EN EN

EUROPEAN COMMISSION

Brussels, 29.6.2026 COM(2026) 340 final

2026/0182 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion of the Comprehensive Economic Partnership Agreement between the

European Union and Indonesia

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EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

Indonesia is the EU’s 30th largest trading partner for goods globally and the EU’s fifth trading

partner in the ASEAN in 2025, while the EU is Indonesia’s fourth largest trading partner,

accounting for 6% of its total trade. Bilateral trade between the two partners amounted to

EUR 28.9 billion in 2025, with EU exports worth EUR 10.2 billion and EU imports worth

EUR 18.7 billion. Indonesia exports to the EU include mainly agricultural products, base

metals, chemicals, machinery and appliances, fats and oils as well as footwear. The EU’s

exports to Indonesia are largely dominated by industrial products, including machinery and

appliances, transport equipment and chemical products. Bilateral trade in services between the

EU and Indonesia amounted to EUR 9.3 billion in 2024, with EU exports amounting to

EUR 5.8 billion and imports amounting to EUR 3.5 billion. In 2024, the EU’s foreign direct

investment stock in Indonesia amounted to EUR 24.7 billion, while Indonesia’s FDI stock in

the EU was EUR 1.3 billion.

Indonesia, a WTO member since 1995, currently enjoys trade preferences with the EU under

the Generalised Scheme of Preferences (“GSP”), of which it is the second largest beneficiary.

In 2024, 44% of its exports to the EU were eligible for reduced tariffs under the GSP.

Indonesia will however graduate out of the GSP on 1 January 2027, due to its upper-middle

income status over the last 3 years.

On 23 April 2007, the Council authorised the Commission to enter into negotiations for a Free

Trade Agreement with ASEAN countries. The objective at the time was to negotiate a region-

to-region free trade agreement. The authorisation however provided for the possibility of

bilateral negotiations in the event that it was not possible to reach agreement to negotiate

jointly, and where such bilateral negotiations were politically acceptable and economically

meaningful.

On 8 May 2009, the Commission reported to the Article 133 Committee – as it was known at

the time- on the difficulties encountered in the EU-ASEAN negotiations, which both sides

had agreed to pause. The Article 133 Committee asked the Commission to explore the

prospects of individual bilateral negotiations with a number of ASEAN countries and in

December 2009 the Council endorsed this approach.

Indonesian President Susilo Bambang Yudhoyono and European Commission President José

Manuel Barroso decided in late 2009 to examine how commercial relations between the EU

and Indonesia could be deepened. They tasked a Vision Group with representatives from

Indonesia and the EU to produce recommendations on how to take relations to the next level.

The Vision Group recommended on 4 May 2011 “the conclusion of a Comprehensive

Economic Partnership Agreement (CEPA) between the EU and Indonesia, based on a free

trade area and building on enhanced market access, capacity building and facilitation of trade

and investment”. Important consideration was given to Indonesia’s large potential in terms of

size, current and expected growth rates, the shift of its economy towards manufacturing

exports, emerging services, increasing openness and macro-economic stability. The

complementarity between the EU’s and Indonesia’s economies, with the EU exporting very

different products to Indonesia than Indonesia to Europe, also played a significant role.

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The EU and Indonesia carried out a joint scoping exercise to determine the scope and the

level of ambition of a future trade agreement. This exercise was concluded in April 2016,

demonstrating that negotiations could lead to a trade agreement in both sides’ interest.

On 13 July 2016, the Council authorised the Commission to start bilateral FTA negotiations

with Indonesia. The negotiations for a Comprehensive Economic Partnership Agreement

(“CEPA” or the “Agreement”) between the EU and Indonesia were officially launched on 19

July 2016. The first negotiating round took place in Brussels from 20-21 September 2016.

The negotiations were supported by a Trade Sustainability Impact Assessment. Following a

nine-year negotiation process and 19 rounds of negotiations, the EU and Indonesia concluded

the negotiations for the CEPA on 23 September 2025.

From the broader geopolitical and geo-economic context, the conclusion of these negotiations

with the main ASEAN economy sends a strong signal of the joint commitment of the EU and

Indonesia to a rules-based trading system, and of the EU’s resolve to accelerate its trade

openness and diversification agenda.

The deal will eliminate tariffs on over 98% of tariff lines, and close to 100% in terms of

value. 80% will be liberalised already at entry into force, and after a 5-year phase out

liberalisation will reach 96% of bilateral trade. The CEPA also aims to remove technical

barriers to trade in goods between the EU and Indonesia. It creates a more transparent,

predictable, and cost-effective environment, enhanced market access and reduced costs. The

agreement will expand opportunities for EU and Indonesia services suppliers andinvestors,

and ensure amore predictable trade environment. While the CEPA promotes trade and

investment flows between the EU and Indonesia, it explicitly safeguards each party’s right to

regulate in pursuit of legitimate policy objectives. It also provides direct protection for 221

EU and 72 Indonesian geographical indications and contains robust commitments on trade

and sustainable development.

The legally reviewed texts of the CEPA have been made public and can be found at the

following link:

Text of the agreements - Trade and Economic Security - European Commission

The Commission is putting forward the following proposals for Council decisions:

– Proposal for a Council Decision on the signing of the Comprehensive

Economic Partnership Agreement between the European Union and Indonesia;

– Proposal for a Council Decision on the conclusion of the Comprehensive

Economic Partnership Agreement between the European Union and Indonesia;

– Proposal for a Council Decision on the signing of the Investment Protection

Agreement between the European Union and Indonesia;

– Proposal for a Council Decision on the conclusion of the Investment Protection

Agreement between the European Union and Indonesia.

The attached proposal for a Council Decision constitutes the legal instrument for the

conclusion of the CEPA between the European Union and Indonesia.

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• Consistency with existing policy provisions in the policy area

Prior to concluding the negotiations for an FTA, the EU and Indonesia had negotiated

Partnership Cooperation Agreement (“PCA”), which was signed in Jakarta on 9 November

2009 and entered into force on 1 May 2014. The Agreement provides the basis for

cooperating across a wide spectrum of policy fields, including human rights and trade, and for

holding regular political dialogue and sectoral cooperation.

Once the CEPA enters into force, it will coexist with the PCA as a specific agreement and an

integral part of the overall bilateral relations between the EU and Indonesia. The two

agreements have no conflicting provisions.

• Consistency with other Union policies

The CEPA is fully consistent with Union policies and will not require the EU to amend its

rules, regulations or standards in any regulated area. Furthermore, like all other trade

agreements the Commission has negotiated, the CEPA fully safeguards public services and

ensures that governments’ right to regulate in the public interest is fully preserved and

constitutes a basic underlying principle to them.

Furthermore, the provisions of the CEPA fully reflect the outcome of the EU’s recent

sustainable trade policy review communication (‘'The power of trade partnerships: together

for green and just economic growth’ of 22 June 2022).

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Substantive legal basis

Article 207 of the Treaty on the Functioning of the European Union (TFEU) provides for the

negotiation and conclusion of trade agreements as part of the Union’s common commercial

policy. Articles 91 and 100(2) provide for the basis for agreeing international transport

provisions.

Given that the main objectives and components of CEPA are the common commercial policy

and the provision of transport, the substantive legal bases are Articles 207, 91 and 100(2)

TFEU.

