RESTRICTED  
 
  
G/TRIMS/M/45  
 
8 March 2019  
(19-1430) Page: 1/16 
Committee on Trade -Related Investment Measures    
 
MINUTES OF THE MEETI NG HELD ON 17 OCTOBER  2018  
CHAIR: MS CARRIE WU  (CHINESE TAIPEI ) 
1.  The Chair  referred to the proposed agenda circulated in document WTO/AIR/TRIMS/8 dated 
4 October  2018. No additional items were raised under  "Other Business ", and the  Committee 
adopted the following agenda:  
1   CHINA – LOCAL CO NTENT IN CY BERSECURITY MEASURES  (INCLUDING  
PROVISIONS ON INSURA NCE SYSTEM IN FORMATIZATION)  ................................ ...........  1 
2   INDONESIA – LOCAL CONTENT REQU IREMENTS FOR 4G LTE MOBILE DEVICES ..........  3 
3   INDONESIA – CERT AIN LOCAL CONTENT PR OVISIONS IN THE ENER GY SECTOR 
(MINING, OIL AND GAS ) ................................ ................................ ................................ . 5 
4   INDONESI A – INDUSTRY LAW AND  TRADE LAW  ................................ ........................  7 
5   INDONESIA – MINI MUM LOCAL PRODUCT RE QUIREMENT FOR MODERN  RETAIL 
SECTOR  ................................ ................................ ................................ ...........................  8 
6   INDONESIA – CERT AIN MEASU RES ADDRESSING LOCAL  CONTENT IN  
INVESTMENT IN THE TE LECOMMUNICATIONS SEC TOR ................................ ...................  9 
7   INDONESIA – LOCA L CONTENT REQUIREMENTS FOR PHA RMACEUTICAL  
PRODUCTS AND MEDICAL  DEVICES  ................................ ................................ .................  9 
8   RUSSIAN FEDERATI ON – MEASURES IMPLEM ENTING RUSSIA'S IMPO RT 
SUSBTITUTION POLICY  ................................ ................................ ................................ . 10 
9   ARGENTINA – ACT 27,263 ON TH E DEVELOPMENT AND ST RENGTHENING  
REGIME OF THE ARGENT INE AUTOPARTISM  ................................ ................................ . 13 
10   TURKEY – CERTAI N PRACTICES AND MEASUR ES BY TURKEY IN THE 
PHARMACEUTICAL SECTO R ................................ ................................ ...........................  14 
11   NOTIFICATIONS U NDER ARTICLE 6.2 OF THE TRIMS AGREEMENT OF 
PUBLICA TIONS IN WHICH TRIMS  MAY BE FOUND  ................................ ........................  16 
12   OTHER BUSINESS  ................................ ................................ ................................ ... 16 
13   DATE OF THE NEX T MEETING  ................................ ................................ .................  16 
14   ANNUAL REPORT T O THE COUNCIL FOR TR ADE IN GOODS (2018)  .........................  16 
 
1  CHINA  – LOCAL CONTENT IN CYBERSECURITY MEASURES (INCLUDING PROVISIONS 
ON INSURANCE SYSTEM INFORMATIZATION ) 
2.  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 written replies had  
been submitted.  
3.  The United States  remained  concerned about China 's Cybersecurity Law and related 
implementing measures that appear ed to require local content and that raise d questions about their 
consistency with China 's obligations under the TRIM s Agreement. According to  the United  States,  G/TRIMS/M /45 
 
- 2 - 
 
  China 's Cybersecurity Law entered into force on 1 June  2017, in spite of serious and long -standing 
concerns from the United States and many other international stakeholders.  Since then, China has 
continued to develop, and in certain cas es, finalize related implementing measures that are 
sometime s general in scope, and sometimes sector -specific. The United States stated that it had  
many concerns regarding China 's Cybersecurity Law and related measures, including those 
measures that restri ct the ability of companies operating in China including foreign investors to 
procure the technology of their choice, through "secure and controllable " requirements, enforced by 
cybersecurity review regime checks.  According to the United States, s uch requi rements were largely 
based on a planned update and expansion of the Ministry of Public Security 's Multi -Level Protection 
Scheme  ("MLPS "). As one example, China 's draft measure  released 25 January  2018, "Information 
Security Technology – Guidelines for Grading of Classified Cy bersecurity Protection, " appeared  to 
repeat and elaborate upon China 's MLPS. As a more recent example, on 27 June 2018, China 's 
Ministry of Public Security rel eased for public comment draft "Cybersecurity Cla ssified Protection 
Regul ations. " Although the draft measure did not, according to the United States,  clearly specify its 
relationship to China 's Cybersecurity Law, implementing measures f or the Cybersecurity Law that 
mention "classified protection ", or China 's 2007 MLPS Administr ative Measure, this draft measure 
seems to perpetuate many concerning aspects of China 's existing measure s. The United States 
recalled that , at prior meetings of this Committee, it had raised concerns relating to "secure and 
controllable " procurement guide lines for both the banking and insurance industries.  The 
United  States recalled that, i n those meetings, it had  observed that the respective guidelines 
indicated a requirement for the purchase of Chinese rather than foreign technology. According to 
the Uni ted States, "secure and controllable " was now being  the standard applied to additional 
industry sectors as well as to  individual technology products  to the detriment of foreign investors 
and trade in ICT products more generally, and  with potential implicat ions for China 's TRIM s 
obligations. The United States reiterated its position that China 's policies are of major concern for 
investors across industries and sectors as well as for ICT suppliers, given that the "secure and 
controllable " and similar technical standards had not been clarified.  The United States was  concerned 
that, because no further clarity ha d been provided on the meaning of such standards, and because 
it had been understood in the past to refer to domestic technology req uirements, companies sourcing 
ICT products were already interpreting this language conservatively, meaning that they believe they 
are required to purchase only domestic goods. The United States indicated it would  continue to 
carefully monito r developments with respect to China 's Cybersecurity law and its implementing 
measures, with a particular eye on any policies that would further propagate  "secure and 
controllable " technical standards.  The United States requested that  China refrain from moving 
forward wi th any such measures until and unless it ha d fully addressed concerns of WTO Members.  
4.  Japan  shared  the concerns raised by the United States . Regarding the Cybersecurity Law, Japan 
was also concerned that Chinese authorities could  require the use of  product s originating from China 
through the multi -level protection requirements applicable to critical information infrastructure or 
through the review process about security and controllability of network products and services. Japan 
request ed China to elaborate  on the meanings of "multi-level protection requirements " and "security 
and controllability " in this regard.  Japan also  sought to point out that the provisions on Insurance 
System Informatization appear to  be inconsistent with the WTO Agreement, because, d epending on 
the manner in which they are implemented, some articles of the provisions could constitute a 
de facto requirement to use products originating from China. In particular, according to Japan, 
Article  56 of the Provisions could oblige the use of products of domestic origin, by requiring  the use 
of Chinese intellectual property in core technologies or requiring domestic certification in China, 
according to some levels of security classifications.  In this regard, Japan request ed China to 
elaborate upon how China applies the "multi-level protection requirements " stipulated in this article. 
Japan was also concerned about the meaning of "secure and controllable products " under Article 52 
of the Provisions. While China  had explained that "secure and cont rollable products " means that, 
among others, products or service providers should not illegally obtain users ' data and curtail the 
users ' right of control, Japan  consider ed this phrase to be vague , and indicated that  it remained 
concerned  that this phrase could also constitute a de facto  requirement to use products originating 
from China. Japan requested  China to clarify whether the meaning of "secure and controllable 
products " is stipulated in regu lations regarding this measure.  If so, Japan also requested  clarification 
of the name of regulations. Finally, with regard to China 's explanation that the drafting process ha d 
been open  and transparent, Japan requested  China to provide updates on the provisions of both 
Insurance System Informatization and Cybersec urity Law.  
5.  The European Union  shared the concern expressed by the United States and Japan . The 
European  Union also  noted the entry into force of China 's Cybersecurity Law in June 2017 and  the G/TRIMS/M /45 
 
