WORLD TRADE  
ORGANIZATION  WT/REG241/2 
7 September 2009 
 (09-4213) 
Committee on Regional Trade Agreements Original:  English 
  
 
 
ECONOMIC PARTNERSHIP AGREEMENT BETWEEN JAPAN AND INDONESIA 
(GOODS AND SERVICES) 
 
Questions and Replies
 
 
  The following communication, dated 3 September 2009, is being circulated at the request of the delegations of Japan and Indonesia.  
 This document reproduces the questions addressed to the Parties and the responses submitted. 
 
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Questions from the Delegation of Australia
 
 
1. We would appreciate an explanation as to why the Agreement does not provide a full 
schedule of tariff reductions/elimination?  We are of the view that the absence of such information makes it difficult to assess the trade implications of the EPA for the Parties, as well 
as the potential impact on the trade interests of non-Parties. 
 The schedules of both Parties attached as Annex 1 to the Agreement indicate the results of the 
concessions for all tariff lines in terms of tariff reduc tions/elimination. It is certainly considered to be 
a full schedule.  
2. We note that the Agreement provides fo r Indonesia to reduce tariffs on autos 
(Chapter 87) by 50%, and that Japan has not committed to eliminate tariffs on all agricultural 
products (paras 19-33).  Do the Parties intend to negotiate further reductions - and elimination 
of tariffs - on these categories of products as pa rt of future tariff negotiations that are scheduled 
to be held in the fourth year after entry into force of the Agreement? 
 The figures reflect the results of the negotia tions conducted by both Parties, taking into 
consideration each side’s specific interests and concerns. 
 
 The lines which are subject to renegotiation in th e forth year belong to R category noted with 
4 in Column 5 (only in the Schedule of Japan), an d the EPA will be reviewed every 5 years, unless 
otherwise agreed by the both Parties.  The result  of the renegotiations is subject to discussions 
between the Parties, and that cannot be prejudged at this stage. WT/REG241/2 
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  3. Can Indonesia explain why tariffs of mo re than 50% are not liberalised under the 
Agreement?  What products are covered by these  lines and what is the trade between Japan and 
Indonesia in these items? 
 Tariffs more than 50% are partly liberalized . Those which are not covered by the Agreement 
reflect the sensitivity of some goods. Those items wh ich are liberalized in the Agreement are mostly 
those fall under Harmonized System Chapter 87.03, while items which are not liberalized include 
alcoholic beverages under Harmonized System Number 2204.21.21.00, 2204.21.22.00, 2204.29.21.00, 22.04.29.22.00, 2206.0040.00, 2206.00.50.00. 
 
4. Can Japan explain why tariffs of more than 40% are not liberalized under the 
Agreement?  What products are covered by these  lines and what is the trade between Japan and 
Indonesia in these items? 
 The figures reflect the results of the negotia tions conducted by both Parties, taking into 
consideration each side’s specific interests and conc erns.  These lines reflect the sensitivity of some 
products, and their trade volumes are li mited between Japan and Indonesia. 
 
5. We refer to the provision where safeguards under Article 5 of the WTO Agreement on 
Agriculture will continue to apply under the EPA.  What is the reasoning behind this?  Will 
Article 5 of the Agreement on Agriculture cont inue to apply to concessions under their EPA in 
the event of that Article ceasing to apply under the WTO? 
 For agricultural products Indonesia and Japan agreed to apply safeguards provision of the 
WTO Agreement on Agriculture, because both sides considered that the WTO provision provides 
necessary safeguards measures.  Paragraph 6 of Artic le 24 of the EPA will con tinue to be applied, 
until both sides agreed to do otherwise. 
 
6. Japan’s tariff rate quotas for three lines – bananas; dates,  figs, pineapples, avocadoes, 
guavas, mangoes and mangosteens; and D-glucitol (sorbitol) – are subject to renegotiation in 
2013.  Are any other agricultural tariff lines ( 40% of which will retain duties) subject to 
renegotiation or liberalization? 
 Not only these items under tariff rate quotas, but also other agricultural products, classified 
under the tariff lines indicated with “R” in Column 4 and “1” or “4” in Column 5 of Japan’s schedule 
under the EPA, are subject to renegotiation on i ssues such as improving market access conditions. 
These products indicated with “1” or “4” in Columns 5 are subject to renegotiation on issues such as 
improving market access conditions in the fifth year or the fourth year, respectively, after the date of entry into force of this Agreement. 
 
Questions from the Delegation of Brazil
 
 7. Are the preferences granted for goods prod uced with materials imported with 
suspension or elimination of duties and taxes? 
 Whether materials are exempted from customs duty or not at the time of importation does not 
affect the determination of the origin status of the final goods.  Preferential tariff treatment will be 
applied to originating goods which satisfy all th e requirements of Chapter 3 (Rules of Origin). 
 
