G/SG/N/8/IDN/17/Suppl.2  
G/SG/N/10/IDN/17/Suppl.2  
 
25 October 2017 
(17-5790) Page:  1/6 
Committee on Safeguards  Original: English  
 
 NOTIFICATION UNDER A RTICLE 12.1(B) OF TH E AGREEMENT ON  
SAFEGUARDS ON FINDIN G A SERIOUS INJURY O R THREAT  
THEREOF CAUSED BY IN CREASED IMPORTS  
 
NOTIFICATION OF A PR OPOSAL TO EXTEND  A MEASURE  
INDONESIA  
Supplement  
(I and H Sections of Other Alloy Steel)  
The following communication, dated 19 October 2017, is being ci rculated at the request of the 
Delegation of Indonesia  
 
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Pursuant to Article 7.2 and Article 12.1(b) of the WTO Agreement on Safeguards, the Government 
of the Republic of Indonesia hereinafter referred as " GOI", hereby notifies the Committee on 
Safeguards on the investigation findings concerning the extension of safeguard measure against 
the importation of "I and H Sections of Other Alloy Steel " under HS. Code Ex.  7228.70.10 and 
Ex. 7228.70.90.  
A. GENERAL BACKGROUND  
1. On 20 July 2017, The KPPI hereinafter referred as the "Investigating Authority", received an 
application from  PT. Gunung Garuda , hereinafter referred as the "Applicant", to conduct an 
investigation for the extension of the imposition of safeguard measure on imports of Subject 
Goods product based on the claim that the imposition of the safeguard measure is still necessary 
for the domestic industries to remedy the serious injury suffered by the Applicant. Other known 
domes tic industry, PT. Krakatau Wajatama, through a letter number 098/DU -KW/VII/2017 stating 
that they are fully support the application of the extension of safeguard measure so the domestic 
industry not suffered further injury.  
The Investigating Authority init iated a  safeguard  investigation against importation of Subject 
Goods on 18 August  2017 (as announced in "Bisnis Indonesia"  daily newspaper ), and was notified 
to the WTO which had been  circulated on 25 August  2017 (G/SG/N/6/IDN/25/Suppl.2).  
2. Major Proport ion 
The total production of the Applicant is 92% from total domestic production, representing a major 
proportion of the total domestic production of the Subject Goods in Indonesia.  
3. Evidence and Views  by Interested Parties  
Pursuant to Article 3.1 WTO Ag reement on Safeguards, The Investigating Authority  has held a 
hearing on 19 September 2017 where the interested parties may directly submit evidences and 
views related to the investigation.  G/SG/N/8/IDN/17/Suppl.2 • G/SG/N/10/IDN/17/Suppl.2  
 
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  4. The WTO document referring to the notification of initial appli cation of the measure  
G/SG/N/8/IDN/17 -G/SG/N/10/IDN/17  
5. Precise description of the product involved  
5.1. I Section with a height or a width of 100 mm up to 600 mm, and H Section with height 
100 mm up to 350 mm, of other alloy steel, not further worked than ho t-rolled, hot -drawn, 
or extruded, under HS. Code ex. 7228.70.10; and  
5.2. I Section with a height or a width of 100 mm up to 600 mm, and H Section with height 
100 mm up to 350 mm, of other alloy steel, hot -rolled, hot -drawn, or extruded, and further 
worked, und er HS. Code ex. 7228.70.90 . 
6. Period of Investigation  
The period of investigation is May 2014 – April 2017  
B. NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON SAFEGUARDS ON 
FINDING A SERIOUS INJURY OR THREAT THEREOF CAUSED BY INCREASED 
IMPORTS  
1. Information on absolute increase in imports  
Table 1: Volume of Imports  
Description  Period  
I 
(May 2014 -April 2015)  II 
(May 2015 -April 2016)  III 
(May 2016 -April 2017)  
Quantity (Ton)  111.375  39.581  49.258  
Changes (%)   (64) 24 
Source: Indonesian Statistic.  
As shown in Table 1, it is verified that th e volume of imports decreased by 64% in period II 
(May 2015-April 2016) compared to the previous period. However, in period III (May 2016 -April 
2017) there is an increase by 24% compared to the previous period.  
2. Information on imports relative to the domestic production  
Table 2: Volume of Imports  and Domestic Production  
Description  Unit Period  
I 
(May 2014 - 
April 2015)  II 
(May 2015 - 
April 2016)  III 
(May 2016 - 
April 2017)  
Volume of Imports  Ton 111.375  39.581  49.258  
Domestic  Production  Index  100 112 110 
Imports Relative to Domestic 
Production  Index  100 32 40 
Source: Indonesian Statistic , Verification Result, and processed.  
As determined in Table 2, the imports relative to the domestic production decreased in period II 
(May 2015 - April 2016) after the imposition of safeguard measures by (68) index points. However, 
in period III (May 2016 -April 2017) compared to the previous period, the imports relative to the 
domestic production has increased by 8 index points.   G/SG/N/8/IDN/17/Suppl.2 • G/SG/N/10/IDN/17/Suppl.2  
 