- 3 - 
 
  different guidelines and administrative measures designed to implement the law. The 
European  Union reiterated its statements from previous meetings of the Committee that it had 
concerns that this package of  measures could  lead to possible discriminatory practice s against 
foreign enterprises. The European Union expre ssed concern  about the rising burden for networks 
graded as protection level two and the increased scope of protection level three as compared to the 
2007 Measures. According to the European Union, m any European -invested companies are operating 
within the scope of protection level two, meaning they would  be directly impacted with increased 
costs and possibly delayed entry into operation of new networks.  The European Union requested 
that China provide an update of the developments  with respect  to the measure s as well as other 
implementing regulations of the Cybersecurity Law , in particular whether and how the key concerns, 
including those expressed by the industry, had been addressed.  
6.  Australia  reiterated its concerns and the concerns raised by others that Ch ina's Cybersecurity 
Law and its implementing measures are ambiguous in scope and application. Australia shared the 
view that safeguarding cybersecurity is a legitimate policy objective of governments, but , as 
Australia had said before, it believed in findi ng the least trade restrictive manner to achieve that 
objective.  
7.  China  thanked  the delegation s for raising their concerns on this issue. China  stated that it 
attached  great importance to efforts concerning  cyber and information security. According to China , 
the purpose of drafting the Provisions on Insurance System Informatization was to ensure the  
security of informa tion in the insurance industry.  China explained that,  during the drafting process, 
it had fully respected  its WTO transparency obligation s, and it guarantee d the openness and 
transparency of the drafting process . China explained that  its relevant authorities were evaluating 
the comme nts raised by WTO M embers  and stakeholders , and that they were exchanging  views and 
cooperating bilaterally wit h other WTO M embers.  In China 's view, it was not necessary for this issue 
to continue being included in the agenda of this committee . 
8.  The Committee took note  of the statements made.  
2  INDONESIA – LOCAL CONTENT REQUIREMENTS FOR 4G LTE M OBILE DEVICES  
9.  The Chair recalled that this item was first considered by the Committee in April 2015, and was 
on the agenda at the request of the European Union, Japan and the United States. Questions to 
Indonesia had been previously circulated in document G/TRIMS/W/148, and replies had been 
circulated in document G/TRIMS/W/162.  
10.  The United States  made some overarching comments concerning what it described as 
Indonesia 's pervasive and growing use of local content requirements. First, the United  States noted 
that the number of T RIMs agenda items relating to measures by Indonesia was significant, namely, 
more than half of the meeting 's agenda items concerned Indonesia. These agenda items concerned 
measures that affect a full range of sectors, including industrial goods, high techn ology products, 
and telecommunications. The United States also foreshadowed that it would also refer later in the 
meeting to a proposed significant expansion of trade distortive actions in the energy sector, and 
proposals for new measures affecting pharmac eutical products and medical devices. Not only had 
many of these issues been befo re this Committee for some time – some for nearly a decade – but 
the United States stated that it had repeatedly engaged with Indonesia on these issues in 
Washington and Jakar ta, and in other meetings of the WTO Committees – such as Agriculture and 
Import Licensing, and in the Council for Trade in Goods. For the United States, this engagement 
reflected the fact that its concern with regard to Indonesia 's trade and investment po licies extended 
beyond issues relevant to this Committee. According to the United States, Indonesian government 
officials at the highest levels have publicly touted the success of their local content requirements, 
and have called for their expansion to new  areas (for example, information technology -related 
"Internet of Things " products, as well as pharmaceutical products and medical devices). Such 
measures distort trade by reducing the market access other Members legitimately expect in 
Indonesia, and alteri ng patterns of investment in ways that directly harm other developing countries. 
The United States once again urged Indonesia to reconsider all of the measures Members have 
placed on the agenda. The United States noted some progress in discussions with Ind onesia on the 
distortive local content requirement policies. The United States also noted that, in its recent 
engagements in Washington and Jakarta, Indonesia had agreed to undertake a "comprehensive " 
review of its local content policies. The United States  welcomed this comprehensive review and 
requested Indonesia to conduct the review in an open and transparent process with stak eholders  G/TRIMS/M /45 
 
- 4 - 
 
  and trading partners. The United States also expected that this review would be undertaken 
expeditiously, with meaningful  milestones geared towards the elimination of the trade distorting LCR 
measures. The United States requested the Indonesian delegation to keep the Committee informed 
of any  updates regarding the review. In this vein, the United States posed the following q uestions: 
What is the timeframe and process for the comprehensive review? What policies will Indonesia 
examine as part of this review? Does Indonesia intend to reconsider any of the measures on the 
current agenda as part of this review?  
11.  In respect of the 4 G LTE measure in particular, 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 i n the WTO 
TRIMs Committee since April 2015 and bilaterally in its TIFA meetings, it did not believe that 
Indonesia had taken sufficient steps to answer its questions or address its concerns. The 
United  States had hoped that over the years Indonesia would h ave minimized its use of local content 
requirements. To the contrary, the United States now saw local content requirements for the 
2300 MHz frequency of 4G LTE subscriber stations and base stations set to increase to 30 % and 
40% respectively in 2019. For t he United States, this was a worrisome development. While the 
United  States appreciated Indonesia 's responses to its questions and its interventions in this 
Committee, those interventions had not resolved its underlying concerns regarding this policy, nor 
addresse d the specific concerns that it  had raised. Rather, the responses only added to the 
United  States ' uncertainty about how these measures were being implemented. According to the 
United States, certain measures Indonesia had put in place require inve stors who wish to distribute 
4G LTE base stations and subscriber stations, such as smart phones and tablets, to meet certain 
local content requirements: i.e., they must purchase or use products of domestic origin or invest in 
the development of the availab ility of local content. Local content under that measure included local 
manufacturing, and development of software. The United States considered that other Members 
should be aware that this would mean Indonesia 's measures were successfully drawing investme nt 
away from other developing countries. The United States indicated that it had elaborated on these 
concerns in prior meetings, and invited Members to review those detailed statements. At the last 
two TRIMs Committee meeting s, the United  States also highl ighted the economic cost of Indonesia 's 
local content policies. In that regard, the United States wished to again note that Indonesia 's Minister 
of Industry had said that illegal cellphones imports cost Indonesia an estimated US$10 million/year. 
The United  States believed this was due, in large part, to Indonesia 's 4G LTE measures. Although 
Indonesia 's measures may have diverted some investment from other developing countries into 
Indonesia, the United States contended that the main beneficiary of Indonesia 's 4G LTE measure 
was the black market. This was consistent with the experience of other Members who had attempted 
to impose local content requirements on popular consumer electronics. The United States stated 
that unfortunately, notwithstanding this exper ience, Indonesia 's Ministry of Communication and 
Information Technology had publicly stated that it is considering similar local content requirement 
on Internet of Things applications. The United States noted that Indonesia had not yet imposed such 
measure s, and had promised to consult with stakeholders on any such measures. The United States 
requested Indonesia to inform this Committee of the current status of any plans for such a measure, 
to keep this committee updated on this matter in the future, and to  conduct an open and transparent 
process with stakeholders and trading partners in  the development of the measure . Lastly, the 
United States again wished to stress that although some companies have managed to find creative 
solutions to Indonesia 's restrictive policies in this sector, it still had concerns with the market access 
barriers created by the local content requirements and the potential inconsistencies with Indonesia 's 
WTO commitments. The United  States hoped that, given the renewed interes t at the highest levels 
of the Indonesian and United States ' governments at building their economic relationship and 
removing barriers to trade, Indonesia would consider the elimination of its 4G LTE local content 
measures.  
12.  Japan  likewise continued  to have  concern s regarding this issue. Japan recalled that  Indonesia 
had explained  at the previous meeting of the Committee  that the local content requirement  
stipulated by the Regulation 65/2016 had  been applied in a non-discrimina tory manner . However, 
Japan maintained its concern  that Regulations relating to this measure , including 
Regulation  65/2016 , oblige d companies to fulfi l a certain level of local content in order to sell mobile 
phone s in Indonesia.  Japan considered  the very fact that Indonesia imposes a l ocal content 
requirement to be by nature discriminatory, as it affords  an incentive to use domestic products over 
the imported ones, and is therefor e inconsistent with GATT Article III:4 as stipulated in 
paragraph  1(a) of the TRIMs Annex, as well as Articl e 2 of the TRIM s Agreement. Japan consider ed 
that the local content requirement for 4G LTE mobile devices should be eliminated in order for G/TRIMS/M /45 
 
