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Indonesia - Certain Measures Affecting the Automovile IndustryReport of the Panel (Continued)
XIII. Interim review 63713.1 On 6 April 1998, Indonesia requested the Panel to review, in accordance with Article 15.2 of the DSU, certain aspects of the interim report that had been transmitted to the parties on 24 March 1998. On 7 April 1998, the European Communities, Japan and the United States also requested the Panel to review the interim report. None of the parties requested the Panel to hold an additional meeting. 13.2 We have reviewed the arguments and drafting suggestions presented by the four parties, and finalized our report, taking into account those comments by the parties which we considered justified. In this context we have clarified the wording of certain paragraphs addressing some factual aspects of the various pieces of legislation under examination and revised paragraphs 2.1, 2.3, 2.28, 2.37, 2.44, 3.1, 2.44, 3.1, 3.4(a), 5.126, 6.100, 7.87 to 7.91, 7.161, 7.163, 8.13, 8.160, 8.199, 8.332, 8.393, 8.418, 8.443, 8.444, and 10.4 to 10.12 of the descriptive part and paragraphs 14.10, 14.86, 14.92, 14.107 and 14.115 of the findings accordingly. Some parties have also raised arguments with regard to the description of their claims. We have carefully reviewed the claims of the complainants, as identified in the originals of their requests for establishment of panels, and revised paragraphs 14.15, 14.18, 14.20, 14.21, 14.94, 14.124, 14.125 and 14.148 accordingly. We have also revised paragraphs 14.210 to 14.213 of the findings to more accurately characterize the arguments of the European Communities. Further, we have decided in light of comments from the European Communities to delete paragraphs 14.198 and 14.199 and to modify paragraph 14.247. In addition, we have made other minor modifications including those to paragraphs 14.9, 14.38, 14.68, 14.73, 14.76, 14.77, 14.94, 14.95, 14.133, 14.134, 14.149, 14.152, 14.176 and 15.1(a). 13.3 Finally, we would like to address the issue of the confidentiality of the interim report. When, on 24 March 1998, we transmitted our interim report to the parties, we clearly indicated that such report was confidential. Indeed all panel proceedings remain confidential until the panel report is circulated to WTO Members. According to paragraph (h) of Appendix 1 of the Council Decision on Procedures for the Circulation and Derestriction of WTO Documents 638 it is possible to maintain the restricted nature of any such panel report for 10 days after circulation to Members. We had also explicitly emphasized at our first meeting with the parties that the panel proceedings were confidential and that we expected all delegations to treat the present proceedings with utmost circumspection and discretion. This was accepted by the parties. We are seriously concerned to find out that parties (leaks from Japan and the United States have been brought to our attention) have not respected this obligation and have disclosed aspects of the interim report. We consider that this lack of respect of a specific requirement imposed by the Panel affects the rights of the parties and the integrity of the dispute settlement process, and should not remain unmentioned. XIV. Findings 639A. Preliminary Rulings 1. Presence of private lawyers as representatives of a party to the dispute 14.1 As further detailed in paragraphs 4.1 to 4.35 of the Descriptive Part, in connection with the first substantive meeting of the Panel with the parties, Indonesia announced that two private lawyers were members of its delegation. Following a request by the United States to exclude those lawyers from the meeting, the Panel heard the arguments of the parties on this issue. On 3 December 1997, the Chairman announced the following ruling on behalf of the Panel: "I wish to inform the parties that having carefully reviewed the letters received in the preliminary matter before us, and having heard the arguments of the parties, the Panel does not agree with the United States� request to exclude from meetings of the Panel certain persons nominated by the Government of Indonesia as members of its delegation. We conclude that it is for the Government of Indonesia to nominate the members of its delegation to meetings of this Panel, and we find no provision in the WTO Agreement or the DSU, including the standard rules of procedure included therein, which prevents a WTO Member from determining the composition of its delegation to WTO panel meetings. Nor does past practice in GATT and WTO dispute settlement point us to a different conclusion in this case. In particular, we note that unlike in this present case, the working procedures of the Bananas III Panel contained a specific provision requiring the presence only of government officials. We would like to emphasize that all