RESTRICTED  
 
  
G/TRIMS/M/47  
 
14 January 2020  
(20-0449) Page: 1/10 
Committee on Trade -Related Investment Measures    
 
MINUTES OF THE MEETI NG HELD ON 13 NOVEMBER  2019  
CHAIR: MS TIZIANA ZUGLIANO  (ITALY ) 
 
 The Chair  referred to the proposed agenda circulated in WTO/AIR/TRIMS/ 10 dated 
1 November  2019. No additional item was raised under  "Other Business ", and the Committee 
adopted the following agenda : 
1 CHINA – LOCAL CONTEN T IN CYBERSECURITY M EASURES  ................................ ............  1 
2 INDONESIA – COMPREHENSIVE REVI EW OF LOCALIZATION M EASURES  ......................  2 
3 RUSSIAN FEDERATION – MEASURES IMPLEMENTI NG RUSSIA'S IMPORT  
SUBSTITUTION POLICY  ................................ ................................ ................................ .... 7 
4 NOTIFICATIONS UNDER ARTICLE 6.2 OF THE T RIMS AGREEMENT OF  
PUBLICATIONS IN WHIC H TRIMS MAY BE FOUND  ................................ ...........................  9 
5 OTHER BUSINESS  ................................ ................................ ................................ ..........  9 
6 DATE OF THE NEXT MEE TING  ................................ ................................ ........................  9 
7 ANNUAL REPORT TO THE  COUNCIL FOR TRADE I N GOODS (ARTICLE 7.3 ) ....................  9 
 
1  CHINA  – LOCAL CONTENT IN CYBERSECURITY MEASURES  
 The Chair recalled that this item was  first considered by the Committee in June 2016 and was  
on the agenda at the request of the United States. Questions were posed to China by the 
United  States in document G/TRIMS/Q/CHN/1 dated 3 June 2016. To date no wri tten replies had 
been submitted.  
 The United States  indicated that it  remained very concerned about China 's Cybersecurity Law 
and related implementing measures that appeared to require local content and that raised questions 
of consistency with China 's obligations under the TRIMS Agreement. The United States recalled that 
China 's Cybersecurity Law entered into force on June 1, 2017, in spite of serious and long -standing 
concerns from the United States and many other internationa l stakeholders. The United States 
indicated that, since then, China had continued to develop, and in certain cases, finalize related 
implementing measures that are sometime s general in scope, and sometimes sector -specific. The 
United States indicated that it had many concerns regarding China 's Cybersecurity Law and related 
measures, including those that restrict the ability of foreign investors  operating in China to procure 
the technology of their choice, through "secure and controllable " requirements, enfo rced by 
cybersecurity review regime checks. This phrase indicated a requirement to purchase Chinese rather 
than foreign technology and had potential implications for China's TRIMS obligations. The 
United  States noted that, in 2019, China published "Cyberse curity Review Measures " for public 
comment; the Measures would replace the Cyber Product and Service Security Review Measures, in 
place since June 2017. The United States invited China to inform the Committee how these  measure s 
would address the concerns r aised by Members in past meetings.  
 The European Union  shared the concern s expressed by the United States on China 's 
cybersecurity legislation, including the different guidelines and administrative measures designed to 
implement the law. The European Union stated that  it continued to have concerns that these 
measures may lead to possible discriminatory practices against foreign enterprises. For example, G/TRIMS/M/47  
 
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  under the Multi -Level Protection Scheme, the grading into protection level three or above ha d led to 
the de facto exclusion of foreign -invested vendors through the wide scope of application of protection 
level three and above. The EU was concerned about the increas ing burden for networks graded as 
protection level two and the increased scope of protection leve l three. Many European -invested 
companies were operating within the scope of protection level two, meaning they will be directly 
impacted with increased costs and possibly delayed entry into operation of new networks. The 
European Union asked China to prov ide an update of the developments with respect to this measure, 
as well as other implementing rules of the Cybersecurity Law, in particular whether and how the key 
concerns, including those expressed by the industry, had been addressed.  
