G/SG/N/8/IDN/18  
G/SG/N/10/IDN/18  
 
5 January 2015  
(15-0014)  Page: 1/9  
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  
(Bars and Rods, Hot-Rolled, in Irregularity Wound Coils, of Iron 
or Non-Alloy Steel or of Other Alloy Steel)  
The following communication, dated 23 December 2014,  is being circulated at the request of the 
Delegation of Indonesia. 
 
_______________ 
 
 
Pursuant to Article 12.1(b) of the WTO Agreement on Safeguards, the Government of the Republic 
of Indonesia, hereinafter referred as "GOI", hereby notifies to the Committee on Safeguards on its 
findings of serious injury or threat thereof caused by the increased imports. 
 1  GENERAL BACKGROUND 
a. Initiation of Investigation 
On 23 December 2013, the Indonesian Safeguards Committee/ Komite Pengamanan Perdagangan 
Indonesia  (the Investigating Authority) received an application from PT. Ispat Indo and PT. 
Krakatau Steel Tbk., hereinafter referred as the "App licant", requesting an initiation of a safeguard 
investigation against importation of "bars and rods, hot-rolled, in irregularity wound coils, of iron 
or non-alloy steel or of other alloy steel under HS Codes 7213.91.10.00, 7213.91.20.00, 7213.91.90.00, 7213.99.10.00, 7213.99.20.00, 7213.99.90.00", and 7227.90.00.00". 
 
Based on the examination of the above-mentioned application, the Investigating Authority initiated an investigation on 17 January 2014. On the same date, the Investigating Authority announced the initiation of the investigation in a national daily newspaper ("Bisnis Indonesia"), and notified to 
the WTO Secretariat, which the document was circulated to the Members on 24 January 2014 
(G/SG/N/6/IDN/24).  
b. Period of Investigation 
The period of investigation covers 2010 to 2013. 
 
c. Major Proportion 
The total production of the Applicant is 58.6% fr om the total domestic production of the Subject 
Good, therefore it represent a major proporti on as required by Article 4.1 (c) of the 
WTO Agreement on Safeguards. 
 G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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  d. Views and Comments of the Interested Parties 
In accordance to Article 3.1 of the WTO Agreement on Safeguards, during the process of 
investigation, the Investigating Authority has provide an opportunities to all interested parties, including the representatives of exporting country to submit their views, evidence, and response. 
The Investigating Authority has held 2 (two) times public hearings. The first hearing was held on 
21 February 2014, and the second one on 18 August 2014.   
2  EVIDENCE OF SERIOUS INJURY OR THREAT THEREOF CAUSED BY INCREASED 
IMPORTS 
In a view to determine the existence of serious injury or threat thereof caused by increased 
imports, the Investigating Authority has made an evaluation and analyze of all relevant factors of 
an objective and quantifiable nature having a bearing on the situation of the Applicant. The 
following evaluation was based on data provided  by the Domestic Industry (both Applicant and 
non Applicant), and interested parties, where the data has been verified by the Investigating 
Authority. 
 
a. Evidence of serious injury 
TABLE 1 
IMPORTS, DOMESTIC SALES, MARKET SHARES, AND NATIONAL CONSUMPTION 
No. Description  Unit Year Trend 
10-13 (%) 
2010  2011 2012 2013 
1. Imports Ton 222,876 254,595 444,702 677,965 47.6  
2. Applicant's Domestic sales Index 100 101.0 102.6 94.7 (1.5)  
3. Other Domestic Industry (Non 
Applicant) Domestic Sales Index 100 186.4 199.4 157.5 15.4  
4. Shares of imports Index 100 95.7 132.4 174.2 22.0  
5. Applicant Market Share Index 100 84.6 68.1 54.2 (18.6)  
6. Other Domestic Industry (Non-
Applicant) Market Share Index 100 156.1 132.3 90.2 (4.6)  
7. National Consumption Index 100 119.4 150.7 174.6 20.9  
Source: CBS (Central Bureau Statistic) an d as verified by Investigating Authority 
 
