G/SG/N/8/IDN/4/Suppl.3  
G/SG/N/10/IDN/4/Suppl.3  
 
20 March 2014  
(14-1749)  Page: 1/5  
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  
(Cotton Yarn Other Than Sewing Thread) 
Supplement 
The following communication, dated 18 March 2014, is being circulated 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 referre d as "GOI", hereby notifies the Committee on 
Safeguards on the investigation findings concer ning the extension of safeguard measure against 
the importation of Cotton Yarn Other than Sewing Thread. 
 A. GENERAL BACKGROUND 
 
1. The KPPI hereinafter referred as the "Investigating Authority", received an application from 
The Indonesian Textile Industries Association ( Asosiasi Pertekstilan Indonesia /API), hereinafter 
referred as the "Applicant", requesting for the ex tension of safeguard measure on the importation 
of the Subject Goods, which necessary to prevent se rious injury and that the domestic industry is 
still adjusting.  
The Investigating Authority initiated a safeguard investigation against importation of Subject 
Goods on 15 January 2014 (as announced in "Bisnis Indonesia" daily newspaper), and was notified to the WTO which had been circulated on 17 January 2014 (G/SG/N/6/IDN/11/Suppl.1).  
2. Major Proportion 
 Based on data and information submitted by the A pplicant, the total production of the Applicant 
representing a major proportion of the total domestic production of the Subject Goods in 
Indonesia.  
3. Views and Comments by Interested Parties 
 In accordance with the Article 3.1 WTO Agreement on Safeguards, during the said investigatory proceeding, the Investigating Authority has provided  sufficient opportunities to Interested Parties 
to submit their views, evidences,  and responses. In light of the aforementioned, a public hearing 
was also conducted on 14 February 2014, in orde r to meet the requirement of transparency and 
procedural due process. During the public hearing, the Interested Parties, as invited, were given 
the same opportunities to address their evidences and views. G/SG/N/8/IDN/4/Suppl.3 • G/SG/N/10/IDN/4/Suppl.3 
 
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  4. The WTO document referring to the noti fication of initial application of the 
measure  G/SG/N/10/IDN/4/Suppl.2-G/SG/N/11/IDN/9, dated 21 June 2011. 
 
5. Precise description of the product involved.  
Referring to the notification made in accordance with Article 7.2 and Article 12.1(a) as circulated in 
document number G/SG/N/6/IDN/11/Suppl.1, and in light of the notification made in accordance 
Article 12.1(c) as circulated in document G/SG/N/10/IDN/4/Suppl.2-G/SG/N/11/IDN/9, the Subject Goods under investigation is Cotton Yarn Other Than Sewing Thread under HS Codes 5205 
and 5206: 
Table 1: Subject Goods 
HS Code Description 
5205 Cotton yarn (other than sewing thread), containing 85% or more by weight of cotton, not 
pit up for retail sale. 
5206 Cotton yarn (other than sewing thread), co ntaining less than 85% by weight of cotton, 
not put up for retail sale. 
Source:  Indonesia Customs Tariff Book 
 
6. Period of Investigation  The period of investigation are 2010 to 2013 (January-June). 
 
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 2: Volume of Imports 
Description Year Growth (%) Trend  
10-12  
(%) 2010 2011 2012 2012 
(Jan-
Jun) 2013 
(Jan-
Jun) 10-
11 11-
12 12-13 
(Jan-Jun) 
Imports 
(Ton) 18,960 15,302 24,038 12,264 16,017 (19) 57 31 13 
Source: Indonesian Statistic 
 
As shown in Table 2, it is verified that:  
1) The volume of imports increased in 2010 to 20 12 with trends of 13%. Although there was a 
decreased by 19% from 2010 to 2011, but there was an increase in volume of imports by 
57% in 2012 compared to 2011. 
2) Safeguard measure on Subject Good has been imposed since 6 June 2011 and effective up 
to 5 June 2014, but increased in import still occured from 2011 to 2012 by 8,736 tons or 
57% and also in the period of January-June 2012 compared to January-June 2013 by 3,808 or 31%. As a result of such an increased in import, the domestic industry had not 
fully recovered from financial losses and may threaten the sustainability of the domestic 
industry. 
2. Evidence of serious injury or thre at 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 conducted on-site verifications to the domestic industry. The foll owing table 3 and table 4, contained data and 
information of the situation of the domestic industry, which is provided in indices. G/SG/N/8/IDN/4/Suppl.3 • G/SG/N/10/IDN/4/Suppl.3 
 