members of parties' delegations -- whether or not they are government employees -- are present as representatives of their governments, and as such are subject to the provisions of the DSU and of the standard working procedures, including Articles 18.1 and 18.2 of the DSU and paragraphs 2 and 3 of those procedures. In particular, parties are required to treat as confidential all submissions to the Panel and all information so designated by other Members; and, in addition, the Panel meets in closed session. Accordingly, we expect that all delegations will fully respect those obligations and will treat these proceedings with the utmost circumspection and discretion. I would ask the four Heads of Delegation to confirm that all members of their delegations are present as representatives of their governments, and as such will abide by all of the applicable provisions; and therefore that the governments are responsible for the actions of their representatives." 14.2 The parties accepted these prescriptions by the Panel and the four Heads of Delegation confirmed that all members of their delegations were present as representatives of their governments, and as such would abide by all of the applicable provisions. 2. The alleged loan to PT TPN as a measure covered by the terms of reference of this panel 14.3 At the first meeting of the Panel with the parties, on 3 December 1997, Indonesia raised a preliminary objection to the United States� claim with respect to a $US 690 million loan to PT TPN, on the basis that this loan was not within the Panel�s terms of reference. The arguments of the parties can be found in paragraphs 4.36 to 4.50 of the Descriptive Part of this report. After hearing the arguments of the parties, the Chairman announced the following ruling on behalf of the Panel: "In its first submission, the United States alleges that the Government of Indonesia directed certain government-owned and private banks to provide PT TPN with a $690 million loan as a component of the National Motor Vehicle Programme. The United States claims that this government-directed loan is inconsistent with Article III:4 of GATT 1994 and Article 2 of the TRIMs Agreement, and that it is a specific subsidy which causes or threatens to cause serious prejudice to the interests of the United States. Indonesia in its first submission alleges that the loan is not within the Panel's terms of reference and asks us to so rule. At its first meeting, we invited the parties to address this issue. We note that this Panel has standard terms of reference. Therefore, in determining whether a measure is before us, we must examine the United States' request for establishment of a panel, which is found in document WT/DS59/6. Consistent with the findings of the Appellate Body in Bananas III, we have carefully examined that request to ensure its compliance with both the letter and spirit of Article 6.2 of the Dispute Settlement Understanding. We conclude that the $690 million loan was not "identified as a specific measure" in that document as required by Article 6.2 of the DSU. Indeed the United States states that the loan was not identified in the U.S. request, because it had not yet been made. Rather, the United States suggests that the loan is properly before the Panel because it is one aspect of the National Car Programme, which the United States considers to be the subject of its request. In our view, however, the United States in its request has clearly identified the measures to be considered by the Panel, and those measures do not include this loan. Accordingly, we conclude that the loan in question is not within the terms of reference of this Panel." 14.4 Consequently, we do not address any claims related to the said $690 million loan in our findings. 3. Business proprietary information 14.5 At three points in its first submission, the United States indicated that it had further information relevant to its serious prejudice claims but that this information was "business proprietary" and that the United States was reluctant to provide it to the Panel in the absence of "adequate procedures" to protect such information. 14.6 At the first meeting of the Panel, Indonesia expressed concern that the United States would submit this information only in its second submission, thereby denying Indonesia an opportunity to respond in its second submission. Accordingly, Indonesia requested the Panel to require the United States to submit its confidential data immediately. Indonesia further stated that it must be given an opportunity to review and respond fully to the data and to any additional argumentation based thereon. The arguments of the parties can be found in paragraphs 4.51 to 4.60 of the Descriptive Part of this panel report. 