WORLD TRADE  
ORGANIZATION  WT/REG241/M/1 
1 October 2009 
 (09-4650) 
Committee on Regional Trade Agreements 
Fifty-fourth Session  
 
 
 
CONSIDERATION OF THE ECONOMIC PARTNERSHIP AGREEMENT BETWEEN  
JAPAN AND INDONESIA, GOODS AND SERVICES 
 
Note on the Meeting of 15 September 2009  
 
Chairman: Mr D. Brauns (Germany) 
  
1. The meeting was convened in document  WTO/AIR/3410, dated 7 August 2009. 
2. Under Agenda Item B.VI of its 54
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) took up cons ideration of the Economic  Partnership Agreement 
(EPA) between Japan and Indonesia (hereinafter 'the Agreement'), goods and services.  
3. The Chairman  noted that the Agreement had entered into force on 1 July 2008 and had been 
notified by the Parties to the WTO on 27 June 2008 under Article XXIV:7(a) of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement establishing 
a free trade agreement (document WT/REG241/N/ 1) and under GATS Article V:7(a) as an 
Agreement providing for the liberalization of trade in services within the meaning of GATS Article V 
(document S/C/N/462).  The text of the Agreement w as available, together with its Annexes, on the 
Parties' official websites.  The Factual Presentation on the goods and services aspects (document WT/REG241/1 dated 6 July 2009) had been prepared  by the Secretariat on its own responsibility in 
full consultation with the Parties, in accordance w ith paragraph 7(b) of the Transparency Mechanism 
for Regional Trade Agreements (document WT/L/671).  In addition, written questions and replies on 
the Agreement had been recently distributed in document WT/REG241/2, dated 7 September 2009.   
He proposed to organize the consideration of the Ag reement by asking first the Parties and then other 
Members to give any general comments.  The Co mmittee would then turn to the specifics of the 
Agreement using the Factual Presentation to guide th e debate.  He proposed to go through the Factual 
Presentation by section, and then through the questions and replies document.  
4. The representative of Indonesia
 expressed appreciation for the opportunity to introduce and 
discuss the Agreement.  He thanked the WTO Secret ariat for its work on the Factual Presentation and 
to delegations for their interest in the Agreement.   Even though Indonesia was familiar with the work 
of the Committee, it was the first time his delegation presented an agreement in the CRTA.  The 
Agreement with Japan was Indonesia's first bilate ral trade agreement.  Until recently, Indonesia had 
relied heavily on the multilateral trading system and on regional trading arrangements, particularly the 
ASEAN schemes for international trade and investment.  However, due to the dynamics of situation, 
evolving circumstances, and lessons learnt from the experiences of other countries, Indonesia had 
been motivated to complement these with bilateral agreements to forg e external trade and investment 
relations.  Japan, which had been one of Indonesia' s largest trade and investment partners and its 
largest export market, had been logically the fi rst bilateral counterpart.  Negotiations on the 
Agreement had been launched in Toky o in June 2005 with the first round held in Jakarta in July of the 
same year.  After two years, six rounds of formal negotiations and countless informal talks in working 
groups, the Agreement had been signed in Jakarta in  August 2007.  In having forged ahead with a WT/REG241/M/1 
Page 2  
 
