WORLD TRADE  
ORGANIZATION  G/SG/N/8/IDN/3 
G/SG/N/10/IDN/3 
G/SG/N/11/IDN/3 
14 October 2009 
 (09-5023) 
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 PURSUANT TO ARTICLE 12.1(C) 
OF THE AGREEMENT ON SAFEGUARDS 
 
NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2  
OF THE AGREEMENT ON SAFEGUARDS  
 
INDONESIA 
 
(Wire Nails
) 
   The following communication, dated 12 October 2009, is being circulated at the request of 
the Delegation of Indonesia. 
 
______________  
 
 
 Pursuant to article 12.1 (c) of the WTO Ag reement on Safeguards, Indonesia notifies that 
Ministerial of Finance Decree number:  151/PM K.011/2009 dated 24 September 2009 was published 
on 7 October 2009 in the Indonesian daily news pa per (Bisnis Indonesia) enacting the adoption of 
definitive safeguard measures on import of Wire Nails for a period of three (3) years.    
 Annexed hereto a copy of Ministerial of Finance Decree number:  151/PMK.011/2009 dated 
24 September 2009 and Indonesian daily news pa per (Bisnis Indonesia dated 7 October 2009).   
  It is requested that this notification under Ar ticle 12.1 (C) of the Agreement on Safeguards be 
brought to the notice of Members.   G/SG/N/8/IDN/3 
G/SG/N/10/IDN/3 G/SG/N/11/IDN/3 
Page 2 
  
  A. B
ACKGROUND  
1. On 17 October 2008 Compartment L ong Product, Cluster of Wi res and Nails (formerly 
Ikatan Pabrik Kawat dan Paku Indonesia/ IPPA KI) of the Indonesian Iron and Steel Industry 
Association (IISIA) on behalf of wire nails producers filed a pe tition to Indonesian Safeguard 
Committee (Komite Pengamanan Perdagangan Indonesi a/ KPPI) requesting for a safeguard measure 
from various countries.   
 2. The petitioner claimed that the domestic indus try has been facing serious injury caused by 
imports.   
 
This claim is based on information covering the period 2005 – First Semester of 2008 which 
shows that imports, in terms of volume, increased si gnificantly that resulted in serious injury to the 
domestic industry. 
 
3. Date of the Initiation 
 
After examining the request made by the petitioner, the KPPI decided to initiate an 
investigation on 5 November 2008 (published in Bi snis Indonesia daily newspaper) and individual 
notices were sent to all known interested parti es and concerned government agencies as well as 
private entities.   
 
4. Product Subject to Investigation 
 
Wire Nails, under HS code 7317.00.10.00.   
 
5. Period of Investigation 
  The period of investigation covers 3 and ha lf years (2005 – First Semester of 2008).  
 6. Standing of the Petitioner  
There were 36 producers of wire nails  in Indonesia in 2005, and in the First Semester of 2008 
when the petition was filed there were only 19 ac tive producers.  Ten active producers which accounts 
for 79.5 per cent  of total national production, support the petition. 
 7. Hearing 
 
 The hearing was held on 2 March 2009 at the Office of the KPPI, Ministry of Trade of 
Indonesia building, and in attendance were repre sentatives from the petitioner, Indonesian Importers 
Association (GINSI);  Ministry of International Trade and Industry (MITI), Malaysia;  Representative 
Taipei Economic and Trade Office;  Emb assy of Mexico;  PT Rodamas Baja Intan;  PT Sidoarjo 
Universal Metal Works;  PT Dunia Metal Works, and PT ISPAT Wire.   
 
 The parties that submitted written comments were:    
Petitioner (IPPAKI); Indonesian Importers Association (GINSI); Embassy of Malaysia; Representative Taipei Economic and Trade Office; 
Embassy of Mexico.  G/SG/N/8/IDN/3 
 G/SG/N/10/IDN/3 
 G/SG/N/11/IDN/3 
 Page 3 
  
  B. E
VIDENCE  
 Evidence that the safeguard measure is cons idered necessary to remedy serious injury 
caused by increased imports:   
 
1. Development of Imports  
 
Development of Imports (in MT) 
 
2005 2006 2007 Semester I of 2008 
3,911.35 ton 4,203,33 12,243.24 17,009.95 
 Source:  Central Agency for Statistics of Indonesia.   
 
 The table above shows a sudden-sharp increase of impor ts in 2007 and in Semester I of 2008 which 
represent a significant mark et share of the subject goods in Indonesia.   
 