14.7 The Panel considered the request by Indonesia and on 3 December 1997 the Chairman announced the following ruling on behalf of the Panel: "We encourage all parties to submit relevant data to the Panel as early as possible. However, we have concluded that it would not be appropriate for us to require the United States to submit the information in question in the context of this meeting. It is a matter for each party to decide when and if to submit information and argumentation within the schedule set forth by the Panel. In this respect, we note that there is no rule in the DSU or our working procedures that requires parties to submit all factual information in their first submissions. In fact, factual information is often provided in second submissions or in response to questions from a panel as the issues in the case come into sharper focus. We see no reason to deviate from that approach in this case. This does not mean that we do not take seriously Indonesia's concern that it be allowed an opportunity to review and respond to any new data and to any additional argumentation based thereon. We note that, at the second meeting of the Panel, parties will be able to address any new data and related argumentation presented in each others' second submissions. If, however, any party considers at the time of that meeting that it has not had an adequate opportunity to address any such data and argumentation, the party should so inform us at that time. I can assure you that the Panel will take all reasonable steps to insure that all parties have had a full opportunity to respond to the factual information and argumentation submitted to the Panel. Finally, we would like to remind all parties that Article 18.2 of the DSU does allow parties to designate information as confidential. Such designation will be respected by this Panel, the WTO Secretariat and the other parties to the dispute. Accordingly, we encourage all parties to submit to the Panel such information as they consider may be helpful to the resolution of this dispute. In this respect, we note that the parties agree that the complainants alleging serious prejudice must demonstrate its existence by positive evidence. If the United States considers that the information in question is necessary in order to meet that burden, and if it believes that Article 18.2 is inadequate, the United States may propose to the Panel in writing, at the earliest possible moment, a procedure that it considers sufficient to protect the information in question." 14.8 The United States did not propose or request the Panel to adopt any such procedure. 4. Whether the National Car programme has expired and should therefore not be examined by this panel 14.9 On 25 February 1998, Indonesia sent to the Chairman of the Subsidies Committee a letter in which it indicated that on 21 January 1998 the National Car programme was terminated and that regulations and decrees thereunder had been revoked. For Indonesia, the Presidential Instruction establishing the National Car programme was therefore "obsolete". A copy of that letter was officially notified to the Chairman of this Panel. Upon request of the Panel, all parties have commented on this notification by Indonesia. 641 We note that this communication from Indonesia came after the deadline of 30 January 1998 set by the Panel for submitting information and arguments in this case. Further, the complainants challenge whether the National Car programme has effectively been terminated and have requested the Panel to rule on all claims before it. In any event, taking into account our terms of reference, and noting that any revocation of a challenged measure could be relevant to the implementation stage of the dispute settlement process, we consider that it is appropriate for us to make findings in respect of the National Car programme. In this connection, we note that in previous GATT/WTO cases, where a measure included in the terms of reference was otherwise terminated or amended after the commencement of the panel proceedings, panels have nevertheless made findings in respect of such a measure. 642 We shall therefore proceed to examine all of the claims of the complainants.B. Claims 1. Claims of the complainants 14.10 The various Indonesian measures at issue in this dispute are described in paragraphs 2.3 to 2.43 of the Descriptive Part of this report. For the purpose of these findings, we shall generally categorize and refer to the measures as those adopted pursuant to the 1993 car programme, 643 the February 1996 car programme 644 and the June 1996 car programme645. When we refer to the "Indonesian car programmes", especially in the discussion on the general relationship between the provisions of the SCM Agreement and Article III of GATT, we include all the measures adopted pursuant to all three car programmes. When we refer to the National Car programme we refer to the measures adopted pursuant to the February and June 1996 car programmes. Our use