G/SG/N/8/IDN/9
G/SG/N/10/IDN/9
G/SG/N/11/IDN/8
Page 1

World Trade
Organization
G/SG/N/8/IDN/9
G/SG/N/10/IDN/9
G/SG/N/11/IDN/8
12 April 2011
(11-1811)
Committee on Safeguards / Original: English

NOTIFICATION UNDER ARTICLE 12.1(B) OF THE
AGREEMENT ON SAFEGUARDS ON FINDING
A SERIOUS INJURY OR THREAT THEREOF
CAUSED BY INCREASED IMPORTS

NOTIFICATION PURSUANT TO ARTICLE 12.1(C)
OF THE AGREEMENT ON SAFEGUARDS

NOTIFICATION PURSUANT TO ARTICLE 9, FOOTNOTE 2
OF THE AGREEMENT ON SAFEGUARDS

INDONESia

(Bleached and unbleached woven fabric of cotton)

The following notification, dated 10 April 2011, is being circulated at the request of the Delegation of Indonesia.

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Pursuant to Article 12.1 (b) and (c) of the WTO Agreement on Safeguards ("WTO Safeguards"), the Republic of Indonesia notifies on the findings and the imposition of a safeguard measure on imports of bleached and unbleached woven fabric of cottonunder HS codes: 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, 5208.29.00.00, 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, and 5208.29.00.00, for a period of three (3) years by the issuance of Minister of Finance's Decree number: 58/PMK.011/2011[1] dated 23 March 2011, promulgated in the Berita Negara of the Republic of Indonesia Number 163 on the same date.

It is requested that this notification under Article 12.1 (b) and (c) of the WTO Agreement on Safeguards be brought to the notice of Members.

A.Background

On 22 June 2010, The Indonesian Textile Industries Association (API) on behalf of its members filed an application with Indonesian Safeguards Committee (Komite Pengamanan Perdagangan Indonesia/ KPPI) requesting for a safeguards measure against imports of bleached and unbleached woven fabric of cotton.

The domestic industry claimed to suffer from a serious injury caused by the significant increased volume of of imports of the subject goods. The claim based on the information covering the period 2007 to 2009, which showed that imports of bleached and unbleached woven fabric of cotton, in terms of volume, increased significantly causing a serious injury to domestic industry.

1.Initiation of investigation

After examining a request made by the domestic industry, the investigating authority decided to initiate an investigation, and individual notice sent to all known interested parties and concerned government agencies. The Government of Indonesia notified members of the WTO through the WTO Secretariat, which is issued the notification on the 16 July 2010 (G/SG/N/6/IDN/12).

2.Subject goods

The subject goods are:

  1. Woven Fabrics Of Cotton Containing 85 percent Or More By Weight Of Cotton, weighing not more than 200 gram/m2 under HS codes 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, and 5208.29.00.00;
  2. Woven Fabrics Of Cotton Containing 85 percent Or More By Weight Of Cotton, Weighing More Than 200 gram under 5209.29.00.00;
  3. Woven Fabrics of Cotton containing less than 85 percentby weight of cotton, mixed mainly or solely with man-made fibres, weighing not more than 200 g/m2 under HS codes 5210.11.00.00;
  4. Woven Fabrics of Cotton containing less than 85 percent by weight of cotton, mixed mainly or solely with man-made fibres, weighing more than 200 g/m2 under HS codes 5211.11.00.00, 5211.12.00.00;
  5. Other woven fabrics of cotton under HS codes 5212.11.00.00.

3.Period of investigation

The period of investigation covers calendar years 2007 until 2009.

4.The domestic industry

The investigating authority confirmed that the domestic industry subject to investigation represents the majority of the subject goods produced in Indonesia.

5.Hearing

In accordance with Article 3.1 WTO Agreement on Safeguards, during the investigation period, the investigating authority has provided opportunities to importers, exporting countries delegation, and domestic industry, to submit their evidence and comments. In this regard, the investigating authority received the following comments from The Indonesian Textile Industries Association (API), the Embassy of Malaysia; and Taipei Economic and Trade Office.