  bilateral economic partnership agreement, the Par ties had aimed at an even closer and mutually 
beneficial economic relationship through, inter alia,  liberalizing and facilitating trade in goods and 
services, increasing investment opportunities and activities, improving the business environment and confidence, enhancing transparency of each other’ s laws, regulations and policies, and promoting 
cooperation in capacity building.   
5. The Agreement was comprehensive,  consisting of thirteen chapte rs and covering a wide range 
of issues such as goods, rules of origin, customs pr ocedures, services, movement of natural persons, 
investments, energy and mineral resources, intelle ctual property rights, government procurement, 
competition, and cooperation.  He noted that the le vels and emphasis of commi tment in those chapters 
varied, reflecting the understanding on, and respect for,  the interests and sensitivities of the partners.  
The Agreement was also evolving in nature that gave  room for further improvements.  In this context, 
a joint committee and a number of sub-committees ha d been established to monitor and ensure its 
implementation, and, as appropriate, to review the Agreement.  The Agreement had been intended to 
be a WTO consistent bilateral agreement.  Th roughout the negotiations, the Parties had been 
constantly and consistently mindful to ensure th at each and every element was in full accordance with 
WTO provisions.  This included serious attempts by the Parties to achieve the required “substantially 
all the trade” provision of the GATT Article XXIV and in this context the Parties had appropriately 
fulfilled their obligation to notify the Agreement to the WTO prior to its entry into force.  Although 
the Agreement was a tailor-made bilateral agreement,  it was still very much within the corridor of, 
and hopefully could serve as a small building bloc k to the multilateral trading system.  As the 
Agreement was between a develope d and a developing country,  since the outset, the Parties had 
agreed that development aspects should be fully taken into account during the negotiation process and 
in the content of the Agreement.  In this context, capacity building had been made an integral part of 
the Agreement and was recognized to be as importa nt as market access.  Hence, liberalization, 
facilitation, and cooperation were the three pilla rs of the Agreement.  He highlighted the 
comprehensive cooperation project called 'Manufact uring Industrial Development Center' (MIDEC) 
as an example of cooperation, which had been desi gned to contribute positively to the reinforcement 
of a business partnership between local supporting in dustries and Japanese manufacturers with a view 
to enhancing Indonesia’s competitiveness.   
6. The Agreement's entry into force had coincide d with the worsening of the world economic 
crisis.  Various factors and forces, which were well beyond and outside the purview of the Agreement 
had adversely impacted the trade and investment pe rformance of the Parties.  As consequence, he 
found it difficult to make an objective assessmen t of the benefits and disadvantages of the 
implementation of the Agreement in the past one year.  He remained optimistic that with the 
improvement of the global economic situation as we ll as the Parties' own respective conditions, the 
Agreement would effectively and be neficially serve its objectives.  
7. The representative of Japan
 expressed thanks to the Committee for the opportunity to present 
the Agreement for consideration by WTO Members and to the Secretariat for the Factual Presentation.  
The Agreement encompassed a wide range of areas be yond trade in goods and services, for example,  
movement of natural persons, energy and minera l resources, intellectual property, competition, 
improvement of business environment, and coopera tion.  The Agreement was the sixth Economic 
Partnership Agreement (EPA) concluded by Jap an, following those with Singapore, Mexico, 
Malaysia, Chile and Thailand.  Its key objectives were  to liberalize and facilitate trade and investment 
and to cooperate for capacity-building.  Throu gh these means, the Agreem ent was expected to 
strengthen economic relations between the Parties.  Indonesia had been one of Japan’s major trading 
partners and a host country to its investment as we ll as a supplier of energy and mineral resources.  
The Parties had decided to negotiate  the Agreement to further strengthen such economic ties.  It had 
been expected that the conclusion of the Agreem ent with Indonesia, which was one of the core 
countries of ASEAN, would have had a positive and demonstrative impact on other economies, 
particularly those in East Asia, and help further and enhance economic integration in the region.  In  WT/REG241/M/1 
 Page 3 
 