8. Are there any plans to implement digital certificates of origin, with digital signature? 
 At the moment there is no discussion between th e two countries to apply digital certificates of 
origin with digital signature.  WT/REG241/2 
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  Questions from the Delegation of Chinese Taipei  
 Goods
 
 
9. According to paragraph 6 （page 2）of the WTO Secretariat’s Factual Presentation, the 
export products from Japan and Indonesia were highly concentrated during 2005-2007, and the 
four largest export product categories of Japan  and Indonesia, accounted for 85.6% and 78.8% 
of imports to each other respectively. We would like to ask whether there has been significant 
change in the two countries’ export product struct ure since the EPA entered into force on 1 July 
2008, and what the impact of the financial crisis has been. 
 According to trade statistics, no significant change has been seen in the two countries’ 
products exported each other after the entry into force of the EPA.  The trade volume between the 
two countries after the entry into force of the EPA has declined compared to  the trade volume before 
the entry into force of the EPA, and this shows the financial crisis has had an impact on trade volume 
between the two countries.  
Movement of Natural Persons
 
 
10. According to paragraphs 65 to 70 of th e WTO Secretariat’s Factual Presentation, we 
know this Agreement exceptionally cate gorizes nurses and care-workers under specific 
commitments for the movement of natural person s. We would appreciate it if both Parties 
(Japan and Indonesia) could elaborate on the following respectively: 
(a) What is the annual ceiling set for nu rses or certified workers to enter each 
party? How is the maximum number determined? 
 As for Indonesian candidates for nurses or certified care-workers who enter Japan;  the 
maximum number of entry of Indonesian candidat es to Japan is up to 1,000 (candidates for 
nurses: 400, candidates for certified care-workers:  600) for the first two years.  The maximum number was determined by Japan based upon the cons ideration whether they could be smoothly and 
appropriately accepted and whether they would not affect the labour market in Japan. 
 
 As for Japanese candidates for nurses and care- workers who enter Indonesia, there is no 
annual ceiling notified by Indonesia.  
(b) Since the Agreement has been in force for one year, have these migrant nurses 
and care-workers have constituted a majo r supplement to nursing manpower of 
each Party? Has it shown a great impact on better nursing for elderly or others? 
Are there any related statistics available? How does that compare in percentage with migrant nurses or care-workers from elsewhere? 
 Indonesian candidates for nurses or certified car e-workers who enter Japan under the EPA are 
not being qualified as nurses or certified care-workers in Japan unless they pass Japanese national 
examination.  Their purpose of staying in Japan is to engage in activities including training in order to 
acquire necessary skills for being qualified as nurses or certified care-workers by passing the 
examination.   If they pass each examination, they will be gran ted entry and temporary st ay in order to work 
as nurses or certified care-workers in Japan.  Since none of them has passed the examination as of 
today, there is no statistics available about the questions.    WT/REG241/2 
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   For reference, in 2008, Japan has permitted en try and temporary stay of 104 candidates of 
nurses and certified care-workers respectively (208 ca ndidates in total).  As for 2009 Indonesia is in 
preparation for sending these candidates to Japan.  
Questions from the Delegation of the European Communities:
 
 
11. The Factual Presentation indicates that Indonesia liberalizes by 2023 
(one-year-transition period) 92.9% of tariff lines, corresponding to 92.1% of Indonesia's 
imports from Japan during 2005-2007. In turn, Japan liberalizes, by 2023, 89.2% of its tariff 
lines, corresponding to 94.4% of Japanese impo rts from Indonesia in the period 2004-2006 by 
2023.  
 Could the Parties elaborate on the reasons fo r this asymmetrical liberalization, given the 
diverse economic and trading potential of both Parties? 
 
 The figures concerning the liberalization commitm ents reflect the results of the negotiations 
between both Parties, taking into consideration each Party’s specific interests or concerns.  Japan’s 
liberalization commitments are substantial and high-level which are consistent with the 
WTO benchmark, i.e. liberalization of “substantially all the trade”.  On top of the liberalization ratio 
as indicated in the Factual Presentation, Japan al so made the commitments to reduce duties or 
establish special arrangements for tariff ra te quotas, for certain sensitive products. 
 
 The EPA is a comprehensive agreement coveri ng not only trade liberalization but also trade 
promotion and facilitation.  As far as Indonesia is concerned, the be nefits derived from the Agreement 
is not solely in the market access concessions ma de by Japan but also from technical cooperation for 
capacity building commitments by Japan to Indonesia,  with participation of our respective industries. 
These programmes address the gap in capacity and are expected to contribute positively to the 
benefits derived by Indonesia from the Agreement. 
 