 Japan  shared the co ncerns raised by the United States and the European Union. Regarding 
the Cybersecurity Law, Japan was also concerned that Chinese authorities could require the use of 
products originating from China through the multi -level protection requirements applicabl e to critical 
information infrastructure or through the review process about security and controllability of network 
products and services , which according to Japan was inconsistent with GATT Article III:4 and 
Article  2 of the TRIMS Agreement.  Japan requested China to elaborate on the concrete elements of 
"multi-level protection requirements " and "security and controllability ". Japan wanted to know how 
these elements are described in the law and how they will be assessed. In addition, regarding  the 
draft of the cyber security review regulation, Japan still had some concerns on the local content 
requirement in the process. For example, operators of critical information infrastructure were subject 
to examination by the authorities in certain cases  of procuring Internet -related products and 
services. Japan was concerned that domestic products could be given preferential treatment in such 
examinations. Japan asked China to make the examination criteria clear. Finally, Japan recalled that 
at the last meeting of the TRIMs Committee, China had explained that openness and transparency 
were guaranteed during the drafting process of its Cybersecurity Law. However, considering that 
many members were interested in this issue, Japan requested China to provide updates at this 
Committee on the overall picture of the Cybersecurity Law, including its detailed regulations, and 
the concrete enactment schedule.  
 China  thanked  the delegation s for raising concerns on this issue. China  reiterated that there 
was no local content requirement in China 's Cybersecurity Law and relevant measures. The purpose 
was not to restrict market access of foreign enterprises, technologies or product s, but rather to 
safeguard cyberspace sovereignty and national security, maintain soc ial public welfare, and protect 
the rights and interests of Chinese citizens, legal persons and other organizations. Since some 
Members had concerns regarding the draft "Cybersecurity Review Measures ", China wanted to share  
more information to facilitate t ransparency and understanding. The draft Cybersecurity 
Review  Measures had been established in accordance with the National Security Law of China, the 
Cyber Security Law of China and other laws and regulations, with the aim to enhance the security 
of criti cal information infrastructure and safeguard national security. Purchase of network products 
and services by Critical information infrastructure operators, which affects, or may affect national 
security, would  be subject to cyber security review in accorda nce with these Measures. A Critical 
information infrastructure operator referred to an operator that had been designated by relevant 
Critical information infrastructure protection departments. China stated that n on-discrimination was 
one of the main princi ples of the draft Cybersecurity Review Measures, which would not target any 
specific Member. Products and services w ould be treated equally, whether  domestically produced or 
imported. Regarding the meaning of "secure and controllable ", the Article 18 of th e draft 
"Cybersecurity Review Measures " clearly indicate d that, "secure and controllable " mean t that the 
product and service provider should not take the advantage of the convenience of providing products 
and services to illegally access users ' data, illeg ally control and manipulate user 's devices, or exploit 
users ' dependence on their products and services for unjustified gains or to force users into 
upgrading.  China hoped the information provided  would promote further understanding on this issue.  
 The Committee took note  of the statements made.  
2  INDONESIA – COMPREHENSIVE REVIEW  OF LOCALIZATION MEA SURES  
 The Chair  stated  that this item was on the agenda at the request of the European Union, the 
United States, and Japan . 
 The United States  remained deepl y concerned by Indonesia 's use of localization requirements 
across a broad and expanding range of sectors, including telecommunications, mobile technology, 
energy, agriculture, retail, and franchising. According to the United States, not only do these loca l G/TRIMS/M/47  
 
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  content requirements raise questions about consistency with Indonesia 's trade obligations, they also 
act as barriers to trade that potentially divert investment from other developing countries. The 
United States and other Members had been raising these i ssues for at least a decade  and it would 
not be an exaggeration to note that a seemingly endless flow of measures mandating purchase of 
local goods has had an extremely negative impact on Indonesia 's reputation among investors. This 
proliferation of local content requirements was especially puzzling given the President's recent calls 
for transformation s in Indonesia's efforts to attract greater foreign investment.  The United States 
wished to consider some examples of Indonesia 's measures that Members of thi s committee are 
familiar with , including some measures where recent changes had been made . 
 With regard to 4G LTE measures, the United States continued to remain deeply concerned 
about Indonesia 's adoption and implementation of local content requirements for 4G LTE mobile 
devices and base stations. Although the United States had raised this matter in the WTO TRIM S 
Committee since April 2015 and bilaterally in its TIFA meetings, it stated that Indonesia had not 
answered its questions or address ed its concerns. The United States indicated that it had hoped that 
over the years Indonesia would have ceased use of local content requirements.  To the contrary, the 
United States indicated that it now saw local content requirements for the 2300 MHz frequ ency of 
4G LTE subscriber stations and base stations set to increase in 2019 to 30 % and 40%, respectively. 
The United States considered this a problematic development.  