- 5 - 
 
  Indonesia to ensure  its measures in this sector are consistent with the WTO Agreements and also  
requested  Indonesia to respond  clearly  to the questions it had put  on numerous prior occasions . 
13.  The European Union  continued to share the concerns consistently raised by other Members with 
regard to the local content requirements for 4G LTE mobile devices contained in Indones ia's 
Regulation No. 29/2017. The European Union reiterated that all points it had  raised at previous 
meetings remain ed valid.  The European Union remained unconvinced by Indonesia 's explanation 
given in this Committee that the purpose of the measures was to  guarantee the safety of the devices. 
The European Union saw no reasonable relationship between the requirement to use domestic 
products and product safety, and invited Indonesia to amend its legislatio n in compliance with WTO 
rules.  
14.  Australia  remained  interested in this issue and was monitoring the status and implementation 
of the regulations including in other WTO Committees.  
15.  Chinese Taipei  shared the concerns expressed by the European Union , the United States,  Japan, 
and Australia  regarding the local con tent requirements for 4G LTE mobile devices contained in 
Regulation No. 65/2016. It remain ed deeply concerned about this matter.  In its view, these 
measures could constitute local content requirements and are inconsistent with GATT Article III:4 
as stipula ted in paragraph 1(a) of the Annex and Article 2 of the TRIMs Agreement. Chinese Taipei  
expressed deep concern  about the negative impacts on the efficiency of investments as well as 
manufacturers ' ability to introduce new products in Indonesia.  It urged  Indonesia to con sider 
eliminating this measure, and requested Indonesia to provide update s on any amendments or furthe r 
developments in this regard , and would be closely monitoring the situation .  
16.  Indonesia  thanked the delegations for their interventions and interest in the matter. Indonesia 
stated that all relevant Ministries were continuing to oversee the existing policy in order to ensure 
the flow of foreign investment. The regulation s in the telecommunication sector would also be 
simplified and amended  to be more efficient and transparent so as to support a positive investment 
climate in Indonesia. According to Indonesia, the simplification process applied not just to the 
telecommunication sector but to overall sectors. Some issues within certain regula tions were being 
reviewed to establish a more efficient and transparent procedure to facilitate foreign investment as 
well as to improve Indonesia 's contribution to global telecommunication development. Indonesia 
indicated that this was a continuing proces s and a work in progress, and that it would inform 
interested Members about such updates in due course.  
17.  The Committee took note  of the statements made.  
3  INDONESIA  – CERTAIN LOCAL CONTENT PROVISIONS IN THE ENERGY SECTOR 
(MINING , OIL AND GAS) 
18.  The Chair recalled that this item has been under consideration  by the Committee since 
October  2009 and was on the agenda at the request of the European Union, Japan, and th e 
United  States. Questions  to Indonesia had been circulated previously in documents  G/TRIMS/W /70, 
88, 108, and 128, and replies had been circulated  in documents G/TRIMS/W /74, 79, 100, 123, 137, 
and 137/ Corr.1.  
19.  Japan  remain ed concerned about the situation surrounding the Mining Law. Japan indicated that 
it was  aware of the reforms that have been ma de to partially lift the complete prohibition of nickel 
ore exports.  However, the period that mining companies would  be allowed to export their ores was 
tentatively set at five years.  In addition to the restricted period,  Japan stated that  there was a 
requirement  to meet certain conditions including that they would build their own smelters within 
5 years and that at least 30 % of the smelted ores would be supplied to Indonesia 's domestic market. 
Taking these points into account, Japan believe d that this meas ure was still inconsistent with GATT 
Article XI and once again urge d Indonesia to further revise the measures to prohibit or restrict 
exportation of mineral ores including nickel and copper.  Japan would  continue to closely monitor the 
situation surrounding  exportation of these ores. Finally , with regard to Indonesia 's explanation that 
the amendment of the mining law is under consideration in the parliament, Japan requested that 
Indonesia keep WTO  Members updat ed on this issue, including in relation to the a forementioned 
amendment.   G/TRIMS/M /45 
 
- 6 - 
 
  20.  The European Union  noted that, as explained repeatedly in the past, it remain ed concerned by 
the local content requirements in the oil and gas sector that it kept raising in the Committee. The 
European Union  reiterate d its previously -expressed concerns. At the previous  Committee meeting, 
the European Union had noted  that the strict local content requirements set in the Minister of 
Industry (M OI) Regulation s Nos 4 and 5 of 2017  for solar panel s, issued in February 2017, ha d been 
postponed indefinitely , but the European Union  remain ed concerned about the status of the 
Regulation which, to its knowledge, was still in place even if not applied. The European Union sought 
to ascertain  the intentions of the authorities in this regar d. 
21.  The United States  continue d to have concerns with investment restrictions in Indonesia 's energy 
sector – mining, oil and gas, and now renewables . In its view,  many of the policies that it had 
expressed concern about in the extractive industry were now  emerging in the renewables sector. 
Despite trying to find a solution to the questions and concerns that it had  raised in this Committee 
and bilaterally, the United  States considered that the situation in the energy sector ha d deteriorated. 
The United  States recalled that it  had elaborated on these concerns in prior meetings, and invite d 
Member s to review those detailed statements. The United States  continue d to seek updates from 
Indonesia on developments on revisions to the Oil and Gas Law and whether any changes would  be 
made regarding the elements that had been discussed . The United States also understoo d that in 
the previous  month, Indonesia 's Ministry of Energy and Mineral Resources (MEMR)  issued 
Regulation  42/2018. According to the United States ' under stand ing of  this regulation, it would  
require domestic processors to "prioritize " domestic crude oil, and require companies with oil 
contracts operating in Indonesia to offer the full volume of their crude oil to the state -owned oil and 
gas company, Pertam ina, and other domestic processors. The United States  regard ed this regulation 
as a significant negative development in a sector where it already had many concerns. The 
United  States also continued  to be concerned with developments in the mining area, wher e despite 
assurances in this Committee, it appear ed 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. 
Moreover, it was deeply concerning for the United States 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 appear ed to have doubled down on this approach and was now applying similar 
requirements in the renewable sector, such as solar power plants. While the United States  continue d 
to have specific questions about how these requireme nts work in practice – such as the function of 
local content certificates, rationales for different requirements depending on the type of plant, and 
different weights depending on whether it is a good or service – it understood  that "prioritizing " 
domestic  content actually means "requiring " domestic content. It was precisely the requirement to 
use a certain amount of domestic content that raise d questions about the consistency with TRIMs 
obligations. Moreover, such policies, while appearing to work in the s hort term, in the longer -term 
adversely hinder ed Indonesia 's power sector development goals by driving up the costs and 
hampering access to the most innovative technologies and companies. The United States continued  
to seek resolution to these concerns and  hoped that Indonesia would  reconsider these policies.  
22.  Australia  remained concerned about ownership divestment requirements, measures to convert 
Contracts of Work to Special Mining Business Licences (IUPK) and restrictions on obtaining appro vals 
for expatr iate employees. According to Australia, these regulations create uncertainty for foreign 
and Indonesian mining ventures operating in Indonesia, and the regulations are affecting investor 
confidence more broadly, with large fore ign players leaving the marke t. Australia stated that 
companies should be treated fairly during negotiations. Australia looked forward to ongoing 
discussion and further clarification on the implementation of these regulations.  
23.  Indonesia  stated that, c onsistent with its previous intervention, there was no requirement and 
obligation for investors to use local goods and services in the energy sector. The requirement to 
utilize domestic goods and services in this context must meet with the standard of quality, 
competitive p ricing, availability, after sales services, and continuity. Indonesia stated  that the 
utilization of domestic goods  and services in the mining sector  was not mandatory.  Regarding the  
exportation of mineral ore, Indonesia reiterated  that there is no export prohibition as long as the 
materials meet the purification lev el as required in Regulation No 5/2017  (amended by Minister 
Regulation No 25/2018) . The requirement to comply with pre -specified purification thresholds to 
export mineral ores was not a prohibit ion of exports as such. Rather, according to Indonesia, t his 
measure is a standard on the processing/refining of mineral products that could  be exported.  
Regarding the amendments to the Mineral, Coal, Oil, and Gas Law , Indonesia noted that these are  
curren tly under deliberation by the government and parliament. Indonesia  indicated it would strive G/TRIMS/M /45 
 
