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World Trade Organization

WT/DS54/R
WT/DS55/R
WT/DS59/R
WT/DS64/R


2 July 1998
(98-2505)
Original: English

Indonesia - Certain Measures Affecting the Automovile Industry

Report of the Panel

(Continued)


I. Introduction

A. Background

1. Complaint of Japan

1.1 On 4 October 1996, Japan requested consultations with 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 measures affecting the automotive industry of Indonesia (WT/DS55/1).

1.2 On 29 November 1996, Japan requested additional consultations with Indonesia regarding the National Car Programme under Articles 1 and 4 of the DSU, Article XXII:1 of GATT 1994 and Articles 7 and 30 of the Agreement on Subsidies and Countervailing Measures (the "SCM Agreement") (WT/DS64/1).

1.3 On 5 November and 3 December 1996, Japan and Indonesia held the consultations requested on 4 October 1996. On 3 December 1996, also in Geneva, Japan and Indonesia held the consultations requested on 29 November 1996. No mutually satisfactory solution was reached.

1.4 On 17 April 1997, Japan requested the establishment of a panel, pursuant to Articles 4.7 and 6.1 of the DSU, Article XXIII:2 of GATT 1994, Article 8 of the TRIMs Agreement, and Article 30 of the SCM Agreement. Japan requested the panel to examine the consistency of various measures under the National Car Programme with Articles I:1, III:2, III:4, X:1 and X:3(a) of GATT 1994, Article 2 of the TRIMS Agreement, and Articles 3.1(b) and 28.2 of the SCM Agreement.

2. Complaint of the European Communities

1.5 On 3 October 1996, the European Communities requested consultations with Indonesia pursuant to Article 4 of the DSU, Article XXII of GATT 1994, Article 8 of the TRIMs Agreement and Articles 7 and 30 of the SCM Agreement, with respect to certain measures affecting the automobile industry (WT/DS54/1).

1.6 The European Communities and Indonesia held consultations on 6 November 1996 and on 5 December 1996. No mutually satisfactory solution was reached.

1.7 On 12 May 1997, the European Communities requested the establishment of a panel pursuant to Article XXIII:2 of GATT, Article 6 of the DSU, Article 8 of the TRIMs Agreement (to the extent that it incorporates by reference Article XXIII of GATT) and Articles 7.4 and 30 of the SCM Agreement (to the extent that Article 30 incorporates by reference Article XXIII of GATT). The European Communities requested the panel to examine the consistency of the measures identified with Articles I:1, III:2 and III:4 of GATT 1994, and Article 2 of the TRIMS Agreement. The European Communities also requested the panel to examine its complaint that the measures identified constitute "specific subsidies" within the meaning of Articles 1 and 2 of the SCM Agreement which cause "serious prejudice" to the Community's interest in the sense of Article 6 of that Agreement.

1.8 The European Communities also requested, in conjunction with its request for establishment of a panel, that the Dispute Settlement Body initiate the procedure provided in Annex V of the SCM Agreement pursuant to point 2 of that Annex.

3. Complaint of the United States

1.9 On 8 October 1996, the United States requested consultations with Indonesia pursuant to Articles 1 and 4 of the DSU, Article XXII:1 of GATT 1994, Article 8 of the TRIMs Agreement (to the extent it incorporates by reference Article XXII of the GATT 1994), Articles 7 and 30 of the SCM Agreement (to the extent Article 30 incorporates by reference Article XXII of the GATT 1994), and Article 64 of the TRIPS Agreement (to the extent it incorporates by reference Article XXII of the GATT 1994) regarding certain measures affecting trade and investment in the motor vehicle sector (WT/DS59/1).

1.10 The United States and Indonesia held consultations on 4 November 1996 and 4 December 1996, but failed to reach a mutually satisfactory solution.