 With regard to the energy sector – i.e. oil and gas, and renewable energy – the United S tates 
indicated that it likewise continued to have concerns with investment restrictions in Indonesia 's 
energy sector, including now renewables , as many of the policies that it had expressed concern 
about in the extractive industry were emerging in the ren ewables sector. The United States stated 
that, despite trying to find a solution to the concerns that it had raised in this Committee and 
bilaterally, the situation in the energy sector had deteriorated. For the United States, it was deeply 
concerning that  despite its concerns about the use of local content requirements, whether in mining, 
oil and gas or in the high-tech sector, the Indonesian government appeared to have doubled down 
on this approach and was now applying similar requirements in the renewabl e sector, such as solar 
power plants.  
 With regard to the mining  sector , the United States indicated that it also continued to have 
concerns about developments in this sector , where despite assurances in this Committee, it 
appeared to the United States that  Indonesia was forcing companies to switch from contracts of 
work to special mining licenses, as well as continuing to force companies to build smelters and divest 
51% of shares to be able to continue to export unprocessed mineral ores.  
 With regard to reta iling and franchising, the United States noted that  Indonesia had recently 
issued a new set of regulations replacing Ministry of Trade (MOT) Regulations 53/2012 and 68/2012. 
As Regulations 53/2012 and 68/2012 had long been a source of concern to members of  this 
Committee, the United States regarded their revocation as a positive development. Indonesia 's new 
Regulation 71/2019 appeared to remove the requirement that 80% of the products sold by retailing 
companies in Indonesia be of Indonesian origin, however , still required these companies to "prioritize 
the use of goods and/or services produced domestically " (Article 18). The United States asked 
Indonesia to clarify what it meant by "prioritize " in this context, and confirm that the 80% local 
content require ment was no longer in force.  
 With regard to telecommunications, the United States said that Indonesia had been working 
on implementing domestic content requirements for licensed telecommunication services suppliers 
for many years. According to the United S tates, in 2009, Indonesia 's Ministry of Communications 
and Information Technology (KOMINFO) implemented two regulations imposing domestic purchasing 
requirements. KOMINFO Regulation 41/2009 required Indonesian telecommunications operators to 
expend a minim um of 50 percent of their total capital expenditures for network development on 
locally -sourced components or services.  KOMINFO Regulation 7/2009 imposed local content 
requirements of 30 to 50 percent in the wireless broadband sector. The United States' un derstanding 
was that, recently, KOMINFO has issued two regulations that reinforce  — and potentially expand  —
these longstanding domestic content requirements for telecommunication services suppliers. Under 
Regulation 9/2019, KOMINFO required that all "wavel ength division multiplexing telecommunication 
tools and/or devices …must meet local content levels, in accordance with statutory provisions " 
(Article 4).  And under Regulation 10/2019, KOMINFO required that "each internet protocol network 
telecommunication tool and/or device… must meet local content levels, in accordance with statutory 
provisions " (Article 4). The United States asked Indonesia to clarify to the Committee the scope of G/TRIMS/M/47  
 
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  these new measures and the statutory provisions to which they refer. The United States also wished 
to underscore its concern that Indonesia appeared to be moving in th e wrong direction by expanding 
rather than eliminating these trade restrictive measures.  
 In addition,  the United States was concerned by reports that Indonesia considered  expansion 
of its local content requirements to the pharmaceutical and medical device sectors. The United States 
noted that in February 2017, pursuant to an earlier Presidential Instruction No. 6 of 2016 the Ministry 
of Health issued Regulation No. 17 of 2017: Action Plan for the Pharmaceutical and Medical Device 
Industries (MOH 17/2017). A s directed in the Presidential Instruction, this MOH regulation laid out 
an action plan to increase the use of domestic products in the pharmaceutical and medical device 
industries. The action plan had set a goal of decreasing the market share of imported medical devices 
from 94% to 45% by 2035, and stated that both the private sector and government must prioritize 
the use of domestically produced pharmaceuticals and medical devices. The United States said that 
it appreciated Indonesia's efforts to address its questions but the information provided so far did not 
fully resolve its concerns. For example, Indonesia assert ed that the relevant measures were limited 
to government procurement not covered by the TRIMS. However, nothing in the measures indicate d 
that they were limited in that way. Indeed, the United States quoted Article 6 of the Ministry of 
Health Action Plan ( "MOH 17/2017 "), which stated plainly that : 
"(1) The pharmaceutical and medical device industry must prioritize the 
use of domestically -produc ed raw materials; (2) The provision of drugs and 
medical devices by the government and /  or the private sector for the needs 
of the public must prioritize pharmaceutical preparations and medical 
devices that use raw materials produced by the domestic pharm aceutical 
and medical device industry. " 
 For the United States, t his language applie d to the private sector without regard to whether 
the transaction in question constitutes government procurement. In light of this and other confusing 
points, the United Sta tes had  posed follow -up questions to Indonesia, and it was looking  forward to 
their responses.  