- 7 - 
 
  to ensure  business certainty and a  sound fiscal policy in mining. Indonesia also  took note  of the 
trade -related concerns of other Members  relating to these amendme nts. Indonesia stated it would  
inform interested Members o f development s when such information becomes  available.  In 
Indonesia 's view,  the issue of its divestment policy falls within the scope of the services sector , and 
Indonesia has made no commitments under mining services in its current GATS Schedule.  Regarding 
employment of foreign worker s in the mining and energy sector s, Indonesia stated that these 
matters  were regulated in accordance with its schedule of commitment on GATS.  
24.  The Committee took note  of the statements made.  
4  INDONESIA – INDUSTRY LAW AND TRADE LAW 
25.  The Chair recalled that this item was first discussed at the Committee 's meeting in June 2014 
and was on the agenda at the request of the European Union and Japan. Quest ions to Indonesia in 
relation to this item had been circulated in documents G/TRIMS/W/138 and 140, and responses were 
provided  in documents G/TRIMS/W/157 and 158.  
26.  The European Union  reiterated its concerns with respect to these laws  that it had  raised  in this 
Committee and also in the Council  on Trade in Goods . Taking  into consideration  that the Trade  and 
Industry  Laws were adopted  in 2014 and the first deregulation package was adopted in 2015, the 
European Union requested Indonesia to  provide clarity in particular regarding the list of the  measures  
implementing  the deregulation . In particular,  the European Union requested Indonesia to  indicate  
how these  deregulation  packages  affect  the current  legislation  on local content requirement.  
27.  Japan  recalled its statements  at previous meetings relating to concern s about the consistency 
of the Trade Law and Industry Law with the WTO Agreement.  Japan stated that t hese Laws should 
be implemented in compliance with the WTO rules and that it was  closely monitoring their 
implementation, including the establishment of implementing regulations. Regarding 
implementation regulations, Japan indicated that it appreciated  Indonesia 's explanation at the last 
meeting about development s in certain  areas.  However, the regulatio ns that Indonesia mentioned 
at the last meeting seem ed to Japan  to be amendments to regulations related to  the import license 
regime s of specific sectors and , according to Japan 's understanding,  they did not  cover all of the 
implementation regulations under the Trade Law and Industry Law. Japan requested  Indonesia to 
provide an overall picture of the implementation regulations both already enacted and to be enacted 
regarding these Laws as well as the regulations referred to at the last meeting.  For instance , Japan 
sought clarification of  the fact that Regulation 74/2017 for imports of rice was replaced by 
Regulation  01/2018.  
28.  Australia  recalled earlier discussions and Indonesia 's advice from previous meetings. Australia 
remained interested in what this means for Indonesia 's use of trade remedy measures. Australia 
sought an ongoing update on how Indonesia intended to go forward in issuing its implementing 
regulations and reassure Members that it is taking into account its WTO obligations in drafting such 
regula tions.  
29.  Chinese Taipei  indicated that it share d the concerns expressed by Japan  and Australia  regarding 
Indonesia 's Trade Law and Industry Law. It  continue d to have concern s regarding  this matter, 
particularly in respect of the implementing measures. Chinese Taipei indicated that it would  be 
closely monitoring development s. 
30.  The United States  shared the concerns expressed by the European Union and Japan abo ut the 
Industry and Trade Laws. The United States requested updates from Indonesia on the 
implemen tation of these two laws, in particular any implementing regulations that relate  to the 
concerns it had previously raised in this Committee.  
31.  Indonesia  thanked the delegations for th eir interest in these matters. Indonesia stated that the 
two laws were bein g used as broad national guidance to support sustainable economic development 
through, inter alia , job creation, improving competitiveness, and increasing production capacity. 
They were adopted to support the growth of Indonesia 's economy while respecting Indonesia 's 
commitment towards an open economic system, mainly the WTO multilateral trading system. 
According to Indonesia, there were multifaceted social and economic considerations as well as public 
consultation that would need to be taken into account b efore the regulations could be issued.  G/TRIMS/M /45 
 
- 8 - 
 
  Regarding requests for updated information on implementing regulations for the Trade and Industry 
Laws, Indonesia indicated that it had issued implementing regulations as follows: (a) Regulation of 
The Minister for Tr ade of The Republic of Indonesia No. 65 of 2018 on Third Amendment to 
Regulation of the Minister of Trade No. 59/M -DAG/PER/8/2016 on Provisions for Export and Import 
of animal s and animal products; (b) Regulation of The Minister for Trade of The Republic o f Indonesia 
No. 64 of 2018 on Fourth Amendment to Regulation of the Minister of Trade No. 30/M -
DAG/PER/5/2017 on Provisions for Import of Horticulture Products; (c) Regulation of The Minister 
for Trade of The Republic of Indonesia No. 96 of 2018 on Purchas ing Price References at The Farmers 
Level and Selling Price References at The Consumers Level; (d) Government Regulation No. 2 of 
2017 on the Development of Industrial Facilities and Infrastructure; (e) Regulation of the Minister 
for Industry of the Republ ic of Indonesia No. 4 of 2018 on the Enactment on the Mandatory 
Enforcement of Standar d National Indonesia (SNI) / Indonesian National Standard . 
32.  The Committee took note  of the statements made.   
5  INDONESIA – MINIMUM LOCAL PRODUCT REQUIREMENT FOR MODERN RETAIL SECTOR  
33.  The Chair noted that this item was first discussed at the Committee 's meeting in June 2014 and 
was on agenda at the request of the European Union and Japan. Questions to Indonesia in relation 
to this item had been circulated in documents G/TRI MS/W/139 and 141, and responses were 
provided in G/TRIMS/W/159 and 161.  
34.  The European Union  expressed its regret  that the legislation on minimum local content 
requirements was still in  force and reiterate d its concern  about  the 80% local content  requirement  
imposed by Regulation 70/2013 . The European Union indicated it would welcome  an update from 
Indonesia on how it intends to address concerns raised by Members . The European  Union  requested 
Indonesia to respond to the question s raised  at the  last meeting  of this Committee  and to inform  
Members about the number of exemptions granted so far under the relevant legislation. The 
European Union also sought clarification as to any plans regarding any updates on any possible new 
bill of law in this sector , and wheth er and how the rules may be modified following Indonesia 's 
internal discussions.  
35.  Japan  indicated that it shared  the concerns raised by the European Union . Japan reiterated the 
concerns it had raised at previous meetings about the consistency of the Minimum  Local Product 
Requirement for Modern Retail Sector  with Article III:4 of GATT and Art icle 2 of the 
TRIMs  Agreement.  Japan recalled that, a t the previous meeting, Indonesia had explained that 
several retail stores with unique characteristics such as IKEA o r UNIQLO would  be exempted from 
the future regulation. Japan requested  clarifications regarding the criteria o f this exemption. Japan 
requested  Indonesia to explain how the relevant articles of the regulation are written or will be 
written . Regardless of e xemptions, Japan urge d Indonesia to expeditiously revise those regulations 
to ensure that they conform with the WTO Agreement.  
36.  The United States  continued to be concerned  about these measures, and sought an update from 
Indonesia on their implementation. Th e United States requested Indonesia to keep the Committee 
apprised of any developments concerning implementation of these regulations , including any further 
developments . 
37.  Australia  indicated that it remain ed interested in Indonesia 's local content requirem ents in the 
retail sector.  According to Australia 's understanding,  while some exemptions are provided for  in 
these measures in certain circumstances, the local content requirements would  still distort trade 
across a range of goods in which Australia has an  interest.  Australia requested Indonesia to ensure  
that these measures would be  implemented in a manner consistent with its obliga tions under the 
TRIMs Agreement, and requested an update from Indonesia on any developments in 
implementation . 
38.  Chinese Taipei  indicated that it shared the views expressed by the foregoing delegations  
regarding Indonesia 's local content requirements in the retail sector.  It noted that Indonesia 's 
introduction of local content requirements was applied to a wide range of sectors, an d remain ed 
deeply concerned.  It urged Indonesia to provide updates on the implementation of these regulations 
as well as any amendments.  G/TRIMS/M /45 
 
