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Abstract
AbstractThis paper analyzes the Australia – Anti-Dumping Measures on A4 Copy Paper panel report, the second recent WTO dispute to involve a challenge to Indonesia's paper industry. The Indonesian paper industry benefits from reduced-cost inputs because of the Indonesian government's influence and subsidies over the timber and pulp market. The report offers the first interpretation of ‘particular market situation’ under Article 2.2 of the WTO's Anti-Dumping Agreement. At the same time, it raises questions regarding the appropriateness of using anti-dumping measures to address what are fundamentally subsidy issues. While the panel ultimately found that Australia's measure was inconsistent with Article 2.2, the paper shows that the panel's interpretation of ‘particular market situation’ increases the relative attractiveness of using anti-dumping duties instead of countervailing measures. Two key points on the welfare implications of the decision can be made. The first relates to the motivations of the Australian paper industry and the imperfectly competitive market in which Australian Paper operates. The second is the importance of challenging subsidies rather than imposing anti-dumping duties where the subsidies in question have negative environmental effects.
Highlights
The global paper industry has received increased scrutiny in recent years as concerns regarding greenhouse gas emissions and the deleterious effect that the timber and pulp industries have on the environment mount
We argue that the specific interpretation of the legal text with respect to the "particular market situation" affects the choice between AD and other trade policy tools — mainly countervailing measures (CM) — when facing a subsidy issue in a foreign market with implications for domestic downstream markets
Even though a formal assessment of the broader economic and welfare implications of using AD as a trade policy response to a downstream foreign subsidy lies outside the scope of the present paper, we argue that further research in this direction is necessary, especially when the interpretation of the “particular market situation” under Article 2.2 of the AD Agreement increases the attractiveness for downstream industries to petition for AD investigations
Summary
The global paper industry has received increased scrutiny in recent years as concerns regarding greenhouse gas emissions and the deleterious effect that the timber and pulp industries have on the environment mount. In this paper we focus on a novel dimension of this debate and argue that the interpretation of “particular market situation” in Article 2.2 of the AD Agreement offers an avenue for AD to be considered as an (optimal) trade policy tool for a downstream industry to tackle a subsidy issue in a foreign upstream market. Even though a formal assessment of the broader economic and welfare implications of using AD as a trade policy response to a downstream foreign subsidy lies outside the scope of the present paper, we argue that further research in this direction is necessary, especially when the interpretation of the “particular market situation” under Article 2.2 of the AD Agreement increases the attractiveness for downstream industries to petition for AD investigations.
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