Subsidy determination, benchmarks and adverse inferences : assessing ‘benefit' in US – coated paper (Indonesia)

This paper presents a legal-economic analysis of key aspects of the WTO Panel Report involving a challenge by Indonesia against the anti-dumping and countervailing duties imposed by the US on certain coated paper from Indonesia. We focus on the findings in this case relevant to the determination of a ‘benefit’ to the recipient, a core requirement to establish the existence and extent of a subsidy. We examine benchmarking for determining benefit in cases of predominant government ownership of a natural resource and the use of ‘adverse facts available’ against a non-cooperative respondent to infer the existence of a benefit. The benefit analysis in this case may have broader implications. First, it may limit the scope for governments to determine their own policies regarding the ownership and management of natural resources. Second, it may create a loophole allowing investigating authorities to fill gaps in the factual record by intentionally using the ‘facts available’ to the disadvantage of a respondent. In both cases the panel’s findings may open the door to potential misuse of these flexibilities to find a benefit where none exists, or to inflate the margin of benefit to allow for higher countervailing duties.