of these general references is not intended to preclude discussion of the WTO compatibility of more specific aspects of the various car programmes. We note, however, that Japan considers that most of Government Regulation No.20/1996 and Government Regulation No. 36/1996 are not related to the National Car Programme. We also note that Government Regulation No. 36/1996 has affected the level of benefits under the 1993 car programme.14.11 We understand from the requests for establishment of the panel that the claims of the complainants are as follows: (i) Local-content requirements 14.12 The European Communities and the United States claim that the local content requirements of the 1993 car programme (to which are linked tax benefits for finished motor vehicles incorporating a certain percentage value of domestic products and customs duty benefits for imported parts and components used in motor vehicles incorporating a certain percentage value of domestic products) violate the provisions of Article III:4 of the General Agreement on Tariff and Trade of 1994 (hereafter, "GATT") 646 and Article 2 of the Agreement on Trade-Related-Investment Measures (hereafter "TRIMs Agreement"). 14.13 Japan, the European Communities and the United States claim that the local content requirements of the February 1996 car programme (to which are linked tax benefits for National Cars incorporating a certain percentage value of domestic products and customs duty benefits for imported parts and components used in National Cars) violate the provisions of Article III:4 of GATT and Article 2 of the TRIMs Agreement. (ii) Tax discrimination 14.14 The European Communities and the United States claim that the tax benefits of the 1993 car programme in favour of certain domestic cars violate the provisions of Article III:2 of GATT. 14.15 The European Communities, Japan and the United States claim that the tax benefits of the February 1996 car programme in favour of National Cars violate the provisions of Article III:2 of GATT. The European Communities and the United States claim that the tax benefits of the June 1996 car programme in favour of National Cars violate the provisions of Article III:2 of GATT. 14.16 The European Communities claim that the tax benefits on finished motor vehicles of the 1993 and the February and June 1996 car programmes, because of the local content requirements, also provide an indirect tax benefit on parts and components of the finished motor vehicles, in violation of Article III:2 of GATT. (iii) MFN discrimination 14.17 Japan, the European Communities and the United States claim that the tax benefits accorded to National Cars produced in Korea, under the June 1996 car programme, violate Article I of GATT. 14.18 Japan, the European Communities and the United States claim that the customs duty benefits accorded to National Cars produced in Korea under the June 1996 car programme violate Article I:1 of GATT. 14.19 Japan and the European Communities claim that the customs duty benefits accorded on certain parts and components used for the production in Indonesia of National Cars under the February 1996 car programme violate Article I of GATT. 14.20 The European Communities claim as well that the customs duty benefits on certain parts and components used for the production of finished motor vehicles in Indonesia under the 1993 car programme, violate Article I of GATT. We note, however, that the European Communities have not further argued this claim. (iv) Absence of notification and partial administration 14.21 Japan claims that the National Car programme violates Article X:1 of GATT, because it was not published promptly in such a manner as to enable governments and traders to become acquainted with it, and Article X:3(a) of GATT, because it has not been administered in a uniform, impartial and reasonable manner. (v) Serious prejudice 14.22 The European Communities and the United States claim that the February and June 1996 car programmes constitute specific subsidies which cause serious prejudice to their interests within the meaning of Article 6 of the SCM Agreement. (vi) Extension of the scope of existing subsidies 14.23 The United States claims that the introduction of the National Car programme and certain modifications to the 1993 car programme represent an extension of the scope of existing subsidy programmes in violation of Article 28 of the SCM Agreement. (vii) National treatment violation with respect to the acquisition and maintenance of trademarks, and the use of trademarks 14.24 The United States claims that the provisions of the National Car programme discriminate against nationals of other WTO Members with respect to the acquisition and maintenance of trademarks, and the use of trademarks as specifically addressed in Article 20, in violation of Article 3 of the TRIPS Agreement. (viii) Introduction