1. The above Table shows that during the period of investigation the Applicant domestic sales 
have declined with a trend 1.5%. Even though the Applicant Domestic Sales increased during 
the period of 2010-2012, but in 2013 it suffered  a decreased by 7.7% which was relatively 
higher than the increased in 2010-2012. During the period of 2010-2013 the domestic industry 
Non-Applicant domestic sales have increased with a trend 15.4%, however it also experienced 
a declined by 21.0% in 2013 compared to 2012.  
2. During the period of investigation, there was a significant increased volume of imports with a 
trend 47.6%. On the other hand the Applicant's Domestic Sales experienced a decline during the same period, while the Domestic Industry Non Applicant's domestic sales increased with a trend of 15.4%, however it experienced a decline in 2013 compared to 2012. 
 
3. When the imports increased significantly during the period of investigation, the Applicant 
market shares decreased significantly and suffered a year-to-year declined during the same 
period. During 2010-2013, the Domestic Industry Non Applicant's market shares decreased 
with a trend 4.6%, therefore, both the Applic ant and the Domestic Industry Non Applicant 
suffered a loss in market shares which has been taken by imports during the period of 
investigation. G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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INDONESIA NATIONAL CONSUMPTION 
 
Source: CBS, and the Dome stic Industry Output  
(Applicant and Non-Applicant) 
 
4. During the period of investigation, the national consumption has increased with a trend 
of 20.9%. In line with the increased of national consumption, the market shares of imports has 
also increased significantly from 2010-2013 with a trend of 47.6%. Consequently, the market shares of both the Applicant and Domestic Indu stry Non Applicant have been taken by imports 
and they could not enjoy the increased in national consumption during the period of 
investigation. 
TABLE 2: 
PRODUCTION, CAPACITY, AND UTILIZATION CAPACITY 
No. Description  Unit Year Trend 
10-13 
(%) 2010  2011 2012 2013 
1. Production Index 100 104.4 87.5 84.6 (6.6) 
2. Target Production Index 100 98.4 96.1 97.8 (0.9) 
3. Capacity Index 100 100 100 100 - 
4. Capacity Utilization  Index 100 104.4 87.5 84.6 (6.6) 
Source: as been verified by  The Investigating Authority 
 
5. During the period of investigation, the Applicant production has suffered a decline with a 
trend 6.6%. Even though the Applicant Producti on enjoyed a slight increased by 4.4 index 
point in 2011 compared to 2010, during 2011-2013 it declined by 18.9%. In line with the 
decline in production, the capacity utilization also experienced a declined during the same 
period.  
6. In contrary with the capacity which remains stable, during the period of investigation, the 
decline of production and capacity utilization has made the actual production was not in 
optimal condition, therefore, the Applicant was forced to reduce its production target from 100 index point in 2010 to 97.8 index point in 2013. 
 
TABLE 3: 
PROFIT/LOSS, AND COST OF PRODUCTION 
No. Description  Unit Year Trend 
10-13 
(%) 2010  2011 2012 2013 
1. Profit/Loss Index (100) (253.9) (174.5) (315.6) (36.0) 
2. Loss Margin Index (100) (228.6) (142.9) (300.0) (32.7) 
3. Profit/Loss (per unit) Index (100) (251.4) (170.1) (333.3) (38.0) 
Source: As been verified by  the Investigating Authority G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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  7. The Applicant has experienced financial losses during 2010-2013 with a negative trend 
of 36.0%. In 2013, the Applicant suffered a huge financial loss compared to 2012, from (174.5) index point to (315.6) index point.  
TABLE 4: 
EMPLOYMENT, PRODUCTIVITY, TARGET PRODUCTIVITY, PRODUCTION, AND TARGET PRODUCTION 
No. Description  Unit Year Trend 
10-13 
(%) 2010  2011 2012 2013 
1. Employment Index 100 97.7 102.3 105.9 2.2 
2. Productivity Index 100 106.8 85.5 79.9 (8.6) 
3. Expected Productivity Index 100 100.7 94.0 92.3 (3.0) 
Source: As been verified by  the Investigating Authority 
 
8. From the table above, employment has increase d with a trend 2.2% during the period of 
investigation. The increased in employment was due to the effort by the Applicant to improve 
and maintain its sales to its consumers by focusing on the improvement of product quality 
control.  
9. The Applicant's productivity has declined duri ng the period of investigation with a trend 
of 8.6%, even though it increased in 2011 comp ared with 2010. The declined in productivity 
was mainly due to the decline in production with a trend of 6.6%. 
 
