WORLD TRADE  
ORGANIZATION   
G/SG/N/10/IDN/4/Suppl.2
G/SG/N/11/IDN/9 
21 June 2011 
 (11-3049) 
Committee on Safeguards Original:   English 
 
 
 
NOTIFICATION PURSUANT TO ARTICLE 12.1(C) OF 
THE AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS 
 
INDONESIA 
 
(Cotton Yarn Other Than Sewing Thread) 
 
 
 The following communication, dated 17 June 2011,  is being circulated at the request of the 
Delegation of Indonesia. 
 
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 Pursuant to Article 12.1(c) of the WTO Ag reement on Safeguards ("WTO Safeguards"), the 
Republic of Indonesia notifies on the imposition of a safeguard measure on import of Cotton Yarn 
Other Than Sewing Thread under HS codes 5205 and 5206, for a period of three (3) years by the 
issuance of Minister of Finance's Decree number: 87/PMK.011/2011 dated 6 June 2011. 
    It is requested that this notification under Article 12.1(c) of the WTO Agreement on 
Safeguards be brought to the notice of Members. 
 
A. SUBJECT GOODS 
 As notified by the Republic of Indonesia under Article 12.1(b) of the WTO Agreement on 
Safeguards (G/SG/N/8/IDN/4), the subejct good is Co tton Yarn Other Than Sewing Thread produced 
under HS codes 5205 and 5206: 
 
HS CODE DESCRIPTION 
5205 Cotton yarn (other than sewing thread), containing 85% or more by weight of 
cotton, not put up for retail sale. 
5206 Cotton yarn (other than sewing thread), containing less than 85% by weight of 
cotton, not put up for retail sale. 
 Source : Indonesian Customs Tariff Book 
 
B. PERIOD OF INVESTIGATION 
 The period of investigation covered cal endar years of 2007, 2008, and 2009.  
 G/SG/N/10/IDN/4/Suppl.2 
G/SG/N/11/IDN/9 Page 2 
 
 
  C. THE DOMESTIC INDUSTRY 
 The domestic industry subject to serious injury  investigation represents the majority of the 
subject goods produced in Indonesia.   
  D. INFORMATION OF AN ABSOLUTE INCREASE IN IMPORTS  
 Although the period of investigation has been determined to cover 2007, 2008, and 2009, in 
order to have a more comprehensive trends of the increase in imports of the subject goods, the 
examination of volume and trend of imports also in clude year of 2006 as shown in Table 1. The table 
reveals a gradual increase in imports over the pe riod 2006, 2007 followed by a sharp increase in 
imports in 2008 and a decline in 2009.  During the i nvestigation, it was found that a decline of volume 
of imports in absolute term in 2009 reflects a comb ination of an attempt of the domestic industry to 
shore up market share by reducing prices, and a tem porary decline in demand. However, in relative 
term to the production of the domestic industr y the imports continued to increase in 2009. 
 
 
Table 1:  Volume of Import of the Subject Goods 
 
 Unit 2006 2007 2008 2009 
Imports 
(Absolute 
Terms) Ton 22,143 23,716 28,642 21,313 
Index 100 107 129 96 
Relative to 
Domestic Production Index - 100 136 113 
           Source :  Badan Pusat Statistik  
 
E. EVIDENCE OF SERIOUS INJURY CAUSED BY INCREASED IMPORTS 
 Evidence of Serious Injury 
 
 A determination of serious injury to the dom estic industry has been made following a process 
of investigation, which include collection and ve rification of information received from responses to 
questionnaires, on site verification, and from other da ta available to the investigating authority.  
Table 2 provides information on the situation of the domestic industry during the period of 
investigation, indicating a serious injury.  
 
 The findings of the investigating authority are as follows:     G/SG/N/10/IDN/4/Suppl.2 
 G/SG/N/11/IDN/9 
 Page 3 
 
 
  (a) The market share of import had increased from 2007 to 2009, while the market share 
of the domestic industry decreased during the same period.   
(b) As the domestic industries' sales decreased due to the loss of market share, the 
production and capacity also declined. 
(c) The loss of market share, and the reduction of production and capacity, had forced the 
domestic industry to reduce the number of employment by 7 indexed points from 2007 to 2008 and by 13 indexed points from 2008 to 2009. 
(d) Productivity declined in 2008 in line with lower output. The improvement in 2009 
does not reflect real productivity gains in terms of increased production, but is 
attributable to reduced employment levels.  
(e) Due to the loss of market share against imported subject goods, the domestic industry 
continues to suffer from significant losses during the period of investigation. The 
biggest loss was in 2009, which was due to the attempt of the domestic industry to shore up market share by reducing sales price below the cost of production. 
(f) While capacity utilization fell by 13 indexed points in 2008 from 2007, it further 
decreased by 8 indexed points in 2009.  The fall in capacity utilization, from 2007 onwards reflects continued decrease in the production caused by the loss of market 
share to imports from year-to-year during the period of investigation. 
Table 2:  Indicators of Serious Injury 
 
DESCRIPTION UNIT YEAR 
2007 2008 2009 
Volume of Import Ton 23,716 28,642 21,313 
Market Share of 
Import Index 100 130 130 
Market Share of the 
Domestic Industry Index 100 94 94 
Domestic Sales Index 100 87 65 
Production Index 100 88 79 
Productivity Index 100 94 99 
Capacity Utilization Index 100 87 79 
Profit and Loss Index (100)   (144) (208) 
Employment Index 100 93 80 
 G/SG/N/10/IDN/4/Suppl.2 
G/SG/N/11/IDN/9 Page 4 
 
 
  F. CAUSAL LINK 
 As indicated in point E., the investigating authority confirmed an overall negative 
development of the domestic industry. The overa ll negative development was caused by the market 
share of domestic industry that was taken by increased imports of the subject goods. 
 