• Procedural legal basis

Given that Articles 91(1), 100(2) and 207 TFEU are the substantive legal bases, the Council is

to adopt the decision concluding the agreement after obtaining the consent of the European

Parliament, in accordance with Article 218(6), second subparagraph, point (a) TFEU.

Therefore, the procedural legal basis for the proposed decision on concluding the agreement is

Article 218(6), second subparagraph, point (a) TFEU.

Article 218(7) TFEU should also be added as a legal basis as it is appropriate for the Council

to authorise the Commission to approve the position of the Union to rectify and/or modify

certain parts of the agreement.

• Union competence

In accordance with Opinion 2/15 on the EU-Singapore FTA of the Court of Justice of 16 May

2017, all the areas covered by the CEPA would fall within the exclusive competence of the

EU and, more particularly, within the scope of Articles 91, 100(2) and 207 TFEU. The Court

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drew the EU exclusive competence from the scope of the Common Commercial Policy under

Article 207(1) TFEU and from Article 3(2) TFEU (based on the affectation of existing

common rules contained in secondary legislation).

• Subsidiarity

The FTA as presented to the Council does not cover any matters that fall outside the EU’s

exclusive competence.

• Proportionality

Trade agreements are the appropriate means to govern market access and the related areas of

comprehensive economic relations with a third country outside the EU. No alternative exists

to render such commitments and liberalisation efforts legally binding.

This initiative pursues directly the Union's objective in external action and contributes to the

political priority of 'EU as a stronger global actor’. It is in line with the EU Global Strategy’s

orientations to engage with others and revamp its external partnerships in a responsible way,

in order to attain the EU's external priorities. It contributes to the EU’s trade and development

objectives.

• Choice of the instrument

This proposal for a Council decision is submitted in accordance with Article 218(6) TFEU,

which envisages the adoption by the Council of a decision concluding the agreement. There

exists no other legal instrument that could be used in order to achieve the objective pursued

by this proposal.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

CONSULTATIONS AND IMPACT ASSESSMENTS

• Stakeholder consultations

Prior to and during the negotiations, the EU Member States were regularly informed and

consulted orally and in writing on the different aspects of the negotiation via the Council’s

Trade Policy Committee. The European Parliament was also regularly informed and consulted

via its Committee on International Trade (“INTA”). The texts progressively resulting from the

negotiations were circulated throughout the process to both institutions.

In parallel to the negotiations, the Commission commissioned a Sustainable Impact

Assessment (“SIA”) of the CEPA between the EU and Indonesia.

The SIA, which was completed in September 2019, examined how the trade and trade-related

provisions of the CEPA under negotiation could affect economic, social, human rights and

environmental issues in the EU and in Indonesia. It built on the analysis presented in the SIA

carried out in 2008 in support of the region-to-region negotiations for a EU-ASEAN trade

agreement, providing more up-to-date information and a clear focus on the specific features

and potential impacts of bilateral negotiations with Indonesia only. It notably examined more

in-depth the potential impacts of CEPA in a number of sectors of specific relevance for EU-

Indonesia trade relations, including vegetable oils and oilseeds, clothing and apparel, and

financial services.

Overall, the report concluded that an EU-Indonesia agreement was expected to have positive

impacts for both Parties and their societies, across all the key economic indicators (GDP,

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welfare, global and bilateral trade), with their comparative magnitude being larger in

Indonesia than in the EU due to the differences in the relative size of the two economies. The

economic modelling projected a increase in EU welfare of EUR 2 to 2.4 billion and an

increase in EU GDP of EUR 2.5 to 3.1 billion. It showed that the higher the degree of trade

liberalisation achieved in the agreement, the larger the economic gains expected for both

sides, thereby making the case for pursuing the maximum degree of liberalisation possible in

the negotiations. The removal of non-tariff barriers (NTBs) to trade appeared to be a key

factor in determining the size of the expected economic gains, and the report stressed the

importance of paying specific attention to areas such as Sanitary and Phyto-Sanitary (SPS)

measures and Technical Barriers to Trade (TBT).

The Commission issued a position paper on the SIA carried out in supoprt of CEPA

negotiations, on 26 June 2020. It concluded that the SIA corroborated the case for negotiating

an ambitious trade and investment agreement and provided insights on specific sectors or

actors that could experience negative impacts, and to which special attention should be paid.

In the context of the SIA and throughout the negotiations, the Commission provided the

possibility for civil society organisations to have their voice heard, ask questions, and

contribute to a sound, evidence-based and transparent societal debate, including through

dedicated civil society dialogues, a workshop with local stakeholders in Indonesia, bilateral

meetings, interviews and web-based surveys.

Furthermore, during the negotiations and in line with its transparency policy, the Commission

has published on its website and regularly updated reports of the negotiating rounds, the text

proposals, press releases, facts sheets and background information materials.

• Collection and use of expertise

The SIA of the CEPA was carried out by a consortium of independent consultancy companies

led by Development Solutions and commissioned by the Commission’s Directorate-General

for Trade.

• Impact assessment

The negotiations for bilateral Free Trade Agreements between the EU and Southeast Asian

countries were covered by the August 2009 Impact assessment carried out at the time of the

Commission proposal for a negotiating mandate for and EU-ASEAN Free Trade agreement.

• Regulatory fitness and simplification

The CEPA is not subject to REFIT procedures. It nevertheless contains a number of

provisions that will simplify trade and related procedures, reduce export related costs and will

therefore enable more SMEs to do business in both markets. A dedicated chapter for SMEs

addresses in particular enhanced information exchange and cooperation with Indonesia on

SME-related issues. Tariff elimination including on electronic communications, simplified

and digitised customs procedures and more compatible technical requirements will lower

export related costs and allow SMEs with lower trade volumes to compete with larger

companies. This also enhances SMEs' ability to participate in supply chains, digital trade and

public procurement and to provide services on the Indonesian market. The CEPA also

promotes transparency and the use of international standards to facilitate market access and

lower costs of compliance.

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• Fundamental rights

The proposal does not affect the protection of fundamental rights in the Union.

4. BUDGETARY IMPLICATIONS

The CEPA will have a financial impact on the EU’s budget on the side of the revenues. It is

estimated that foregone duties could reach an amount of between EUR 630 million and EUR

700 million a year upon full implementation of the CEPA. The estimate is based on average

imports projected for 2041 in the absence of an FTA.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The CEPA includes institutional provisions that lay down the structure for the implementing

bodies to continuously monitor CEPA implementation, operation and impact of the CEPA.

The institutional chapter of the CEPA establishes a Trade Committee that has as its main task

to supervise and facilitate the implementation and application of the CEPA. The Trade

Committee will be in charge of supervising the work of all specialised committees and

working groups established under the CEPA.

The Trade Committee will exchange views on topics linked to the implementation of the

agreement with civil society representatives participating in a Civil Society Dialogue.

The CEPA also establishes Domestic Advisory Groups comprising of a balanced

representation of independent civil society organisations including non-governmental

organisations, business and employers' organisations as well as trade unions active on

economic, social and environmental matters. The Domestic Advisory Groups may submit

views and recommendations concerning the functioning and implementation of the FTA and

shall meet at least once a year.

As emphasised in the “Trade for All” Communication, the Commission is dedicating

increasing resources to the effective implementation and enforcement of trade and investment

agreements. In November 2025, the Commission published its fifth annual Implementation

and Enforcement Report. The main purpose of the report is to convey an objective picture on

the implementation of EU FTAs, highlighting the progress made and the shortcomings that

need to be addressed. The objective is for the report to serve as the basis for open debate and

engagement with Member States, the European Parliament and the civil society at large on the

functioning of the FTAs and their implementation. As an annual exercise, the publication of

the report will allow regular monitoring of developments, registering also how identified

priority issues have been addressed. The report will cover the EU-Indonesia CEPA as of its

entry into force

• Explanatory documents (for directives)

Not applicable.