12. Chart III.2 shows that for most of the non- liberalized tariff lines in Indonesia's tariff 
schedule at the end of the implementation period (by 2023), Japan will not benefit of tariff preference over the relevant MFN Indonesian duties, with the significant exception of HS Chapter 87 goods (Vehicles) where the average preferential duty is less than half the 
MFN duty. 
 Could the Parties elaborate on the reasons for this particular Indonesian bilateral 
concession to Japan ? 
 
 In our understanding, the Chart III.2. show s the comparison between average MFN duty and 
average preferential duty for tariff lines which will remain dutiable after the implementation period.  
This is because in the negotiation on Indonesia’s con cession, the Parties agreed on exclusion from any 
tariff commitments for certain tariff lines in many Ch apters, while in HS Chapter 87, the Parties also 
agreed tariff reduction.  The figures reflect the resu lts of the negotiations between both Parties, taking 
into consideration each Party’s speci fic interests and concerns.    
 
 Japan will also gain benefits from concessions made by Indonesia in most of tariff lines in 
Chapters other than HS Chapter 87. 
 
13. Paragraph 19 of the Factual presentation notes that "[…] for certain products, the 
Parties agree to negotiations in the fourth year  following the Agreement's entry into force.   WT/REG241/2 
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   Could the Parties indicate whether they have  already agreed on a product shortlist for 
the above-mentioned future liberalization? Will this new list include category R (subject to renegotiation) and category X (e xcluded from liberalization)? 
 
 The lines which are subject to renegotiation in  the fourth year belong to R category noted 
with 4 in Column 5 (only in the Schedule of Japan). 
 
14. As regards Japan's liberalization schedule, pa ragraph 32 indicates that "[l]ines subject 
to duties of more than 40% are not liberalized  under the Agreement".  Could Japan explain 
why it has not liberalized any of the products subject to duties of more than 40%? 
 The figures reflect the results of the negotia tions conducted by both Parties, taking into 
consideration each side’s specific interests and concerns. 
 
15. The Factual Presentation shows that this Agreement does not provide for ambitious 
commitments in trade in services, which seem not to go beyond GATS commitments.  
(a) Could the Parties explain in detail the reasons for this limited level of ambition?  
(b) How do the Parties consider this limited liberalization in terms of GATS Article 
V compatibility? 
 Under this EPA, the schedules of specific co mmitments by Japan and Indonesia are being set 
up as a result of intensive and prolonged negotiations  between the delegation of  Indonesia and that of 
Japan, and Japan and Indonesia have made impr ovement in both of the specific commitments 
compared to those under the GATS.    Japan commits more sectors than it does unde r Japanese schedule of specific commitments of 
the GATS, and it also has made full commitments in  more than 30 sectors.  This demonstrates the 
high level commitments that the EPA provides for.   Most of the sectors/sub-sectors commented by  Indonesia are in the process of regulatory 
reform. Indonesia’s commitments do not necessarily bind the prevailing laws and regulations. However, Indonesia agrees to make GATS plus o ffers by making improvements to the committed 
sectors/sub-sectors and commenting additional new se ctors/sub-sectors.  Therefore, we are of the 
view that this EPA conforms to Article V of the GATS.   Under this EPA, economic inte gration between both countries can be achieved through their 
longstanding friendship and str ong political and economic ties that  have developed through many 
years of fruitful and mutually beneficial cooperation.  
  Furthermore bilateral relationship will enha nce mutually beneficial economic partnership 
through cooperation, trade and investment  facilitation, and trade liberalization. 
 
Questions from the Delegation of the United States
 
 
Goods  
 16. According to Paragraphs 27 - 28 and Annex 1 of the Factual Presentation, 
Tables A.1-A.2:  WT/REG241/2 
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   Indonesia
 eliminates tariffs on 92.9% of all tari ff lines covering 92.1% of imports from 
Japan under the Agreement.  94% of Indonesia’ s industrial tariffs are duty-free and 85.6% of 
its agricultural tariff lines are duty-free under the Agreement. 
 
 Japan  eliminates duties on 89.2% of all tariff lines covering 94.4% of imports from 
Indonesia under the agreement.  However, though 96.1% of industrial tariffs are duty-free, only 
60.0% of Japan’s agricultural tariff lines are duty-free under the agreement. 
 
(a) How does Japan explain the disproportio nate tariff elimination between its 
industrial and agricultural sectors?  
 The figures concerning the liberalization commitm ents reflect the results of the negotiations 
between both Parties, taking into consideration each Party’s specific interests and concerns.  Japan is 
of the view that the liberalization commitments  should be substantial and high-level which are 
consistent with the WTO benchmark, i.e. liberali zation of tariffs on “substantially all the trade.”  
With this principle in mind, certain tariff lines we re excluded from the elimination given the possible 
impacts on domestic industries. 
 