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  Table 3: National Consumption and Market Share 
No. Description Unit Year 
2010 2011 2012 2012 
(Jan-Jun) 2013 
(Jan-Jun)  
1. Market Share of 
Imports Index 100 92 112 100 110 
2. Market Share of the 
Applicant Index 100 113 111 100 94 
3. National 
Consumption Index 100 87 113 100 119 
4. Domestic Sales Index 100 99 126 100 112 
Source: As verified by the Investigating Authority 
 
Although the domestic sales experienced an increase  in trend during the period of investigation, 
yet the Applicant's market share decreased from 113 points in 2012 to 111 points in 2011. 
Furthermore, in the period of January-June 2012 compared to the same period in 2013, the 
Applicant's domestic sales remain increased but the Applicant's market share decreased from 100 points to 94 points.  
From 2011 to 2012, when the Applicant’s market sh are decreased from 113 points to 111 points, 
the market share of imports had increased from 92 points to 112 points. In line with the changes 
in 2011 to 2012, in the period of January-June 2012 to January-June 2013 the Applicant's market share decreased from 100 points to 94 points, wh ile the market share of imports increased from 
100 points to 110 points. From the analysis above, it can be concluded that the Applicant's market 
share could not be increased due to import. 
Table 4: The Applicant’s Indicators of Injury 
No. Description Unit Year Trend 
10-12 
(%) 2010 2011 2012 2012 
(Jan-
Jun) 2013 
(Jan-Jun) 
1. Production Index 100 86 100 100 120 (0.1) 
2. Domestic Sales Index 100 99 126 100 112 12.1 
3. Production 
Capacity Index 100 100 102 100 100 1.2 
4. Capacity 
Utilization Index 100 86 97 N/A N/A (1.3) 
5. Profit and Losses Index (100) (177) (241) (100) (79) (81.8) 
6. Productivity to 
Target of 
Productivity % 81 73 91 N/A N/A 6.0 
7. Employment Index 100 96 89 100 99 (5.7) 
8. Inventory Index 100 135 51 100 98 4.4 
9. Cost of Production Index 100 123 119 122 116 9.3 
10. Selling price Index 84 103 100 102 97 2.9 
Source: As verified by the Investigating Authority 
 
1) From 2010 to 2012 the Applicant's Production has decreased with the trend of 0.1%. Due to 
existence of increased in consumption during  the same period, then the decreased in 
production is inversely proportional to the volume of imports which has increased with the 
trend of 13%. 
2) In the period of January to June 2012-2013 production increased from 100 to 120. 
Furthermore, in the same period the volume of imports experienced a higher increased by 
31%. During the period of 2010 to 2012 the ca pacity utilization was always below the G/SG/N/8/IDN/4/Suppl.3 • G/SG/N/10/IDN/4/Suppl.3 
 
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  normal average of capacity utilization, so it can be concluded that the capacity utilization 
could not be optimalized. 
3) During the period of 2010-2012, the Applicant suffered financial losses every year with a 
negative trend. As a result of the significan t losses, the Applicant performed efficiency by 
reducing the employment with the trend of decr ease by 5.7% over the same period, so the 
target of production could not be achieved, which in turn lower the productivity of the Applicant which was also under the target of productivity. 
4) In 2010 to 2011 when the selling price increased, the domestic sales volume has decreased 
which resulted in increased inventory. Furthermore, from 2011 to 2012 selling price decreased and sales volume increased, which lead to decreasing inventory. 
5) During 2010-2012, desp ite the selling price likely to incr ease, but the Applicant had suffered 
financial losses during the period of investigation with a declining trend. This was 
happened because the increased in cost of production during the period of investigation is not proportional to the increased in the selling price. 
6) Furthermore, in the period of January-June 2012-2013, although the cost of production has 
decreased and the Selling price has increased,  but the applicant was still experiencing 
financial losses because the Applicant still selling Subject Good below the cost of 
production. 
3. Evidence that the Applicant is adjusting 
 During the imposition of the initial safeguard measure the Applicant has undertaken the following 
adjustment program: 
 
