1. Overview

On 2 October 2025, the World Trade Organization (WTO) circulated the Panel Report in European Union — Countervailing and Anti-Dumping Duties on Stainless Steel Cold-Rolled Flat Products from Indonesia (DS616) (EU — CVD/AD on SSCRFP (Indonesia)). The dispute concerns the European Commission's imposition of countervailing duties on imports from Indonesia, specifically addressing the legality of "attributing" financial contributions provided by the Government of China (GOC) to the Government of Indonesia (GOI). More specifically, the report addresses, among other issues, whether the European Commission could treat financial contributions granted by Chinese state entities to an Indonesian producer as subsidies "by" the Government of Indonesia within the meaning of Article 1.1(a)(1) of the SCM Agreement.

The panel rejected that approach, holding that Article 1.1(a)(1) sets out an exhaustive list of types of "financial contribution" and does not permit the attribution of one government’s conduct to another on the basis of "inducement", "acknowledgment" or "adoption".

The Panel’s findings on this "cross-border" attribution issue are of significant systemic importance for the interpretation of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).

The main legal and interpretative implication of this decision is that it highlights the gap between WTO rules and modern subsidy practices. This decision may impact the viability of unilateral instruments which seek to offset cross-border subsidies through anti-subsidy measures.

2. Background to the EU investigation

The dispute arose from the EU’s anti‑dumping and anti‑subsidy investigations into imports of stainless steel cold‑rolled flat products from several countries, including Indonesia. In the countervailing duty investigation, the Commission examined various forms of support to the Indonesian producer IRNC Group, including loans and other financial support from Chinese state‑owned banks and funds.​

The Commission found that those Chinese entities had provided preferential financing and other support that conferred a benefit on the IRNC Group in Indonesia and treated that support as countervailable in the measures imposed on Indonesian exports.​

3. The Commission’s attribution theory

A central legal question was how the Commission characterised the "granting authority" for the Chinese financing. Rather than treat China as the granting government, the Commission attributed the financial contributions to the GOI.​

According to the panel report, the Commission did so on the basis of an "inducement" and "acknowledgment and adoption" theory. In essence, the Commission reasoned that:​

• Indonesia and China entered into a framework of bilateral cooperation, under which Indonesia sought Chinese investment and financing for the development of an integrated stainless‑steel industry in Indonesia;

• Indonesia’s policy of restricting nickel ore exports, and its broader industrial policy choices, were designed to attract and secure Chinese financing for downstream processing capacity; and

• by actively seeking this support and integrating it into its industrial policy, Indonesia had "acknowledged and adopted" the Chinese conduct as its own, so that the Chinese financial contributions could be treated as financial contributions "by" the GOI for purposes of Article 1.1(a)(1).​

In support of this approach, the Commission referred to Article 11 of the ILC Articles on State Responsibility, which addresses when a state "acknowledges and adopts" the conduct of another as its own for purposes of attribution under general international law.​

4. The panel’s interpretation of Article 1.1(a)(1) SCM Agreement

The panel disagreed with the Commission’s legal characterisation. Its reasoning proceeded in two main steps.​

4.1 Exhaustive nature of the "financial contribution" list

First, the panel examined the structure and wording of Article 1.1(a)(1). It emphasised that the chapeau refers to "a financial contribution by a government or any public body within the territory of a Member, i.e. where" and then lists four categories in subparagraphs (i)–(iv). On that basis, the panel concluded that:​

• the phrase "i.e. where" indicates that the list of forms of financial contribution in subparagraphs (i)–(iv) is exhaustive; and

• an investigating authority must characterise a measure as falling within one or more of those subparagraphs to establish a "financial contribution" for subsidy purposes.​

The panel recalled prior case law on the closed nature of the "financial contribution" concept and extended that reasoning to the way in which the provision identifies who can be considered the granting authority.​

4.2 No textual basis for government‑to‑government inducement

Second, the panel considered whether the Commission’s "inducement" theory could be accommodated within the text of Article 1.1(a)(1). It distinguished:​

• the express "entrusts or directs" standard in subparagraph (iv), which allows attribution of a private body’s actions to a government under certain conditions; from

