Indonesia and its Track Record at WTO Dispute Settlement

WTO Dispute Settlement | Indonesia

Simon Lacey | Last Updated 18 April 2013

Indonesia’s Track Record So Far

www.uph-analytics.com

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As Complainant (6 cases)Argentina — Safeguard Measures on Imports of FootwearUnited States — Continued Dumping and Subsidy Offset Act of 2000Korea — Anti-Dumping Duties on Imports of Certain Paper from IndonesiaSouth Africa — Anti-Dumping Measures on Uncoated Woodfree PaperUnited States — Measures Affecting the Production and Sale of Clove CigarettesEuropean Union — Anti-Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia

As Defendant (5 cases – but really only 2)Indonesia — Certain Measures Affecting the Automobile Industry (4 cases DS 54/55/59/64)Indonesia —Importation of horticultural products, animals and animal products

Argentina Footwear


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Parties- Complainant: Indonesia

- Respondent: Argentina

Issue(s)GATT 1994: Art. XIX

Safeguards: Art. 2, 4, 5, 6, 7, 12

Status On 23 April 1998, Indonesia requested consultations

On 15 April 1999, Indonesia requested the establishment of a panel.

In a communication dated 10 May 1999, Indonesia informed the DSB that it was not pursuing its request for a panel at the next DSB meeting, but that this was without prejudice to its rights under the DSU to resurrect the panel request.

SignificanceIndonesia was able to free-ride off the action taken by the EC in regard to the same measure.

Byrd Amendment Case


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PartiesComplainant: Australia; Brazil; Chile; European Communities; India; Indonesia; Japan;

Korea, Republic of; Thailand

Respondent: United States

Third Parties: Argentina; Canada; Costa Rica; Hong Kong, China; Israel; Mexico; Norway

IssueVarious provisions of the WTO Antidumping and Subsidies Agreements.

Status Authorization to retaliate granted on 26 November 2004, BUT, Indonesia was NOT one of the countries that requested authorization to retaliate (these were Brazil, Chile, the EC, India, Japan, Korea, Canada and Mexico).

Significance

Systemically important decision for the WTO.

Korea – Certain Paper


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PartiesComplainant: IndonesiaRespondent: Korea, Republic ofThird Parties: Canada; China; European Communities; Japan; United States; Chinese Taipei

IssueVarious provisions of the AD Agreement and GATT Art. VI

Status Compliance proceedings completed with finding(s) of non-compliance on 22 October 2007

SignificanceWas an important victory for Indonesia but some observers would argue that Indonesia dropped the ball in the end game.

South Africa - Paper


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PartiesComplainant: Indonesia

Respondent: South Africa

IssueAnti-dumping (Article VI of GATT 1994): Art. 11.3, 11.4

Status Settled or terminated (withdrawn, mutually agreed solution) on 20 November 2008

SignificanceNo apparent far-reaching implications to this dispute, except that like Korea Paper, it is testimony to the importance Indonesia attaches to its paper exports.

United States - Clove Cigarettes


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Respondent: United States

IssueVarious provisions under GATT 1994 and the TBT Agreement

Status Report(s) adopted, with recommendation to bring measure(s) into conformity by 24 July 2013 (Reasonable Period of Time).

SignificancePart of a broader strategy of push-back from the global tobacco industry

European Union - Fatty Alcohols


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Respondent: European Union

IssueVarious provisions of GATT 1994 and the AD Agreement

Status In consultations on 30 July 2012

SignificanceToo early to tell

Indonesia - Autos


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PartiesComplainants: European Communities; United States, Japan,

Respondent: Indonesia

Third Parties: India; Korea, Republic of; United States; European Communities; Japan

Issue

Various provisions of GATT 1994 and the TRIMS Agreement

Status Implementation notified by respondent on 26 July 1999

SignificanceDiscussed below

Indonesia - horticultural products


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PartiesComplainant: United States

Respondent: Indonesia

IssueVarious provisions of GATT 1994, the Agreement on Agriculture and the Import Licensing Agreement

Status Panel established on 24 April 2013

SignificanceStill to early to tell, but could deal a significant blow to the “permit raj” that increasingly dominates Indonesia’s import sector

An Analysis of the Indonesian Autos Case

Simon Lacey | Last Updated 15 January 2013

Time Line of the Dispute

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Date Event

Feb 19, 1996

National Car Program Launched

Feb 26, 1996

Kia Motor / Timor Putra Nasional Joint Venture announced

Mar 12, 1996

Japanese MITI reported as announcing possibility of taking action at the WTO

Apr 24, 1996

Sir Leon Britain visits Jakarta and criticizes the national car program

Jun 4, 1996 Presidential decree No. 42/1996 National Cars made overseas by foreign workers and that fulfill the content requirement would be treated as if made in Indonesia

Oct 3, 1996 EU requests consultations with Indonesia (similar requests from Japan on Oct 4 and USA on Oct 8)


Time Line of the Dispute 2

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Date Event

Apr 17, 1997 Japan requests establishment of a Panel (similar requests from EC on May 12 and the US on June 12

Early June 1997

Minister Tunky announces that negotiating teams have been sent to Japan, Europe and the US to try and find a negotiated settlement

Jun 12, 1997 Panel established (EC/Japan) with a panel also established for the US on July 30.