1) Machinery 
 
The Applicant has done the modernization by replacing old machines with new machines that aims to: 
 Efficiency in energy use by using alternative energy other than electricity, such as gas 
or coal; 
 Minimize residual materials in the production process. 
Since the imposition of a safeguard measure, the Applicant is able to reach around 64% of the 
renewing machine’s plan target. 
2) Human Resources 
 
Besides machines modernization, the Applicant try to improve efficiency by improving the 
workforce competency. This improvement of workfo rce competency is built through training which 
would increase the productivity of companies in general. From this effort, The Applicant could 
reach productivity by 91% of the productivity target 2012. 
3) Quality Control and Packaging Facilities 
 In the effort to improve the product’s quality,  the Applicant has improved the quality control 
management system by reducing the amount of defective/ damaged product. 
Furthermore, the Applicant is also improving packaging facilities to comply with international 
standards by using carton box packaging (international standards) instead of originally by the Pack 
sack to reduce the number of damaged or defective goods during the distribution. 
4. Causal link 
 
1) While the safeguard measure on the importation of the Subject Goods was imposed during 
the investigation period, however the import volume showed an increasing trend, and the G/SG/N/8/IDN/4/Suppl.3 • G/SG/N/10/IDN/4/Suppl.3 
 
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  domestic industry has yet to recover from the condition of serious injury as incurred before 
the imposition of the said safeguard measure. 
2) In line with the increasing trend of import volume of the Subject Goods during the 
investigation period, the market share of import remained high in 2012 and in the same 
year the Applicant’s market share has been decreased. Furthermore, in the period of 
January-June 2012 to the period of January –June 2013 the market share of imports 
continued to increase and the Applicant’s market share keeps declining. 
3) In its effort to maintain their market share, the Applicant had been forced to sell its product 
at prices below the reasonable cost of production, which cause significant financial losses in 2010 to 2012, and during the period of January-June 2013.  
4) Even though the Applicant was able to regain  some of the market share in 2011, but this 
increase in market share proven to be temporary because in 2012 the Applicant’s market 
share stumbled back below the level of market share in 2011.  
5) Based on the aforementioned, during the investigation period there has been clearly a 
strong correlation between the increasing tren d of import volume of the Subject Goods and 
the Applicant’s failed effort to recover from financial losses. For this reason, the Investigating Authority concludes that the expiry of the safeguard measure would likely 
result in further increases in import volume of the Subject Goods, which in turn would 
impede altogether the recovery progress of the domestic industry from financial losses and threaten the sustainability of Applicant's perf ormance that would lead to a serious injury. 
5. Evidence that the safeguard measure co ntinues to be necessary to prevent or 
remedy serious injury. 
 Albeit the relevant safeguard measure on the importation of the Subject Goods has had been 
imposed from 6 June 2011 to 5 June 2014, the Applicant has not fully recovered from serious 
injury. Therefore, if the safeguard measure were not extended, it may trigger a sudden and sharp 
increase in import volume of the Subject Goods, which in turn would bring the Applicant back to 
the unfavorable condition before the imposition of safeguard measures in 2011. Consequently, the 
ongoing adjustment undertaking by the Applicant may be disturbed and all relevant achievements to strengthen the Applicant’s competitiven ess would be also affected negatively. 
 
Based on the abovementioned, the Investigating Authority concluded that the relevant safeguard 
measure needs to be extended, in particular to prevent or to remedy the recurrence of serious 
injury suffered by the Applicant. The extension of such Safeguard measure will also give the 
Applicant opportunity to continue and to complete the ongoing adjustment program in order to 
improve the competitiveness of domestic industry vis a vis cheaper imported like products. 
C. NOTIFICATION OF A PROPOSAL TO EXTEND A MEASURE 
 
1. Proposed date of introduction of the measure  In view of the section B above, and taking into account the initial measure as previously imposed, 
the Investigating Authority has proposed to extend the imposition of the safeguard measure on the 
importation of the Subject Goods.  
The proposed safeguard measure to be imposed is now being circulated for inputs from relevant 
government agencies, and will be elaborated in the notification under the Article 12.1(c) of the WTO Agreement on Safeguards.  
 
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. 
 
THE INDONESIAN 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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