G/SG/N/8/IDN/17
G/SG/N/10/IDN/17
14 October 2014
(14-5867)  Page: 1/8
 Committee on Safeguards  Original: English
 
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON  
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT  
THEREOF CAUSED BY INCREASED IMPORTS 
 
NOTIFICATION OF A PROPOSAL TO IMPOSE A MEASURE 
INDONESIA  
(I and H Sections of Other Alloy Steel  
Under HS. Codes 7228.70.10.00 and 7228.70.90.00) 
The following communication, dated 10 October 2014, is being circulated at the request of the 
Delegation of Indonesia 
 
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1  GENERAL BACKGROUND 
1. On 15 January 2014, the KPPI hereinafter referred as the "Investigating Authority", received 
an application from PT. Gunung Garuda, hereinafte r referred as the "Applicant", requesting for the 
imposition of a safeguard measure on the such increased importation of "I and H Sections of Other Alloy Steel" under Harmonized System (HS.) Codes 7228.70.10.00 and 7228.70.90.00, claimed to be the cause of injury as incurred by the Applicant. 
 
Based on the examination of the above mentioned application, the Investigating Authority initiated an investigation on 12 February 2014, which was a nnounced in the Ministry of Trade website. The 
said initiation was notified in the WTO document G/SG/N/6/IDN/25, circulated on 
13 February 2014.  
2. Subject Good 
 
a. I Section with a height or a width of 100 mm up to 600 mm, and H Section with  
a height of 100 mm up to 350 mm, of other alloy steel, not further worked than hot-
rolled, hot-drawn or extruded, under HS. Code 7228.70.10.00; 
b. I Section with a height or a width of 100 mm up to 600 mm, and H Section with  
a height of 100 mm up to 350 mm, of other alloy steel, under HS. Code 7228.70.90.00, 
excluding: 
• I Section and H Section, of other alloy steel, cold-rolled; and 
• I Section with a height or a width of 100 mm up to 600 mm, and H Section with a 
height of 100 mm up to 350 mm, of other alloy steel, not further worked than 
hot-rolled, hot-drawn or extruded. 
3. Period of Investigation 
 
The period of investigation covers 2010-2013. 
 G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  4. Major Proportion 
 The Applicant constitutes a major proportion of the total domestic production, which is 91%.  
5. Views and Comments by Interested Parties 
 
In accordance with the Article 3.1 WTO Agreement on Safeguards, during the said process of 
investigation, the Investigating Authority has provided opportunities for interested parties to 
submit their views, evidences, comments, and resp onses concerning the investigation. In light of 
the aforementioned, a public hearing was also conducted on 21 March 2014, in order to meet the 
requirement of transparency and procedural due proc ess. During the public hearing, the interested 
parties, as invited, were given the same opportunities to address their evidences and views. 
 2  DATA OF IMPORTS 
1. Increased In Imports 
 
a. Absolute Increased of Imports 
Table 1: Volume of Imports 
 
Description Unit 2010 2011 2012 2013 
Volume of Imports Ton 20,331 104,083 348,477 395,814 
Growth %  412 235 14 
Trend % 175 
Source: Indonesian Statistics/ Badan Pusat Statistik  (BPS) 
 
As shown in table 1, there was a significant incr eased of the volume of imports of the Subject 
Good in absolute terms, where the imports increa sed with the trend of 175%. The surge in imports 
occurred significantly in 2011 by 412%, from 20.331 tons in 2010 to 104,083 tons in 2011. In 
subsequent years, there also been a significant surge in imports by 235% and 14% respectively. 
 
b. Imports Relative to Domestic Production 
Table 2: Imports Relative to Domestic Production 
 
Description Unit 2010 2011 2012 2013 
Volume of Imports Ton 20,331 104,083 348,477 395,814 
Domestic Production Indices 100 109 133 113 
Imports Relative to 
Domestic Production Indices 100 468 1,282 1,705 
Trend of Imports Relative to 
Domestic Production (%) 160 
Source: Indonesian Statistics/ Badan Pusat Statistik  (BPS), Applicant, and processed. 
 
As shown in table 2, during the period of inve stigation the volume of imported Subject Good 
increased in relative term with the trend of 160%.   G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  2. Market Share 
 
Table 3: Market Share 
 
Subject Unit Year 
Trend (%)2010 2011 2012 2013 
Market Share of 
Imported Subject Good Indices 100 129 190 218 31 
Market Share of 
The Applicant Indices 100 95 77 71 (12) 
Source: Indonesian Statistics/ Badan Pusat Statistik  (BPS), Applicant, and processed. 
 
