INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY
Document: Request for Consultations by Japan
Date: 5 December 1996
Document codes: WT/DS64/1; G/SCM/D9/1
Complainant: Japan
Respondent: Indonesia
Third parties: India, South Korea, U.S.
Dispute stage: Panel
Agreements cited: Art. 3, 6, 28.2, 5  Subsidies and Countervailing Measures (SCM)Art. I:1, X:1, X:3(a), III:2, III:4  GATT 1994Art. 2  Trade-Related Investment Measures (TRIMs)

INDONESIA - CERTAIN MEASURES AFFECTING
THE AUTOMOBILE INDUSTRY
Request for Consultations by Japan
The following communication, dated 29 November 1996,from the Permanent Mission of Japan
to the Permanent Mission of Indonesia, is circulated in accordance with Article 4.4 of the DSU.
Upon instruction from my authorities, I wish to convey the request of the Government of Japan
for 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") and Articles 7 and 30 of the Agreement on
Subsidies and Countervailing Measures ("SCM Agreement") regarding certain automotive industry
measures ("the Measures") of Indonesia (i.e. so-called National Car Programme), 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 Government of Japan considers that the exemption from customs duties and luxury tax
granted by the Measures constitutes subsidies, since there is a financial contribution by the Government
of Indonesia where government revenue that is otherwise due is foregone or not collected, as provided
for in Article 1 of the SCM Agreement. These subsidies are "prohibited subsidies" contingent upon
the use of domestic over imported goods, and therefore deemed to be specific in accordance with
paragraph 3 of Article 2 of the Agreement.
The Government of Indonesia has, through the promulgation of Presidential Decrees No. 2
and No. 42 after entry into force of the WTO Agreement, extended the scope of the subsidies inconsistent
with the SCM Agreement which have been introduced before the date on which Indonesia signed the
WTO Agreement, to the import of completed vehicles (i.e. "National Car"). This is, in the view of
the Government of Japan, inconsistent with paragraph 1(b) of Article 3 and paragraph 2 of Article 28
of the SCM Agreement. The obligation of the Government of Indonesia under the said Article is not
exempted by paragraph 3 of Article 27 of the same Agreement.
Furthermore, the Government of Japan considers that these subsidies cause serious prejudice
to the interests of Japan as provided for in Article 6 of the SCM Agreement and, therefore, the
Government of Japan may seek remedies under the provisions of Article 7 of the same Agreement,
irrespective of whether the Government of Indonesia is entitled to maintain such subsidies under the
SCM Agreement. Therefore, the Government of Japan hereby requests the Government of Indonesia
to take appropriate steps to remove the adverse effects or withdraw these subsidies under the Measures.

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 that
the consultations requested in this letter will be held simultaneously with the second round of consultations
requested in my previous letter (WT/DS55/1), which is to be held in early December.