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Published online by Cambridge University Press: 29 March 2019
The EU–Fatty Alcohols decision of the Appellate Body addressed an important issue of the scope of permissible adjustments under Article 2.4 of the Agreement on Interpretation of Article VI of the GATT 1994, focusing on the ‘mark-up’ paid by an Indonesian exporter to a related company as a difference affecting price comparability between the export price and the normal value. The Appellate Body confirmed that the primary focus of the investigating authority's assessment is on whether the relationship between related companies can be demonstrated to be a factor that impacts the prices of the relevant transactions. This case raises the question of whether a harmonized approach to transfer pricing across different regulatory areas would be useful to bring greater consistency of treatment and certainty to international transactions.
This paper benefited from comments received from participants at the 18–19 June 2018 American Law Institute workshop on WTO Appellate Body Case Law, and especially from Dukgeun Ahn, Emily Blanchard, Jan Bohanes, Chad Bown, Arevik Gnutzmann-Mkrtchyan, Petros Mavroidis, Niall Meagher, Thomas Prusa, Laura Puccio, and Mark Wu.
1 Appellate Body, European Union – Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia (EU–Fatty Alcohols), WT/DS442.
2 PT Musim Mas v. Council, Case C-468/15, judgement of the European Court of Justice, 26 October 2016, para. 5. The precise ownership structures of PTMM and ICOF-S were treated as business confidential information and redacted from the WTO reports. The Orbis database lists ICOF-S as a PTMM subsidiary incorporated in May 2009.
3 Commission Regulation (EU) No. 446/2011 of 10 May 2011 imposing a provisional anti-dumping duty on imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia, Official Journal of the European Union, L Series, No. 122 (11 May 2011), pp. 47–62.
4 Council Implementing Regulation (EU) No. 1138/2011 of 8 November 2011 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia, Official Journal of the European Union, L Series, No. 293 (11 November 2011), pp. 1–18.
5 PT Musim Mas v. Council, judgment of the General Court of the European Union of 25 June 2015, Case C-468/15.
6 PT Musim Mas v. Council, judgement of the European Court of Justice, 26 October 2016, Case C-468/15.
7 The products concerned fall within CN codes 2905.16.85, 2905.17.00, 2905.19.00, and 3823.70.00.
8 The unit value of fatty alcohols imported from Indonesia ranged from €880 to €2,120 between 2006 and 2016, with an average of €1,230.
10 The CN code 2905.16.85 was introduced in 2009, thus all statistics pertaining to this product start in 2009.
11 The corporate tax is 25% in Indonesia and 17% in Singapore.
12 Appellate Body Report, EU–Fatty Alcohols, para. 5.8.
13 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community, Official Journal of the European Community, L Series, No. 343 (22 December 2009), p. 51.
14 Court of Justice, Judgment of 16 February 2012 in joined Cases C-191/09 P and C-200/09 P, Council of the European Union (C-191/09 P) European Commission (C-200/09 P) v. Interpipe Nikopolsky Seamless Tubes Plant Niko Tube ZAT (Interpipe Niko Tube ZAT) and Interpipe Nizhnedneprovsky Tube Rolling Plant VAT (Interpipe NTRP VAT) (concerning Judgment of the Court of First Instance of the European Union, Case T-249/06, Interpipe Niko Tube ZAT and Interpipe NTRP VAT v. Council of the European Union  ECRII-383).
15 Interpipe Judgment, Para. 53.
18 Council Implementing Regulation (EU) No. 1241/2012, 11 December 2012.
19 Panel Report, EU–Fatty Alcohols, para. 7.41.
21 Appellate Body Report, EU–Fatty Alcohols, para. 5.31.
23 Ibid., Appendix B-3, Executive Summary of the European Union's Appellee's Submission, paragraph 20.
24 Panel Report, EU–Fatty Alcohols, para. 7.47.
26 OECD, OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (22 July 2010).
27 Panel Report, EU–Fatty Alcohols, paras. 7.76–7.77.
31 Appellate Body Report, EU–Fatty Alcohols, para. 5.36, citing Panel Report, EU–Fatty Alcohols, paras. 7.105–7.106.
34 Appellate Body Report, European Communities – Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R (2011).
35 Appellate Body Report, EU–Fatty Alcohols,, para. 5.41–5.42.
36 Panel Report, EU–Fatty Alcohols, para. 7.43.
39 Appellate Body Report, EU–Fatty Alcohols, paras. 5.67–5.68.
40 Panel Report, EU–Fatty Alcohols, para. 7.70, citing EU Final Determination (Exhibit IDN-5).
41 Ibid., para. 7.56, citing Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184, para. 177.
42 Appellate Body Report, EU–Fatty Alcohols, para. 5.32.
43 Panel Report, EU–Fatty Alcohols, para. 7.61.
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