Oct 31, 1997 Indonesia issues commitment letter to the IMF agrees to phase out local content requirements for motor vehicles by 2000 and to implement the WTO ruling ahead of schedule.

Mar 24, 1998 Interim report issued

Jul 2, 1998 Final report circulated.

Jul 23, 1998 Panel report adopted by the DSB

Dec 7, 1998 Arbitrator’s report circulated for the reasonable period of time for implementation (12 months).


The Main Actors


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Tungky Ariwobowo - Minister of Trade and Industry Hutomo Mandala Putra – owner of TPN Aburizal Bakrie – Chairman of KADIN (welcomes the TPN initiative) Bambang Trihatmojo – behind a competing national car program Sir Leon Britain – EC Commissioner for External Relations Andrew Card, President of the American Automobile Manufacturers Associations Mari Elka Pangestu – CIS Jakarta – warns of the danger to Indonesia of letting the

matter go to a WTO dispute Japanese car manufacturers (Toyota, Honda, Isuzu) European car manufacturers (BMW, VW, Citroën, etc.)

Dispute Settlement at the WTO


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Panel Proceedings (no Appeal) Main legal issues covered:

- GATT 1994: Art. I, I:1, III, III:2, III:4- Subsidies and Countervailing Measures: Art. 1, 2, 3.1(b), 6- Trade-Related Investment Measures (TRIMs): Art. 2

Followed by arbitration to determine the reasonable period for implementation (12 months, i.e. until 23 July 1999)

Implementation largely unproblematic:“By a communication dated 15 July 1999, Indonesia informed the DSB that it had issued a new

automotive policy on 24 June 1999 (the 1999 Automotive Policy), which effectively

implemented the recommendations and rulings of the DSB in this matter.”

An Analysis of US –Clove Cigarettes

Simon Lacey | Last Updated 15 January 2013

Time Line of the Dispute

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Date Event

Jun 22, 2009 Family Smoking Prevention and Tobacco Control Act becomes law, essentially banning flavored cigarettes (except menthol)

Apr 7, 2010 Indonesia requests consultations with the United States

Jun 9, 2010 Indonesia requests the establishment of a panel

Jul 20, 2010 Panel established

May 27, 2011 Interim report issued

Sep 2, 2011 Final report circulated

Jan 5, 2012 Notice of appeal

Apr 4, 2012 AB report circulated

Apr 24 2012 Panel and AB reports adopted


The Main Actors


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Parties- Complainant - Indonesia- Respondent – United States- Third Parties - Brazil, Colombia, Dominican Republic, EU,

Guatemala, Mexico, Norway, Turkey - Parties

Interests- What is the importance of tobacco in Indonesia?- Why was menthol not banned by the Act too?

Other (indirect) actors?- Tobacco companies- WHO

Dispute Settlement at the WTO


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Panel upheld Indonesia’s argument that the US measure constituted a violation of Art. 2.1 TBT, i.e. that the ban on clove cigarettes, but not menthol was a national treatment violation.

Panel rejected Indonesia’s argument that the US measure constituted a violation of Art. 2.2 TBT, i.e. that the US measure was more trade restrictive than necessary.

Appellate Body upheld Panel’s findings on these points. Current status: US has until 24 July 2013 to comply.

Other Observations on Indonesia’s Participation in WTO Dispute

Settlement Simon Lacey | Last Updated 15 January 2013

Potential Future Issues


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Indonesia still has a lot of outstanding compliance issues under its WTO obligations as can be seen from this years USTR Trade Barriers Estimate Report (we will go through this now).

Indonesia will have to tread carefully if it does not want to bear the brunt of challenges that could in fact be aimed at opening larger and more important markets.

Assessing Indonesia’s Use of the System

Indonesia has only used the system sparingly, even reluctantly. Indonesia’s first experience with the WTO dispute settlement system was

a painful one, but since then it has had some moderate successes. Indonesia still has some way to go before it obtains the respect of other

members as a serious and fearless user of the system.


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Indonesia and its Track Record at WTO Dispute Settlement

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