of special requirements in respect of the use of trademarks 14.25 The United States claims that the provisions of the National Car programme which were introduced by Indonesia during its transition period under the TRIPS Agreement put special requirements on nationals of other WTO Members in respect of the use of their trademarks inconsistent with Article 20 of the TRIPS Agreement and are thus in violation of Indonesia�s obligations under Article 65.5 of that Agreement. To continue with Indonesia�s general defence 637 Pursuant to Article 15.3 of the DSU, the findings of the panel report shall include a discussion of the arguments made at the interim review stage. Consequently the following section entitled Interim Review is part of the Findings of this Panel Report. 638 Decision adopted by the General Council on 18 May 1996, WT/L/160/Rev.1. 639 Throughout this report, we have based our analysis on the ordinary meaning to be given to the terms of the provisions under examination in their context and in the light of their object and purpose. In our analysis of the scope and purpose of these provisions we have also taken into account past GATT and WTO panel reports and Appellate Body reports when we considered them relevant and applicable to the present dispute. We are aware, however, that they are not binding, except with respect to resolving the particular dispute between the parties to that dispute. Appellate Body Report on Japan - Taxes on Alcoholic Beverages, WT/DS8, 10, 11, adopted on 1 November 1996, p. 14, hereafter called Alcoholic Beverages (1996). 640 The Panel in referring to Bananas III, referred to the Appellate and Panel Reports on EC - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27, adopted on 25 September 1997. 641 See paragraphs 4.61 to 4.110 of the Descriptive Part. 642 See, e.g. Panel Report on United States - Measures Affecting Imports of Wool Shirts and Blouses from India, WT/DS33, adopted on 23 May 1997, (hereafter called "Shirts and Blouses"), the US restriction was withdrawn shortly before the issuance of the panel report; Panel Report on EEC - Restrictions on Imports of Dessert Apples, Complaint by Chile, adopted on 22 June 1989, BISD 36S/93; Panel Report on EEC-Restrictions on Imports of Apples, Complaint by the United States, adopted on 22 June 1989, BISD 36S/135; Panel Report on United States - Prohibition of Imports of Tuna and Tuna Products from Canada, adopted on 22 February 1982, BISD 29S/91; Panel Report on EEC - Restrictions on Imports of Apples from Chile, adopted on 10 November 1980, BISD 27S/98; and Panel Report on EEC - Measures on Animal Feed Proteins, adopted on 14 March 1978, BISD 25S/49. In the Panel Report on United States - Section 337 of the Tariff Act of 1930, BISD 36S/345, adopted on 7 November 1989 (hereafter called "Section 337"), the challenged measure was amended during the panel process but the panel refused to take into account such amendment. We note that this is also the line taken by the Appellate Body in Argentina - Measures Affecting Imports of Footwear, Textiles, Apparels and Other Items, WT/DS56, adopted on 22 April 1998, para. 64. 643 Including the Decree of the Minister of Industry No. 114/M/S/6/1993, dated 9 June 1993 and its amendments; Decree of Minister of Finance No. 645/KMK.01/1993, dated 10 June 1993; Decree of Minister of Finance No. 647/KMK.04/1993, dated 10 June 1993; Decree of Minister of Finance No. 223/KMK.01/1995, dated 23 May 1995. 644 Including the Presidential Instruction No. 2 and all of the implementing regulations and decrees (e.g. Government Regulation No. 20/1996, Decree of the Minister of Industry and Trade No. 31/MAP/S/2/1996, Decree of the Minister of Finance No. 82/KMK.01/1996), Decree of the State Minister for Mobilisation of Investment Funds/Chairman of the Investment Coordinating Board No.01/SK/1996, 27 February 1996, Decision of the State Minister For the Mobilization of Investment Funds/Chairman of the Capital Investment Co-Ordinating Board, Number 02/SK/1996, 5 March 1996. 645 Including the Presidential Decree No.42, 4 June 1996, Government Regulation No. 36/1996, Decree of the Minister of Industry and Trade No. 142/MAP/KEP/6/1996 and Decree of the Minister of Finance No. 404/KMK.01/1996. 646 Throughout this draft, "GATT" will be used when referring to GATT 1994. When references are made to GATT 1947, the Panel will be referring to the General Agreement on Tariff and Trade of 1947 which was terminated on 31 December 1995 by the Decision of 8 December 1994 adopted by the Preparatory Committee for the WTO and the CONTRACTING PARTIES TO GATT 1947, PC/12-L/7583. In discussions involving the comparison between provisions of GATT 1947 and parallel provisions in the WTO Agreement (including GATT 1994), we may use the expression GATT 1994 and GATT 1947. |
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