2. Import by Major Supplying Country  
 
Import Share 
 
VOLUME/ HS COUNTRY SHARE 2005 2006 2007 Semester 
I 2008 
VOLUME 
(TON) 2,261.47 2,812.80 10,529.33 15,557.90 CHINA 
SHARE 57.82% 66.92% 86.00% 91.46% 
VOLUME 
(TON) 1,149.25 1,072.41 1,607.51 1,437.08 MALAYSIA 
SHARE 29.38% 25.51% 13.13% 8.45% 
VOLUME 
(TON) 500.62 318.13 106.4 14,973 OTHERS 
SHARE 12.80% 7.57% 0.87% 0.08% 
VOLUME 
(TON) 3,911.35 4,203.33 12,243.24 17,009.95 7317001000 
TOTAL 
TOTAL 100% 100% 100% 100% 
 Source:  Central Agency Statistics  of Indonesia (processed).   
 
 As can be seen, China is the main supplier of wire nails by 86.00 per cent share of 
Indonesian total imports or 10,529.33 MT in 2007, followed by Malaysia as the second main 
supplier by 13.13 per cent share of Indonesian total import or 1,607.51 MT.    
 
3. Situation of Domestic Industry (indices unless otherwise stated) 
 
Indicator of Injury Suffered  By Domestic Industry  
(Indexed Unless Otherwise Stated) 
 
INDICATOR 2005 2006 2007 Semester I 
2008 
Production 100.00 104.00 97.00 53.00 
Capacity Utilization  100.00 104.00 97.80 53.00 G/SG/N/8/IDN/3 
G/SG/N/10/IDN/3 G/SG/N/11/IDN/3 
Page 4 
  
  INDICATOR 2005 2006 2007 Semester I 
2008 
Domestic Sales  100.00 105.00 100.00 48.00 
Inventory 100.00 131.00 123.00 266.00 
Loss -100.00 -48.00 -51.00 -44.00 
Employment 100.00 69.00 61.00 46.00 
Productivity 100.00 107.53 115.05 82.80 
Imports (MT) 3,911.35 4,203,33 12,243.24 17,009.95 
National Consumption 100.00 105.60 111.82 69.13 
Import share  100.00 100.00 300.00 680.00 
Domestic market share  100.00 100.00 89.47 69.47 
 Sources:  Petitioner and Central Agency Statistics of Indonesia (processed).   
 
 As can be seen, the surge of imports during IP has resulted in a significant increase in inventory and 
a loss is mainly due to impact of imports. 
  a) Causation analysis 
 
Effect of increased imports: Imports have increased in the period under investigation from 
3,911.35 MT in 2005 to 12,243.24 MT in 2007 which means 213 per cenet increase in the level of imports.  Over the same period the market share of imports grew from 5 per cent to 15 per cent, whilst 
the market share of the domestic industry fell from 95 per cent to 85 per cent.   
 
Based on a comparison of average ex-works prices charged by the domestic producer and by 
exporting producers to the Indonesian importers (sum  of CIF price, customs duty and other costs), 
domestic prices were undercut during IP by 143 per cent.  At the same time the domestic industry's 
loss increased by 6.5 per cent.   
 
 b) Other Factors 
 
Other factors have been examined that selling pr ice of wire nails has been effected by global 
economic recession although it is not significant.  In addition, low prices of Chinese products in 
global market have caused negative impact to Indone sian export products, including wire nails and, in 
turns, it caused increase the inventory of domestic industry.    
However, as shown in Table 1 that there was sharp increases in imports from 3,911.35  MT in  
2005 to 12,243.24  MT in 2007.  The surge of imports has caused a decline in the domestic market 
share.  The domestic market share of domestic industry declined from 10 per cent in 2007, when 
compared to 2005.  
 c) Unforeseen Development 
  Indonesia's bound tariff for HS 7317.00.10.00 was 40 per cent.  Since 2007 the applied tariff 
for HS 7317.00.10.00 have been 7.5 per cent (in 2009  the tariff has been to 12.5 per cent).  Even 
though the current tariff has been increased, sh arp competition between domestic product and the 
import of product concerned still ex ists and the increase of national consumption was mostly taken by 
imports.  This situation was not predicted by the petitioner.    G/SG/N/8/IDN/3 
 G/SG/N/10/IDN/3 
 G/SG/N/11/IDN/3 
 Page 5 
  
   As one of the biggest steel producers in the world, China exports a lot of steel products to US 
and European markets.  When the global econom y recession happened, a lot of the orders were 
cancelled and the Chinese exporters had to reroute thei r cargoes to other destinations in Asian market, 
particularly Indonesia.   
 
4. Adjustment Plan 
 
 The domestic industry has submitted the following adjustment program for the purpose of 
improving the competitiveness in the global market conditions.  The program includes:   
 
• More production cost efficiency; 
• Increasing of production utilization; 
• Improvement of  chain distribution;   
• Focus on environmental friendly production; 
• Increasing the labor productivity. 
 
5. Expected timetable for progressive liberalization of the measure 
 
In order to induce adjustment, the tariff level will be subject to liberalization on a regular 
basis following its imposition, thereby ensuring that  there is a strong incentive for domestic producer 
to progressively undertake the necessary restructurin g and adjustment.  The timetable for progressive 
liberalization of the proposed measure is shown below.   
 
