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Indonesia - Certain Measures Affecting the Automobile Industry WORLD TRADE WT/DS54/R WT/DS55/R ORGANIZATION WT/DS59/R WT/DS64/R 2 July 1998 (98-2505) Original: English INDONESIA - CERTAIN MEASURES AFFECTING THE AUTOMOBILE INDUSTRY REPORT OF THE PANEL The report of the Panel on Indonesia - Certain Measures Affecting the Automobile Industry is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 2 July pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body. Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat. - i - TABLE OF CONTENTS Page I. INTRODUCTION .................................................................................................................1 A. Background...............................................................................................................1 1. Complaint of Japan......................................................................................1 2. Complaint of the European Communities....................................................1 3. Complaint of the United States....................................................................2 B. Establishment and Composition of the Panel ...........................................................2 C. Information-Gathering Procedure under Annex V of the SCM Agreement .............3 D. Panel Proceedings.....................................................................................................3 II. FACTUAL ASPECTS...........................................................................................................3 A. Tax and Tariff Treatment in Indonesia of Imported Completely Built-Up Motor Vehicles..........................................................................................4 B. Measures at Issue......................................................................................................4 1. 1993 Programme..........................................................................................4 (a) Decree No. 114/1993......................................................................5 (b) Decree No. 645/1993......................................................................6 (c) Decree No. 647/1993......................................................................7 (d) Decree No. 223/1995......................................................................7 (e) Decree No. 36/1997........................................................................9 2. National Car Programme.............................................................................9 (a) "The February 1996 Programme"...................................................9 (b) "The June 1996 Programme"........................................................12 3. The US$690 million loan to TPN..............................................................15 C. Notifications by Indonesia to WTO Committees....................................................15 III. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES...............15 A. Japan ...................................................................................................................15 B. European Communities...........................................................................................16 C. United States...........................................................................................................18 D. Indonesia.................................................................................................................19 - ii - Page IV. REQUEST FOR PRELIMINARY RULINGS ....................................................................19 A. Participation of Private Lawyers.............................................................................19 1. Objection of the United States ...................................................................19 2. Response of Indonesia...............................................................................20 (a) General principles of international law support Indonesia's sovereign right to select counsel of its choice and organize and present its defence.................................22 (b) Practice before international adjudicatory bodies confirms Indonesia's right.............................................................23 (c) The WTO Appellate Body supports Indonesia's right...............................................................................................23 (d) GATT past practice does not and cannot circumvent Indonesia's sovereign right...........................................................24 (e) Practical and equitable considerations mandate that Indonesia not be denied its right............................................25 B. Preliminary objection to United States' claim regarding the US$690 million loan to TPN.............................................................................................................26 1. Objection by Indonesia..............................................................................26 (a) First, the loan was not raised in the Panel request or the Panel's terms of reference...................................................26 (b) Second, the loan arose after the Panel was established.....................................................................................26 (c) Third, the United States cannot "cure" its omission of the loan from its Panel request by discussing the loan in its first submission ............................................................27 2. Response of the United States ...................................................................27 C. Business Proprietary Information ...........................................................................28 1. Request of Indonesia..................................................................................28 2. Response of the United States ...................................................................29 D. Request from Indonesia for Termination of the Panel with Respect to the National Car Programme.................................................................30 1. Request from Indonesia.............................................................................31 2. Response of Japan......................................................................................32 (a) It is still not clear whether the National Car Programme has been fully terminated ..........................................32 (b) The Government of Indonesia has not provided any assurances that it will not introduce the measures of the same nature as the National Car Programme, i.e. discriminatory measures to benefit specific domestic products.........................................................................32 - iii - Page (c) Even if measures are eliminated, a panel can and should rule on them................................................................33 3. Response of the European Communities ...................................................33 4. Response of the United States ...................................................................34 (a) The measures at issue are within the Panel's Terms of Reference.......................................................................35 (b) Established GATT and WTO Panel practice is to make findings on measures that are withdrawn subsequent to the establishment of a Panel's Terms of Reference.......................................................................35 (c) It is not established that the measures have, in fact, expired..............................................................................36 (d) A termination of the dispute would diminish US rights under the DSU..............................................................37 (e) Conclusion....................................................................................38 V. CLAIMS UNDER ARTICLE III OF GATT 1994 ..............................................................38 A. Claims under Article III:2, First Sentence of GATT 1994 .....................................38 1. Claims raised by Japan ..............................................................................38 (a) Article III:2, first sentence requires that sales of imported products not be taxed at rates in excess of rates imposed on like domestic products ......................39 (b) Luxury tax is an internal tax .........................................................39 (c) National cars are domestic products.............................................39 (d) National cars and imported automobiles are "like" products........................................................................39 (e) Imported products are taxed less favourably than "like" domestic products.......................................................41
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