 The United States stated that despite years of complaints by WTO Members, about this long 
list of local content requirements, it was alarmed that Indonesia was m oving to reinforce —and 
potentially expand —existing local content requirements in sectors such as telecommunications. Not 
only had many of these issues been before this Committee for some time – some for nearly a decade 
– but the United States had repeatedl y engaged with the Government of Indonesia on these issues 
in Washington and Jakarta, and in other meetings of the WTO committees  – such as Agriculture and 
Import Licensing, and in the Council for Trade in Goods. Despite the United States' engagement to 
date, Indonesian government officials at the highest levels had publicly touted the success of their 
local content requirements and had called for their expansion to new areas (for example, information 
technology -related "Internet of Things " products). Such measures distorted trade by reducing the 
market access other Members legitimately expect in Indonesia and altering the flow of goods and 
patterns of investment in ways that directly harmed other countries, in particular other developing 
countries. The Unit ed States once again urged Indonesia to reconsider all of the measures Members 
had raised to date, in particular those noted on the day of the Committee meeting.  
 As the United States had shared at the last meeting of this Committee, in recent engagements 
in Washington and Jakarta, the Government of Indonesia ha d agreed to undertake a 
"comprehensive " review of its local content policies. The United States also understood that the 
Government of Indonesia ha d undertaken similar commitments to other WTO Members . The 
United  States explained that it had  requested this agenda item to again give the delegation of 
Indonesia an opportunity, in an open and transparent manner, to brief the committee on the conduct 
of this comprehensive review. At the past few meetings of this Committee and at the April CTG 
meeting the United States had  requested the delegation from Indonesia to come prepared to provide 
such a briefing. Given the high degree of importance the United States attache d to this issue, it 
hoped that Indonesia would  provide the committee with the following information:  
• What is the timeframe and process for the comprehensive review, and what policies will the 
Government of Indonesia examine as part of this review?  G/TRIMS/M/47  
 
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  • Which measures have been reviewed to date? What has the Government of Indonesia concluded 
with respect to those measures?  If Indonesia plans to maintain a local content measure, please 
explain the basis on which Indonesia has concluded that the measure is consistent with its WTO 
obligations.  
• Which Indonesian officials are in charge of the comprehensive review?  
• What opportunities do stakeholders, including foreign investors have to provide information and 
views in connection with the comprehensive review?  
• Are there publications or o ther documents we can study in order to learn more about the ongoing 
comprehensive review?  
 The United States thank ed the Indonesian delegation in advance and indicated that it would 
pose follow -up question in writing after this meeting.  
 The European Union  said that it supported fully the statement of the United States on this 
issue.  
 Regarding the pharmaceutical sector, the E uropean Union was interested in the state of play 
with respect to the draft regulation on the calculation of local conte nt levels for pharmaceutical 
products, in particular how the regulations would apply "to government procurement only ". The 
European Union recalled that a notification to the WTO was needed before issuance  of the measures . 
The European Union  was also concer ned that the imposition of arbitrary local content percentages, 
to be met under limited time, would create an impossible condition and would bar most of the players 
from the market in a situation where, to its knowledge, Indonesia was still importing over 95% of 
Active Pharmaceutical Ingredients. The EU stood ready to support Indonesia's objective on improving 
healthcare and promoting the development of the local pharma industry. However, the European 
Union  believed that rather than imposing local content r equirements , the Government should focus 
on policies that incentivise more domestic and foreign investment in local pharma industry.  
 Regarding Local content requirements for 4 G LTE mobile devices , the European Union 
reiterate d its concerns and said that i t support ed the concerns consistently raised by other Members 
with regard to the local content requirements for 4G LTE mobile devices contained in Indonesia's 
Regulation No. 29/2017. The European Union  recalled the  background: Regulation No 29/2017 
details  the technical guidelines for the calculation of the local content percentage and requires that 
a certificate proving the fulfilment of the local content requirements is issued by the Minister of 
Industry, following the reception of a verification report a ttesting surveyors' conformity check. The 
European Union  remain ed unconvinced that the purpose of Regulation No 29/2017 was to guarantee 
the safety of the devices. The European Union  did not see any relationship between these 
requirement and product safety  and invit ed Indonesia again to amend its legislation in compliance 
with WTO rules.  