• the situation in EU — CVD/AD on SSCRFP (Indonesia), where the Commission sought to attribute the conduct of another government (China) to Indonesia, based on alleged inducement and adoption.​

The panel held that Article 1.1(a)(1) does not contain language allowing attribution of one government’s conduct to another on an inducement or adoption theory. In particular, it found that importing Article 11 of the ILC Articles to expand the range of conduct that counts as a "financial contribution by a government" would be inconsistent with the closed, treaty‑specific definition negotiated in the SCM Agreement.​

On that basis, the panel concluded that the Commission’s method for attributing the Chinese financial contributions to Indonesia was inconsistent with Article 1.1(a)(1).​

5. Implications for cross‑border subsidies and unilateral instruments

The report is notable for what it does not decide as well as for what it does. The panel underlined that the parties had not asked it to rule on whether the SCM Agreement permits countervailing "transnational" or "cross‑border" subsidies in the sense of subsidies granted by one Member in the territory of another. The panel therefore confined itself to the attribution question and left the broader territorial scope issue open.​

At the same time, the reasoning confirms that WTO adjudicators will apply a strict, text‑based approach to the definition of "financial contribution". That has implications for how Members design responses to cross‑border support that may not fit easily within the existing categories of Article 1.1(a)(1).​

In parallel, the European Union and the United Kingdom have adopted unilateral instruments, such as the EU's Foreign Subsidies Regulation (FSR) (Regulation (EU) 2022/2560) and the UK Subsidy Control Act, which address certain foreign financial contributions outside the SCM Agreement framework. The panel report in EU — CVD/AD on SSCRFP (Indonesia) does not assess these instruments and does not determine their consistency with WTO law. Whether, and how, those regimes might be reviewed under WTO rules would depend on their concrete application and on how any future dispute frames the relevant WTO provisions.​​

5.1 Debate on the EU's Foreign Subsidy Regulation and the SCM Agreement

Academic commentary on Regulation (EU) 2022/2560 has emphasised from the outset that the Foreign Subsidies Regulation is conceived as a unilateral response to perceived "gaps" in the multilateral subsidy regime, in particular the limited reach of the SCM Agreement over foreign financial contributions that operate within, but are granted outside, the EU internal market. A recurrent theme in this literature is that the Foreign Subsidies Regulation sits at the intersection of trade, competition and industrial policy, borrowing instruments and concepts from EU State aid control while operating in a legal space only partially covered by WTO subsidy rules.​

Several authors argue that, in practice, there is a significant zone of overlap between the the Foreign Subsidies Regulation and the SCM Agreement. For "classic" subsidies to goods that could be countervailed under Regulation 2016/1037, unilateral FSR interventions risk being characterised as parallel or even alternative responses to the same underlying measure, raising questions under Article 32.1 SCM (the exclusivity clause for countervailing measures). Others stress that the FSR also targets financial contributions and market behaviour that would fall outside the SCM Agreement altogether (for example, certain forms of support to services or investment), and therefore cannot be analysed simply as a disguised countervailing duty regime.​

5.2 "Transnational" subsidies and the FSR

A distinct strand of scholarship focuses specifically on "transnational" or "cross‑border" subsidies – financial contributions granted by one state to economic actors operating in the territory of another state – and on the structural tension this creates for the SCM Agreement’s concepts of "financial contribution", "by a government" and "within the territory of a Member". These studies underline that the SCM Agreement was drafted around a paradigm in which the subsidising and exporting country are identical, and that regulatory experimentation by the EU and others (including via the FSR) is a direct response to outward‑oriented industrial strategies such as China’s Belt and Road Initiative.​

From this perspective, the panel decision in EU — CVD/AD on SSCRFP (Indonesia) can be read as confirmation that panels will resist attempts to bridge these structural gaps by importing the general law of state responsibility into the SCM Agreement’s attribution rules. Public international law scholarship had already cautioned that WTO covered agreements are treaty‑specific instruments to "facilitate trade relations and no further", and that extending WTO subsidy disciplines to outward investment promotion measures through state‑responsibility analogies would be difficult to square with their text and object and purpose. The panel’s rejection of an inducement‑/adoption‑based attribution theory fits that cautionary line and limits the scope for reading cross‑border subsidies into Article 1.1(a)(1) by interpretative fiat.​