- 9 - 
 
  39.  Indonesia  thanked the delegations of the European Union,  Japan, United States, Australia and 
Chinese Taipei  for their c ontinued interest on this issue, and referred to its previous responses in 
documents G/ TRIMS/W/159 and G/TRIMS/W/161. As a commitment from the current 
administration, Indonesia indicated it was in the process of deregulating and overseeing the overall 
investment related policy, including in the modern retail sector. Indonesia undertook to inform the 
Committee in the event of any updates.  
40.  The Committee took note  of the statements made.  
6  INDONESIA – CERTAIN MEASURES ADDRESSING LOCAL CONTENT IN INVESTMENT IN 
THE TELECOMMUNICATIONS SECTOR  
41.  The Chair recalled that this issue has been under consideration by the Committee since 
May 2009, and was on the agenda at the request of the European Union and Japan. Since this matter 
was first raised, a number o f questions had been posed to Indonesia. These could  be found in 
documents G/TRIMS/W/61, 71, 78, 86, 104, and 154, as well as in document G/TRIMS/Q/IDN/1. 
Responses could  be found in documents G/TRIMS/W/63, 75, 80, 96, 131, 160, and 
G/TRIMS/Q/IDN/2 . 
42.  Japan  thanked  Indonesia for the written replies it had provided ( G/TRIMS/Q/IDN/2). Japan 
welcomed  the removal of the regulation concerned.  
43.  The Republic of Korea  wished to raise the following concerns on this issue. For Korea, local 
content requirements in the telecommunication s sector could restrict foreign investment and trade, 
and ultimately undermine core WTO principles including those in the TRIMs Agreement. Korea 
encouraged Indonesia to consider the concerns raised by Members at the current meeting, and to  
review the measures in a more careful way.  
44.  The United States  continued to be concerned by Indonesia 's use of local content requirements 
in the telecommunications sector. The United States was specifically concerned that they result in 
favourable treatment for domestic versus imported products, and that investors could be penalised 
for not complying. More over, the United States considered that, instead of curtailing the use of local 
content requirements, Indonesia appeared to be expanding their use to other sectors , as 
demonstrated by the ever -growing list of concerns raised in this Committee . The United S tates 
remained concerned about this expansion due to its disruption of global supply chains.  
45.  Indonesia  referred to its written response, and in particular that Ministerial Regulation No.38 of 
2007 (which had been revoked and replaced by Ministerial Regulat ion No. 32 of 2008) has now been 
revoked and replaced by Ministerial Regulation No. 25 of 2015, which removes the requirement for 
local content. Indonesia thanked Japan for its intervention , and proposed the deletion of this agenda 
item for the next meetin g. 
46.  The Committee took note  of the statements made.  
7  INDONESIA – LOCAL CONTENT REQUIREMENTS FOR PHARMACEUTICAL PRODUCTS AND 
MEDICAL DEVICES  
47.  The Chair  noted that this item was on the agenda at the request of the European Union and the 
United States. Written q uestions posed by the United States to Indonesia were circulated in 
document G/TRIMS/Q/IDN/3. No written replies had yet been provided . 
48.  The United States  stated that it was concerned by reports that Indonesia is considering 
expansion of its local content requirements to the pharmaceutical and medical device s sector . 
According to the United States ' understanding, in June 2016, the Indonesia issued President ial 
Instruction No. 6 of 2016 ( "PI 6/2016 "), requiring Indonesia to accelerate the development of the 
domestic pharmaceutical and medical devices industry . According to the United States, the 
Presidential Instruction charges the Ministry of Industry (MOI) with implementing this local content 
policy, in conjunction with the Ministry of Health  (MOH) , which had been instructed to prioritize the 
use of domestic pharmaceutical products and medical devices. In response to this Presidential 
Instruction, the MOI an d the MOH had taken steps that would distort trade in both pharmaceutical 
products as well as medical devices in a manner that raises questions about consistency with  G/TRIMS/M /45 
 
- 10 - 
 
  Indonesia 's obligations under the TRIM s Agreement. According to the United States, in 
February  2017, the MOH issued Regulation No. 17 of 2017: Action Plan for the Pharmaceutical and 
Medical Device Industries  (MOH 17/2017). As directed in the Presidential Instruction, this MOH 
regulation laid out an action plan to increase the use of domestic p roducts in the pharmaceutical and 
medical device industries. According to the United States, this action plan 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 governm ent must prioritize the use of domestically produced pharmaceuticals 
and medical devices. The United States submitted further that, earlier this year, the M OI developed 
a draft regulation that would establish a detailed local content calculation methodolog y for 
pharmaceutical products, and would assess a pharmaceutical product 's local content based on its 
raw materials, research and development, manufacturing, and packaging. Although the draft MOI 
regulation does not specify a minimum  local content level, t he United States understood that MOI 
officials had said publicly that they are considering a requirement that all pharmaceutical products 
sold in Indonesia contain at least 20% local content. The Un ited States requested Indonesia : to 
inform the Committee of the status of these MOH and MOI measures, to keep the Committee updated 
on this matter in the future, and to conduct an open and transparent process with stakeholders and 
trading partners in the development of these measures. Th e United  States expressed serious 
concerns about the overarching policy of the Presidential Instruction, and the mandate it appeared 
to provide ministries to formulate import -discriminating measures, as well as the steps taken to 
implement the Presidential  Instruction by the Ministries  of Industry and Health. Moreover, the 
United  States expressed dismay  by the fact that the list of local content measures in Indonesia 
appeared to be growing, notwithstanding the commitment of Indonesia to review its local con tent 
policies.  The United States looked forward to receiving Indonesia 's replies to its written questions 
regarding these measures, and hoped that Indonesia would move to expeditiously eliminate many 
of the import -discriminating policies mentioned during t he Committee meeting.  
49.  The European Union  sought to express its concern with the seeming introduction by Indonesia 
of another set of local content requirements, applicable to pharmaceutical products and medical 
devices. The European Union indicated it looke d forward  to Indonesia 's responses to the questions 
raised and would come back with further questions and comments as necessary.  
50.  Switzerland  sought to signal its interest on this issue, and looked  forward to receiving more 
information on the matter by mean s of Indonesia 's responses to the questions and issues raised  by 
the United States.  
51.  Indonesia  thanked the delegation of the European Union and Switzerland, and also the 
United  States,  for their interest and the written questions in document G/TRIMS/Q/IDN/3. Indonesia 
indicated that it was working on replies and would will submit them at the earliest available 
opportunity. In order to clarify the concern of WTO Members, Indonesia explai ned that Regulation 
No. 17/2017 concerning Action Plan for the Pharmaceutical and Medical Devices Industries was not 
aimed at decreasing the market share of imported medical devices in the Indonesian market. In 
respect of the requirement to prioritize the use of domestically produced pharmaceuticals and 
medical devices, Indonesia believed that it is applied in a way that was consistent with the 
requirements of the GATT because Indonesia applied the requirement only for the procurement of 
products for govern mental purposes.  
52.  The Committee took note  of the statements made.  
8  RUSSIAN FEDERATION – MEASURES IMPLEMENTING RUSSIA 'S IMPORT SUSBTITUTION 
POLICY  
53.  The Chair  recalled that this item, which was first considered by the Committee in June 2016, 
was on the agenda a t the request of the European Union and the 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 were circulated in documents G/TRIMS/Q1/RUS/7 and 9.  
54.  The European Union  reiterated  its concern as to the growing utilisation  of requirements for 
State -owned enterprises and other entities to source domestic goods and services. It referred to 
procurement covered by Law 223/2011 regulating purchasers of state-owned enterprises  (SOEs) , 
and not to procurement under Law 44/2013 (Law on Government Procurement).  The European Union 
sought to recall that buying certain goods abroad was not possible for SOEs without a prior  G/TRIMS/M /45 
 