 Regarding certain local content provisions in the energy sector (mining, oil and gas) , the 
European Union continued to be concerned with the local content requirements for goods and 
services in the energy sector, including mining, oil and gas, electricity and renewables, as stipulated 
in Decree No 1953/2018. The E uropean Union was also concerned that - according to Regulation  
34/2017 - license holders were required to "prioritise the utilisation of local employees and domestic 
goods and services according to the prevailing laws and regulations " (Art.31). Given that foreign 
companies were not regarded as providing "domestic ser vices" in this regulation even if they were 
locally incorporated, the E uropean Union considered that this measure de facto creates 
discrimination. Furthermore, the EU asked for an update  on the revision of the Mining Law. The 
European Union understood  that the draft law had not been  adopted. Instead, some elements that 
were part of the draft revised legislation were inserted in a number of government or Ministerial 
regulations issued in 2017. The E uropean Union  said it welcome d further information from the 
authorities.  
 Concerning the Trade Law and  Industry Law  adopted in 2014 and the first deregulation 
package adopted in 2015 , the European Union said it would appreciate receiving any update on the 
measures implementing the deregulation and how those would im pact the current legislation on local 
content requirements.  G/TRIMS/M/47  
 
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 Finally, the E uropean Union referred  to the Minimum local product requirement in retail . It 
regretted that the legislation on minimum local content requirements was still in force. The 
European  Union reiterate d its request to get information on the scope and number of exemptions 
granted under the relevant legislation. It said it would also appreciate further information as to the 
Government 's intentions regarding possible update s or amendments to the legislation in this sector.  
 Japan  indicated that it continued to be concerned with  Indonesia 's four localization measures 
regarding 4G LTE mobile devices, the Energy Sector, Industry Law and Trade Law, and the Modern 
Retail Sector.  
 The first issue of concern to Japan was the local content requirement (LCR) for 4G LTE mobile 
devices. According to Japan, the LCR required by Regulation 65/2016 was clearly inconsistent with 
GATT Article III:4 as well as Article 2(1) of the TRIMS Agreement , because the regulation obliges 
companies to fulfil a certain level of local content requirement to sell mobile phones in Indonesia. 
Japan believed that the local content requirement for 4G LTE mobile devices should be eliminated.  
 Secondly, Japan remained concerned about the situation surrounding the Mining Law. 
According to Japan, prohibiting exports of minerals that do not meet the requirement of complying 
with pre -specified purification thresholds was inconsistent with GATT Article XI and Article 2 of th e 
TRIMS Agreement. Mining companies were also required to meet certain conditions in order to export 
their nickel ore. These conditions included building  their own smelters within 5 years and that at 
least 30% of the smelted ores should be supplied to Indo nesia's domestic market. According to 
Japan, this requirement corresponded to export restriction s as well. Furthermore, allowing imports 
only when domestic products and services are not able to meet the domestic demand, corresponded 
to import restriction a nd went against the principle of non -discrimination.  
 The third issue that Japan was concerned with was the Industry Law and Trade Law. Japan 
had doubts about the consistency of some provisions with the GATT Article  XI:1, Article III:4, and 
Article 2 of the  TRIMS Agreement. Japan said that these laws should be implemented in compliance 
with the WTO rules and Japan requested Indonesia to provide an overview of the implementing 
regulations for these laws, including those that have already been enacted and thos e that are yet to 
be enacted.  
 Japan  also indicated that it was concerned about the Modern Retail Sector. Japan recalled that 
it had explained repeatedly at previous meetings that it had concerns about the consistency of the 
Minimum Local Product Requiremen t for the Modern Retail Sector with Article III:4 of GATT and 
Article 2 of the TRIMs Agreement and urged Indonesia to remove this measure. Japan also requested 
some clarifications regarding the criteria of the exemption.  Japan  recalled that, at the previou s 
meeting, Indonesia had explained that it was in the process of deregulating and overseeing the 
overall investment related policy, including in the modern retail sector. Japan requested Indonesia 
to update Members  on this issue.  