As affirmed in table 3, the market share of impo rted Subject Good showed an increased with the 
trend of 6%, whereas the market share of the Applicant showed a decreased with the trend 
of 12%.  3. Share of Main Exporters 
 
Table 4: Share of Main Exporters 
 
Countries Share of Import 2010 (%) Share of Import 2013 (%) 
People's Republic of China 59.78 96.62 
Singapore 36.55 0.96 
Total 96.33 97.58 
Source: Indonesian Statistics/ Badan Pusat Statistik  (BPS), and processed. 
 
Based on table 4, the total market share of  the two main exporters in 2010 was 96.33% and 
in 2013 the market share was increased to 97.58%. The highest increased in share is from the 
People's Republic of China (PRC) which has increased significantly from 59.78% to 96.62%. On the contrary, the market share of imports from Si ngapore has decreased from 36.55% to 0.96%. 
 
3  EVIDENCE OF SERIOUS INJURY 
The Investigating Authority examined all data and information available having a bearing on the 
actual condition of the Applicant. The Investigating Authority also conducted on-site verifications to 
the Applicant.  
 
Table 5: Applicant Performance Indicator: National Consumption, Volume of Imports, 
Market Share of Imported Subject Good , and Market Share of the Applicant 
 
No. Subject Unit Year Trend 
(%) 2010 2011 2012 2013 
1. National Consumption Indices 100 124 169 167 20
2. Volume of Imports Ton 20,331 104,083 348,477 395,814 175
3. Market Share of 
the Applicant Indices 100 95 77 71 (12)
4. Market Share of 
the Non-Applicant Indices 100 73 57 40 (26)
5. Market Share of 
imported Subject Good Indices 100 129 190 218 31
Source: Indonesian Statistics/ Badan Pusat Statistik  (BPS), Applicant, and processed. 
 
1. During the investigation period, the national consumption of I and H Section experienced an increased with the trend of 20%. The increased in national consumption occurred significantly 
in 2012 by 45 points, although in 2013 has decrease d slightly by 2 points if compared with the 
previous year. On the other hand, imports of Su bject Good experienced an increased with the G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  trend of 175% during the period of investigatio n, which means increased in imports of Subject 
Good are much larger if compared with the increased in the national consumption. During the same period, the market share of imports increa sed with the trend of 31%, while the applicant's 
market share decreased with the trend of 12%, thereby the non-applicant's market share also 
decreased with the trend of 26%. This showed th at increased in the national consumption could 
not be utilized by the domestic producers to increase their sales.  
Table 6: National Consumption, Production, Domestic Sales, and Applicant's Market Share 
 
Unit: Indices  
No. Subject Year Trend 
(%) 2010 2011 2012 2013 
1. National Consumption 100 124 169 167 20 
2. Production 100 111 138 120 8 
3. Domestic Sales 100 118 131 118 6 
4. Market Share of The 
Applicant 100 95 77 71 (12) 
Source: As verified by KPPI. 
 
2. As shown in table 6, the increased in production during the investigation period carried out 
in line with the efforts of the Applicant to im prove domestic sales due to the increase in the 
national consumption. In the same period, domest ic sales increased with the trend of 6%, but the 
Applicant's market share experienced decreased with the trend of 12%. This happened because 
the increase in the national consumption is  filled with the imported subject goods. 
 
Table 7: Profit/Loss 
Unit: Indices  
Subject Year 
2010 2011 2012 2013 
Profit/Loss (100) 234 356 (383) 
Source: As verified by KPPI. 
 
3. As shown in table 7, the Applicant suffered the greatest losses in 2013 by (383) points, because the applicant was forced to sell below the cost of production in order to compete with 
imported subject good's prices. 
 
Table 8: Applicant's Selling Price, Cost of Production, and Import's Price 
 
Unit: Indices  
No. Subject Year 
Trend (%) 2010 2011 2012 2013 
1. Applicant's Selling Price 100 119 121 111 3 
2. Cost of Production  99 112 111 115 4 
3. Imported Subject Good's 
Price 116 112 94 101 (6) 
Source: As verified by KPPI. 
 
4. Based on table 8, during the investigation period, the Applicant's selling price continues to 
increase with the trend of 3% due to higher cost of production with the trend of 4%. At the same 
time, the imported subject good's price has de creased with the trend of 6%. Although the 
Applicant selling a higher price than the imported  subject good's price in 2013, but the Applicant 
was forced to sell below the cost of production due to the pressures of the cheaper imported subject good's price. 
 G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  Table 9: Employment, Productivity, and Target of Productivity 
 
Unit: Indices  
No. Subject Year 
Trend (%) 2010 2011 2012 2013 
1. Employment 100 108 138 102 3 
2. Productivity 100 103 101 118 5 
3. Target of Productivity 106 111 99 153 11 
Source: As verified by KPPI. 
 