- 11 - 
 
  authorisation by the Import Substitutio n Commission. The governmental orde r N° 2744 of 
29/12/2015 lists eleven categ ories of engineering products (e.g. metal products , electric equipment  
and tran sport vehicles and equipment ). For the European Union, t he same was true  for goods listed 
in the gov ernmental order 2781 of 31/12/2015 that  defines  139 types  of engineering  goods  such as 
electric  and optical equipment , electri c equipment, plant  equipment,  and transport  equipment , etc. 
According to the European Union, the measures thus establish a different treatment on the basis of 
origin of the goods, and the European Union asked Russia to indicate how this difference of 
treatment, applicable to purchases outside of government procurem ent, can be compatible with the 
principle of national treatment enshrined in WTO Law. The European Union sought to reiterate its  
seriou s concern regarding Decree  No 925, adopted on 16 September 2016 and in force since 
1 January 2017, as it introduce d a 15% price preference for goods of Russian origin and services 
provided by Russian suppliers. The European Union pointed out that the scope of the measures does 
not concern government procurement, and covered instead SOEs as defined by Law  223, and  any 
entity – including purely private entities – benefitting, even partially,  from state subsidies for 
implementation of investment projects.  
55.  The European Union  recalled that Russia stated, in its reply at the June meeting of the 
TRIMs Committee, that priority for d omestic products purchased for governmental purposes is 
compatible with GATT. However , the European Union requested Russia to indicate how this price 
preference for goods of Russian origin and services supplied by Russian entities, applicable to 
purchases outside of government procurement, can be compatible with the principle of national 
treatment enshrined in WTO Law. The European Union requested  Russia to clarify whether it 
considers that Law 223 can provide preference to Russian products on the basis of the exception 
from the principle of natio nal treatment which applies to 'government procurement '. According to 
the European Union, a  further initiative to extend the control by the government of SOEs ' purchases 
of planes, ships and other machinery was adop ted by the Dum a on 31 December 2017 – Law 496. 
The European Union requested  the Russian Federation to explain the criteria that may guide the 
government when assessing these SOEs ' purchases and allowing or preventing them, and in 
particular, whether the or igin of t he goods is one of the criteria.  Finally,  the European Union noted 
that Law 44/2013 -FZ on Government Procurement was recently amended by Law 174 -FZ of 
29 June 2018. The European  Union  requested  Russia to explain whether this amendment implied  
that Law 44 on Government Procurement now covers also investments made by SOEs where these 
make fixed capital investments using state subsidies – including in the case of legal entities which 
are not 100% owned by the State and which were previously gover ned by Law 223/2011 with regard 
to their procurement. On 27 September 2016, the European Union  submitted a set of detailed 
questions on the Russian Federal Law No 223 -FZ and its implementing measures 
(G/TRIMS/Q/ RUS/5). The European Union expressed regret t hat it had  not yet received the replies 
to its questions. The European Union  recall ed that, in the last three meetings of this Committee, 
Russia had announced that the replies were in  the process of being finalised , but no replies had yet  
been received. Th e European Union wished  to urge Russia to submit its detailed replies to all 
outstanding questions.  
56.  In relation to the Russian Federation Car Programme, the European Union  referred  to Russia 's 
obligations under paragraph 1090 of Russia 's WTO Accession Wor king Party Report (WPR).  The 
European Union first thanked Russia for bilateral engagement on these matters.  According to the 
European Union, paragraph 1090  relates to the termination, as of 1 July 2018, of the temporary 
exemption from the application of WT O rules for the TRIM s measures associated with the 
implementation of Auto Investment Programme N°1 and Auto Investment Programme N°2, the 
investment agreements concluded under these programmes and the eliminati on as of this date of 
all WTO -inconsistent mea sures . The European Union  has repeatedly expr essed its interest in the 
issue, and the  European Union  and the Russian Federation met bilaterally on 31 May 2018. During 
those consultations , the Russian representatives gave clear reassurances on the eliminati on as from 
1 July 2018 of the preferential tariffs on car components applied pursuant to the above -mentioned 
TRIMs measures.  The European Union noted that t hese points were confirmed by Russia at the last 
TRIMs Committee. However , according to the European  Union,  the preferential tariffs that should 
have been eliminated by 1 July 2018 were still in place until recently, in breach of Russia 's WTO 
commitments. The European Union understoo d that a decision at the level of the Eurasian Economic 
Commission had b een made recently, which it welcomed, but this had not yet been published. The 
European Union indicated that it  would need therefore confirmation of this decision and how it 
addresses its concerns and meet s Russia 's WTO obligations. Furthermore, the Europe an Union also 
indicated that it  would need  clarificatio n on whether this decision  address es only Russia or the whole 
Eurasian Economic Union .  G/TRIMS/M /45 
 
- 12 - 
 
  57.  The United States  reiterate d its concerns about certain measures put in place by the 
Russian  Federation that raise  questions with respect to the TRIM s Agreement. The United States  
noted as an initial matter  that Russia ha d replied to questions raised by the United States in 
document G/TRIMS/Q/RUS/4, and to questions raised by the E U in document G/TRIMS/Q/RUS/5. 
Howeve r, the United States indicated that it had submitted follow -up questions to Russia about 
additional relevant programs in April 2017 in document G/TRIMS/Q/RUS/6  and in January 201 8 in 
document G/TRIMS/Q/RUS/8 . During the last meeting of this Committee, the United States recalled 
that Russia indicated that it was working on further responses tha t would be forthcoming shortly.  
The United States  looked forward  to receiving those responses. The United States asked whether  
Russia was able to indicate when the y might be circulated to the Committee . The United States 
reiterated  its concerns, expressed in this Committee over the past several years, about the apparent 
expansion of Russia 's localization measures. For example, in the written questions posed by the 
United States in April 2017, the United States had asked about Decree No. 925.  According to the 
United States, t hat measure appear ed to provide a 15 % price preference to Russian (and EAEU) 
made goods and services purchased by State-owned enterprises.  The Un ited States now understood 
that the Ministry of Industry and Trade ha d approved a plan to increase  that preference to 25 %. The 
United States requested Russia to provide the Committee with any information about this proposal.  
The United States also asked wh ether this increase in preferential treatment for domestic goods had 
been adopted, and continued to  await a response to its question from the last meeting regarding 
the justification for Russia directing private companies to give priority to Russian -source d goods, 
services and works, over imports. The United States asked h ow that directive was consistent with 
the WTO principle of national treatment.  In the written questions posed in January of this year, the 
United States  asked a series of written questions  about the criteria for a product to be considered 
"Made in Russia ", and thereby receive preferential treatment.  The United States indicated it had  
recently learned of another measure implementing the "Made in Russia " requirements, namely  
Decree No. 1135 (2017) , which the United States considered  had tightened the req uirements to 
obtain "Made in Russia " status, including t he requirements for concluding "Special Investment 
Contracts ". According to the United States ' understanding , some Spec ial Investment Contracts had 
strong localization requirements as well as export requirements – both of which raise concerns 
relating to the TRIM s Agreement. The United States requested  Russia to provide further information 
about any localization or export  requirements in such contracts.  Finally, the United States indicated 
interest in  Federal Law No. 946 -FZ (12.31.17) which gives the government of Russia oversight 
authority of any procurement of lease of good or machinery for an investment project receiving  more 
than 500 million rubles in state support. The United States asked whether this oversight authority 
extend ed to the purchases or leases undertaken by private companies.  According to the 
United  States ' understand ing, the government maintains a registry  of investment proj ects subject 
to this oversight, and the United States asked whether  that registry  was public.  
58.  The Russian Federation  thanked the interested Members for their questions, and indicated it 
was preparing replies to the ones contained in docu ments G/TRIMS/Q/RUS/6 and 8. The 
Russian  Federation noted that those questions touch upon the same legal acts, namely Federal Law 
No. 223 -FZ and Resolution of the Government of the Russian Federation No. 925. Therefore, the 
Russian Federation believed that  instead of finalizing the replies one by one it would be more 
appropriate to work on them in parallel in order to make them as comprehensive as possible. The 
Russian Federation hoped that it would manage to submit the replies to both sets of questions 
shortly. The Russian Federation also considered it would be worth recalling its earlier clarifications. 
As a reminder of the aims of import substitution policy, the Russian Federation considered that this 
should not be perceived by the WTO Members as a tool f or elimination of foreign products in the 
Russian market. According to the Russian Federation, this policy is focused on developing innovative, 
environmentally -friendly and high -technology industrial production, and on strengthening 
competitiveness of Russ ian goods. It is aimed at ensuring stability of trade and confidence of its 
participants. As the Russian Federation had explained in its previous interventions, the need for 
import substitution policy was predetermined by the external threats that the Russ ian economy had 
faced about four years ago. According to the Russian Federation, the situation had now only changed 
for the worse. Certain Members started to apply measures restricting trade and economic 
cooperation with Russian companies more aggressively . According to the Russian Federation, 
depriving Russian enterprises of their access to money and technologies, prohibiting co -operation 
with them for local firms, and trying to displace Russian companies from other countries ' markets 
through extraterritor ial application of restrictions, are all examples that vividly illustrate the intention 
of certain Members to harm the Russian economy. According to the Russian Federation, Members 
that are deliberately pursuing such policies should not be amazed by Russia 's efforts to protect its 
industries and ensure economic stability. Their endeavours  only prove that import substitution policy G/TRIMS/M /45 
 
