INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY
Document: Request for Consultations by the United States Thefollowingcommunication,dated 8October 1996,from the PermanentMission ofthe United Statestothe PermanentMission of Indonesiaand theDisputeSettlement Bodyiscirculated inaccordance with Article 4.4 of the DSU.
Date: 15 October 1996
Document codes: WT/DS59/1; G/L/117; G/TRIMS/D/5; G/SCM/D8/1; IP/D/6
Complainant: U.S.
Respondent: Indonesia
Third parties: India, South Korea
Dispute stage: Panel
Agreements cited: Art. 2  Trade-Related Investment Measures (TRIMs)Art. 3, 20, 65  Intellectual Property (TRIPS)Art. I:1, III:2  GATT 1994Art. 1, 2, 6  Subsidies and Countervailing Measures (SCM)Art. III:4  GATT 1994Art. 27, 28.2  Subsidies and Countervailing Measures (SCM)Art. III:7  GATT 1994

INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY
Request for Consultations by the United States
Thefollowingcommunication,dated 8October 1996,from the PermanentMission ofthe United
Statestothe PermanentMission of Indonesiaand theDisputeSettlement Bodyiscirculated inaccordance
with Article 4.4 of the DSU.
My authorities have instructed me to request consultations with the Government of Indonesia
pursuant to Articles 1 and 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),
Article 8 of the Agreement on Trade-Related Investment Measures (to the extent it incorporates by
reference Article XXII of the GATT 1994), Articles 7 and 30 of the Agreement on Subsidies and
Countervailing Measures (to the extent Article 30 incorporates by reference Article XXII of the GATT
1994), and Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (to
the extent it incorporates by reference Article XXII of the GATT 1994) regarding certain measures
affectingtrade andinvestmentinthe motorvehiclesector implementedbyIndonesiathroughPresidential
Decrees 54/1993 and 42/1996, Presidential Instruction 2/1996, numerous ministerial decrees and
government regulations, and other governmental measures.
The measures in question provide, inter alia, for benefits to manufacturers of motor vehicles
and parts in the form of a reduction in duties on their imports of certain products and a reduction in
or elimination of taxes on the sale of motor vehicles. These benefits are conditional to varying degrees
on compliance with domestic content requirements, local content requirements with regard to inputs,
and the use of a trademark that is unique to Indonesia and owned by Indonesians. The Minister of
Industry and Trade and the Minister of Finance are directed to implement the program through decrees
and regulations in accordance with the general Presidential mandate.
The United States considers these tax and tariff benefits tied to domestic content to be specific
subsidies within the meaning of Articles 1 and 2 of the Agreement on Subsides and Countervailing
Measures (SCM Agreement). The total subsidization indicates serious prejudice in accordance with
Article 6.1(a) of the SCM Agreement. In addition, as a result of these specific subsidies, products
that benefit from them are priced significantly lower than products that do not benefit from them,
thereby impeding the sale of the non-subsided products in Indonesia. The United States believes that
these measures cause serious prejudice to the interests of the United States because their effect is to

IP/D/6

displace or impede imports of motor vehicles and motor vehicle parts and components from the United
States, and to cause significant price undercutting by the subsidized products compared with products
from another Member in Indonesia.
The United States considers that these measures violate the obligations of Indonesia under
Articles I:1, III:2, III:4, III:5 and III:7 of the GATT 1994; Article 2 of the Agreement on Trade Related
Investment Measures; Article 3, 6, and 28.2 of the SCM Agreement; and Articles 3, 20 and 65.5
of the Agreement on Trade-Related Aspects of Intellectual Property Rights. The United States reserves
the right to raise additional factual matters and legal claims during the course of the consultations.
We look forward to receiving your reply to this request and to fixing a mutually acceptable
date for consultations.