WORLD TRADE WT/DS59/6
13June1997
ORGANIZATION(97-2480)
Original: English
INDONESIA -CERTAIN MEASURES AFFECTING THE
AUTOMOBILE INDUSTRY
Request fortheEstablishment ofaPanel bytheUnited States
Thefollowing communication, dated 12June 1997, from thePermanent Mission ofthe
United States totheChairman oftheDispute Settlement Body, iscirculated attherequest ofthat
delegation.
_______________________
On8October 1996, theUnited States requested consultations withIndonesia pursuant to
Articles 1and4oftheUnderstanding onRules andProcedures Governing theSettlement ofDisputes
(DSU), Article XXII:1 oftheGeneral Agreement onTariffs andTrade 1994(GATT 1994), Article 8
oftheAgreement onTrade-Related Investment Measures (TRIMs Agreement) (totheextent it
incorporates byreference Article XXII oftheGATT 1994), Articles 7and30oftheAgreement on
Subsidies andCountervailing Measures (SCM Agreement) (totheextent Article 30incorporates by
reference Article XXII oftheGATT 1994), andArticle 64oftheAgreement onTrade-Related Aspects
ofIntellectualPropertyRights(TRIPSAgreement)(totheextentitincorporatesbyreferenceArticleXXII
oftheGATT 1994) regarding certain measures affecting trade andinvestment inthemotor vehicle
sector (WT/DS59/1).
Pursuant totheabove-mentioned request, theUnited States consulted withIndonesia inGeneva
on4November 1996 and4December 1996, inanattempt toreach amutually satisfactory solution.
Additional informal consultations havebeenandwillbeheldtoward thesame end. Unfortunately,
theconsultations heldtodatehavefailed tosettle thematter.
TheUnited States therefore respectfully requests thataPanel beestablished pursuant toArticle 6
oftheDSU, Article XXIII:2 oftheGATT 1994, Article 8oftheTRIMs Agreement (totheextent
itincorporates byreference Article XXIII oftheGATT 1994), Articles 7.4and30oftheSCM
Agreement (totheextent Article 30incorporates byreference Article XXIII oftheGATT 1994), and
Article 64oftheTRIPS Agreement (totheextent itincorporates Article XXIII oftheGATT 1994).
TheUnitedStatesrequeststhattheDisputeSettlementBody(DSB)initiatetheprocedureprovided
forinAnnex VoftheSCM Agreement pursuant toparagraph 2ofthatAnnex. TheUnited States
notes thatthisprocedure hasalready beeninvoked inthecontext ofaparallel request fortheformation
ofaPanel bytheEuropean Community dated 12May1997, andthattheDSBhastoday chosen a
representative tocarry outthiswork. TheUnited States requests thattheinformation-gathering process
ontheUnited States andEuropean Community claims becombined intoasingle exercise. TheUnited
States would liketobegin immediately toparticipate intheprocess ofidentifying theinformation which
should besought under thisprocedure, andtheprocedures bywhich thatinformation should becollected
andconsidered.WT/DS59/6
Page2
TheMeasures atIssue
TheMeasures atissue inthisrequest include:
- thegrant ofimport dutyrelief topartsandcomponents usedintheassembly ofmotor
vehicles inIndonesia based onthefinished vehicles, andunder some circumstances
thefinished parts andcomponents, meeting certain localcontent requirements;
- theeffective reduction orelimination oftheluxury salestaxonvehicles inIndonesia
based onthefinished vehicles meeting certain localcontent requirements;
- theexemption ofimport duties forparts andcomponents usedfortheassembly of
"national motor vehicles" assembled inIndonesia andmeeting certain local content
obligations;
- theeffectiveexemptionfromtheluxurysalestaxon"nationalmotorvehicles"assembled
inIndonesia andmeeting certain localcontent obligations;
- thegrant of"national motor vehicle" tariff andluxury sales taxbenefits toasingle
company thatimports suchvehicles from Korea; and
- defining"nationalmotorvehicles"asincludingonlythosemotorvehiclesbearingunique
Indonesian trademarks owned byIndonesian nationals.