TABLE 5: 
PRICE UNDERCUTTING 
(Index) 
No. Description Year 
2011 2012 2013 
1. The Applicant Sales Price 100 100 100 
2. Import Price 98.6 83.8 87.9 
Source: As been verified by The Investigating Authority  
 
10. Based on the Table above, during the period of  2011-2013 the import price was lower than the 
Applicant sales price, thus the Applican t unable to increase its sales price. 
 
TABLE 6: 
PRICE SUPPRESSION 
(Index) 
No. Description Year Trend 
11-13 
(%) 2011 2012 2013 
1. The Applicant Sales Price 100.0 100.0 100.0 0.9  
2. Import Price 98.7 83.8 87.9 (4.7)  
3. The Applicant Cost of Production 102.1 102.0 104.1 (24.4)  
Source: As been verified by  The Investigating Authority 
 
11. The table above shows that during the period 2011-2013 the Applicant Sales Prices were lower 
than the Applicant cost of production. The ch eap price of imported goods, has caused the 
Applicant unable to increase its sales price higher than the cost of production.  
 
b. Other Factors That May Contribute to Injury 
In order to ensure that injury is only caused by increased imports, the KPPI also examined the 
following other known factors: 
 G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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  1. Effect of competition among the Domestic Industry 
 
TABLE 7: 
THE DOMESTIC INDUSTRY AND IMPORTS MARKET SHARE 
(Index) 
No. Description  Year Trend 
10-13 (%) 2010  2011  2012  2013 
1. Shares of imports 100 95.7 132.4 174.2 22.0 
2. Applicant Market Share 100 84.6 68.1 54.2 (18.6) 
3. Domestic Industry Non-
Applicant Market Share 100 156.1 132.3 90.2 (4.6) 
Source: as been verified by  the Investigating Authority 
 
Based on table above, although the domestic industry Non-Applicant market share increased 
in 2011, however in 2011-2013 the domestic indu stry Non-Applicant market share decreased 
significantly from 156.1 index point to 90.2 index po int. Therefore, it can be concluded that the 
decline in the Applicant market share was not caused by the competition among the Domestic 
Industry. 
 2. Technology and machineries 
 
Verification result shows that the Applicant uses Electric Arc Furnace (EAF) machineries to produce 
raw material for wire rod, which is billet. EAF technology uses scrap iron, mixed with sponge iron and direct reduced iron (DRI). Billet then directly  processed to rolling mill plant and then formed 
into wire rod. 
 Wire rod produced using the Applicant's technology and machinaries is in compliance with 
domestic and international standards, such as  Indonesian National Standard (SNI), Japan 
Industrial Standard (JIS), Standard American fo r Automotive Engineering (SAE) and American Iron 
and Steel Institute (AISI). Strict quality control of wire rod production process has also been implemented by the Applicant, such as the control of scrap, chemical analysis sampling, and 
metallurgy analysis. The purpose of this strict quality control is to ensure that the wire rod 
produced is in accordance with the aforemen tioned standards. Therefore, the Applicant's 
technology and machinaries was not a factor that caused its injury. 
 
3. Captive Market 
 
Based on the result of investigation, although the Applicant was selling low carbon wire rod to its 
subsidiaries, however the volume was insignificant, which was less than 1% of the Applicant's total sales of low carbon wire rod during the period of investigation. Therefore, it can be concluded that sales to captive market did not have any effect to the injury suffered by the Applicant. 
 
c. Conclusion on Causal Link  
The investigation authority has examined all factors having a bearing in the Applicant situation, 
and came to a conclusion that serious injury suffer ed by the Applicant mainly caused by significant 
increased volume of imports and not due to the ot her factors. The reasonings of the conclusions 
are as follows: 
 