• Detailed explanation of the specific provisions of the proposal

As a result of Chapter 2 of the CEPA, the EU and Indonesia will eliminate tariffs on over 98%

of tariff lines, and close to 100% in terms of value. 80% will be liberalised already at entry

into force. After a 5-year phase-out, liberalisation will reach 96% of bilateral trade. For

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example, Indonesia will remove high duties on industrial products, such as motor vehicles

(current tariffs up to 50%), machinery and electrical equipment, pharmaceuticals and

chemicals, agri-food products. The agreement will also eliminate or substantially reduce EU

duties on most Indonesian goods exported to the EU.

Chapter 3 of the CEPA contains rules of origin that ensure that only products that have been

significantly processed in the EU or Indonesia can benefit from the tariff preferences of the

agreement.

Chapter 4 of the CEPA will help companies trading goods between the EU and Indonesia get

their products easier and faster through customs. It will help to ensure effective customs

control, so that imported goods meet all the rules of the importing country including

requirements related to safety, security and respect of intellectual property rights. The

agreement notably includes provisions on customs procedures to be complied with at the

border, commitments to provide easy access to information on applied tariffs, and common

principles for customs legislation.

Chapter 5 of the CEPA also includes a bilateral safeguard mechanism, which allows the EU

and Indonesia to impose temporary measures in case a significant increase of preferential

imports causes, or threatens to cause, serious injury to their domestic industry.

Chapter 6 of the CEPA on Sanitary and Phytosanitary (SPS) matters, covers food safety and

animal and plant health. It preserves the way the EU adopts and enforces its food safety rules,

be it for domestically produced or imported products. The agreement reaffirms the principles

of the WTO SPS Agreement. The EU and Indonesia will reinforce joint work on SPS matters

to ensure rapid intervention in emergencies related to imports and exports of agriculture and

fishery products.

Chapter 7 of the CEPA aims to remove technical barriers to trade in goods between the EU

and Indonesia. For key sectors like electronics, machinery, and energy-efficient products,

certificates and test reports from EU-based, accredited bodies are recognised, which

eliminates the need for expensive and time-consuming re-testing and re-certification in

Indonesia. The CEPA also contains streamlined labelling procedures. The CEPA provides for

better regulatory transparency and predictability improving the possibilities for stakeholders

and authorities to provide feedback on draft technical regulations of the other party and

leaving sufficient time to adapt before their entry into force. It also mandates that both parties

adopt and apply relevant internationally recognised standards as the basis for their technical

regulations. A dedicated automotive annex to the CEPA ensures that EU vehicles with UN

type-approval certificates identified in the agreement do not face additional testing or marking

requirements in Indonesia, reducing costs and time-to-market.

Chapter 8 of the CEPA will also expand opportunities for EU and Indonesian services

suppliers and investors, and ensure a more predictable trade environment. It will in particular

guarantee that EU service providers and investors in sectors identified in the CEPA will not

be discriminated vis-a-vis their Indonesian counterparts. It will make it easier for EU

operators to acquire the licenses or qualifications necessary to supply their services, through

clear, fair, and timely processes. It will ensure that EU service suppliers in certain sectors

will not be required to have local presence (such as a branch), a certain number of operators

or a certain value of transactions in Indonesia.

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While the CEPA promotes trade and investment flows between the EU and Indonesia, it

explicitly safeguards each party’s right to regulate in pursuit of legitimate policy objectives.

Chapter 9 of the CEPA ensures that the capital needed to carry out the transactions liberalised

under the agreement – for example, setting up a foreign-owned business – is in practice

allowed to move from the EU to Indonesia and vice versa. At the same time, both sides can

still apply their own laws and rules where necessary, for example in cases of bankruptcy or

when dealing with securities.

Chapter 10 of the CEPA creates a predictable, secure, and fair digital trade environment. It

notably ensures free cross-border data flows by prohibiting unjustified localisation

requirements and prohibits customs duties on electronic transmissions. It provides for binding

rules that build consumer trust and ensure legal certainty for business and support innovation.

Chapter 11 of the he CEPA sets out rules ensuring that procedures to award public contracts

are transparent, fair and non-discriminatory for EU businesses.

The EU and Indonesia have agreed on the effective protection and enforcement of intellectual

property rights in Chapter 12. The CEPA notably provides direct protection for 221 EU and

72 Indonesian Geographical Indications (“GIs”), covering agri-food products such as EU

meats and cheeses and Indonesian spices and coffees. This high level of GI protection

strengthens the export potential in high-value agri-food sectors, ensuring exclusive

designation and helping producers market premium products.

Chapter 13 of the CEPA ensures that effective competition laws are maintained in both

jurisdictions, which are implemented by operationally independent authorities, that are to act

in a transparent and non-discriminatory manner, respecting the rights of defence. The

agreement also foresees cooperation between the authorities. It contains rules on subsidies,

antitrust and state-owned enteprises.

Chapter 14 of the CEPA also represents a major step in opening trade and investment and

securing supply chains between the EU and Indonesia in energy and raw materials.

Chapter 15 provides a comprehensive framework on trade and sustainable growth and

development, with legally binding commitments enforceable through the CEPA’s dispute

settlement mechanism. The CEPA also provides for a platform for dialogue and cooperation

on trade-related environmental and climate issues, including in the palm oil sector. It includes

dedicated provisions on the protection and management of natural resources, setting

commitments with respect to forest conservation, biodiversity, combatting illegal wildlife

trade, and combatting Illegal, Unreported, and Unregulated (IUU) fishing.

Chapter 16 of the CEPA creates a framework for the EU and Indonesia to cooperate on

strengthening policies and defining programmes that contribute to the development of

sustainable, inclusive, healthy and resilient food systems.

The Agreement in its chapter 17 sets out basic principles and operational guidelines for

economic cooperation and capacity building in areas covered under its scope.

It also has a chapter 18 dedicated to SMEs and a number of other provisions which benefit

such undertakings, e.g setting-up of a single publicly-accessible digital platform providing

information on how to access and do business on each other’s markets, creation of SME

contact points, digitization of commercial operations, etc.

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Chapter 19 of the CEPA promotes transparent, coordinated, and evidence-based regulations

that respect domestic laws, support public policy goals, and consider the interests of

businesses and stakeholders. Parties must notably publish an annual list of major planned

regulations, explaining their purpose and timelines.

Chapter 20 of the CEPA enhances predictability, accountability, and fairness in trade-related

regulation. By guaranteeing timely publication, open access to information, fair administrative

processes, and independent avenues of appeal, it strengthens trust in regulatory systems and

lowers uncertainty for businesses operating across borders.

• Text of the Agreement and notifications

The text of the Agreement is submitted to the Council together with this proposal.

In accordance with the Treaties, it is for the Commission to proceed to the notification

provided for in Article 25.2 of the Agreement, in order to express the consent of the Union to

be bound by the Agreement.

