This 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.

The World Trade Organization (WTO) Panel Report in Australia – Anti-Dumping Measures on A4 Copy Paper (Australia – A4 Copy Paper) marks a significant development of the multilateral rules on anti-dumping. Under certain circumstances, WTO agreements permit members to impose anti-dumping measures to counteract the injurious effect of dumping on domestic industries, typically through import duties. The Report is the first to examine in detail when an anti-dumping authority may determine that a “particular market situation” exists in the country of exportation under Article 2.2 of the WTO Anti-Dumping Agreement, potentially justifying the imposition of elevated remedial duties. The Report also develops the jurisprudence on how such remedies may be calculated, expounding the use of benchmark costs for the calculation of a constructed normal value (CNV) under Article 2.2.1.1. These doctrinal questions are central to the longstanding debate over how far the Anti-Dumping Agreement allows anti-dumping measures against state intervention and market distortions. On both fronts, the Australia – A4 Copy Paper panel created flexibilities for WTO members to respond to government-induced distortions. In doing so, the Report deviates considerably from the course set by the Appellate Body in the landmark EU – Biodiesel decision, which seemed to confine anti-dumping measures to responding to private action. At the same time, the panel left open several important issues relating to the adoption of CNVs and the use of benchmarks for their calculation, leaving wide latitude for investigating authorities to inflate dumping margins in practice.