- 13 - 
 
  is justified, and that there is an obvious need to support its producers using all WTO -compatible 
tools. The Russian Federation then touch ed upon some specific issues raised by the Members earlier 
within this Committee. The first one is priority for Russian goods, works and services established by 
the Resolution of the Government of the Russian Federation No.  925. According to the 
Russian  Federation, this priority cannot be provided without due account of the provisions of the 
GATT. In this context the Russian Federation noted that provisions of Article  III of the GATT are not 
applied in certain cases, particularly the one described  in its paragraph  8(a). The second issue 
referred to by the Russian Federation was the functioning of the coordinating body envisaged by 
Federal Law No. 223 -FZ. The general idea of establishing the commission on import substitution was 
to harmonize the eff orts of Russian authorities to guarantee the quality, effectiveness and security 
of the procurement. According to the Russian Federation, this intention should be comprehensible 
in light of the aims of import substitution policy that it had described in th e first part of its 
intervention at this Committee meeting. As for another matter of concern for certain Members – the 
implementation of commitments of the Russian Federation in paragraph 1090 of the Working Party 
Report on the accession to the WTO – the R ussian Federation sought to convey the following point. 
At the meeting of the Council of the Eurasian Economic Commission in September of 2018 a decision 
was taken to raise customs duty rates with respect to goods "for industrial assembly ", in accordance 
with the commitments of the Russian  Federation in the said paragraph of the Working Party Report. 
The Russian Federation explained that, a t the moment , the Decision was undergoing the formal 
procedure of its signature by the Members of the EAEU Council, whi ch was expected to be finalized 
soon.  
59.  The Committee took note  of the statements made . 
9  ARGENTINA – ACT 27,263 ON THE DEVELOPMENT AND STRENGTHENING REGIME OF 
THE ARGENTINE AUTOPARTISM  
60.  The Chair recalled that item, which was first considered by the Committee in October 2016, was 
on the agenda at the request of Mexico. Questions to Argentina were circulated in documents 
G/TRIMS/Q/ARG/1, 3, 5, and 7. Responses were provided in documents G/TRIMS/Q/ARG/2, 4 and    
6.  
61.  Mexico  noted that Law No 27 ,263 on the Developm ent and Strengthening Regime of the 
Argentine Autopartism , through which a regime is created to grant tax incentives to specific 
producers of autoparts which comply with specific national content , entered into force on 
2 August  2016. The regime was impleme nted through Resolution 599 -E/2016  from the Industry and 
Services Secretariat of Argentina 's Ministry of Production , published on 7  December  2016 in the 
official gazette, and entered into force  on 12 December 2016 . Mexico recalled it had raised this 
matter  at the TRIMs Committee, as well as at the Committee on Market Access , more than two years 
ago without Argentina having brought its autoparts regime into conformity  with WTO rules. 
According to Mexico, t hrough the regime established by Law  27,263, digital tax credit bonds are 
granted, which may be transferred to third parties for the payment of domestic taxes for an amount 
which is equivalent to an ex-factory percentage of the amount of domestic autoparts. The digital tax 
credit bond varies from 4 % to 15%, depending on the local content and applies in line with t he table 
established in Article  13 of that law, and it also extends to purchasing new machinery manufactured 
in Argentina. In order to benefit from the regime, the Act also establishes local  content percentages 
which vary according to the autopart in question and run from 25% to 50%. Mexico consider ed that 
this law, to gether with the other measures envisaged in its application, could violate Article 2 and 
the Annex of the TRIM s Agreement, bec ause granting the tax benefit is conditioned upon legal 
persons who use inputs and production which comes from local manufacturers, and which is not 
granted to legal persons who use imported inputs. Therefore,  according to Mexico,  the regime would 
reduce  the competitive opportunit ies for exporters when compared with manufacturers of similar 
autoparts  established in the Argentinean territory . Mexico recalled that, at the previous Committee  
meeting, Argentina had reported that as of June 2018 no benefit had y et been granted and that this 
was due to the fact that the regime requires the platforms to be new and exclusive . This implied  
that time would be required for adapt ation and preparation  for companies to develop such platforms, 
which led Mexico to believe that Argentina intended not only to not bring this measure into 
conformity , but also to maintain it in force for a long period. Acco rding to Mexico, t his measure of 
import substitution gener ates an unfortunate precedent and reduces the competitive opportun ities 
in the Argentine market for WTO Members that export auto parts.  Mexico expected  Argentina to 
respond to its most recent questions, which address ed, inter alia , the amount of tax benefits granted  G/TRIMS/M /45 
 
- 14 - 
 
  so far, and request ed that Argentina brings  its auto pa rts regime into conformity  with the rules of 
the WTO.  
62.  The European Union  shared  Mexico 's views. The European Union wished to reiterate its concerns 
that the scheme is  not compatible with the TRIM s Agreement. The European Union looked forward 
to replies  from Argentina about the new legislative developments and a potential withdrawal of the 
scheme.  
63.  Argentina  thank ed Mexico and the European Union for their interest in this agenda item  and for 
the question s posed by Mexico in document G/TRIMS/Q/ARG/ 7. With respect to Mexico 's request for  
an update on the latest steps taken to implement  Law 27 ,263 on the Development and Strengthening 
Regime of the Argentine Autopartism , as well as other related resolutions or  legislation, Argentina 
responded that there have b een no further  steps other than those contained in the responses 
circulated by Argentina through this Committee . Regarding the question put by Mexico as to the 
number of firms  that were currently registered  in the program governed by Law  27,263, Argentina 
responded as follows : from 12 December 2016, the date on which the regulation of Law 27 ,263 
came into force, a total of six firms have joined this scheme , and any others who comply with the 
requirements established in Article 3 of the Law, as well as under  the terms established under the 
Resolution 599/E/2016 , may also apply.  Regarding the question put by Mexico as to how much the 
enrolled individuals referred to in the previous question had received in benefits  to date, Argentina 
responded that t o date, no  benefits have been granted as established under Article 4 of Law 27 ,263. 
64.  The Committee took note  of the statements made.  
10  TURKEY – CERTAIN PRACTICES AN D MEASURES BY TURKEY  IN THE PHARMACEUTIC AL 
SECTOR  
65.  The Chair recalled that this item was first considered by the Committee in November 2017, and 
was on the agenda at the request of the Europe an Union and the United States.  
66.  The European Union  remained  concerned about what it considered to be Turkey 's forced 
localisation in the pharmaceutical sector. The European Union stated that this measure damages 
European  Union  exports to Turkey and thus negatively affects production and jobs in the 
European  Union, while also  affecting  other WTO Members . According to the European Union, t he 
Turkish authorities pla n to publish a total of five waves (lists) of products of increasing sophistication. 
For the European Union, t he economic program for the years 2019 to 2021 rel eased on 
20 September 2018 seemed  to affirm this course. The European Union noted that its  expor ts of 
pharmaceutical products to Turkey amounted to nearly €3 billion in 2016. If fully implemented as 
outlined by the Turkish authorities, the measure would potentially affect all imports.  According to 
the European Union, t he on -going policy obliges produ cers of pharmaceutical products to submit 
localisation plans to shift production to Turkey or to produce locally via a Turkish manufacturer. If 
international manufacturers do not comply, the respective pharmaceutical products are 
subsequently barred from r eimbursement by the Turkish Social Security Insti tute, which accounts 
for approximately  90% of total sales of pharmaceutical products in Turkey. Since the previous 
Committee meeting , the European Union noted that  the second phase of this policy was impleme nted 
on 31 July 2018, and products covered under the second wave were now barred from 
reimbursement. For the European Union, t his policy is a clear breach of fundamental WTO rules, 
notably as regards GATT Article III:4 and TRIMs Article  2.1. Therefore , the European Union 
requested  Turkey to stop its implementation immediately and remove those rules already enacted. 
Should Turkey continue to ignore its obligations, the European Union stated that it  will consider all 
options available for exercising its right s to respond to measures incompatible with Turkey 's 
international obligations. The European Union indicated that , at this stage,  it cannot exclude legal 
means to defend the rights of European companies. The European Union was  aware of Turkey 's oft-
repeated  claim that the measure would fall within the public procurement exemption of GATT 
Article  III:8. However, the European Union did  not consider this reimbursement scheme as public 
procurement. In view of all this, the E uropean Union called on Turkey to end this policy entirely.  
67.  According to the United States , on 8 February  2017, pursuant to Turkey 's 10th Development 
Plan and 64th Government Action Plan, the Social Security Institution (SGK) published on its 
webpage a list of medicines to be delisted from SGK 's official reimbursement l ist effective 
8 February  2018. In the United States ' understanding,  the medicines  that were  to be delisted G/TRIMS/M /45 
 
