WORLD TRADE WT/DS59/1
G/L/117
G/TRIMS/D/5
G/SCM/D8/1
IP/D/6
ORGANIZATION 15October 1996
(96-4253)
Original: English
INDONESIA -CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY
Request forConsultations bytheUnited States
Thefollowing communication, dated 8October 1996, fromthePermanent Mission oftheUnited
States tothePermanent Mission ofIndonesia andtheDispute Settlement Bodyiscirculated inaccordance
withArticle 4.4oftheDSU.
_______________
Myauthorities haveinstructed metorequest consultations withtheGovernment ofIndonesia
pursuant toArticles 1and4oftheUnderstanding onRules andProcedures Governing theSettlement
ofDisputes (DSU), Article XXII:1 oftheGeneral Agreement onTariffs andTrade 1994(GATT 1994),
Article 8oftheAgreement onTrade-Related Investment Measures (totheextent itincorporates by
reference Article XXII oftheGATT 1994), Articles 7and30oftheAgreement onSubsidies and
Countervailing Measures (totheextent Article 30incorporates byreference Article XXII oftheGATT
1994), andArticle 64oftheAgreement onTrade-Related Aspects ofIntellectual Property Rights (to
theextent itincorporates byreference Article XXII oftheGATT 1994) regarding certain measures
affecting tradeandinvestment inthemotor vehicle sector implemented byIndonesia through Presidential
Decrees 54/1993 and42/1996, Presidential Instruction 2/1996, numerous ministerial decrees and
government regulations, andother governmental measures.
Themeasures inquestion provide, interalia,forbenefits tomanufacturers ofmotor vehicles
andpartsintheform ofareduction induties ontheirimports ofcertain products andareduction in
orelimination oftaxesonthesaleofmotor vehicles. These benefits areconditional tovarying degrees
oncompliance withdomestic content requirements, localcontent requirements withregard toinputs,
andtheuseofatrademark thatisunique toIndonesia andowned byIndonesians. TheMinister of
Industry andTrade andtheMinister ofFinance aredirected toimplement theprogram through decrees
andregulations inaccordance withthegeneral Presidential mandate.
TheUnited States considers these taxandtariffbenefits tiedtodomestic content tobespecific
subsidies within themeaning ofArticles 1and2oftheAgreement onSubsides andCountervailing
Measures (SCM Agreement). Thetotalsubsidization indicates serious prejudice inaccordance with
Article 6.1(a) oftheSCM Agreement. Inaddition, asaresult ofthese specific subsidies, products
thatbenefit from them arepriced significantly lower thanproducts thatdonotbenefit from them,
thereby impeding thesaleofthenon-subsided products inIndonesia. TheUnited States believes that
these measures cause serious prejudice totheinterests oftheUnited States because theireffect isto
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displace orimpede imports ofmotor vehicles andmotor vehicle partsandcomponents fromtheUnited
States, andtocause significant priceundercutting bythesubsidized products compared withproducts
from another Member inIndonesia.
TheUnited States considers thatthese measures violate theobligations ofIndonesia under
Articles I:1,III:2, III:4, III:5andIII:7oftheGATT 1994; Article 2oftheAgreement onTrade Related
Investment Measures; Article 3,6,and28.2oftheSCM Agreement; andArticles 3,20and65.5
oftheAgreement onTrade-Related Aspects ofIntellectual Property Rights. TheUnited States reserves
therighttoraiseadditional factual matters andlegalclaims during thecourse oftheconsultations.
Welookforward toreceiving yourreply tothisrequest andtofixing amutually acceptable
dateforconsultations.