1)  There was a significant increase volume of imports in absolute and relative terms to the domestic production, as shown in Table 7 and 8 below.  
2)  When the national consumption increased during the period of investigation, the volume of 
imports has also increased significantly with a tr end much higher than the increase of national 
consumption. On the contrary, the Applicant domestic sales has suffered a decline with trend 
of 1.5%.  
 3)  With the decline in the Applicant Domestic Sales, consequently the Applicant market shares 
also declined with a trend 18.6% during the peri od of investigation. The increased volume of G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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  imports has caused a fierce competition to the Applicant's domestic sales, and has taken the 
Applicant market share during the period of investigation.  4)  The declining in the Applicant domestic sales and market shares during the period of 
investigation has made a negative impact to th e Applicant production, utilization capacity, and 
above all on the Applicant financial performance. During the period of investigation, the Applicant suffered a financial losses with a trend of 36.0%, particularly in 2013 where the Applicant 
experienced a huge financial loss in 2013 of 315.6 point index. 
 5)  There was also an existence of the low selling price of the imported goods below the Applicant's cost of production and sales prices. To regain it s market share that has been taken away by the 
imports during the period of investigation, the Appl icant forced to sell below the cost of production. 
The Applicant decision to sell below the cost of production has contributed to a substantial financial loss. 
 
6)  Based on findings as mentioned in point b, it is concluded that there were no other factors attributed to the serious injury suffered by the Applicant other than significant increased volume of 
imports. 
 3  INFORMATION ON WHETHER THERE IS AN ABSOLUTE INCREASE IN IMPORTS OR AN 
INCREASE IN IMPORTS RELATIVE TO DOMESTIC PRODUCTION 
In the light to provide evidence whether there is an absolute increase in imports or an increase in 
imports relative to domestic production, the Investigating Authority has analyzed import data during the period of investigation. 
 
a. Absolute increase in imports 
TABLE 7: DATA OF IMPORTS 
Description Unit Year 
2010 2011 2012 2013 
Volume Ton 222,876 254,595 444,702 677,965 
Growth % - 14 75 52 
Trend  % 47.6 
Source: Indonesia Statistic 
 
Based on the data shown from the Table 7, there was an increased volume of imports in absolute 
terms during the period of investigation, with a trend of 47.6%. 
 
b. Relative to domestic production 
TABLE 8: DATA OF IMPORTS AND TOTAL PRODUCTION 
Description Unit Year 
2010 2011 2012 2013 
Volume  Ton 222,876 254,595 444,702 677,965 
Total Domestic 
Production Index 100 72.0 100.0 92.8 
Imports to Total 
Domestic Production  Index 100 79.1 151.2 258.1 
Trend % 42.8 
Source: Domestic Industry (Applicant and Non Applicant) As verified by the Investigating Authority, and 
Indonesia Statistic 
 
The Table 8, above indicates that there was also an  increased volume of imports relative to Total 
Domestic Production during the investigation period, with a trend of 42.8%.  
 G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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  c. Imports from Main Countries 
TABLE 9: IMPORTS SHARES (%) 
Country Import Share 2010 Import Share 2013 
China, P. R. 28.3 79.7 
Japan 19.7 8.0 
Malaysia 19.6 5.4 
Total 67.6 93.1 
 
Table 9 indicates that the total shares of impo rt from the main countries are 67.6% in 2010 
and 93.1% in 2013. The imports from China, P. R. has increased significantly from 28.3% in 2010 to 79.7% in 2013.  
4  UNFORESEEN DEVELOPMENT 
a. According to World Steel Association Statistical Yearbook 2014, the capacity of 
production of China steel wire rod had significantly increased from 106 million tons 
in 2010 to 150 million ton in 2013. Such increased has contributed to the overcapacity of 
wire rod products in China. 
b. Based on the International Rebar Exporters and Producers Association (IREPAS), the 
70th Meeting in March 2014 presented data, during 2010-2013 there was a significant 
decline of wire rod consumption in the European countries and North America. At the same time South East Asia and East Asia countries experienced a significant and positive growth of wire rod consumption due to posi tive economic growth on those countries, 
such as Indonesia. 
GRAPHIC OF GROWTH FOR WIRE ROD CONSUMPTION (2012-2013) IN THE WORLD BASED ON 
REGIONS (IN %) 
 
