WORLD TRADE  
ORGANIZATION  G/SG/Q2/IDN/2 
20 May 2011 
 (11-2543) 
Committee on Safeguards Original:   English 
 
 
 
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE AGREEMENT 
ON SAFEGUARDS ON INITIATION OF AN INVESTIGATION 
AND THE REASONS FOR IT 
 
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON 
SAFEGUARDS ON FINDING A SERIOUS INJURY OR THREAT 
THEREOF CAUSED BY INCREASED IMPORTS  
 
NOTIFICATION UNDER ARTICLE 12.1(C) OF 
THE AGREEMENT ON SAFEGUARDS 
 
Replies to Questions Posed by INDIA1 
Regarding the Notification of INDONESIA2 
 
(Cotton Yarn Other Than Sewing Thread ) 
  
 The following communication, dated 19 May 2011, is being circulated at the request of the 
Delegation of Indonesia.  
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Question 1 
 
 Under Article 4.2.(a) of Safeguard Agreement, the competent authority has to 
mandatorily evaluate all relevant factors of an objective and quantifiable nature having a 
bearing on the situation of that industry. 
 
 It is seen from the figures given in notifi cation No. G/SG/N/IDN/4 dated January 1 2011, 
that the volume of import of the product unde r investigation decreased in 2009 compared to 
previous years.  Productivity also increa sed in 2009 compared to previous years. 
  Thus, Indonesia seems to have violated the obligation of Article 4.2.(a) of the Safeguard 
Agreement by failing to address all relevant factor s that must be covered as evidence of serious 
injury.  Consequently, Indonesia has failed to establish a causal link between increased import 
and serious injury or threat thereof as required under Article 4.2.(b) of the Safeguard 
Agreement. 
 Reply
 
 
 Indonesia strongly believes that there is no violation of Article 4.2(a) and 4.2(b): 
 
                                                      
1 G/SG/Q2/IDN/1. 
2 G/SG/N/6/IDN/11;  G/SG/N/8 /IDN/4;  G/SG/N/10/IDN/4. G/SG/Q2/IDN/2 
Page 2  
 
  1. As provided in table 3 of the document G/SG /N/8/IDN/4, the investigating authority has 
evaluated all relevant factors in establishing the existence of evidence of serious injury. 
 
2. The investigating authority has also estab lished causal link between increase imports and 
serious injury as shown in point 4 of the document G/SG/N/8/IDN/4. 
 
3. As stated in the note of table 3, item (d) th e increase of productivity in 2009 does not reflect 
real productivity gains in terms of increased production, but is attributable to reduced employment levels.  Furthermore,  as shown in table below, despite the fact that the volume 
of import decreased in 2009, the trend of volume of import has increased relative to 
domestic production during the period of investigation. 
 
 Unit 2006  2007 2008 2009 
Imports Ton 22.143 23.716 28.642 21.313 
Imports Index  100 107 96 
Relative to domestic 
production Index - 100 136 113 
 Source :  Statistics Indonesia 
Question 2 
Article 12.3 of the Safeguard Agreement also provides that a Member proposing to 
apply or extend safeguard measure shall be  provided adequate opportunity for prior 
consultation with those Members having a su bstantial interest as exporters of the product 
concerned with a view to exchanging views on the measure.  Indonesia's Notification 
No.G/SG/N/10/IDN/4 dated 17 February, 2011 prop osing to apply safeguard measure has been 
issued without prior consultation with the memb ers having a substantial interest as exporters of 
the product concerned.  Thus, Indonesia appears to  have violated provisions of Article 12.3.  
Indonesia has also violated Article 12.5 in not holding consultations and notifying the result of 
such consultation to WTO. 
 Reply
 
 
 Indonesia has not yet imposed any safegua rd measure against the subject good. 
 
 Bearing in mind that the notification G/SG/N/8/IDN/4/Suppl.1 – G/SG/N/10/IDN/4 was 
circulated by the WTO Secretariat on the 17 February 2011, Indonesia is of the opinion that there was ample of time for WTO Members who have a subs tantial interest as exporters of the product 
concerned to request for consultation, as stipulated  in Article 12.3.  However, Indonesia has never 
received any request from such WTO Members.  Due to the fact that there is no consultation held 
under Article 12.3, Indonesia has no obligation to notify the result of consultation as required by 
Article 12.5. 
 Question 3 
 
 Article 8.1 provides that a Member applying a safeguard measure shall endeavour to maintain a substantially equivalent level of con cessions and other obligations in accordance with 
paragraph 3 of Article 12.  Indonesia has failed to comply with this requirement. 
  G/SG/Q2/IDN/2 
 Page 3 
 
 
  Reply  
  Indonesia has not failed to comply with the requirement of Article 8.1 due to the fact that 
there is no consultation held under Article 12.3. 
 Question 4 
 
 Article 3 provides that a Member may appl y a safeguard measure only following an 
investigation pursuant to the established procedu re.  Indonesia has not followed the prescribed 
procedure as pointed out in above paragraphs. 
 Reply
 
 
 Indonesia is confident that all procedures as  required by the WTO Agreement on Safeguards 
has been fully respected. 
 
 In view of the above mentioned explanation, it is crystal clear that Indonesia has not violated any provision of the WTO Agreement on Safeguards in the whole process. 
 
 
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