5. Due to huge losses in 2013, the Applicant did ef ficiency by reducing the employment by 36 
points from the previous year as shown in Table 9. The reduction in the employment in 2013 led to 
an increase in productivity by 17 points from  101 points in 2012 to 118 points in 2013, but the 
rate of productivity in 2013 was still far from the target of productivity which was 153 points. 
 
Table 10: Inventory, Production, and Market Share 
 
Unit: Indices 
No. Subject Year Trend 
(%) 2010 2011 2012 2013 
1. Inventory 100 61 168 201 36 
2. Production 100 111 138 120 8 
3. Market Share of The Applicant 100 95 77 71 (12) 
4. Market Share of Imported 
Subject Good 100 129 190 218 31 
Source: As verified by KPPI. 
 
6. As shown in table 10, the Applicant's inventory has increased with the trend of 36% over the investigation period. The inventory increased because the production process cannot be sold entirely due to the Applicant's market share that has been eroded by the market share of imported 
subject good. 
 
Table 11: Installed Capacity, Production Ta rget, Production, and Capacity Utilization 
 
Unit: Indices 
No. Subject Year Trend 
(%) 2010 2011 2012 2013 
1. Installed Capacity 100 100 100 100 - 
2. Production Target 106 119 136 157 14 
3. Production 100 111 138 120 8 
4. Capacity Utilization 100 111 139 121 8 
Source: As verified by KPPI. 
 
7. As shown in table 11, during the investigat ion period, there is no additional installed 
capacity undertaken by the Applicant. Production during the 2010 to 2012 has increased, but 
in 2013 has decreased by 18 points compared to the previous year. Applicant's target of 
production cannot be achieved except in 2012. This is because of the cost of production during the 
years have increased, while in 2012 target of production may be exceeded due to a decline in the 
cost of production. On the other hand, the selling price of imported subject good during the 
investigation period decreased with the trend of  6%, and in 2012 and 2013 the price of imported 
subject good was below the cost of production, so that in 2013 the applicant was forced to make an adjustment to sell their goods below the cost of production, which in turn causing a serious 
injury. In general, Applicant's production increased with the trend of 8%, however, the increase is 
still not able to meet its production target except in 2012.  G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  4  UNFORESEEN DEVELOPMENT 
PRC is the world's largest steel producer with a production volume of 779 million tons in the 
year 2013. Meanwhile, Japan is the second larges t producer with production volume amounted 
to 110.6 million tons. Hence, the PRC has potential to remain as a country with the world's largest 
supplier of steel production with the trend which continues to increase.  
 With the high volume of PRC's steel production  and also shadowed by increased inventories, 
increased production capacity, and declining capacity  utilization in the PRC. This resulted that the 
PRC looks for overseas markets to reduce the supply of steel in the domestic market.  At the same time, in the year 2010-2013 the largest importing countries of section steel 
experienced a shifting due to the economic slow down. The importation of steel section which was 
originally dominated by a few countries in the Americas and Europe turn to be dominated by several countries in Asia, which one of them is Indonesia. This can be seen in alteration of the 
position of the largest importing countries of section steel in 2010 that Indonesia was still in eighth 
position, then in 2013 Indonesia already ranked in the first position as the biggest importer of steel section.  
 
As a result of increased in production capacity and production volume in the PRC, which is oversupply in their domestic market, causing PRC to  seek overseas markets, including Indonesia. 
This led to a surge in imports of I and H Section of Other Alloy Steel in Indonesia, which is cannot 
be foreseen. 
 5  OTHER FACTORS THAT MAY CONTRIBUTE TO INJURY 
In order to find whether there are other factors existed to cause or threaten to cause serious 
injury to the Applicant other than the increased volume of imported Subject Good, the Investigating Authority has also analyzed the following known factors: 
 
1. The Impact of Export Sales  From the results of the verification, the Applicant is also known to export their sales during the 
period 2010-2013, as shown in the table below. 
 
Table 12: Domestic Sales and Export Sales 
 
Unit: % 
No. Description  Year 
2010  2011  2012  2013 
1. Domestic Sales  96 94 99 99 
2. Export Sales  4 6 1 1 
3. Total Sales 100 100 100 100 
Source: As verified by KPPI. 
 