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  3. Evidence of serious injury or threat thereof caused by increased imports  
The Investigating Authority examined all data and information available based on the actual 
condition of the domestic industry. In addition, the Investigating Authority also cond ucted on -site 
verifications to the domestic industry. The following table 3 and table 4, contained data and 
information on the situation of the domestic industry, which is provided in indices.  
Table 3. The Applicant 's Indicators of Injury  
Description  Unit Period  
I 
(May 2014 - 
April 2015)  II 
(May 2015 - 
April 2016)  III 
(May 2016 - 
April 2017)  
Production  Index  100 111 108 
Domestic Sales  Index  100 111 108 
Profit/Loss  Index  (100)  140 87 
Production Capacity  Index  100 100 100 
Utilization Capacity  Index  100 111 108 
Labour  Index  100 105 100 
Productivity  Index  100 106 107 
Inventory  Index  100 105 107 
Source:  Verification result.  
3.1. Production Volume  
From the period I (May 2014 -April 2015) to the period II (May 2015 -April 2016) the production 
volume increase d by 11 index points, meanwhile in the period III (May 2016 -April 2017) the 
production volume decreased by 3 index points. Although the trend of production volume 
increased by 4% from the period I until period III but in the last period, the volume of prod uction 
decreased by 3 index points.  
3.2. Domestic Sales Volume  
From the period I (May 2014 -April 2015) to the period II (May 2015 -April 2016) the domestic 
sales volume increased by 11 index points, meanwhile in the period III (May 2016 -April 2017) the 
dome stic sales volume decreased by 3 index points. Although the trend of domestic sales volume 
increased by 4% from the period I until period III but in the last period, domestic sales volume 
decreased by 3 index points.  
3.3. Profit/Loss  
As stipulated at table  3 above, the Applicant suffered financial losses in the period I, while in the 
period II the Applicant improved their profit along with the imposition of safeguard measures, 
causing an increase of sales and production volume. Moreover, in the period III t he Applicant 's 
profitability decreased by 53 index points, in line with the decreasing volume of production and 
volume of sales in the same period.  
3.4. Production Capacity  
During the investigation period, the Applicant did not increase their capacity prod uction. However, 
as the Applicant 's commitment of structural adjustment in the production process, the Applicant 
has already purchased and installing a beam blank caster machine in order to reducing a 
production failure and increasing output quality.  
3.5. Capacity Utilization  
From the period I (May 2014 -April 2015) to the period II (May 2015 -April 2016) the capacity 
utilization increased by 11 index points, meanwhile in the period III (May 2016 -April 2017) the 
capacity utilization decreased by 3 index point s. Although the trend of the capacity utilization 
increased by 4 percent from the period I until period III, but in the last period the capacity 
utilization decreased by 3 index points.  G/SG/N/8/IDN/17/Suppl.2 • G/SG/N/10/IDN/17/Suppl.2  
 
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  3.6. Labour and Productivity  
From the period I (May 2014 -April 2015) t o the period II (May 2015 -April 2016) the labour 
increased by 5 index points, meanwhile in the period III (May 2016 -April 2017) the labour 
decreased by 5 index points. Although the trend of the capacity utilization remains steady from the 
period I until pe riod III but in the last period the labour decreased by 4 percent. The decline in the 
last period is because of retirement with no replacement, which these conditions resulting an 
increase of productivity in each period.  
3.7. Inventory  
During the period o f investigation, inventory increased each period with the trend of 4% due to the 
production machine that must keep running to producing a multiple size of I & H section product in 
order to minimize production cost, even though there is a buffer stock.  
Table 4. Market Share of the Imports, Market Share of The Applicant and  The Supporter  
Description  Unit Period  
I 
(May 2014 - 
April 2015)  II 
(May 2015 - 
April 2016)  III 
(May 2016 - 
April 2017)  
Market Share of the Imports  Index  100 36 45 
Market Share of the App licant 
and the Supporter  Index  100 118 115 
Source: Verification result and processed.  
3.8. Based on table 4 above, the market share of Applicant and the Supporter decreased 
by 3 index points from period II to period III, meanwhile the market share of impo rt increased 
by 9 index points at the same period.  
4.  Evidence that the Applicant 's is adjusting  
During the imposition of the initial safeguard measure the Applicant 's has undertaken the following 
adjustment programs:  
4.1. Reducing Cost  
a. Inventory  
Due t o the large number of requests for I & H Section products of a certain size where the product 
is not in stock, the production volume is increasing. Therefore the purpose of reducing the 
warehouse cost is still not optimal due to the inventory that actually  increased in each period.  
b. Franco Method  
The Applicant selling their product with the Franco method, in which the Applicant delivers the 
product of I and H Section with the truck to the factory (send to the buyer's warehouse/project 
location), so the pu rchasing cost is cheaper. Franco's method allows buyers to make purchasing 
decisions faster and choose the Applicant as their supplier of I and H Section products. Franco 
method succeeded in increasing the number of buyers, but the increasing sales volume has not 
been optimized. This is because the number of buyers in small tonnage increased compared to the 
buyers with large tonnage.  
c. Cut to Length Method  
The Applicant has made a sale with the cut -to-length method, in which the Applicant makes a sale, 
according to the specified length requested by the buyer (Customized Length). This method 
successfully increased the number of small buyers, but the sales volume is not significantly 
increasing.  G/SG/N/8/IDN/17/Suppl.2 • G/SG/N/10/IDN/17/Suppl.2  
 