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2026/0182 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion of the Comprehensive Economic Partnership Agreement between the

European Union and Indonesia

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular

Articles 91(1), 100(2) and 207 in conjunction with Article 218(6), second subparagraph, point

(a) and Article 218(7) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament1,

Whereas:

(1) In accordance with Council Decision No [XX] of XX/XX/XXXX2, the

Comprehensive Economic Partnership Agreement between the Union and Indonesia

(the “Agreement”) was signed on [XX XX 2026], subject to its conclusion at a later

date.

(2) The Agreement should ensure the furtherance of the Union’s common commercial

policy by putting in place a comprehensive economic partnership with Indonesia.

(3) The Agreement should be approved.

(4) In accordance with Article 218(7) of the Treaty, it is appropriate to authorise the

Commission to approve, on the Union’s behalf, modifications to the Agreement that

are to be adopted by means of a simplified procedure pursuant to Articles 11.20, 12.37

or points (x) or (xi) of Article 24.2(2), following consultation of the Trade Policy

Committee.

(5) The Agreement, in accordance with Article 25.7(1) thereof, does not, within the

Union, confer rights or impose obligations on persons, other than those created

between the Parties under public international law,

HAS ADOPTED THIS DECISION:

Article 1

The Comprehensive Economic Partnership Agreement between the European Union and

Indonesia (the “Agreement”) is hereby approved.

Article 2

For the purposes of Article 11.20 and point (x) of Article 24.2(2) of the Agreement, any

modification or rectification of Annexes 11-A and 11-B of the Agreement shall be approved

1 OJ C, , p. . 2 [Reference to be inserted].

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by the Commission, on behalf of the Union, following consultation of the Trade Policy

Committee.

Article 3

For the purposes of Article 12.37 and point (xi) of Article 24.2(2) of the Agreement, any

amendment to Annexes 12-A and 12-C of the Agreement shall be approved by the

Commission on behalf of the Union, following consultation of the Trade Policy Committee.

Article 4

This Decision shall enter into force on the day of its adoption3.

Done at Brussels,

For the Council

The President

3 The date of entry into force of the Agreement will be published in the Official Journal of the European

Union.

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LEGISLATIVE FINANCIAL STATEMENT ‘REVENUE’- FOR PROPOSALS

HAVING BUDGETARY IMPACT ON THE REVENUE SIDE OF THE BUDGET

1. NAME OF THE PROPOSAL:

Proposal for a COUNCIL DECISION on the conclusion of the Comprehensive Economic

Partnership Agreement between the European Union and Indonesia

2. BUDGET LINES:

Revenue line (Chapter/Article/Item): Chapter 12, Article 120

Amount budgeted for the year concerned: (2026) EUR 21 368 300 000. Budget available

here: Draft budget 2026 - GENERAL STATEMENT OF REVENUE

(only in case of assigned revenues):

The revenues will be assigned to the following expenditure line (Chapter/Article/Item):

3. FINANCIAL IMPACT

 Proposal has no financial implications

x Proposal has no financial impact on expenditure but has a financial impact on

revenue

 Proposal has a financial impact on assigned revenue

The effect is as follows:

(EUR million to one decimal place)

Revenue line Impact on revenue45 12 monthsYear 2027

Chapter 12/Article 120 EUR 630 mn Entry into force expected

in the first half of 2027

0

Situation following action

Revenue line [N+10] [N+11] [N+12] [N+13] [N+14]

Chapter/Article/Item … EUR 700 mn EUR 700 mn EUR 700 mn EUR 700 mn EUR 700

mn

(Only in case of assigned revenues, under the condition that the budget line is already

known):

Expenditure line6 Year N Year N+1

4 The amounts per year need to be an estimation based on the formula or method defined under section 5.

For the starting year, the yearly amount is normally paid without a reduction or prorata. 5 The indicated amounts are customs duties (gross amounts). As regards the corresponding traditional

own resources due to the EU budget, the collection costs need to be deducted (25 % retained by

Member States until 2027 included, and of 10% afterwards, as proposed in COM(2025)574).

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Chapter/Article/Item

…

Chapter/Article/Item

…

Expenditure line [N+2] [N+3] [N+4] [N+5]

Chapter/Article/Item

…

Chapter/Article/Item

…

4. ANTI-FRAUD MEASURES

5. OTHER REMARKS

The proposal does not incur additional costs (expenditure) in the EU budget.

The CEPA will have a financial impact on the EU’s budget on the side of the revenues. It is

estimated that foregone duties could reach an amount of between EUR 630 million and EUR

700 million a year upon full implementation of the CEPA. The estimate is based on average

imports projected for 2042 in the absence of an FTA.

Indirect positive impacts are expected in terms of increases in resources linked to value added

tax and gross national income.

6 To be used only if necessary.

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EUROPEAN COMMISSION

Brussels, 29.6.2026 COM(2026) 340 final

ANNEX 1

ANNEX

to the

Proposal for a Council Decision

on the conclusion of the Comprehensive Economic Partnership Agreement between the

European Union and Indonesia

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COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

BETWEEN THE EUROPEAN UNION

AND THE REPUBLIC OF INDONESIA

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PREAMBLE

THE EUROPEAN UNION, hereinafter referred to as the "Union" or the "EU",

and

THE REPUBLIC OF INDONESIA, hereinafter referred to as "Indonesia",

hereinafter individually referred to as a "Party" and jointly referred to as the "Parties",

RECOGNISING their longstanding and strong partnership based on the common principles and

values reflected in the Framework Agreement on Comprehensive Partnership and Cooperation

between the European Community and its Member States, of the one part, and the Republic of

Indonesia, of the other part, signed in Jakarta on 9 November 2009 (hereinafter referred to as the

"Framework Agreement"), and their important economic, trade and investment relationship;

DESIRING to further strengthen their relationship as part of and in a manner coherent with their

overall relations, and convinced that this Agreement will create a new climate for the development

of trade and investment between the Parties;

DETERMINED to strengthen their economic, trade, and investment relations in accordance with

the objective of sustainable development, in its economic, social and environmental dimensions,

and to promote trade and investment under this Agreement;

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DESIRING to raise living standards, promote economic growth and stability, create new

employment opportunities and improve the general welfare and, to that end, reaffirming their

commitment to promote trade and investment;

DESIRING to promote the competitiveness of their companies in their trade and investment

relations;

CONVINCED that this Agreement will create an expanded and secure market for goods and

services and a stable and predictable environment for investment, thus providing an opportunity to

enhance the competitiveness of their companies in global markets;

RECOGNISING the importance of transparency in international trade to the benefit of all

stakeholders;

SEEKING to establish clear and mutually advantageous rules governing trade and investment

between the Parties and to reduce or eliminate barriers thereto;

DETERMINED to address the particular challenges faced by small and medium-sized enterprises in

contributing to the development of trade and investment, and to support their growth by enhancing

their ability to participate in, and benefit from, the opportunities created by this Agreement;

& /en 3

REAFFIRMING their commitment to the Charter of the United Nations done at San Francisco on

26 June 1945 and having regard to the principles articulated in the Universal Declaration of Human

Rights adopted by the General Assembly of the United Nations in Paris on 10 December 1948;

BUILDING on their respective rights and obligations under the Marrakesh Agreement Establishing

the World Trade Organization, done at Marrakesh on 15 April 1994 (hereinafter referred to as the

"WTO Agreement"), and other multilateral, regional and bilateral agreements and arrangements to

which both Parties are a party,

HAVE AGREED AS FOLLOWS:

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CHAPTER 1

INITIAL PROVISIONS AND GENERAL DEFINITIONS

ARTICLE 1.1

Objectives

The objectives of this Agreement are to liberalise and facilitate trade and investment, as well as to

promote a closer economic relationship between the Parties.

