WORLD TRADE WT/DS64/1
G/SCM/D9/1
ORGANIZATION 5December 1996
(96-5100)
Original: English
INDONESIA -CERTAIN MEASURES AFFECTING
THE AUTOMOBILE INDUSTRY
Request forConsultations byJapan
Thefollowing communication, dated 29November 1996, fromthePermanent Mission ofJapan
tothePermanent Mission ofIndonesia, iscirculated inaccordance withArticle 4.4oftheDSU.
_______________
Upon instruction frommyauthorities, Iwishtoconvey therequest oftheGovernment ofJapan
forconsultations withtheGovernment ofIndonesia pursuant toArticles 1and4oftheUnderstanding
onRules andProcedures Governing theSettlement ofDisputes ("DSU"), Article XXII:1 oftheGeneral
Agreement onTariffs andTrade 1994 ("GATT 1994") andArticles 7and30oftheAgreement on
Subsidies andCountervailing Measures ("SCM Agreement") regarding certain automotive industry
measures("theMeasures")ofIndonesia(i.e.so-calledNationalCarProgramme),whichwereintroduced
bytheGovernment ofIndonesia inFebruary 1996 bymeans ofitsPresidential Decree No.2and
modified inJune1996 through itsPresidential Decree No.42.
TheGovernment ofJapan considers thattheexemption from customs duties andluxury tax
granted bytheMeasures constitutes subsidies, sincethereisafinancial contribution bytheGovernment
ofIndonesia where government revenue thatisotherwise dueisforegone ornotcollected, asprovided
forinArticle 1oftheSCM Agreement. These subsidies are"prohibited subsidies" contingent upon
theuseofdomestic overimported goods, andtherefore deemed tobespecific inaccordance with
paragraph 3ofArticle 2oftheAgreement.
TheGovernment ofIndonesia has,through thepromulgation ofPresidential Decrees No.2
andNo.42afterentryintoforceoftheWTOAgreement,extendedthescopeofthesubsidiesinconsistent
withtheSCM Agreement which havebeenintroduced before thedateonwhich Indonesia signed the
WTO Agreement, totheimport ofcompleted vehicles (i.e."National Car"). Thisis,intheviewof
theGovernment ofJapan, inconsistent withparagraph 1(b)ofArticle 3andparagraph 2ofArticle 28
oftheSCM Agreement. Theobligation oftheGovernment ofIndonesia under thesaidArticle isnot
exempted byparagraph 3ofArticle 27ofthesame Agreement.
Furthermore, theGovernment ofJapan considers thatthese subsidies cause serious prejudice
totheinterests ofJapan asprovided forinArticle 6oftheSCM Agreement and,therefore, the
Government ofJapan mayseekremedies under theprovisions ofArticle 7ofthesame Agreement,
irrespective ofwhether theGovernment ofIndonesia isentitled tomaintain suchsubsidies under the
SCM Agreement. Therefore, theGovernment ofJapan hereby requests theGovernment ofIndonesia
totakeappropriate stepstoremove theadverse effects orwithdraw thesesubsidies under theMeasures.
./.WT/DS64/1
G/SCM/D9/1
Page2
TheGovernment ofJapan reserves therighttoraiseadditional factual claims andlegalmatters
during thecourse oftheconsultations.
Welookforward toreceiving yourreply tothisrequest forconsultations andtoagreeing that
theconsultationsrequestedinthisletterwillbeheldsimultaneouslywiththesecondroundofconsultations
requested inmyprevious letter (WT/DS55/1), which istobeheldinearly December.