 Finally,  Japan recalled th at in the last meeting of the TRIMs Committee, Indonesia mentioned 
that it did not necessarily consider the domestic component level (TKDN) as a local content 
requirement scheme and that TK DN was merely a manifestation of the Government maintaining the 
inclusivity of economic development. Indonesia also mentioned that TKDN provide d an investment 
facilitation scheme in which investors could  freely choose opportunities, and that TKDN operate d on 
a voluntary basis or was only applied for government procurement  for areas such as public health. 
However, Japan understood  that the scope of TKDN was not limited to public procurement. In 
addition, requiring a certain level of dom estic components was a local content requirement in itself. 
As long as TKDN did not satisfy any justification, it would be in breach of the WTO agreement.  
 Switzerland  expressed its continued interest in this matter and  looked forward to further 
information from Indonesia.  
 Chinese Taipei  shared the concerns expressed by co-sponsors  and requested Indonesia to 
provide updates on any amendments in this regard and  said it would be closely monitoring the status 
and implementation of Indonesia's measures.  
 Australia  reiterated its concerns shared at previous meetings on these points. Regardin g 4G 
LTE local content requirements, Australia remained interested in this issue and was monitoring the G/TRIMS/M/47  
 
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  status and implementation of the regulations , including in other WTO Committees. Australia 
understood that Minister of Industry Regulation 65 /2016 impos es local content requirements for 
both physical hardware as well as software and applications, and Australia  looked forward to 
clarifications on how certain Indonesian measures and the ir local content requirements were 
consistent with the WTO TRIMS Agreeme nt. Regarding measures in the energy sector, Australia 
remained concerned about ownership divestment requirements, measures to convert Contracts of 
Work to Special Mining Business Licences and restrictions on obtaining approvals for expatriate 
employees.  According to Australia, these regulations create d uncertainty for foreign and Indonesian 
mining ventures operating in Indonesia, and the regulations were affecting investor confidence more 
broadly, with large foreign players leaving the market. Australia lo oked forward to ongoing 
discussion and further clarification on the implementation of these regulations. Concerning Industry 
Law and Trade Law, Australia remained interested in what this means for Indonesia 's use of trade 
remedy measures. Australia sought an update on how Indonesia intend s to issue its implementing 
regulations and reassure Members that it is taking into account its WTO obligations in drafting such 
regulations. Australia also  indicated that it remained interested in Indonesia's local content  
requirements in the retail sector. According to Australia's understanding, while some exemptions 
were provided for in these measures in certain circumstances, the local content requirements would 
still distort trade across a range of goods in which Austra lia ha d an interest.  Australia was seeking  
more clarity from Indonesia on these requirements.  
 The representative of Indonesia  thanked the delegations concerned for their interest in  
Indonesia  as a destination for investments . The representative of Indonesia said that his government 
was committed to improving the investment climate and ensuring that Indonesia was the main 
destination of foreign investments in the region . This was done through c ontinuous efforts to improve 
investment related regulations and policies and ensuring the simplification of investment applications 
in order to create a more efficient and transparent procedure to facilitate foreign investment. This 
policy was having posit ive results as shown in UNCTAD's investment report 2019 which recorded  a 
growth in FDI flows to Indonesia by 7% to 22 billion USD in 2018. The Indonesian Investment 
Coordinating Board recorded an amount of 42 .7 billion USD over the period January to Septem ber 
2019, an increase of 12.3% from 2018. Moreover, statistics showed that import of goods in 
Indonesia for the past five years had enjoyed some positive growth , including imports of goods 
which some Members may have concerns about. With regard to localiza tion measures, these 
measures were in place in the following context: in relation with government procurement ; in 
relation with ensuring the nece ssary needs  of the population ; and in relation with strategic resources 
controlled by the State. On the specifi c sectors that some Members ha d raised, Indonesia referred  
to the response s given in previous meetings and reflected in document G/TRIMS/M/45 and 46. In 
addition, Indonesia indicated that it had started a comprehensive review of localization measures, 
starting with harmonizing a set of regulations. According to Presidential Decree 24 / 2018, a national 
team composed of government authorities had been established with the main task of harmoni zing 
regulations. Work was still in progress.  
 The Committee took no te of the statements made.  
3  RUSSIAN FEDERATION – MEASURES IMPLEMENTI NG RUSSIA'S IMPORT S UBSTITUTION 
POLICY  
 The Chair  recalled that this item, which was first considered by the Committee in June 2016, 
was on the agenda at the request of the European Union and United States. Questions to the Russian 
Federation were circulated in documents G/TRIMS/Q/RUS/4, 5, 6, and 8. Responses provided  by the 
Russian Federation had been  circulated in documents G/TRIMS/Q1/RUS/7 and 9.  