ARTICLE 1.2

Establishment of a free trade area

The Parties hereby establish a free trade area in conformity with Article XXIV of GATT 1994 and

Article V of GATS.

& /en 5

ARTICLE 1.3

General definitions

For the purposes of this Agreement, and unless otherwise provided:

(a) "Agreement on Agriculture" means the Agreement on Agriculture contained in Annex 1A to

the WTO Agreement;

(b) "Anti-dumping Agreement" means the Agreement on Implementation of Article VI of the

GATT 1994, contained in Annex 1A to the WTO Agreement;

(c) "Articles of Agreement of the International Monetary Fund" means the Articles of Agreement

of the International Monetary Fund, adopted in Bretton Woods, New Hampshire, on

22 July 1944;

(d) "covered enterprise" means an enterprise which is owned, directly or indirectly, or controlled,

directly or indirectly, by investors of one Party in the territory of the other Party established in

accordance with applicable laws1, whether established before or after the entry into force of

this Agreement; a juridical person is:

(i) "owned" by a natural or juridical person of a Party if more than 50 % of the equity

interest is beneficially owned by natural or juridical person of that Party; or

1 In the case of investments made in Indonesia, in accordance with applicable laws may include

specific approval in writing if applicable.

& /en 6

(ii) "controlled" by a natural or juridical person of a Party if that natural or juridical person

has the power to appoint a majority of its directors or otherwise to legally direct its

actions;

(e) "CPC" means the Provisional Central Product Classification (Statistical Papers Series M

No.77, Department of International Economic and Social Affairs, Statistical Office of the

United Nations, New York, 1991);

(f) "customs authority" means:

(i) for the Union, the services of the European Commission responsible for customs

matters, or, as appropriate, the customs administrations and any other authorities

empowered in the Member States or at the level of the Union to apply and enforce

customs laws and regulations; and

(ii) for Indonesia, the authorities that are responsible under the legislation of Indonesia for

the administration and enforcement of its customs laws and regulations;

(g) "customs duty" means any duty or charge of any kind imposed on or in connection with the

importation of a good, but does not include any:

(i) charge equivalent to an internal tax imposed consistently with Article 2.4;

& /en 7

(ii) anti-dumping, special safeguard, countervailing or safeguard duty applied in conformity

with the GATT 1994, the Anti-dumping Agreement, the Agreement on Agriculture, the

Agreement on Subsidies and Countervailing Measures and the Agreement on

Safeguards, as appropriate; and

(iii) fee or other charge imposed on or in connection with importation that is limited in

amount to the approximate cost of the services rendered;

(h) "customs laws and regulations" means any laws and regulations applicable in the territory of

either Party, governing the entry or import, exit or export and the transit of goods and their

placing under any other customs regime or procedure, including measures of prohibition,

restriction and control;

(i) "days" means calendar days, including weekends and holidays;

(j) "DSU" means the Understanding on Rules and Procedures Governing the Settlement of

Disputes, contained in Annex 2 to the WTO Agreement;

(k) "existing" means in effect on the date of entry into force of this Agreement;

(l) "freely convertible currency" means a currency which can be freely exchanged against

currencies that are widely traded in international foreign exchange markets and widely used in

international transactions;1

1 For greater certainty, currencies that are widely traded in international foreign exchange

market and widely used in international transactions include freely usable currencies as

designated by the IMF in accordance with the Articles of Agreement of the International

Monetary Fund.

& /en 8

(m) "GATS" means the General Agreement on Trade in Services, contained in Annex 1B to the

WTO Agreement;

(n) "GATT 1994" means the General Agreement on Tariffs and Trade 1994, contained in

Annex 1A to the WTO Agreement;

(o) "Harmonized System" or "HS" means the Harmonized Commodity Description and Coding

System, including all legal notes and amendments thereto developed by the World Customs

Organization; and "chapters" and "headings" and "sub-headings" mean the chapters, the

headings (four digit codes) and sub-headings (six digit codes) used in the nomenclature which

makes up the Harmonized System;

(p) "IMF" means the International Monetary Fund;

(q) "investor" means a natural person or a juridical person of a Party that seeks to establish1, is

establishing or has already established an enterprise in the territory of the other Party;

(r) "juridical person" means any legal entity duly constituted or otherwise organised under

applicable law, whether for profit or otherwise, and whether privately owned or

governmentally owned, including any corporation, trust, partnership, joint venture, sole

proprietorship or association;

1 For greater certainty, the Parties understand that, for the purposes of the definition of

"investor", an investor that "seeks to establish" an enterprise refers to an investor that has

taken concrete steps to establish an enterprise. Where a notification or approval process is

required for establishing an enterprise, an investor that "seeks to establish" an enterprise refers

to an investor that has initiated such notification or approval process.

& /en 9

(s) "measure" means any measure by a Party, whether in the form of a law, regulation, rule,

procedure, decision, administrative action, requirement, practice, or any other form;

(t) "measure of a Party"1 means any measure adopted or maintained by:

(i) central, regional or local governments and authorities;

(ii) non-governmental bodies in the exercise of powers delegated by central, regional or

local governments or authorities; and

(iii) any entity which is acting on the instructions of or under the direction or the control of a

Party with regard to the measure;

(u) "Member State" means a Member State of the Union;

(v) "natural person of a Party"2 means:

(i) for the Union, a national of one of the Member States of the Union3 pursuant to its law;

and

1 For greater certainty, "measure of a Party" includes omissions of a Party to take actions that

are necessary to fulfil its obligations under this Agreement. 2 For greater certainty, for the purposes of Chapter 8 (Liberalisation of Investment and Trade in

Services), if a person possesses dual nationality of both Parties, they shall be deemed to be

exclusively a national of the country of their dominant and effective nationality. 3 For the purposes of Chapter 8 (Liberalisation of Investment and Trade in Services), the

definition of natural person of a Party also includes a natural person permanently residing in

the Republic of Latvia who is not a citizen of the Republic of Latvia or any other state but

who is entitled, under the law of the Republic of Latvia, to receive a non-citizen's passport.

& /en 10

(ii) for Indonesia, a national of Indonesia pursuant to its law;

(w) "OECD" means the Organisation for Economic Cooperation and Development;

(x) "originating" or "originating good" means a good qualifying under the rules of origin set out

in Chapter 3 (Rules of Origin and Origin Procedures);

(y) "Paris Agreement" means the Paris Agreement adopted by the Conference of the Parties to the

United Nations Framework Convention on Climate Change, done at Paris on 12 December

2015;

(z) "person" means a natural person or a juridical person;

(aa) "preferential tariff treatment" means the application of the customs duty under this Agreement

to an originating good pursuant to Article 2.5;

(bb) "Safeguards Agreement" means the Agreement on Safeguards, contained in Annex 1A to the

WTO Agreement;

(cc) "sanitary or phytosanitary measure" means any measure referred to in paragraph 1 of Annex

A to the SPS Agreement;

(dd) "SCM Agreement" means the Agreement on Subsidies and Countervailing Measures,

contained in Annex 1A to the WTO Agreement;

& /en 11

(ee) "service supplied in the exercise of governmental authority" means any service which is

supplied neither on a commercial basis nor in competition with one or more service suppliers;

(ff) "service supplier" means a person that supplies or seeks to supply a service;

