[Federal Register Volume 62, Number 180 (Wednesday, September 17, 1997)]
[Notices]
[Pages 48916-48917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24671]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. WTO/D-17]


WTO Dispute Settlement Proceeding Regarding Certain Indonesian 
Measures Affecting the Automobile Industry

AGENCY: Office of the United States Trade Representative.

ACTION: Notice; request for comments.

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SUMMARY: Pursuant to section 127(b)(1) of the Uruguay Round Agreements 
Act (URAA) (19 U.S.C. 3537(b)(1)), the Office of the United States 
Trade Representative (USTR) is providing notice that, at the request of 
the United States, a dispute settlement panel has been established 
under the Agreement Establishing the World Trade Organization (WTO), to 
examine certain Indonesian measures affecting the automobile industry. 
More specifically, in this dispute the United States alleges that the 
Indonesian measures in question are inconsistent with several WTO 
agreements, including Articles I:1, III:2, and III:7 of the General 
Agreement on Tariffs and Trade 1994 (GATT 1994); Article 2 of the 
Agreement on Trade-related Investment Measures (TRIMs Agreements); 
Articles 3, 20 and 65 of the Agreement on Trade-Related Aspects of 
Intellectual Property Rights (TRIPs Agreement); and Article 28.2 of the 
Agreement on Subsidies and Countervailing Measures (SCM Agreement); In 
addition, the United States alleges that the measures in question 
constitute subsidies that cause ``serious prejudice'' to the interests 
of the United States in view of Articles 6 and 27 of the SCM Agreement. 
USTR also invites written comments from the public concerning the 
issues raised in the dispute.

DATES: Although USTR will accept any comments received during the 
course of the dispute settlement proceedings, comments should be 
submitted on or before October 3, 1997, to be assured of timely 
consideration by USTR in preparing its first written submission to the 
panel.

ADDRESSES: Comments may be submitted to Ileana Falticeni, Office of 
Monitoring and Enforcement, Room 501, Attn: Indonesia Automobile 
Industry Dispute, Office of the U.S. Trade Representative, 600 17th 
Street, N.W., Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT:
William D. Hunter, Assistant General Counsel, (202) 395-3582, or Mary 
Latimer, Office of Asia & the Pacific, (202) 395-4755.

SUPPLEMENTARY INFORMATION: On June 12, 1997, the United States 
requested the establishment of a WTO dispute settlement panel to 
examine whether certain Indonesian measures affecting the automobile 
industry are inconsistent with Indonesia's obligations under several 
WTO agreements, and whether such measures constitute subsidies that 
cause serious prejudice to the interests of the United States under the 
SCM Agreement. Previously, on April 17, 1997 and May 12, 1997, Japan 
and the European Communities (EC), respectively, had requested the 
establishment of a panel regarding some of the same measures, making 
claims that were similar to, but narrower in scope than, those made by 
the United States. On June 12, 1997, the WTO Dispute Settlement Body 
(DSB) established a panel to examine the complaints of Japan and the 
EC. On July 30, 1997, the DSB established a panel to examine the U.S. 
complaint, and decided to consolidate the U.S. panel with the Japan/EC 
panel established earlier. Under normal circumstances, the panel, which 
will hold its meetings in Geneva, Switzerland, would be expected to 
issue a report detailing its findings and recommendations within twelve 
months after it is established.

Major Issues Raised by the United States and Legal Basis of 
Complaint

    In 1993, Indonesia adopted a system of incentives for manufacturers 
of motor vehicles and parts in the form of duty reductions on imports 
of certain products and tax reductions on the sale of motor vehicles. 
These incentives are conditional on compliance with local content 
requirements with respect to inputs. In February, 1996, Indonesia 
expanded this system of incentives to provide additional tax and tariff 
incentives designed to promote a ``national car'' that was produced by 
an Indonesian company, carried a unique Indonesian trademark, and had a 
gradually-increasing percentage of local content over the ensuing three 
years. Indonesia made a modification to this program in June, 1996, 
when it