(b) Could Indonesia please explain why it a ccepted from Japan a disproportionately 
lower level of tariff elimination in agriculture?  
 As agreed in the modalities of the negotiati ons, both sides conducted the negotiations with 
flexibility, recognizing the sensitive items in bot h countries.  The concessions exchanged in the 
agricultural sector is the result of giving due consid erations to sensitive items of each side.  For this 
reason, the commitments were made based on volunta ry offers by both sides, except for few items 
which are based on requests and offers.  
 The EPA is a comprehensive agreement coveri ng not only trade liberalization but also trade 
promotion and facilitation.  As far as Indonesia is co ncerned, the benefits de rived from the Agreement 
is not solely in the market access concessions ma de by Japan but also from technical cooperation for 
capacity building commitments by Japan to Indonesia,  with participation of our respective industries. 
The capacity building programs are expected to a ddress the gap in capacity and contribute positively 
to the benefits derived by Indonesia from the Agreement. 
 
(c) Could the Parties please explain how Jap an’s tariff elimination commitments in 
agriculture achieve the “substantially  all trade” standard set out in 
GATT Article XXIV?  
 Pending agreement between WTO Members, GATT Article XXIV paragraph 8 does not 
specify a quantitative benchmark for assessing “substa ntially all the trade” and moreover does not 
mandate a sector by sector assessment.  The onl y condition regarding sectors that is clear in 
GATT Article XXIV is that no exclusion of a major sector is allowed, although Members’ views also 
differ on what constitutes a major sector.  With r espect to this Agreement, it does not exclude any 
major sector, therefore, Japan is of the view that  this Agreement complies w ith the “substantially all 
trade” standard set out in GATT Article XXIV. 
 
Energy/Mineral Resources
 
 
17. Could the Parties please summarize the provisions in Chapter 8 of the Agreement 
relating to energy and mineral resource goods? 
 
  WT/REG241/2 
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   There are 5 main elements of Chapter on Energy and Mineral Resources, namely: 
 1. Improvement of investment climate
 
 
 - expand Japan’s investment in Indonesia  - facilitate energy & mineral resources development in Indonesia 
 - promote power infrastructure development in Indonesia 
 
2. Securing stable supply
 
  - ensure stable supply between Indonesia and Japan 
 - strengthen Japan’s energy security and Indonesia’s transparency 
 - predictable condition for investors of both countries  
3. Policy dialogue
 
  - strengthen collaborative tie between two governments 
 - facilitate actual promotion of investment in Indonesia 
 4. Cooperation
 
 
- solve Indonesia’s energy policy challenges (pro moting energy development and efficient use 
 of energy) 
 
5. Environmental measures  
 
- contribute to sustainable development of Indonesia and Japan  
18. Paragraph 109 of the Factual Presentation no tes that the Parties agreed to establish a 
Sub-Committee on Energy and Mineral Resources.  Has this Sub-Committee been established 
and has it met?  What is the goal of this Sub-Committee?  
 The meeting of Sub-Committee on Energy a nd Mineral Resources has not been held. 
  The functions of the Sub-Committee on Energy and Mineral Resources shall be:  
 
(a) exchanging information on any matters re lated to Energy and Mineral Resources 
Chapter;  
(b) reviewing and monitoring the implementa tion and operation of this Chapter;  
(c) discussing any issues related to this Chap ter, including issues related to business 
environment, cooperation, energy security , and the development of an open and 
competitive market;  
(d) reporting the findings of the Sub-Comm ittee and, where appropriate, making 
recommendations, to the Joint Committee; and  
(e) carrying out other functions as may be delegated by the Joint Committee in 
accordance with Article 14 of the Agreement.  
 
 WT/REG241/2 
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  Relationship with other agreements concluded by the Parties 
 
 19. What is the relationship between the Japan-Indonesia EPA and the ASEAN-Japan 
Agreement?   When will the ASEAN-Japan agreement come into force for Japan and 
Indonesia?  Between the two agreements, will there be separate market access schedules with 
separate preferential rates that traders from which traders will need to choose? 
 From a legal point of view, the Agreemen t on Comprehensive Economic Partnership among 
Japan and Member States of the Association of Southeast Asian Nations (“AJCEP Agreement”) and 
the individual bilateral EPAs are completely sep arate agreements, and traders can choose more 
beneficial preferential tariff from the two agreemen t.  AJCEP Agreement became effective for Japan 
and some ASEAN member states on 1 December 2008.  Indonesia is in the process of finalizing all 
the necessary domestic procedures.  It is expected  that AJCEP Agreement will come into force for 
Indonesia as soon as possible. 
 
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