 The European Union  reiterated its concern with respect to the continued utilisation of 
requirements for state -owned enterprises and other entities to grant preferences when  there was a 
sourcing of domestic goods and services , with a commercial purpose or context. The European Union 
considered this as a separate issue from government procurement, i.e. when governmental agencies 
– which may include SOEs – purchase products for  governmental purposes. The E uropean Union 
thus referred primarily to procurement covered by Law 223/2011 regulating purchases of state -
owned enterprises, not to procurement under Law 44/2013 regulating Government Procurement. As 
a matter of principle no d iscrimination between domestic and foreign products and services could  be 
introduced. However, Russia ha d adopted and was implementing measures that raise serious 
concerns as to their compliance with GATT and GATS rules. The European Union recalled that it  had 
raised some of those measures at previous meetings of the TRIMS committee.  G/TRIMS/M/47  
 
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 The representative of the European Union  thanked Russia for the response received at the 
June meeting of this Committee related to the amendments in Federal Law No. 44 FZ intro duced by 
Federal Law No. 174 FZ. Russia noted that the new rules govern procurement of state -owned 
enterprises carried out at the expense of subsidies granted in accordance with the Budget Code of 
the Russian Federation. However, for the European Union, this response raise d additional concern s: 
whereas the exception of GATT and GATS to the rule of national treatment applies to procurement 
for governmental purposes, the European Union  was concerned that Russia may be expanding this 
exception to purchases of SOEs with a commercial purpose, merely on the basis that State subsidies 
are being used in the context of such purchases. For the European Union, t his seem ed to constitute 
an unwarranted extension of the government procurement exception of GATT and GATS.  
 The European Union thanked Russia for the bilateral contacts which have taken place on the 
application of the 15% preference to domestic products and services set out in Decree 925 of 2015.  
In this respect, the EU has shared a number of specific examples wh ere a 15% price preference was 
granted to Russian products in the context of procurement by Russian SOEs, while the same price 
preference was not granted to products originating from other WTO members. As stated by Russia 
at the previous meeting of this Co mmittee, Article 8 of Decree 925 reads  
"8. Preference is granted subject to the provisions of the General 
Agreement on Tariffs and Trade 1994 and the Eurasian Economic Union 
Treaty of 24 May 2014. " 
 However, the EU was concerned that this article was not applied in practice in a number of 
cases.  
 The EU urged Russia to revise its rules for procurement by SOEs, to ensure that there was a 
clear differentiation of the rules applicable to government procur ement and to SOEs acting in a 
commercial capacity, and that the latter rules avoid ed any distinction between foreign and domestic 
goods and services. As for the written questions submitted by the EU on the issue in the past: on 
27 September 2016, the Europ ean Union  submitted a set of detailed questions on the Russian 
Federal Law No 223 -FZ and its implementing measures (RUS/5). The EU said it regretted that, in 
response, it ha d only received a reference to more general exchanges in the context of the Trade 
Policy Review. The European Union  expect ed Russia to submit detailed replies to all outstanding 
questions.  
 Finally, the E uropean Union  reiterated its concerns (expressed at the last meeting of the 
Committee) with Federal Law 166 "On fisheries and conservation of aquatic biological resources " (of 
20 Decembe r 2004) and its implementing measures, in particular Resolution 633/2017 (of 
25 May 2017) "On securing and granting a catch quota of aquatic biological resources, proposed for 
investment purposes in the sector of fisheries, for the development of industrial fisheries and / or 
coastal fisheries ". The E uropean Union w as concerned that this Law and the Resolution appear ed to 
draw a link between certain investments in Russia or certain purchase or construction by investors 
related to locally manufactured ships and the possibility to obtain subsidies granted in the form of 
fishing quotas attributed by type of vessel, region and a typ e of fish species . The European Union  
recalled its request for clarification from Russia regarding the direct link that the Law and the 
Resolution seem ed to establish between the local investment made and the possibility to obtain 
secured fishing quotas fo r the investors. Secondly, the EU wondered how this link would be 
compatible with Russia 's obligations under the TRIMS Agreement and notably the principle of 
national treatment.  