[[Page 48917]]

permitted the ``national car'' to be produced outside Indonesia.
    The USTR believes that these measures are inconsistent with several 
provisions of the WTO agreements, including the following:

--The grant of tax and tariff benefits under the ``national motor 
vehicle'' program to finished cars imported into Indonesia from a sole 
supplier in Korea is inconsistent with Articles I:1 and III:7 of the 
GATT 1994;
--The grant of benefits tied to percentage local content under the 1993 
program and the ``national car'' program is inconsistent with Article 
III:4 of the GATT 1994 and Article 2 of the TRIMs Agreement;
--The effective imposition of a lower tax on domestic motor vehicle 
parts and components than on imported parts components is inconsistent 
with Article III:2 of the GATT 1994;
--The grant of luxury tax-free treatment to ``national motor vehicle'' 
that is not granted to imported finished vehicles is inconsistent with 
Article III:2 of the GATT 1994;
--The grant of national car benefits only to those cars bearing a 
unique Indonesian trademark owned by Indonesia nationals discriminates 
against foreign-owned trademarks and their owners in a manner 
inconsistent with Articles 3, 30 and 65 of the TRIPs Agreement;
--The adoption of the ``national car program'' in 1996 had the effect 
of extending the scope of tax- and tariff-based subsides in a manner 
inconsistent with Article 28.2 of the SCM Agreement; and
--The grant of the tax and tariff benefits described above constitute 
specific subsidies that cause serious prejudice to the interests of the 
United States within the meaning of the SCM Agreement by displacing or 
impeding imports of U.S. motor vehicles, and of parts or components 
thereof, into the Indonesian market and/or by creating significant 
price and undercutting, price suppression, price depression and/or loss 
of sales for U.S. exporters to that market.

Public Comment: Requirements for Submissions

    Interested persons are invited to submit written comments 
concerning the issues raised in the dispute. Comments must be in 
English and provided in fifteen copies. A person requesting that 
information contained in a comment submitted by that person be treated 
as confidential business information must certify that such information 
is business confidential and would not customarily be released to the 
public by the commenter. Confidential business information must be 
clearly marked ``BUSINESS CONFIDENTIAL'' in a contrasting color ink at 
the top of each page of each copy.
    Information or advice contained in a comment submitted, other than 
business confidential information, may be determined by USTR to be 
confidential in accordance with section 135(g)(2) of the Trade Act of 
1974 (19 U.S.C. 2155(g)(2)). If the submitter believes that information 
or advice may qualify as such, the submitter--
    (1) must so designate that information or advice;
    (2) must clearly mark the material as ``SUBMITTED IN CONFIDENCE'' 
in a contrasting color ink at the top of each page of each copy; and
    (3) is encouraged to provide a non-confidential summary of the 
information or advice.
    Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR 
will maintain a file on this dispute settlement proceeding, accessible 
to the public, in the USTR Reading Room; Room 101, Office of the United 
States Trade Representative, 600 17th Street, N.W., Washington, DC 
20508. The public file will include a listing of any comments received 
by USTR from the public with respect to the proceeding; the U.S. 
submissions to the panel in the proceeding; the submissions, or non-
confidential summaries of submissions, to the panel received from other 
participants in the dispute, as well as the report of the dispute 
settlement panel and, if applicable, the report of the Appellate Body. 
An appointment to review the public file (Docket WTO/D-17 (``U.S.-
Indonesia Automobile Industry Dispute'') may be made by calling Brenda 
Webb, (202) 395-6186. The USTR Reading Room is open to the public from 
9:30 a.m. to 12 noon and 1 p.m. to 4 p.m., Monday through Friday.
A. Jane Bradley,
Assistant U.S. Trade Representative for Monitoring and Enforcement.
[FR Doc. 97-24671 Filed 9-16-97; 8:45 am]
BILLING CODE 3190-01-M