TheGovernment ofIndonesia hasimplemented these Measures through thefollowing acts(as
wellasthrough, interalia,subsidiary decrees, regulations, instructions andimplementing measures):
- Decree oftheMinister ofIndustry No.114/M/SK/6/1993, dated 9June1993
- Decree ofMinister ofFinance No.645/KMK.01/1993, dated 10June1993
- Decree ofMinister ofFinance No.647/KMK.04/1993, dated 10June1993
- Decree ofMinister ofFinance No.223/KMK.01/1995, dated 23May1995
- Presidential Instruction No.2/1996, dated 19February 1996
- Government Regulation No.20/1996, dated 19February 1996
- Decree oftheMinistry ofIndustry and Trade No. 31/MPP/SK/2/1996,
dated 19February 1996
- Decree ofMinister ofFinance No.82/KMK.01/1996, dated 19February 1996
- Decree oftheMinister ofIndustry No.01/SK/1996, dated 27February 1996
- Government Regulation No.36/1996, dated 4June1996
- Presidential Decree No.42/1996, dated 4June1996
- Decree oftheMinistry ofIndustry andTrade No.142/MPP/Kep/6/1996WT/DS59/6
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TheLegal Basis fortheComplaint
TheUnitedStatesbelievesthattheMeasuresnotedaboveareinconsistentwithseveralagreements
oftheWorld Trade Organization, including:
- thegrantoftaxandtariffbenefitsunderthe"nationalmotorvehicle"programtofinished
carsimportedintoIndonesiafromasolesupplierinKoreaisinconsistentwithArticleI:1
andIII:7oftheGATT 1994;
- thegrant ofbenefits tiedtopercentage localcontent under the1993 program andthe
"national motor vehicle" program isinconsistent withArticle III:4oftheGATT 1994
andArticle 2oftheTRIMs Agreement (inviewofItem1(a)oftheIllustrative List
Annexed tothatAgreement);
- theeffective imposition ofalower taxondomestic motor vehicle partsandcomponents
thatonimported parts andcomponents isinconsistent with Article III:2 ofthe
GATT 1994;
- thegrant ofluxury taxfreetreatment to"national motor vehicles" thatisnotgranted
toimported finished vehicles isinconsistent withArticle III:2oftheGATT 1994;
- thegrant ofnational carbenefits onlytothose carsbearing aunique Indonesian
trademarkownedbyIndonesiannationalsdiscriminatesagainstforeignownedtrademarks
andtheirowners inamanner inconsistent withArticles 3,20and65oftheTRIPs
Agreement;
- thegrant oftaxandtariffbenefits intheabove-referenced measures constitute specific
subsidieswithinthemeaningofArticles1and2oftheSCMAgreement,whichsubsidies
cause "serious prejudice" totheinterests oftheUnited States inview ofArticles 6
and27oftheSCM Agreement, inparticular bydisplacing orimpeding imports of
U.S.motor vehicles, andofpartsandcomponents thereof, intotheIndonesian market
and/or bycreating significant price undercutting, price suppression, price depression
and/or lossofsalesforU.S.exporters tothatmarket; and
- theadoption ofthe"national carprogram" in1996hadtheeffect ofextending thescope
oftaxandtariff-based subsidies inamanner inconsistent withtheprovisions of
Article 28.2oftheSCM Agreement.
Accordingly, theUnited States requests theestablishment ofapanel toexamine thismatter
andfindthatIndonesia 'smotor vehicle regime isinconsistent withtheabove-referenced provisions
oftheWTO agreements, andthatitnullifies orimpairs benefits accruing directly orindirectly tothe
United States under those agreements. TheUnited States asksthatthisrequest beplaced ontheagenda
forthemeeting oftheDispute Settlement Body scheduled tobeheldon25June1997, andthatthe
panel beestablished withstandard terms ofreference assetoutinArticle 7oftheDSU.