WORLD TRADE WT/DS54/6
13May1997
ORGANIZATION(97-2071)
Original: English
INDONESIA -CERTAIN MEASURES AFFECTING THE
AUTOMOBILE INDUSTRY
Request fortheEstablishment ofaPanel bytheEuropean Communities
Thefollowing communication, dated 12May1997, from thePermanent Delegation ofthe
European Commission totheChairman oftheDispute Settlement Body, iscirculated attherequest
ofthatdelegation.
_______________
On3October 1996, theEuropean Communities requested consultations withIndonesia pursuant
toArticle 4oftheUnderstanding onRules andProcedures Governing theSettlement ofDisputes (DSU),
Article XXII oftheGeneral Agreement onTariffs andTrade 1994(GATT), Article 8oftheAgreement
onTrade Related Investment Measures (TRIMs Agreement) andArticles 7and30oftheAgreement
onSubsidies andCountervailing Measures (SCM Agreement) withrespect tocertain measures affecting
theautomobile industry (WT/DS54/1).
Pursuanttotheabove-mentionedrequest,consultationswereheldinGenevaon6November1996
1996andon5December 1996withaviewtoreaching amutually satisfactory solution. Unfortunately,
these consultations failed tosettle thedispute.
TheEuropean Communities hereby request thataPanel beestablished atthenextmeeting of
theDispute Settlement Body pursuant toArticle 6oftheDSU, Article XXIII:2 ofGATT, Article 8
oftheTRIMs Agreement (totheextent thatitincorporates byreference Article XXIII ofGATT) and
Articles 7.4and30oftheSCM Agreement (totheextent thatArticle 30incorporates byreference
Article XXIII ofGATT).
TheEuropeanCommunitiesfurtherrequestthattheDisputeSettlementBodyinitiatetheprocedure
provided inAnnex VoftheSCM Agreement pursuant topoint 2ofthatAnnex. TheEuropean
Communities reserve therighttoputforward more specific suggestions astotheinformation which
should besought under thisprocedure oncethepanel isestablished andtheGovernment ofIndonesia
hascomplied withtheprovisions ofparagraph 1ofAnnex V.
Themeasures concerned bythisrequest arethefollowing:
(a) import dutyrelief toparts andcomponents usedfortheassembling inIndonesia of
motor vehicles, andparts andcomponents thereof, which meetcertain localcontent
requirements;
(b) exemption ofimport dutyofpartsandcomponents usedfortheassembling inIndonesia
of“national motor vehicles ”by“Pioneer companies ”;WT/DS54/6
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(c) exemption from theLuxury taxofcertain categories ofmotor vehicles which are
assembled inIndonesia and/or comply withcertain localcontent requirements;
(d) exemption fromtheLuxury taxof“national motor vehicles ”assembled inIndonesia
by“Pioneer companies ”;
(e) exemption fromimport dutyof“national motor vehicles ”assembled inthirdcountries
by“Pioneer companies ”;
(f) exemption fromLuxury taxof“national motor vehicles ”assembled inthirdcountries
by“Pioneer companies ”.
Thedecrees andotherregulations through which theGovernment ofIndonesia hasimplemented
theabove measures include, inparticular, theonesspecified intheannex tothisrequest, aswellas
anyprovisions consolidated therein andanyimplementing measures taken thereunder.
TheEuropean Communities consider thattheabove measures areinconsistent withIndonesia ’s
obligations under theGATT andtheTRIMs Agreement. Inparticular, theCommunities claim that:
(i) themeasures described under points (a),(b),(c)and(d)favour theuseand/or purchase
ofdomestic parts andcomponents overimported likeonesandare,forthisreason,
inconsistent withArticle III:4ofGATT aswellaswithArticle 2oftheTRIMs
Agreement inconjunction withItem 1(a)oftheIllustrative ListAnnexed tothat
Agreement;
(ii) themeasures described under points (c),(d)and(f)result intheimposition ofinternal
taxes onimported products inexcess ofthetaxes imposed, directly orindirectly, on
likedomestic products, thereby infringing Article III:2ofGATT;
(iii) themeasures described under points (a),(b),(c)and(f)donotprovide unconditionally
thesame benefits withrespect totheimposition ofimport duties andinternal taxes
tomotor vehicles, andtoparts andcomponents threof, originating intheEuropean
Communities thantolikeproducts originating inother countries andare,therefore,
inconsistent withArticle I:1ofGATT.
TheEuropeanCommunitiesalsoconsiderthattheabovemeasuresconstitute“specificsubsidies”
within themeaning ofArticles 1and2oftheSCM Agreement which cause “serious prejudice ”to
theCommunities ’interests inthesense ofArticle 6ofthatAgreement, inparticular bydisplacing or
impedingimportsofCommunitymotorvehicles,andofpartsandcomponentsthereof,intotheIndonesian
market and/or bycreating significant price undercutting, price suppression, price depression and/or
lossofsalesforCommunity exports inthatmarket.WT/DS54/6
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ANNEX
Decrees andother regulations referred tointherequest fortheestablishment ofaPanel
Decree oftheMinister ofFinance No645/KMK.01/1993
Decree oftheMinistry ofIndustry No114/M/sk/61993
Presidential Instruction No2/1996 dated 19February 1996
Government Regulation No20/1996 dated 19February 1996
Decree oftheMinistry ofIndustry andTrade No31/MPP/SK/2/1996 dated 19February 1996
Government Regulation No.36/1996 dated 4June1996
Presidential Decree No.,42/1996 dated 4June1996
Decree oftheMinistry ofIndustry andTrade No142/MPP/Kep/6/1996 dated 5June1996.