(gg) "small and medium-sized enterprise" or "SME" means a small and medium-sized enterprise,

which includes micro, small and medium-sized enterprises and entrepreneurs;

(hh) "SPS Agreement" means the Agreement on the Application of Sanitary and Phytosanitary

Measures , contained in Annex 1A to the WTO Agreement;

(ii) "TBT Agreement" means the Agreement on Technical Barriers to Trade, contained in

Annex 1 to the WTO Agreement;

(jj) "TFEU" means the Treaty on the Functioning of the European Union, done in Rome on

25 March 1957;

(kk) "third country" means a country or territory outside the territorial scope of application of this

Agreement, as set out in Article 25.11;

(ll) "TRIPS Agreement" means the Agreement on Trade-Related Aspects of Intellectual Property

Rights, contained in Annex 1C to the WTO Agreement;

& /en 12

(mm) "UNCLOS" means the United Nations Convention on the Law of the Sea, done at Montego

Bay on 10 December 1982;

(nn) "Vienna Convention on the Law of Treaties" means the Vienna Convention on the Law of

Treaties, done at Vienna on 23 May 1969; and

(oo) "WTO" means the World Trade Organization.

CHAPTER 2

NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

ARTICLE 2.1

Objective

The Parties shall progressively and mutually liberalise trade in goods in accordance with this

Agreement.

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ARTICLE 2.2

Scope

Except as otherwise provided in this Agreement, this Chapter applies to trade in goods between the

Parties.

ARTICLE 2.3

Definitions

For the purposes of this Chapter, the following definitions apply:

(a) "Agreement on Import Licensing Procedures" means the Agreement on Import Licensing

Procedures contained in Annex 1-A to the WTO Agreement;

(b) "consular transactions" means the procedure of obtaining from a consul of the importing Party

in the territory of the exporting Party, or in the territory of a third party, a consular invoice or

a consular visa for a commercial invoice, certificate of origin, manifest, shipper's export

declaration or any other customs documentation in connection with the importation of the

good;

& /en 14

(c) "export licensing procedure" means an administrative procedure requiring the submission of

an application or other documentation, other than that generally required for customs

clearance purposes, to the relevant administrative body or bodies as a prior condition for

exportation from the territory of the exporting Party;

(d) "good of a Party" or "good of the other Party" means a domestic good within the meaning of

GATT 1994, and includes originating goods of that Party; and

(e) "import licensing procedure" means an administrative procedure requiring the submission of

an application or other documentation, other than that generally required for customs

clearance purposes, to the relevant administrative body or bodies as a prior condition for

importation into the territory of the importing Party.

ARTICLE 2.4

National treatment on internal taxation and regulation

Each Party shall accord national treatment to the goods of the other Party in accordance with Article

III of the GATT 1994, including its Notes and Supplementary Provisions. To that end, Article III of

the GATT 1994 and its Notes and Supplementary Provisions are incorporated into and made part of

this Agreement, mutatis mutandis.

& /en 15

ARTICLE 2.5

Reduction or elimination of customs duties

1. Except as otherwise provided for in this Agreement, each Party shall reduce or eliminate

customs duties on goods originating in the other Party in accordance with its Schedule in Annex 2-

A (Elimination of Customs Duties).

2. For the purpose of paragraph 1, the base rate of customs duties shall be the one specified for

each good in the Schedules in Annex 2-A (Elimination of Customs Duties).

3. If a Party reduces its applied most favoured nation customs duty rate, that duty rate shall

apply to originating goods of the other Party for as long as it is lower than the customs duty rate

determined pursuant to its Schedule in Annex 2-A (Elimination of Customs Duties).

4. Four years after the entry into force of this Agreement, on the request of a Party, the Parties

shall consult to consider accelerating the reduction or elimination of customs duties set out in the

Schedules in Annex 2-A (Elimination of Customs Duties) or broadening the scope of tariff

reduction or elimination under this Agreement. Pursuant to Article 24.2, the Trade Committee may

take a decision to amend Annex 2-A (Elimination of Customs Duties), including Appendix 2-A-1

(Tariff Schedule of the EU) and Appendix 2-A-2 (Tariff Schedule of Indonesia), to accelerate the

reduction or elimination of customs duties or to broaden the scope of the tariff reduction or

elimination.

& /en 16

5. A Party may at any time accelerate unilaterally the reduction or elimination of customs duties

on originating goods of the other Party set out in its Schedule in Annex 2-A (Elimination of

Customs Duties). That Party shall inform the other Party as early as practicable before the new rate

of import duty takes effect. The Party may raise an import duty back to the level established in its

Schedule in Annex 2-A (Elimination of Customs Duties) for the respective staging period following

a unilateral reduction.

6. Except as otherwise provided in this Agreement, a Party shall not adopt or increase a customs

duty set as base rate on an originating good of the other Party in a manner inconsistent with its

Schedule of tariff commitments in Annex 2-A (Elimination of Customs Duties).

7. For greater certainty, the originating goods classified under the tariff lines indicated with "X"

in Annex 2-A (Elimination of Customs Duties) shall be excluded from any reduction or elimination

of customs duties that takes place after the entry into force of this Agreement and commitment of

future negotiation as referred to in this Article.

& /en 17

ARTICLE 2.6

Export duties, taxes or other charges

1. A Party shall not adopt or maintain any duty, tax or other charge of any kind imposed on, or

in connection with, the exportation of a good to the other Party or any internal tax or other charge

on a good exported to the other Party that is in excess of the tax or charge that would be imposed on

like goods when destined for domestic consumption.

2. Paragraph 1 shall not apply to:

(a) measures which are adopted or maintained prior to 13 July 20251, except for goods subject to

commitments in Annex 2-B (Export Duty Quota Schedule Pursuant to Point (b) of

Article 2.6(2));

(b) the continuation or renewal of measures referred to in point (a), to the extent it does not

decrease conformity with respect to the scope of goods covered by measures referred to in

point (a); or

(c) future measures, with respect to goods obtained in mineral processing in the pre-smelting

phase 2.

1 For Indonesia, these are the following measures as in force on 13 July 2025: Minister of

Finance Regulation No. 38/2024, and Minister of Finance Regulation No. 30/2025. 2 "Mineral processing in the pre-smelting phase" is defined as the process that separates

minerals from the run-of-mine and turns them into a concentrated, different product. This

equals the scope of HS Chapters 25 and 26 and waste and scrap materials under HS Chapters

72-81 that can be recycled and marketed.

& /en 18

3. Notwithstanding paragraph 1, if a Party applies measures other than those in paragraph 2, the

applied duty on exports to the other Party shall be reduced by 50 %. That reduction shall also apply

to the export by investors of either Party which have invested in the other Party, regardless of the

export destination.

4. Any continuation or renewal of the measures referred to in paragraph 2 shall be notified by

the Party applying the measure to the other Party at least 60 days prior to the adoption of the

measure. Upon such notification, the notifying Party shall provide the other Party with an

opportunity to consult on the new measures under point (c) of paragraph 2. Where exceptional and

critical circumstances requiring immediate action prevent such notification of measures covered by

point (c) of paragraph 2, such notification shall be made as soon as possible.

5. If either Party applies a lower rate of duty, tax or other charge on, or in connection with, the

exportation of a good to any other third country and for as long as it is lower than the rate applied to

the other Party, that lower rate shall apply. For greater certainty, the Party may raise the rate of

duty, tax or other charge on, or in connection with, the exportation of a good following a unilateral

reduction.