- 15 - 
 
  involved  imported products for which there are at least three  locally manufactured alternatives. The 
United States stated that r emoval from  "active status " on the reimbursement list would effectively 
deprive  that product of meaningful access to the Turkish market, since Turkish patients generally 
do not have access to drugs not funded by the SGK.  By contrast, moving manufactu ring to Turkey 
allows a company to continue to have access to the reimbursement list for its products.  According 
to the United States,  the Turkish government ha d not identified any public health need that would 
require local production of the identified me dicines. Rather, as indicated in the "Objective and Scope " 
of the Transformation Plan and the associated "Goals " and "Performance Indicators ", the measure 
appear ed to be driven by a number of industrial policy goals including enhancing local production 
capacity, protecting local producers, and reducing Turkey 's trade deficit. The United States sought 
to emphasise  its view that  Turkey 's action does not hinge on pharmaceutical product safety, 
effectiveness,  cost or other similar factors.  Rather, for the United States, the measure was based on 
the location of manufacture.  The measure applies to foreign generic medicines just as much as to 
other foreign medicines. Locally manufactured medicines are preferred under the system , regardless 
of the cost,  and, as the United  States understood it, medicines can continue to be imported if the 
producer agrees to undertake some manufacturing in Turkey. Compelling local manufacturing 
through Turkey 's reimbursement list raise d questions for the United States about a number of 
Turkey 's existing international obligations, including the TRIM s agreement, as well as GATT Article  III 
and the TBT  Agreement. The United States stated  that in early February the Turkish authorities 
implemented the first phase of the '"delist ing"' of pharmaceutical products from the government 's 
reimbursement list, with a second phase implemented in July . The United  States request ed Turkey 
to provide an update on the status of this process, and to elaborate on its justification. Beyond this, 
it was the United States ' understanding  that Turkey  intends to follow up the initial lists of products 
with further lists after an internal review process concludes. It urged Turkey to consult closely with 
both trading partner governments and potentially af fected companies and to take their concerns 
fully into account before making any further decisions in connection with this policy.  
68.  Switzerland  reiterated the concerns raised by the United States , and the European Union, which 
was also of concern to Switzerland and Swiss pharmaceutical companies . According to Switzerland, 
pharmaceutical devices account for around CHF750 million – or about one third of Swiss exports – 
to Turkey. The policy of removing certain imported medicines from the reimbursement l ist of 
Turkey 's Social Security Institute, which covers a substantial share of Turkish patients ' costs for 
medicines, ha d proved to be discriminatory for Swiss pharmaceutical companies. Switzerland 
questioned the compatibility of Turkey 's localisation poli cy with WTO rules, in particular Article III of 
GATT and Article 2.1 of the TRIM s Agreement. Switzerland  called on Turkey to refrain from restricting 
imports of pharmaceuticals  and medical devices, and to reconsider the removal of the relevant 
products fro m the list of  the Social Security Institute.  
69.  Turkey  indicate d that it had shared its position in relation to practices in the pharmaceutical 
sector  in the previous  Committee meetings, and it maintain ed that position. For Turkey, t he issue 
was closely linke d to the social security policy in Turkey. In this respect, for medicines being financed 
by the State, the Repayment Commission under the Social Security Institution was the relevant 
authority in Turkey, which also includes members from the Ministries of Treasury and Finance, and 
for budgetary purposes , and was authorised  to take decisions on removing or omitting a certain 
medicine from official reimbursement lists, or the modification of the existing paym ent conditions. 
This commission makes its decisions through analysing the impacts  on the budget of  Turkey since 
the reimbursement policies are linked to public finances and products are purchased for government 
purposes. The commission also evaluates  the budget  implications of the implementation of the social 
security and healthcare, market share of medicines, clinical and technical  data, and financial and 
economic calculations and assessments . According to Turkey, t hese practices should be considered 
to be  within the framework of the public procurement exception. Turkey  stated that the  
implementation  of this measure  falls under Article III.8(a) GATT.  This practice did not constitute an 
impediment to the importation of medicines , referring also to procedures  like licensing  and good 
manufacturing practices.  On the question of the de -listing of pharmaceutical products from the 
government 's reimbursement list, Turkey stated that these products were not being de -listed from 
the reimbursement list. They were being  indicated or pointed out as passive only. This process had 
already been completed and no additional products would be rendered passive. In addition to this, 
the passive products remained on the market.  
70.  The Committee took note  of the statements made.   G/TRIMS/M /45 
 
- 16 - 
 
  71.  The Chair requested Members that had posed oral questions, or that had provided oral 
responses to oral or written questions on any of the above agenda items, to provide their questions 
and responses in writing to t he Secretariat for circulation.  
11  NOTIFICATIONS UNDER ARTICLE 6.2 OF THE TRIMS  AGREEMENT OF PUBLICATIONS 
IN WHICH TRIMS  MAY BE FOUND  
72.  The Chair noted that, as had been agreed by the Committee, the Secretariat circulated a 
reminder regarding Article 6.2 notifications on 1 October 2018 in docu ment G/TRIMS/W/167. The 
Committee had  received new notifications from Liberia in document G/TRIMS/N/2/Rev.27/Add.1 and 
Cambodia in document G/TRIMS/N/2/Rev.27/Add.2.  The Chair urged Members that had not yet 
notified to do so promptly.  
73.  The Committee took no te of the information provided . 
12  OTHER BUSINESS  
74.  No Member raise d any items under "other business ". 
13  DATE OF THE NEXT MEE TING  
75.  The Chair recalled that Article 7.1 of the Agreement provided that the Committee would meet 
not less than once a year, and otherwise at the request of any Member. The Chair noted that the 
Committee usually holds two meetings per year, in the spring and fall . In acc ordance with past 
practice, the Chair suggested scheduling the next meeting in spring 2019, in order to enable the 
planning of  work. In particular, the Chair proposed a meeting on Thursday 6 June 2019.  
76.  The Secretariat  would issue the annotated draft agend a on Thursday 16 May 2019, and 
therefore Members ' requests to place items on the annotated draft agenda should be submitted by 
Tuesday 14 May 2019. Members wishing to make comments on the draft agenda or to circulate 
documents should do so by Thursday 23 M ay 2018. The airgram convening the meeting will be 
issued on Wednesday 29 May 2019.  
77.  The Committee took note  of the information provided.  
14  ANNUAL REPORT TO THE  COUNCIL FOR TRADE I N GOODS ( 2018 ) 
78.  The Chair noted that 'Article 7.3 of the TRIMs Agreement requires 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 2018, as document 
RD/TRIMS/18. The Chair indicat ed that this report would be updated, if necessary, to take account 
of the present Committee meeting. Upon receiving no reactions to the annual report  and its annexes , 
the Chair propose d that the Committee adopt the annual report ad referendum , request the  
Secretariat to complete and update it if necessary, and forward it to the Council for Trade in Goods.  
79.  The Committee so decided . 
80.  The meeting was adjourned . 
__________