1.11 On 12 June 1997, the United States requested the establishment of a panel pursuant to Article 6 of the DSU, Article XXIII:2 of the GATT 1994, Article 8 of the TRIMs Agreement (to the extent it incorporates by reference Article XXIII of the GATT 1994), Articles 7.4 and 30 of the SCM Agreement (to the extent Article 30 incorporates by reference Article XXIII of the GATT 1994), and Article 64 of the TRIPS Agreement (to the extent it incorporates Article XXIII of the GATT 1994). The United States requested the panel to examine the consistency of the measures identified with Articles I:1, III:2, III:4 and III:7 of GATT 1994, Articles 3, 20, and 65 of the TRIPs Agreement, Article 28.2 of the SCM Agreement, and Article 2 of the TRIMS Agreement. The United States also requested the panel to examine its complaint that the measures identified constitute "specific subsidies" within the meaning of Articles 1 and 2 of the SCM Agreement which cause "serious prejudice" to the United States' interest in the sense of Article 6 and 27 of that Agreement.

1.12 The United States also requested, in conjunction with its request for establishment of a panel, that the Dispute Settlement Body initiate the procedure provided in Annex V of the SCM Agreement pursuant to point 2 of that Annex. The United States noted that this procedure had already been invoked in the context of the European Communities' parallel request for establishment of a panel, and requested that the information-gathering process on the United States and European Communities claims be combined into a single exercise.

B. Establishment and Composition of the Panel

1.13 At its meeting on 12 June 1997, the DSB established a panel pursuant to requests by Japan and the European Communities (WT/DS55/6-WT/DS64/4, and WT/DS54/6, respectively). At its meeting of 30 July 1997, the DSB agreed to the United States' request for establishment of a panel (WT/DS59/6), and also agreed, as provided for in Article 9 of the DSU in respect of multiple complainants, that the Panel established on 12 June 1997 to examine the complaints by Japan and the European Communities would also examine the United States' complaint.

1.14 The terms of reference of the Panel are the following:

"To examine, in the light of the relevant provisions of the covered agreements cited by Japan in document WT/DS55/6-WT/DS64/4, by the European Communities in document WT/DS54/6, and by the United States in document WT/DS59/6, the matter referred to the DSB by Japan, the European Communities and the United States in those documents and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements".

1.15 Pursuant to a joint request by Japan and the European Communities, and as provided for in paragraph 7 of Article 8 of the DSU, on 29 July 1997 the Director-General composed the Panel as follows:

Chairman: Mr. Mohamed Maamoun Abdel Fattah
Members: Mr. Ole Lundby
Mr. David John Walker

1.16 India and Korea reserved their rights as third parties to the dispute.

C. Information-Gathering Procedure under Annex V of the SCM Agreement

1.17 At its meeting of 12 June 1997, the DSB agreed to the European Communities' request for the initiation of the Annex V procedure, and pursuant to paragraph 4 of Annex V, designated Mr. Stuart Harbinson as its representative for purposes of that procedure.

1.18 The 60-day period for the information-gathering procedure provided for in Annex V to the SCM Agreement with respect to the European Communities' complaint began on the date of establishment of the Panel to hear the European Communities' and Japan's claims, 12 June 1997, and ended on 11 August 1997.

1.19 The United States also invoked the 60-day information-gathering procedure provided for in Annex V to the SCM Agreement. Because the United States joined the dispute as a party only on 30 July 1997, the 60-day period related to its claims was a separate, later period, which ended 22 September 1997. All parties agreed that first submissions by complainants should be due four weeks after the end of the second phase of the Annex V procedure (related to the United States' claims), so that all information developed through that procedure could be used in the preparation of the first submissions. This postponement of the deadline for first submissions, to take account of both phases of the Annex V procedure, necessitated an equal postponement of the rest of the Panel's timetable.

D. Panel Proceedings

1.20 The Panel met with the parties on 3/4 December 1997 and on 13/15 January 1998. The Panel met with the third parties on 4 December 1997.

1.21 On 11 December 1997, the Chairman of the Panel informed the DSB that the Panel would not be able to issue its report within six months of the composition and establishment of the terms of reference of the Panel. The reasons for the delay are the postponement of the schedule due to the Annex V procedure, as discussed above and set forth in WT/DS55/9-WT/DS64/7-WT/DS54/9-WT/DS59/8.

To Continue with Factual Aspects.