6. At the request of either Party, or on an annual basis, the Trade Committee shall review any

duties, taxes, or other charges of any kind imposed on, or in connection with, the exportation of

goods to the territory of the other Party. Pursuant to Article 24.2, the Trade Committee may take a

decision to amend paragraph 2 of this Article or Annex 2-B (Export Duty Quota Schedule Pursuant

to Point (b) of Article 2.6(2)).

& /en 19

7. Nothing in this Article shall prevent a Party from imposing on the exportation of a good a fee

or charge that is permitted under Article 2.7.

ARTICLE 2.7

Fees and formalities

1. Each Party shall ensure that fees and charges on, or in connection with, importation and

exportation shall be consistent with its rights and obligations under Article VIII of GATT 1994. A

Party shall not levy fees or other charges on, or in connection, with importation or exportation on an

ad valorem basis.

2. Each Party shall promptly publish details of the fees and charges on or in in connection with

importation and exportation and, to the extent possible, make such information available on the

internet, so as to enable governments, traders and other interested parties to become acquainted with

them.

3. A Party shall not require consular transactions, including related fees and charges, in

connection with the importation of any good of the other Party1.

1 This paragraph does not apply to importation of goods of the other Party for the purposes of

donation or grants granted to allow those goods to benefit from duty exemption.

& /en 20

ARTICLE 2.8

Import and export restrictions

1. A Party shall not adopt or maintain any prohibition or restriction on the importation of any

good of the other Party or on the exportation or sale for export of any good destined for the territory

of the other Party, except in accordance with Article XI of GATT 1994, including its Notes and

Supplementary Provisions. To that end, Article XI of the GATT 1994 and its Notes and

Supplementary Provisions are incorporated into and made part of this Agreement, mutatis mutandis.

2. A Party shall not adopt or maintain:

(a) export and import price requirements1, except as permitted in enforcement of countervailing

and antidumping duty orders and undertakings; or

(b) the mandatory use of pre-shipment inspections, as defined in the Agreement on Pre-shipment

Inspection contained in Annex 1A to the WTO Agreement, or any other inspection activity

performed at destination, before customs clearance, by private companies on goods exempted

from pre-shipment inspections for any third country.

1 For greater certainty, this provision is not meant to prevent a Party from relying on the price

of imports in order to determine the applicable rate of a customs duty in accordance with this

Agreement.

& /en 21

ARTICLE 2.9

Import and export monopolies

1. A Party shall not designate or maintain a designated import or export monopoly, unless such

designation is for public policy purposes1, such as food security, for the trade of any good. For the

purposes of this Article, import or export monopoly means the exclusive right or grant of authority

by a Party to an entity to import or export any good to the other Party.

2. For greater certainty, this Article is without prejudice to the provisions in Chapter 8

(Liberalisation of Investment and Trade in Services) and Annex 8-A (Schedule of Commitments on

Cross-Border Supply of Services Union) and Annex 8-E (Schedule of Commitments on Cross-

Border Supply of Services Indonesia), as well as Annex 8-B (Schedule of Specific Commitments on

Liberalisation of Investment Union) and Annex 8-F (Schedule of Specific Commitments on

Liberalisation of Investment Indonesia), and does not include a right that results from the grant of

an intellectual property right.

ARTICLE 2.10

Transit

Article V of the GATT 1994 is hereby incorporated into this Agreement, mutatis mutandis.

1 For the purposes of this Article, the exclusion for public policy purposes does not apply to

raw material and energy goods, other than electricity, as defined in Chapter 15 (Energy and

Raw Materials).

& /en 22

ARTICLE 2.11

Origin Marking

1. Except as otherwise provided for in this Agreement, and if Indonesia requires a mark of origin

on the importation of goods of the Union, Indonesia shall accept the origin mark "Made in the EU"

or the equivalent in a language required by Indonesian origin marking requirements under

conditions that are no less favourable than those applied to marks of origin of Member States of the

Union. This acceptance shall be without prejudice to Indonesia's right to require information on the

origin of imported goods.

2. For greater certainty, this Article is not meant to confer originating status pursuant to

Chapter 3 (Rules of Origin and Origin Procedures).

ARTICLE 2.12

Import licensing procedures

1. The Parties shall ensure that all import licensing procedures are neutral in application,

administered in a fair, equitable, non-discriminatory and transparent manner, and consistent with

their commitments in Annex 2-A (Elimination of Customs Duties).

& /en 23

2. Each Party shall adopt and administer any import licensing procedures in accordance with

Articles 1 to 3 of the Agreement on Import Licensing Procedures. To that end, Articles 1 to 3 of the

Agreement on Import Licensing Procedures are incorporated into and made part of this Agreement,

mutatis mutandis.

3. A Party that institutes licensing procedures, or changes to existing licensing procedures, shall

notify the other Party thereof within 60 days of publication. The notification shall include the

information specified in Article 5(2) of the Agreement on Import Licensing Procedures. A Party

shall be deemed to be in compliance with this provision if it has notified the relevant import

licensing procedure, or any modifications thereof, to the Committee on Import Licensing provided

for in Article 4 of the Agreement on Import Licensing Procedures, including the information

specified in Article 5(2) of that Agreement.

4. Upon request of a Party, the other Party shall promptly provide the relevant information

specified in Article 5(2) of the Agreement on Import Licensing Procedures, regarding any import

licensing procedure that it has adopted or maintains, or changes to existing licensing procedures.

5. Each Party shall make publicly available and accessible via the internet:

(a) all relevant rules, information, procedures and other conditions, including any exceptions

thereto, for submitting and granting an import licence application;

(b) a contact point or points from which interested persons can obtain further information on the

conditions for obtaining an import licence; and

& /en 24

(c) the administrative body or bodies to which an application for a licence or other relevant

documentation must be submitted.

6. If a Party has denied partially or completely an import licence application with respect to a

good of the other Party, it shall, upon request of the applicant and no later than 15 days after

receiving the request, provide the applicant with a written explanation of the reasons for the denial

and, if applicable, the procedures for resubmission of an application.

7. Each Party shall ensure that:

(a) an applicant is not prevented from submitting another application solely on the basis of a

previously rejected application; and

(b) an applicant has the right of appeal or review through judicial, arbitral, or administrative

tribunals or procedures that are independent of the agencies entrusted with the administrative

enforcement, in accordance with the respective Party's laws and regulations.

ARTICLE 2.13

Export licensing procedures

1. Each Party shall publish any new export licensing procedure, or any modification to an

existing export licensing procedure, in such a manner as to enable governments, traders and other

interested parties to become acquainted with them. Such publication shall take place whenever

practicable and no later than the date such procedure or modification takes effect.

& /en 25

2. Each Party shall ensure that the publication of export licensing procedures includes the

following information:

(a) the texts of its export licensing procedures, or of any modifications it makes to those

procedures, including a description of the goods subject to each licensing procedure, the

process for applying for a license and any criteria an applicant must meet to be eligible to

apply for a license and the administrative body or bodies to which an application or other

relevant documentation should be submitted; and

(b) a contact point or points from which interested persons can obtain further information on the

conditions for obtaining an export license.

3. Within 60 days after the date of entry into force of this Agreement, each Party shall notify the

other Party of its existing export licensing procedures. A Party that institutes new export licensing

procedures, or makes changes to existing licensing procedures, shall notify the other Party thereof

within 60 days of publication. The notification shall include the reference to the source or sources

where the information required in paragraph 2 is published and, where appropriate, the address of

the relevant government internet website or websites.