 The United States  expressed concerns about certain measures put in place by th e 
Russian  Federation that raise d questions with respect to the TRIMS Agreement and noted that Russia 
had not yet replied to questions raised by the United States in January 2018 in document 
G/TRIMS/Q/RUS/ 8, and outstanding  questions in document G/TRIMS/Q/R US/6. The United  States 
asked  when answers to these questions might be circulated to the Committee. The United  States 
reiterated its concerns, which it had expressed in this Committee over the past several years, about 
the apparent expansion of Russia 's localization measures  to direct companies to give priority to 
Russian sourced goods, services and works over imports . Such a policy raised questions with regard 
to consistency with the WTO principle of national treatment and the TRIMS Agreement.  G/TRIMS/M/47  
 
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 The Russian Federation  thanked the delegations concerned for their questions concerning the 
Russian measures  in documents G/TRIMS/Q/RUS/ 6 and G/TRIMS/Q/RUS/ 8. Russia indicated that it 
had nearly finalized the answers. The Russian Federation drew the attention of the Committee on 
Resolution No. 925 : this provision state d that the priority should be given to local products  only in 
conformity with the  GATT 1994 . In this regard, t he representative of Russia noted that the GATT did 
not completely prohibit giving priority to domestic goods, for example in the case of government 
procurement. In case of commercial procurement, Russian and foreign products should be treated 
equally. The second issue was the functioning of the coordinating body envisage d by the federal law 
223-FZ which establishes the particularities for procurement by legal persons implementing state 
financed investment projects. As indicated in G/TRIMS/Q/RUS/3, these were primarily projects in 
the public and defense sectors  and some of  them were aimed at creating facilities for governmental 
purposes. In accordance with Article 3.1 of the Federal Law 223 -FZ, the Government of the Russian 
Federation ha d approved orders 2744R and 2781R which establish the list of machinery products 
purchas es which must be approved by the commission on import substitution. Russia reiterated that 
the main idea behind the establishment of this commission was to guarantee quality, availability and 
timing of the delivery of goods. Regarding additional questions in G/TRIMS/Q/RUS/ 9, the Russian 
Federation said it would endeavour to send responses as soon as possible. The representative of 
Russia reiterated that the import substitution policy was aimed at developing an innovative and high 
tech environment to promote  the competitiveness of Russian made goods and did not violate 
WTO Rules. It was not a tool for the displacement of foreign products from the Russian market.  
 The Committee took note  of the statements made.  
4  NOTIFICATIONS UNDER ARTICLE 6.2 OF THE T RIMS AGREE MENT OF PUBLICATIONS  IN 
WHICH TRIMS MAY BE F OUND  
 The Chair  recalled that the Secretariat had circulated a reminder regarding Article 6.2 
notifications on 1 October in document G/TRIMS/W/167 and that the Committee ha d received a new 
notification from Afghan istan in document G/TRIMS/N/2/Rev.28/Add.2. The Chair u rged Members 
that had not yet notified to do so promptly.  
 The Committee took note  of the information provided.  
5  OTHER BUSINESS  
 The Chair  took note that no Member requested to raise any issue under "other business".  
6  DATE OF THE NEXT MEE TING  
 In accordance with past practice, the Chair  suggested scheduling the next meeting in the 
Spring of 2020 , in order to enable participants to plan their work. The Chair propose d a meeting on 
27 May 2020 . 
 In order to  provide Members with ample opportunity to prepare for this meeting, the 
Secretariat would issue the annotated draft agenda three weeks in advance of the meeting, namely 
on 6 May 2020 . Members' requests to place items on the annotated draft agenda should b e 
communicated in writing to the Secretariat at the latest by close of business 4 May 2020 . The 
annotated draft agenda would be open to Members' comments until close of business on Wednesday 
11 May 2020 . The airgram convening the meeting would be issued on  15 May 2020 . 
7  ANNUAL REPORT TO THE  COUNCIL FOR TRADE I N GOODS (ARTICLE 7.3 ) 
 The last item for consideration was the Committee's Annual Report for 2019. The Chair  
recalled that Article 7.3 of the Agreement required the Committee to report annually to the Council 
for Trade in Goods. As a basis for the Committee's consideration of this matter, the Secretariat had 
circulated to Members the draft annual report for 2019 , as document RD/TRIMS/22.  
 The Chair asked if Members had any comments on the draft annual report.  The Chair noted 
that there were no comments and proposed that the Committee adopt the annual report ad 
referendum  and forward it to the Council for Trade in Goods.  G/TRIMS/M/47  
 
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 The Committee took note  of the information provided.  
 The meeting was adjourned . 
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