INDONESIA – certain measures addressing local
content
in investment in the telecommunications
sector
Questions from japan
The following communication,
dated 2 May 2017, is being circulated at the request of the Delegation of
Japan.
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Japan considers that Indonesia's answers
(G/TRIMS/W/160) to our questions with regard to the local contents requirements
in Indonesia's telecommunications sector (G/TRIMS/W/154) fail
to address our concerns. Following the Indonesia's commitment in the previous meeting
that Indonesia would provide answers in written form if any further questions
are posed, Japan reiterates the following questions which reflect our concerns.
1.
Firstly, according to Item 1 of
Indonesia's answers to our questions (G/TRIMS/W/160), the regulation (i.e. the
local contents requirements) "does not differentiate treatment between
local and foreign-service provider". However, the issue concerned in this
case is not whether there is differentiated treatment between local and foreign
telecommunications service providers, but whether there is differentiated
treatment between local and foreign origin products (i.e. communication
equipment or devices). In fact, Articles 16 and 17 of the Indonesia's
Ministerial Decree No.7/2009 stipulate local contents requirements on
communication equipment or devices. Japan considers that such regulation
substantially differentiates local and foreign origin products, which is
inconsistent with Article 3.4 of the GATT 1994, and that requires the purchase
or use by an enterprise of local origin products, which is inconsistent with
Article 2.2 of the TRIMs Agreement according to Item 1 (a) of its Annex (i.e.
the Illustrative List). Japan would like Indonesia to explain clearly on this
point.
2.
Secondly, according to Item 2 of
Indonesia's answers to our questions (G/TRIMS/W/160), the regulation falls
under the Article 3.8 (a) of the GATT 1994 that stipulates exemption of
government procurement. Specifically, the Article exempts "laws,
regulations or requirements governing the procurement by governmental agencies
of products purchased for governmental purposes and not with a view to
commercial resale or with a view to use in the production of goods for
commercial sale". However, it is not clear for Japan why Indonesia considers
the scope of the regulation (i.e. local contents requirements) corresponds to
government procurement. The regulation is applied to enterprises, not to the
government, and there are no existing rules that allow those enterprises to use
the government budgets. Therefore, Japan could not find any reason why the
regulations fall under Article 3.8(a) of the GATT 1994, and would like
Indonesia to explain clearly on this point.
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