 
  June 2005, at the Japan-Indonesia Summit meeting in To kyo, the leaders of the Parties had decided to 
start negotiations.  The first round of  negotiations had been held in July  2005 in Jakarta;  in November 
2006, the Parties had completed the negotiations on ma jor elements of the Agreement to be followed 
by the finalization of the legal texts.  The Agre ement had been signed on 20 August 2007 in Jakarta 
and had entered into force on 1 July 2008.  Japan be lieved it was comprehensive with a high level of 
tariff liberalization.  Within ten years, it would el iminate up to 92% of tariffs in terms of bilateral 
trade volume from May 2004 to April 2005.  The libe ralization of trade in goods covered all major 
sectors;  therefore the Agreement met GATT Article XXIV requirements.  Concerning trade in services, the Agreement provided for national treatme nt for a broad range of sectors and sub-sectors 
and was compatible with GATS Arti cle V.  The economic effects of the Agreement were difficult to 
assess as it was still in its initial stage, and th e recent economic crisis.  One of the major 
characteristics of the Agreement was the chapter on energy and mineral resources, under which the 
Parties agreed to promote partnership, incl uding through cooperation for the promotion and 
facilitation of investment, assurance of transparency in export licensing procedures, import and export restrictions, as well as the establishment of a mech anism for bilateral policy dialogues.  The Joint 
Committee and eleven sub-committees  had been established to ensure  the effective implementation 
and operation of the Agreement and four sub-committees had already met, namely:  the sub-
committees on trade in goods, on the rules of orig in, on the movement of natural persons, and on 
cooperation.  Under the chapter on cooperation, the Agreement pr ovided for cooperation in nine 
different fields.  The Parties had started discu ssions for the formulation and implementation of 
specific cooperation projects including projects under the Initiative for MIDEC, which aimed at 
enhancing the competitiveness of manufacturing industries in Indonesia.  She noted that the 
Agreement had laid a solid foundation for furthe r growth in economic activities in and across the 
Parties. 
8. The representative of the United States
 thanked the Parties and the Secretariat for the 
information on the Agreement.  According to pa ragraphs 27 and 28 and Tables A.1 and A.2 of the 
Factual Presentation, Japan would eliminate duti es on 89.2% of all tariff lines, covering 94.4% of 
imports from Indonesia under the Agreement.  Although 96.1% of Japan's non-agricultural duties were to be eliminated, only 60% of its agricultural duties were to be eliminated under the Agreement.  
Meanwhile, Indonesia was due to eliminate tariffs on 92.9% of all tariff lines, covering 92.1% of 
imports from Japan under the Agreement.  In contrast to Japan's commitments, 94% of non-
agricultural duties and 85.6% of agricultural duti es were to be eliminat ed by Indonesia under the 
Agreement.  She was compelled to note, as for Japan's other agreements with Chile, Mexico, 
Malaysia and Brunei, the disproportional liberalizat ion between its industrial and agricultural sectors 
and was troubled that Japan choose to eliminate fewe r agricultural tariffs than its developing country 
partner.  The representative of Japan
 said that it had tried its best to arrive at a mutually acceptable 
result at the time when the Ag reement had been negotiated. 
9. The representative of Australia,  expressed concern, as for the Japan-Brunei agreement, about 
the significantly low level of liberalization in agricu ltural products.  He asked the Parties to explain 
the reasons for this low coverage, the disproportionate  level of liberalization between agricultural and 
industrial goods, and the imbalance between the commi tments by the Parties.  He also asked how this 
level of liberalization met GATT Article XXIV requir ements to eliminate duties on substantially all 
the trade.  The representative of Japan  replied that, in the Parties' vi ew, the Agreement was compatible 
with GATT Article XXIV.  The representative of Indonesia  noted that the accomplishment with the 
substantially all the trade requirement should take in to account  all dimensions of trade in goods.  He 
believed that the percentage of trade liberalizati on reported in the Factual Presentation qualified the 
Agreement as being compatible with GATT Article  XXIV requirements.  Moreover the Agreement 
was comprehensive consisting of three pillars and 13 chapters and he believed that a disproportion 
between one chapter or in one pillar and the rest , should not affect the entire Agreement.   WT/REG241/M/1 
Page 4  
 