B.Information on Increase In Imports

An analysis of the increase in imports to Indonesia of the subject goods has been carried out over the period from 2007 to 2009 in absolute term. The investigation authority found that the import of the subject goods has increased considerably in that period.

Table 1 indicates that imports rose significantly, from 7,953 tons in 2007 to 17,128 tons in 2008. The surge of imports continued in 2009, when the level of imports reached 26,153 tons or equivalent 52.7 percent compared with 2008.

Table 1: Volume of Imports of the subject goods

Description / Unit / 2007 / 2008 / 2009
Imports / tons / 7,953 / 17,128 / 26,153

Source: Statistics Indonesia

C.Unforeseen Development

The unforeseen rapid decline in global demand and excess supplies in textile sector of certain major suppliers resultedin a significant increased of import of the subject goods to Indonesia being an important market in the region for those major suppliers.

Moreover, the commitments of the Government of Indonesia to eliminate import tariffs for the subject goods under a number of FTA Agreements has transferred the domestic market to be more open and induced significant increased volume of import of the subject goods, which put the domestic industry into a more vulnerable situation. Would this situation had been predicted, the subject goods would be excluded from these agreements.

D.Evidence of Serious Injury and Effect of increased imports

In order to make a determination of serious injury to the domestic industry of the subject goods, the investigating authority made an evaluation of all relevant factors having a bearing on the stated of the domestic industry. The following evaluation has been based upon data provided by the domestic industry, result of the on-site verification, and other information available to the investigating authority:

Table 2: Indicators of Serious Injury

NO. / DESCRIPTION / UNIT / YEAR
2007 / 2008 / 2009
1 / National Consumption / Index / 100 / 101 / 99
2 / Volume of Imports / Ton / 7,953 / 17,128 / 26,157
3 / Market Share of the Domestic Industry / Index / 100 / 83 / 76
4 / Market Share of Imports / Index / 100 / 225 / 350
5 / Domestic Sales of the Domestic Industry / Index / 100 / 84 / 76
6 / Production / Index / 100 / 87 / 76
7 / Capacity Utilization / Index / 100 / 97 / 89
8 / Inventory / Index / 100 / 176 / 251
9 / Profit/Loss / Index / (100) / (127) / (214)
10 / Employment / Index / 100 / 85 / 70
11 / Productivity / Index / 100 / 100 / 100

(i)While the National Consumption index increased from 2007 to 2008, but decreased slightly in 2009, the volume of import had increased 115 percent from 2007 to 2008 and 52.7 percent from 2008 to 2009. At the same time the market share of import increased significantly, while the market share of the domestic industry decreased steadily during the same period due to the continues decrease of the domestic sales. This condition has resulted in significant decreased of domestic production and increased in inventory.

(ii)The decreased in market share and domestic sales caused significant financial losses to the domestic industry during the period of investigation, in which the biggest loss was in 2009. Due to the financial losses the domestic industry had to layoff substantial number of labours. Because of the decline in production offsite by the reduction in the number of employment, the productivity relatively remained unchanged. Meanwhile capacity utilization fell by 3indexed points in 2008 from 2007, and further decreased by 8 indexed points in 2009. The reduction in capacity utilization from 2007 onwards reflected the decrease in production.

Referring to the above-mentioned examination of information concerning the condition of the domestic industry and the development of volume of imports during the period of investigation, the investigating authority found that the domestic industry suffered a serious injury as a result of the increased volume of imports of the subject goods.

E.Other Factors That May Contribute To Injury

In order to ensure that injury is only caused by increased imports, the investigating authority also examined the following other known factors:

  1. Competition Among Domestic Industries

From the result of investigation, it is found that while the national consumption decreased from 101 indexed points in 2008 to 99 indexed points in 2009, the market share of applicant and non-applicant domestic industries also fell significantly, from 83 indexed points in 2008 to 76 indexed points in 2009 for the applicant domestic industries. As for non-applicant domestic industries, the market share fell from 111 indexed points in 2008 to 89 indexed points in 2009. This condition confirmed that the market share of applicant domestic industry was not taken by non-applicant domestic industries.