Source: IREPAS 
 
c. In addition to that, Malaysia and European Union has imposed trade remedies 
(Anti-Dumping) practices against wire rod product from major exporting countries as shown in Table 10. Thus, that condition has caused an alteration of their export to other 
countries in Southeast Asia region, such as Indonesia. G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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  TABLE 10: STATISTICS OF TRADE REMEDIES MEASURES 
Imposing 
Countries Affected 
Countries Product Trade 
Remedies 
Instruments Duties Initiation Duration of 
Measures 
Malaysia PRC,Taiwan, 
Korea Selatan, Turki Steel Wire 
Rod Anti-Dumping 3.03-
25.20% 25 .06.2011 19.02.2013-
19.02.2018 
Uni Eropa PRC Steel Wire 
Rod Anti-Dumping 7.9%-
24% 08 .05.2008 06.08.2009-
06.08.2014 
Source: European Commission  and Ministry of International Tr ade and Industry Malaysia 
 
d. Based on the above conditions, it's been al erted that overcapacity has occurred during 
the year 2010-2013. However, a sudden slowdown in demand in some major markets 
and also parallel with trade remedies measures imposition by other countries, which 
could not be foreseen, has resulted in export diversion that caused significant increase volume of imports to Indonesia as shown in Table 8. 
5  DESCRIPTION OF THE PRODUCT INVOLVED 
The description of Subject Good under Article 12.1 (a), has been modified and narrowed down 
based on the capability of the Applicant production and considering all inputs from the interested 
parties to exclude some particular products such as high carbon quality and cold heading quality 
wire rod. Therefore, the Subject Good are as follows:  "Wire rod in a form of bars and rods, hot rolled, in irregularity wound coils, of iron or non-alloy 
steel or of other alloy steel, with, which taken all together, particular size of circular cross-section 
diameters, chemical compositions, and Harmonized System (HS) Codes, as follows:  
TABLE 11: 
THE SUBJECT GOOD BASED ON SIZE OF CIRCUL AR CROSS-SECTION DIAMETERS AND CHEMICAL 
COMPOSITIONS 
Steel Wire 
Rod Harmonized 
System (HS) 
Code Circular Cross-
Section Diameter 
Size (mm) Chemical Composition (%) 
C B Al 
Non Alloy Steel 
Wire Rod 7213.91.10.00 < 14 
0.25 max 0.0002 min 0.02 max 7213.91.20.00 5.5 – 14 
7213.91.90.00 5.5 – 14 
7213.99.10.00 14 – 20 
7213.99.20.00 14 – 20 
7213.99.90.00 14 – 20 
Alloy Steel Wire 
Rod 7227.90.00.00 5.5 – 20 0.17 max 0.0008 min - 
Source: Indonesia Custom Tariff Book 2012 (BTKI 2012) 
Note: Carbon (C), Aluminium (Al), and Boron (B)" 
 
6  DESCRIPTION OF THE PROPOSED MEASURE 
In view of the aforementioned findings, a safeguar d measure has been proposed in form of import 
duty.  
7  PROVIDE PROPOSED DATE OF INTRODUCTION OF THE MEASURE 
Not applicable. 
 
8  PROVIDE EXPECTED DURATION OF THE MEASURE 
Not applicable. G/SG/N/8/IDN/18 • G/SG/N/10/IDN/18 
 
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9  CONSULTATIONS 
In light of Article 12.3 of the WTO Agreement on Safeguards, hereby the GOI will give an 
opportunity for consultation for those Members having a substantial interest as the exporters of 
the Subject Good. The consultation scheduled to be carried out in the period of 14 working days 
started from the date of circulation this notification.  
Members, with a substantial interest, requesting a consultation should notify to the Indonesian 
Safeguards Committee/ Komite Pengamanan Perdagangan Indonesia  not later than 7 (seven) 
working days from the date of the circulation of this notification addressed to:  
 
THE INDONESIAN SAFEGUARDS 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 
E-mail: kppi@kemendag.go.id  
 
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