose in the sphere of responsibility of the Sinar Mas Group and would therefore have to be attributed to the exporter, in line with the EC's general observation that the use of facts available should target the related companies as a whole.

  5.54 Fourth, both sides point out that the exporter’s right to be heard concerns “all information which is verifiable” (paragraph 3 of Annex II of the Agreement, first sentence). Indonesia finds that the document of 9 April 2003 was a “verifiable” CMI financial statement, whereas Korea denies this since the papers were not “self-verifying”.

  5.55 Again, without attempting to reach a conclusion on the factual aspects of the issue, the EC submits that the question should not be dealt with in isolation. Rather, verifiability is one of the factors that allow an investigating authority to reject submitted evidence as untimely. Accordingly, a statement may be “verifiable” in abstract terms: but if it is submitted only after a verification mission has already taken place, its actual verification would necessitate a second mission. That costs time and money and is not required by the Agreement. In such a case, the investigating authorities may consider this as an important factor in their overall consideration of whether to reject such a document as untimely or not.

3. The termination of an investigation under Article 5.8 of the Agreement

  5.56 The European Communities agrees with Korea that Article 5.8 refers to termination of an investigation on a country-wide basis. Article 2 of the Agreement defines dumping. Article 2.1 of the Agreement refers to the word “country” 3 times – and specifically to the product exported “from one country to another”. The word “country” is used a further 5 times in Article 2.2 and footnote 2 of the Agreement. These provisions reflect the language of Article VI of the GATT, which also repeatedly refers to imports from one country to another. They indicate that the concept of dumping involves a strong connotation of a country-wide assessment, which may be reflected in the scope of the investigation. Thus, absent particular provisions requiring a company specific approach, a country- wide approach will generally be permissible.

  exporters or producers and importers. This obligation is, however, subject to the important qualification of the word “known” – if the names of the exporters or producers are not known, they do not need to be indicated in the complaint. It would be permissible to initiate an original investigation even in circumstances where only the country of origin would be known – even if there were no known exporters or producers. Thus, the country-wide nature of the investigation is also reflected in the complaint, right from the start.

  5.58 Such an approach is confirmed by Article 12.1.1 of the Agreement, which requires that the public notice of the initiation of an original investigation states the name of the exporting country or countries. There is no obligation to state the names of known exporters or producers.

  5.59 The country-wide approach to the initiation of an original investigation is common sense. The primary objective of an anti-dumping proceeding is to address the economic problem (injury) caused by dumped imports from a particular source. The precise identification of exporters and producers in the exporting country is, in terms of the scope of the investigation, incidental and may be difficult or impossible to achieve. If the investigation were initiated in the first place only in relation to known exporters and producers, then each time a further exporter or producer became known, it would presumably be necessary to extend the investigation. An investigating authority has no real means of ascertaining with complete certainty the full list of exporters or producers in the exporting country, and the Agreement imposes no obligation on an investigating authority to actively seek out that information.

  5.60 The first sentence of Article 5.8 of the Agreement refers to the rejection of an application under paragraph 1, an application which, the European Communities has just observed, could lawfully

  be country-wide only – and indeed is likely to be so. The European Communities thus concludes that the first sentence of Article 5.8 of the Agreement imposes an obligation in relation to the investigation – that is, the country-wide investigation. Members may go further, by considering such matters on a company specific basis, but they are not obliged to do so by the terms of Article 5.8 of the Agreement.

  5.61 The European Communities understands the final words “the case” in the first sentence of Article 5.8 of the Agreement to refer to the case as reflected in the application – which may lawfully

  be country-wide. Furthermore, the European Communities understands the words “the cases” in the second sentence of Article 5.8 of the Agreement to have the same meaning (except that the plural is used) as the words “the case” in the first sentence of Article 5.8 of the Agreement. The European Communities agrees that the text might have read: “in a case”. However, the European Communities does not attach any significance to the use of the plural in the second sentence of Article 5.8. It is common when drafting an abstract and normative piece of legislation to have in mind its future application in concrete terms to many individual cases (plural), and that may often be reflected in the drafting. The first sentence of Article 5.8 of the Agreement might just as well have been drafted in the plural. That the singular was used, presumably for reasons of grammar or style, is without significance.

  5.62 The European Communities would find it unpersuasive to suggest that by using the plural “the cases” the drafters intended to refer to several company specific cases or investigations, as opposed to “the case” referred to in the first sentence of Article 5.8 of the Agreement – that being a country-wide case. It seems to the European Communities that had the drafters wished to write such a distinction into this provision, they would have done so more clearly – choosing, for example, a different abstract noun, rather than relying on an over-subtle distinction between the singular and the plural.

  distinction between the singular and the plural – had they so intended they would surely have ensured that the text had the same meaning in all the language versions.

  5.64 Finally, the European Communities would observe that the second sentence of Article 5.8 of the Agreement refers both to de minimis dumping margins and to a negligible volume of imports. Both of these are linked to the words “in cases where”. The import threshold factor is clearly country- wide, as reflected, for example, in the fourth sentence of Article 5.8 of the Agreement. It follows that the words “in cases where” cannot, in themselves, lead to the conclusion that the investigating authority must conduct a company specific assessment.

  5.65 Accordingly, the KTC’s decision to continue the investigation after the preliminary de minimis determination vis-à-vis Indah Kiat was consistent with Article 5.8. of the Agreement. Only if the KTC had found in its final determination that the country-wide dumping margin was below the

  de minimis threshold – which it did not – would it have been obliged to immediately terminate its investigation as regards Indonesia.