  1. Production Capacity

The investigating authority found that many of the domestic industry has revitalized and renewed the machineries in order to boost productivity and production capacity. Consequently the domestic industry has the ability to fulfil national consumption. However due to the decline in sales, capacity utilization also decreased. Based on the fact, the investigating authority confirmed that production capacity of the domestic industry is not a factor that caused serious injury.

Based on findings on the above-mentioned factors, the investigating authority confirmed that there are no other factors than increased imports that have caused serious injury to the domestic industry.

F.Conclusion Of The Finding And Causal Link

As the result of the investigation referred in point B, C, and D, the investigating authority confirmed that increased volume of imports of the subject goods have caused serious injury to the domestic industry that produced the like products.

G.Description of the Safeguards Measure

  1. As the investigating authority has found that the increased volume of imports of the subject good caused a serious injury to the domestic industry, it is decided that a safeguards measure to be imposed on imports of bleached and unbleached woven fabric of cotton under HS codes: 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, 5208.29.00.00, 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, and 5208.29.00.00.
  1. In order to provide ample period of time for the domestic industry to recover from the serious injury and to induce adjustment, progressive liberalization of a safeguards measure in the form of specific duty will be imposed for 3 (three) years, as follows:

Table 3: Definitive Safeguards Measure

Period / Specific Duty
23 March 2011 – 22 March 2012 / Rp. 116,800/Kg
23 March 2012 – 22 March 2013 / Rp. 109,500/Kg
23 March 2013 – 22 March 2014 / Rp. 102,200/Kg
  1. Pursuant to Article 9.1 WTO Agreement on Safeguards, the Safeguard Measure shall not be imposed against the subject goods originating from developing countries with a market share of less than 3 percent of total volume imports or collectively do not exceed 9 percent of the total volume imports of bleached and unbleached woven fabric of cotton under HS codes: 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, 5208.29.00.00, 5208.11.00.00, 5208.12.00.00, 5208.13.00.00, 5208.19.00.00, 5208.23.00.00, and 5208.29.00.00.
  2. Below is the list of developing countries excluded from the measures as they exported less than 3 per cent of total imports to Indonesia (Article 9.1 of the WTO Agreement on Safeguards).

List of Developing Countries excluded from the measures

COUNTRY / COUNTRY
Albania / Djibouti
Angola / Dominica
Antigua and Barbuda / Dominican Republic
Argentina / Ecuador
Armenia / Egypt
Bahrain, Kingdom of / El Salvador
Bangladesh / Fiji
Barbados / Former Yugoslav Republic of Macedonia (FYROM)
Belize / Gabon
Benin / Georgia
Bolivarian Republic of Venezuela / Ghana
Bolivia, Plurinational State of / Grenada
Botswana / Guatemala
Brazil / Guinea
Brunei Darussalam / Guinea Bissau
Burkina Faso / Guyana
Burundi / Haiti
Cambodia / Honduras
Cameroon / India
Cape Verde / Jamaica
Central African Republic / Jordan
Chad / Kenya
Chile / Kingdom of Saudi Arabia
Colombia / Kuwait
Congo / Kyrgyz Republic
Costa Rica / Lesotho
Côte d'Ivoire / Macao, China
Croatia / Madagascar
Cuba / Malawi
Democratic Republic of the Congo / Maldives
COUNTRY / COUNTRY
Mali / Saint Vincent & The Grenadines
Mauritania / Senegal
Mauritius / Sierra Leone
Mexico / Solomon Islands
Moldova / South Africa
Mongolia / Sri Lanka
Morocco / Suriname
Mozambique / Swaziland
Myanmar / Tanzania
Namibia / Thailand
Nepal / The Gambia
Nicaragua / Togo
Niger / Tonga
Nigeria / Trinidad and Tobago
Oman / Tunisia
Pakistan / Uganda
Panama / Ukraine
Papua New Guinea / United Arab Emirates
Paraguay / Uruguay
Peru / Viet Nam
Philippines / Zambia
Qatar / Zimbabwe
Rwanda
Saint Kitts and Nevis
Saint Lucia

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[1]A copy of the relevant resolution (PERATURAN MENTERI KEUANGAN NOMOR 58/PMK.011/2011 - in Indonesian only) has been submitted electronically. To consult this document please contact Ms. Budd () or Ms. McGrath () of the Rules Division.