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  d. New Marketing Office  
The branch office in Jakarta has been re novated and has been revamped from a merely 
administrative place to a marketing office.  
e. Discount Sales  
The Applicant has given discount since 10 February 2015 to 20 March 2017 for I and H Section 
products. The purpose of the discount is for the buyer to  make transactions continuously in large 
numbers. However, because of the Applicant 's selling price after being given a discount is still 
higher than the import price, then the Applicant does not continue the discount program.  
4.2. Increasing Production:  
a. Reinforcing Production Labour  
Even though the Applicant is still in threat of serious injury, the Applicant doesn't terminate their 
employment or dismissing their production workforce.  
b. Maximizing All Production Lines  
The applicant has maximizing all p roduction lines and increase the production capacity of beam 
blank machine with the installation of new beam blank caster machine in 2015, but not yet optimal 
because it ready to be used in April 2017.  
c. Purchasing and Installing Blasting Furnace Machine  
The demand of the Applicant's I & H Section product during the period I to the period III is still 
below target so that the applicant cannot invest in the blast furnace machine to increase the 
capacity and efficiency of production. However, the Applicant k eep trying to improve production 
efficiency by investing new beam blank caster machine that ready to use in April 2017, but the 
impact still cannot be measurable on the performance of the company. Therefore, the Applicant 
still needs additional time to be able to do structural adjustments to reducing production costs in 
order to compete with imported products.  
5.  Evidence That Safeguard Measure is Still Necessary to Prevent or Remedy Serious Injury or 
Threat of Serious Injury Caused By Imports  
Based on poi nt B.1 to B.4, it can be concluded that:  
5.1. Although safeguards measure has been imposed on the Subject Goods, yet the import 
volume is still increasing in the last period in absolute and relative term and the 
Investigating Authority believes that import  volume will increase significantly if safeguard 
measure is not extended.  
5.2. The Applicant 's indicators of injury indicated that there was a recovery process from serious 
injury which can be seen from the performance improvement in Period I to Period II.  
However, as the volume of imports increased in period II to period III, the Performance of 
the Applicant suffered a threat of serious injury as evidenced by the decline in profits, 
production volume, sales volume, capacity utilization, labor, and increase d inventory 
volume. If the safeguard measure is not extended, the Investigating Authority believes that 
the performance of the Applicant that is currently in threat of serious injury will return to 
serious injury.  
5.3. The Applicant has made several struct ural adjustments, but the applicant still needs 
additional time to complete the structural adjustment optimally. In addition, the Applicant is 
also committed to doing additional structural adjustments if safeguard measure is extended. 
This is necessary so that the Applicant can be more ready to compete with imported goods 
in the future.  G/SG/N/8/IDN/17/Suppl.2 • G/SG/N/10/IDN/17/Suppl.2  
 
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  5.4. Although the Applicant was able to recapture their market share in Period II, this increase in 
market share proved to be temporary because in the Period III the Applica nt's market share 
has eroded by the increased share of imports in the same period.  
5.5. Based on 5.1 to 5.4, during the period of investigation, it has been proved that there is a 
causal link between the increases in import of the Subject Goods with the th reat of serious 
injury suffered by the Applicant. Therefore, the Investigating Authority concludes that if the 
imposition of safeguard measure ends there will be an increase in import volume of the 
Subject Goods, which will hamper the recovery of the Appli cant's performance. This situation 
resulting that the Applicant will suffer serious injury again.  
C. RECOMMENDATION OF THE AMOUNT AND PERIOD OF THE IMPOSITION OF 
SAFEGUARD MEASURE  
Based on point B above, and referring to the previous imposition, the Invest igating Authority 
proposed to extend the imposition of the Safeguard Measure to imports of Product Under 
Investigation with the recommendation of the Safeguard Duty as follows:  
Table 5. Recommendation of the Safeguard Duty  
Period  Safeguard Duty  
Year 1  17.75% 
Year 2  17.50%  
Year 3  17.25%  
D. CONSULTATION  
Referring to Article 12.3 WTO AoS, the Government of Indonesia provides the opportunity for 
consultation to Members with substantial interest i.e. the exporting country of Product Under 
Investigation. Cons ultation will be held within 14 days after the circulation of this notification. 
Members having substantial interest, in requesting for consultation shall notify Investigating 
Authority  at the latest 7 days after the circulation of this notification . 
THE I NDONESIAN SAFEGUARDS COMMITTEE  
(KomitePengamananPerdagangan Indonesia /KPPI)  
Jl. M.I. RidwanRais No. 5, Building I, 5th floor, Jakarta 10110  
Telephone / Facsimile: (62 -21) 385 7758  
E-mail: kppi@kemendag.go.id  
 
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