 The measure is applied for 3 years fro m 1 October 2009 to 30 September 2012.   
 
 The measure will be subject to liberalization.  The timetable for progressive liberalization is 
shown below:   
 
Period Fixed Duty 
1 October 2009-30 September 2010 145% 
1 October 2010-30 September 2011 115% 
1 October 2011-30 September 2012 85% 
 
 Below is the list of Developing Countries ex cluded from the measures as they exported less 
than 3 per cent of total imports to Indonesia (A rticle 9.1 of the Agreement on Safeguards).   
 G/SG/N/8/IDN/3 
G/SG/N/10/IDN/3 G/SG/N/11/IDN/3 
Page 6 
  
  List of Developing Countries excluded  
from the measures 
 
COUNTRY COUNTRY 
Afghanistan 
Albania Algeria American Samoa Angola  Anguilla 
Antigua and Barbuda 
Antilles (Netherlands) Argentina Armenia Aruba 
Ascension 
Austral Islands Azerbaijan Bahamas Bahrain 
Bangladesh 
Barbados Belarus Belize Benin Bermuda 
Bhutan 
Bolivia Bosnia and Herzegovina Botswana Bouvet Islands 
Brazil 
British Antarctic Territories British Indian Ocean Territory British Virgin Islands Brunei Darussalam 
Burkina Faso 
Burundi Cambodia Cameroon Canary Islands Cape Verde  
Caroline Islands 
Cayman Islands Central African Republic Ceuta and Mellia Chad 
Chile  
Christmas Islands Iran, Islamic Republic of Cocos Islands 
Colombia Comoros Congo, Democratic Republic of the Congo, Republic of Cook Islands 
Costa Rica 
Cote d'Ivoire Croatia Cuba Curacao 
Cyprus 
Djibouti Dominica Dominican Republic Ecuador 
Egypt 
El Salvador Equatorial Guinea Eritrea Estonia Ethiopia 
Falkland Islands and Dependencies 
Fiji French Southern and Antarctic Territories French Polynesia Gabon 
Gambia 
Georgia Ghana Gibraltar Gilbert and Ellice Islands 
Greenland 
Grenada Guam Guatemala Guinea Guinea-Bissau 
Guyana 
Haiti Heard Island and McDonald Island Honduras Hong Kong 
Hungary 
India Norfolk Island  G/SG/N/8/IDN/3 
 G/SG/N/10/IDN/3 
 G/SG/N/11/IDN/3 
 Page 7 
  
  COUNTRY COUNTRY 
Iraq 
Israel Jamaica 
Jordan 
Kazakhstan Kenya Kiribati Korea, Democratic People's  Republic of Korea, Republic of 
Kuwait 
Kyrgyzstan Lao People's Democratic Republic of Latvia Lebanon 
Lesotho 
Liberia Libyan Arab Jamaririya Lithuania Macao 
Macedonia (The Former Yugoslav Republic 
of) Madagascar Malawi Maldives Mali 
Malta 
Marianas Islands (North) Marshall Islands Mauritania Mauritius 
Mayotte 
Mexico Micronesia, Federated States of Moldova, Republic of Mongolia 
Montserrat 
Morocco Mozambique Myanmar Namibia 
Nauru 
Nepal New Caledonia and Dependencies Nicaragua Niger Nigeria 
Niue 
Turkey Turkmenistan Oman 
Pakistan Palau 
Panama 
Papua New Guinea Paraguay Peru Philippines Pitcairn Islands 
Qatar 
Romania Russian Federation  Rwanda Samoa 
Sao  Tome and Principe 
Saudi Arabia Senegal Seychelles Sierra Leone 
Slovenia 
Solomon Islands  Somalia South Africa Southern Sandwich Islands and Dependencies Sri Lanka 
Saint  Helena and Dependencies 
Saint Kitts and Nevis Saint Lucia Saint Martin Saint Pierre and Miquelon 
Saint Vincent and Grenadines 
Sudan Suriname Swaziland Syrian Arab Republic 
Taiwan 
Tajikistan Tanzania, United Republic of Thailand Timor-Leste 
Togo 
Tokelau Islands Tonga Trinidad and Tobago Tristan de Cuhna Tunisia 
Vanuatu 
Venezuela  Vietnam G/SG/N/8/IDN/3 
G/SG/N/10/IDN/3 G/SG/N/11/IDN/3 
Page 8 
  
  COUNTRY COUNTRY 
Turks and Caicos Islands 
Tuvalu Uganda 
Ukraine 
United Arab Emirates United States Minor Outlying Islands Uruguay Uzbekistan  Virgin Islands (United Kingdom) 
Virgin Islands (United States) Wallis and Futuna Islands 
Western Sahara 
Yemen Zambia Zimbabwe  
   
__________