  10. The representative of Korea
 asked the Parties to explain the relationship between the 
Agreement and their other free trade agreements ( FTAs).  According to the Factual Presentation, 
Japan had a number of FTAs in effect with individu al ASEAN member states, namely:  Indonesia, the 
Philippines, Brunei, Thailand, Malaysia and Singapore .  Japan had also concluded an agreement with 
ASEAN which included wider membership and an accelerated liberalization schedule.  He asked 
about the implications for the individual agreem ents once the Japan-ASEAN agreement entered into 
force and whether they would be replaced by the collective agreement or if the new agreement would 
be a compilation of the individual ones.  The representative of Japan  answered that the Japan-ASEAN 
agreement would not supersede any individual ag reements which would re main valid.  Thus the 
Agreement with Indonesia and the agreement with  the ten member states of the ASEAN were two 
independent and valid agreements.  A potential user  of these two agreements would benefit from them 
both, and would, she believed, choose the agreement with the lower customs duty.  She also pointed 
out that the Japan-ASEAN agreement had more favour able cumulative rules of origin, which applied 
to the wider area of all ASEAN member states.  The representative of Indonesia  added that there was 
no contradiction between the two agreements, rather th ere were lots of specific features in each.  It 
would be up to the user to take the maximum advantage from both agreements.   
11. The representative of the European Communities (EC)  noted that the Agreement between 
Japan and Indonesia and between Japan and ASEAN were  completely different and traders could take 
advantage of the provisions of each agreement, de pending on which was most beneficial.  In this 
regard, she asked how economic operators were info rmed about the different treatment provided by 
the two agreements, what the benefits of maintaini ng two separate agreements at the same time were, 
and how the Parties calculated the impact on the tr ansaction costs of maintaining both agreements in 
force.  She also noted that the Japan-ASEAN agreem ent had entered into force in December 2008 and 
that the Parties were in the process of preparing a notification to the WTO, which she looked forward 
to seeing.  The delegate of Japan  said that besides the official g azette and the government websites, 
there were briefing sessions on the agreements, by the Government or the Japanese Chamber of 
Commerce, which issued certificates of origin.  She believed that one of the benefits of having two 
agreements in force at the same  time was more favourable rules of origin, as under the Japan-ASEAN 
agreement, producers could take advantage of ru les allowing regional cumulation instead of only 
bilateral under the Japan-Indonesia Agreement.  However,  in the bilateral context, it was easier for the 
Parties to accommodate specific needs or potentia l benefits, for example concerning the business 
environment or the movement of na tural persons.  The costs of having two agreements in force at the 
same time was easily superseded by the benefits to the Parties.  The representative of Indonesia  added 
that Indonesia was still in the process of ratif ying the ASEAN-Japan agreement, whereas the 
Agreement with Japan was already in to force.  However, prior to ra tifying the collective agreement, 
Indonesia would provide all the necessary educa tion to stakeholders, for example through the 
Chamber of Commerce and Industry, and would expl ain to them how to take advantage of the 
collective agreement, as they had alrea dy done for the Agreement with Japan.  
12. The representative of the EC  asked why the Agreement did not contain provisions for the 
elimination and prohibition of export duties on any goods.  The representative of Indonesia  replied 
that WTO rules on export duties had been suffi cient to cover the Parties' interests.  
13. The representative of the United States  noted the Parties responses to questions 2, 4, 11, 14, 
and 16 of the questions and replies document that th e liberalization commitments reflected the results 
of the negotiations taking into account each Party's 'specific interests and con cerns'.  She asked Japan 
to explain how its approach to tari ffs liberalization in its bilateral tr ade agreements was not essentially 
institutionalizing protectionism.  The representative of Japan  said that it was not Japan's intention to 
institutionalize protectionism and in its written answ ers had mentioned the possibility of renegotiating 
its commitments thus proving its intention to liberalize further.    WT/REG241/M/1 
 Page 5 
 
 
  14. The Chairman  noted that the consideration of the goods and services aspects of the Economic 
Partnership Agreement between Japan and Indonesi a had allowed the Committee to clarify a number 
of questions and oral discussion of the Agreement could be concluded in accordance with paragraph 
11 of the Transparency Mechanism.  If any delega tions wished to ask follow-up questions they were 
invited to forward submissions in writing to the Secretariat by 22 September 2009  and the Parties 
were asked to submit replies  in writing by no later than 6 Oc tober 2009.  In accordance with 
paragraph 13 of the Transparency Mechanism all written submissions, as well as minutes of this 
meeting would be circulated promptly, in all WTO official languages, and would be made available 
on the WTO website. 
15. The Committee took note  of the comments made. 
__________