 The evidence showed that increased imports of  the subject goods resulted in reduced domestic 
sales, production, productivity, capacity utilization,  employment, and substantial financial losses of 
the domestic industry. The financial losses were a ttributable to severely depressed selling prices 
below the cost of production of the domestic industry.  
 G. THE SAFEGUARD MEASURE AND EXPECTED TIMETABLE 
 The safeguard measure is imposed on importation of Cotton Yarn Other Than Sewing Thread 
falling under HS codes 5205 and 5206 in the form of specific duty for 3 (three) years. The amount of 
the specific duty will be progressively liberalized in  the second year and third year of the imposition 
period: 
6 June 2011 – 5 June 2012   : Rp.  40,687 per kilogram. 
6 June 2012 – 5 June 2013   : Rp.  38,144 per kilogram. 6 June 2013 – 5 June 2014   : Rp.  35,601 per kilogram. 
 However, some specific Cotton Yarn Othe r Than Sewing Thread falling under HS codes 
5205.27.00.00, HS 5205.33.00.00, HS 5205.34.00.00, HS 5205.46.00.00, HS 5206.33.00.00, HS 5206.34.00.00, and HS 5206.44.0 0.00, are excluded from the imposition of the measure because 
in the year of 2009 there were no importation of these products into Indonesia during the period of 
investigation. The product falls under HS code 520 5.28.00.00 is also excluded from the measure due 
to the continuing decrease of the volume of impor t of the product concerned during the period of 
investigation. 
 
H. LIST OF DEVELOPING COUNTRIES EXCLUDED  
 The following is the list of Developing Count ries excluded from the safeguard measure as 
they exported less than 3 per cent of total imports , provided that developing country Members with 
less than 3 per cent import share collectively account fo r not more than 9 per cent of total imports to 
Indonesia (Article 9.1 of the WTO Agreement on Safeguards).   G/SG/N/10/IDN/4/Suppl.2 
 G/SG/N/11/IDN/9 
 Page 5 
 
 
  Table 3:  List of Developing Countries excluded from the measure 
 
NO. COUNTRY NO. COUNTRY 
1 Albania 37 Former Yugoslav Republic of Macedonia 
(FYROM) 
2 Angola 38 Gabon 
3 Antigua and Barbuda 39 Georgia 
4 Argentina 40 Ghana 
5 Armenia 41 Grenada 
6 Bahrain, Kingdom of 42 Guatemala 
7 Bangladesh 43 Guinea 
8 Barbados 44 Guinea Bissau 
9 Belize 45 Guyana 
10 Benin 46 Haiti 
11 Bolivia, Plurinational State of 47 Honduras 
12 Botswana 48 Jamaica 
13 Brazil 49 Jordan 
14 Brunei Darussalam 50 Kenya 
15 Burkina Faso 51 Kingdom of Saudi Arabia 
16 Burundi 52 Korea, Republic of 
17 Cambodia 53 Kuwait 
18 Cameroon 54 Kyrgyz Republic 
19 Cape Verde 55 Lesotho 
20 Central African Repu blic 56 Macao, China 
21 Chad 57 Madagascar 
22 Chile 58 Malawi  
23 Colombia 59 Maldives 
24 Congo 60 Mali 
25 Costa Rica 61 Mauritania 
26 Côte d'Ivoire 62 Mauritius 
27 Croatia 63 Mexico 
28 Cuba 64 Moldova 
29 Democratic Republic of the Congo 65 Mongolia 
30 Djibouti 66 Morocco 
31 Dominica 67 Mozambique 
32 Dominican Republic 68 Myanmar 
33 Ecuador 69 Namibia 
34 Egypt 70 Nepal 
35 El Salvador 71 Nicaragua 
36 Fiji 72 Niger G/SG/N/10/IDN/4/Suppl.2 
G/SG/N/11/IDN/9 Page 6 
 
 
   
NO. COUNTRY NO. COUNTRY 
73 Nigeria 90 Suriname 
74 Oman 91 Swaziland 
75 Panama 92 Tanzania 
76 Papua New Guinea 93 The Gambia 
77 Paraguay 94 Togo 
78 Peru 95 Tonga 
79 Philippines 96 Trinidad and Tobago 
80 Qatar 97 Tunisia 
81 Rwanda 98 Uganda 
82 Saint Kitts and Nevis 99 Ukraine 
83 Saint Lucia 100 United Arab Emirates 
84 Saint Vincent and the Grenadines 101 Uruguay 
85 Senegal 102 Venezuela  (Bolivarian Republic of Venezuela)  
86 Sierra Leone 103 Viet Nam 
87 Solomon Islands 104 Zambia 
88 South Africa 105 Zimbabwe 
89 Sri Lanka   
 
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