5.3 Collision risks and coordination clauses

Scholars are divided on how far the Foreign Subsidy Regulation can be reconciled with WTO law if the EU uses it in areas where the SCM Agreement already provides a complete remedial framework. Some argue that, where a foreign financial contribution amounts to a subsidy to goods covered by the SCM Agreement, acting under the FSR instead of – or in addition to – the Basic Anti‑Subsidy Regulation may place the EU “on a collision course” with its WTO obligations, notwithstanding the FSR’s internal clause that purports to give priority to WTO law in cases of overlap. Others view that conflict‑of‑laws clause, together with the FSR’s focus on distortions to the internal market rather than import volumes, as creating enough conceptual distance to keep the two regimes formally distinct, while admitting that litigation risks remain high and will ultimately depend on how the Commission exercises its new powers.​

A further question raised in the literature is how WTO adjudicators might characterise FSR‑based measures if they were challenged: as countervailing measures subject to the disciplines of the SCM Agreement and Article VI GATT, as internal measures under Article III GATT, or as sui generis regulatory instruments with both trade‑remedy and competition‑law features. The panel's rationale in EU — CVD/AD on SSCRFP (Indonesia) adds another layer to that debate by underlining that any WTO review of FSR‑type measures will be constrained by the closed definition of “financial contribution” and by the reluctance of panels to use general international law to expand the personal and territorial reach of WTO subsidy disciplines.

6. Procedural status of the panel report

The panel report in EU — CVD/AD on SSCRFP (Indonesia) was circulated on 2 October 2025. On 21 November 2025, the European Union notified an appeal under Article 16.4 of the DSU to the (currently non‑functioning) Appellate Body. Indonesia is not a participant in the Multi‑Party Interim Appeal Arbitration Arrangement (MPIA), and the parties did not agree on any alternative appeal arbitration procedure.​

As a result, the appeal cannot presently be heard, and the panel report has not been adopted by the Dispute Settlement Body. In DSU terms, this means the report has no binding legal effect between the parties at this stage. Nonetheless, given the novelty and systemic importance of the issues addressed, the panel’s reasoning on Article 1.1(a)(1) and attribution is likely to be treated as a relevant interpretative reference by future panels, third parties, and investigating authorities confronting similar questions on cross‑border subsidies.

7. How De Minimis Law can assist

De Minimis Law advises on trade remedies and subsidy control across WTO and domestic regimes. In light of the panel report in EU — CVD/AD on SSCRFP (Indonesia), clients may wish to:

• assess how existing or planned support measures, investment structures, or supply chains could be characterised under Article 1.1(a)(1) SCM;

• evaluate exposure in ongoing or potential EU and UK trade remedy proceedings where cross‑border elements are present; and

• coordinate WTO‑consistent strategies with compliance under the EU Foreign Subsidies Regulation, EU State aid rules (where applicable), and the UK Subsidy Control Act.

The firm supports both advisory and contentious work, including representation in WTO dispute settlement and in administrative and judicial review of trade and subsidy decisions in Brussels, London, and other key jurisdictions.

Disclaimer: This article is provided for information purposes only and does not constitute legal advice. Specific advice should always be sought in light of the relevant facts and jurisdictions.

8. Resources

• WTO Panel Report, European Union — Countervailing and Anti-Dumping Duties on Stainless Steel Cold-Rolled Flat Products from Indonesia (DS616) (available here).

• Commission Implementing Regulation (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia (hereafter "Countervailing Regulation") (available here)

• Malte Frank, 'The EU’s new Foreign Subsidy Regulation on collision course with the WTO', (2023), 60, Common Market Law Review, Issue 4, pp. 925-958

• Marios Tokas, 'Playing the Game: The EU’s Proposed Regulation on Foreign Subsidies', (2022), 56, Journal of World Trade, Issue 5, pp. 779-802

• Vassilis Akritidis, Jean Baptiste Blancardi, 'Analysis Of The Foreign Subsidies Regulation From An International Trade Law Perspective On Trade In Goods', (2023), 18, Global Trade and Customs Journal, Issue 10, pp. 380-383