INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY
Document: Request for Consultations from Japan
Date: 10 October 1996
Document codes: WT/DS55/1; G/L/114; G/TRIMS/D/3
Complainant: Japan
Respondent: Indonesia
Third parties: India, South Korea, U.S.
Dispute stage: Panel
Agreements cited: Art. X:1, X:3(a)  GATT 1994Art. 3.1(b), 28.2  Subsidies and Countervailing Measures (SCM)Art. I:1, III:2, III:4  GATT 1994Art. 2  Trade-Related Investment Measures (TRIMs)

INDONESIA - CERTAIN MEASURES AFFECTING THE
AUTOMOBILE INDUSTRY
Request for Consultations from Japan
The following communication, dated 4 October 1996, from the Permanent Mission of Japan
to the Permanent Mission of Indonesia and the Dispute Settlement Body, is circulated in accordance
with Article 4.4 of the DSU.
Upon instructions from my authorities, I hereby wish to convey the request of the Government
of Japan for consultations with the Government of Indonesia pursuant to Article 4 of the Understanding
on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article XXII:1 of the General
Agreement on Tariffs and Trade 1994 ("GATT 1994") and Article 8 of the Agreement on Trade-Related
Investment Measures ("the TRIMs Agreement") regarding certain automotive industry measures ("the
Measures") of Indonesia (i.e. so-called National Car Program), which were introduced by the Government
of Indonesia in February 1996 by means of its Presidential Decree No. 2 and modified in June 1996
through its Presidential Decree No. 42.
The National Car Program currently applied by the Government of Indonesia provides substantial
tax and duty preferences to a new automobile model ("the Timor"), assembled for or by a specific
Indonesian company that has received "pioneer" status. This company, "PT Timor Putra Nasional",
formed a joint venture exclusively with Kia Motor Corp. ("Kia") of the Republic of Korea to produce
the Timor first in the Republic of Korea and subsequently in Indonesia. Under the National Car
Program, the Timor imported from the Republic of Korea in the first year, as well as components
subsequently imported for the assembly of the Timor in Indonesia, will incur no customs duties or
other import charges, whereas other imported automobiles and components are subject to substantial
tariffs. An exemption from Indonesia's substantial luxury tax on sales of automobiles (normally 35%)
will also apply to both the imported and locally-assembled Timor on more relaxed conditions that in
the case of the other automobiles. To retain its tariff and tax exemption status, the Timor must fulfil
several requirements, including a specified level of domestic content. The National Car Program was
effectively implemented in October 1996, with the importation by PT Timor Putra Nasional of a
substantial number of Timors for commercial sale in Indonesia.
The Government of Japan considers that the Measures are inconsistent with obligations of
Indonesia under the WTO Agreement, including, inparticular, GATT 1994 and the TRIMs Agreement.
The provisions of these Agreements with which the Measures appear to be inconsistent include, but
are not limited to, the following:

(1) Articles I:1, III:2, III:4, X:3(a) of GATT 1994; and
(2) Article 2 and 5.4 of the TRIMs Agreement.
The Government of Japan reserves the right to raise additional factual claims and legal matters
during the course of the consultations.
We look forward to receiving your reply to this request for consultations and to agreeing upon
a mutually acceptable date for the consultations. We wish to request that they be held within the week
beginning on 21 October 1996.