The table shows that export sales during the period of investigation was rather small, which was 
only about 1% to 6% of the total sales during the years. It can be concluded that the injury suffered by the Applicant is not caused by the export sales.  G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  2. Impact of Competition with the Other Domestic Industry 
 
Table 13: Share of Imported Subject Good, Sh are of Applicant, Share of Non-Applicant 
 
Unit: Indices 
No. Description  Year 
2010  2011  2012  2013 
1. Share of Imported Subject Good 100 129 190 218 
2. Share of Applicant 100 95 77 71 
3. Share of Non-Applicant 100 73 57 40 
Source: BPS Statistics Indonesia, Appl icant, Non-Applicant, and processed 
 
As seen in the table above, it is clear that the share of both Applicant and Non-Applicant has 
decreased while the share of imports continued to increase during the investigation period. This is proved that the competition between the Applicant and the Non-applicant is not causing the injury 
suffered by the Applicant. 
 3. Quality 
 
The Applicant produces goods which is directly competitive with the Subject Good which based on same standard quality such as Indonesian National Standard (SNI) and the Japan International Standard (JIS). Thus, the domestic products are able to compete with imported products in terms 
of quality, because it is in conformity with standards that are recognized nationally and 
internationally.  
Based on the aforesaid findings, the Investigating Au thority is of the view that there are no other 
factors contributing to the serious injury as suffe red by the Applicant, beside the increased volume 
of imports of the Subject Good. 
 
6  STRUCTURAL ADJUSMENT 
The Applicant's structural adjustments are as follows: 
 1. Reducing Cost of production by selling exis ting inventory in the warehouse, maximizing the 
capacity utilization by optimizing all of production line, and installing new production capacity when 
the current production line already have reached the maximum level of utilization.  
2. Increasing sales by cooperating with logistic companies to facilitate the delivery of goods to 
customer, opening the new marketing office, and discount for purchases in a certain amount. Therefore, production goods as mentioned above can be absorbed by the domestic market. 
 
7  CAUSAL LINK 
In accordance with the findings as duly elaborated in Sections 3 and 5, the Investigating Authority 
concluded that there is a strong evidence of a ca usal link between the increased volume of imports 
of the Subject Good and the serious injury suffered by the Applicant. 
 1. There is a surge increased in imports both in absolute or relative term during the 
investigation period. 
 2. Trend of national consumption has increased during the period of investigation, but it could 
not be optimized by the Applicant. In fact, the tr end of the Applicant's market share was declining 
due to the Applicant's market share eroded by imports.  3. Due to a surge increased in imports, there has been a decline in domestic sales, which also 
resulted in decreased production and increased inventories. This resulted in a decrease in the 
Applicant's market share in national consumption.  G/SG/N/8/IDN/17 • G/SG/N/10/IDN/17 
 
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  4. The decline in domestic sales and in the Applicant's market share caused the Applicant 
suffered significant financial losses in 2013, which forcing the Applicant to reduce the number of their employees.  
5. There were Price Undercutting, Price Depre ssion, and Price Suppression experienced by the 
Applicant as a result of the surge increased in imports.  
Table 14: Price Undercutting 
 
Unit: Indices 
No. Description Year 
2010 2011 2012 2013 
1. Imported Subject Good's Price 100 97 81 87 
2. Applicant's Selling Price  86 103 104 96 
3. Price Undercutting  14 (6) (23) (9) 
Source: BPS Statistics Indonesi a, Applicant, and processed. 
 
In the period of 2011 to 2013 the price of imports has always been under the Applicant's selling price. Import prices continued to experience a significant decline from 2010 to 2013 with the trend 
of 6%, and import prices are still far below the Applicant's selling price, except in 2010. 
 
Table 15: Price Depression and Price Suppression 
Unit: Indices 
No. Description Year 
2010 2011 2012 2013 
1. Imported Subject Good's Price 116 112 94 101 
2. Applicant's Selling Price 100 119 121 111 
3. Cost of Production 99 112 111 115 
Source: Applicant, and processed. 
 
In 2013 the Applicant's selling price was under pressure of import prices which makes the selling 
price fell by 8 points, so it can be concluded th at the Applicant experienced a price depression 
during the year. In the same year, the Applicant also experienced Price Suppression which led the 
Applicant to sell goods below the cost of production. 
 
8  PROPOSED MEASURE 
1. In view of the aforementioned conclusion of  the Causal Link, the Investigating Authority has 
proposed to the Government of the Republic of Indonesia a Safeguard Measure to be imposed on 
the importation of the Subject Good for a period of three years.  
2. The imposition of the Safeguard Measure will be carried out in accordance with the 
Article 2.2 and Article 9 of the WTO Agreement on Safeguards.  3. Pursuant to Article 12.3 of the WTO Agreement on Safeguards, Indonesia is prepared to 
consult with those Members having a substantial interest as exporters of the products concerned. 
  
THE INDONESIAN SAFEGUARD COMMITTEE 
(Komite Pengamanan Perdagangan Indonesia/KPPI) 
Jl. M.I. Ridwan Rais No. 5, Building I, 5
th floor, Jakarta 10110 
Telephone/Facsimile: (+62-21) 385 7758 
Email: kppi@kemendag.go.id  
 
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