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ARTICLE 2.14

Exchange of information and data

1. For the purpose of monitoring the functioning of this Agreement and calculating preference

utilisation rates, the Parties shall annually exchange import statistics for a period starting one year

after the entry into force of this Agreement until 10 years after the tariff elimination is completed

for all goods according to the Schedules in Annex 2-A (Elimination of Customs Duties). Unless the

Trade Committee decides otherwise, that period shall be automatically extended for five years. The

Trade Committee may decide, pursuant to Article 24.2, to subsequently extend this period further.

2. The exchange of import statistics shall cover data pertaining to the most recent year available,

including value and, where applicable, volume, at the tariff line level for imports of goods of the

other Party benefitting from preferential duty treatment under this Agreement and those that

received non-preferential treatment.

& /en 27

ARTICLE 2.15

Specific measures concerning the management of preferential treatment

1. The Parties shall co-operate in preventing, detecting and combating breaches of customs laws

and regulations, as defined in the Protocol on Mutual Administrative Assistance in Customs

Matters, related to the preferential treatment granted under this Chapter, in accordance with their

specific obligations under Chapter 3 (Rules of Origin and Origin Procedures) and the Protocol on

Mutual Administrative Assistance in Customs Matters.

2. Without prejudice to temporary suspension as provided for under the Chapter 3 (Rules of

Origin and Origin Procedures), a Party may, in accordance with the procedure laid down in

paragraph 3, suspend, for a limited period of time, the relevant preferential tariff treatment of the

goods concerned if:

(a) that Party has made a finding, on the basis of objective, compelling and verifiable

information, that systematic and large-scale breaches of customs laws and regulations related

to the preferential treatment granted under this Chapter, have been committed, and;

(b) the other Party repeatedly and unjustifiably refuses or fails to cooperate with that Party as

provided for in paragraph 11.

1 For greater certainty, cooperation is understood to be in place, for example, when exchanges

between the Parties with a view to address the matter in paragraph 1 are undertaken, including

within the Trade Committee.

& /en 28

3. The Party which has made a finding referred to in paragraph 2 shall, without undue delay,

notify the Trade Committee thereof and enter into consultations with the other Party within the

Trade Committee with a view to reaching a solution acceptable to both Parties.

4. Within two months after the notification referred to in paragraph 3, the other Party may

provide written comments to such finding.

5. If the Parties fail to agree on an acceptable solution within three months following the

notification referred to in paragraph 3, the Party which has made the finding may decide to suspend,

for a limited period of time, the relevant preferential tariff treatment of the goods concerned. The

suspension shall apply only to those traders, which during consultations referred to in paragraph 3

were identified and agreed by both Parties as involved in the breaches of customs laws and

regulations. Such decision to suspend shall be notified to the Trade Committee without undue delay.

6. If a Party has made a finding, and within three months following the notification referred to in

paragraph 5, has established that the suspension referred to in paragraph 5 has been ineffective in

combating breaches in customs laws and regulations related to the preferential treatment granted

under this Chapter, that Party may decide to suspend, for a limited period of time, the relevant

preferential treatment of the goods concerned. Such decision to suspend shall be notified to the

Trade Committee without undue delay.

& /en 29

7. The Party which has made a finding referred to in paragraph 2 may decide to suspend, for a

limited period of time, the relevant preferential treatment of the goods concerned if during

consultations referred to in paragraph 3, the Parties were unable to identify and agree on traders

involved in the breaches of customs laws and regulations. Such decision to suspend shall be notified

to the Trade Committee without undue delay.

8. The suspensions referred to in paragraphs 5, 6 and 7 shall apply only for a period necessary to

protect the financial interests of the Party concerned, and no longer than six months, and may be

terminated by the Party which has made the finding referred to in paragraph 2 any time before the

end of the notified period. Any change in the suspension period shall be notified to the Trade

Committee.

9. If the conditions referred to in paragraph 2 that gave rise to the initial suspension persist at the

expiry of the period as notified to the Trade Committee, the Party concerned may decide to renew

the suspension. The Party concerned shall notify the Trade Committee at the latest one month

before the renewal. The renewed suspension shall be subject to periodic consultations within the

Trade Committee.

10. Each Party shall publish, in accordance with its internal procedures, notices to importers about

any notification and decision concerning the suspensions referred to in paragraphs 5, 6, 7, 8 and 9.

& /en 30

11. Notwithstanding paragraphs 3 to 9, if an importer satisfies the customs authority of the

importing Party that its goods comply with the customs laws and regulations of the importing Party,

the requirements of this Agreement, and any other appropriate conditions related to the suspension

limited in time established by the importing Party in accordance with its laws and regulations, the

importing Party shall allow the importer to apply for preferential treatment and recover any customs

duties paid in excess of the applicable preferential customs duties when the goods were imported.

ARTICLE 2.16

Committee on Trade in Goods, Customs Matters and Sanitary and Phytosanitary matters

in its specific configuration for Chapters 2 (National Treatment and Market Access for Goods),

5 (Trade Remedies), and 7 (Technical Barriers to Trade)

1. This Article complements and further specifies Article 24.4.

2. The Committee on Trade in Goods, Customs matters and Sanitary and Phytosanitary matters

in its specific configuration for Chapters 2 (National Treatment and Market Access for Goods), 5

(Trade Remedies), and 7 (Technical Barriers to Trade) established under Article 24.4 (hereinafter

referred to as the "Committee" for the purposes of this Chapter) shall consider any matter relating to

the effective implementation and operation of this Chapter, Chapter 5 (Trade Remedies) and

Chapter 7 (Technical Barriers to Trade).

3. The Committee shall be composed of representatives of the Union and Indonesia, including

the contact points of each Party as set out in paragraph 4.

& /en 31

4. Each Party shall designate, within 90 days of the date of entry into force of this Agreement, a

contact point responsible for facilitating communication between the Parties on matters covered by

this Chapter, Chapter 5 (Trade Remedies) and Chapter 7 (Technical Barriers to Trade). Each Party

shall notify the other Party promptly of any change to its contact point.

5. The Committee shall meet in accordance with paragraph 4 of Article 24.4.

6. The Committee shall have the following functions:

(a) promoting trade in goods between the Parties, including through consultations on accelerating

reduction or elimination of customs duties under this Agreement and other issues as

appropriate;

(b) reviewing and monitoring the implementation or operation of this Chapter and Chapter 5

(Trade Remedies);

(c) promptly addressing barriers to trade in goods between the Parties, especially those related to

the application of non-tariff measures, and, if appropriate, referring such matters to the Trade

Committee for its consideration;

(d) considering matters related to Chapter 7 (Technical Barriers to Trade) that are referred to it by

the TBT Chapter Coordinators established under Article 7.11(1);

& /en 32

(e) consulting on and endeavouring to resolve any issues relating to this Chapter, including

differences that may arise between the Parties on matters related to the classification of goods

under the Harmonized System and Annex 2-A (Elimination of Customs Duties) and Annex 2-

B (Export Duty Quota Schedule Pursuant to Point (b) of Article 2.6(2)), or amendment to the

Harmonized System Code Structure or each Party's respective nomenclatures, including

methodologies and procedures used by each Party, to ensure that the obligations in Annex 2-A

(Elimination of Customs Duties) and Annex 2-B (Export Duty Quota Schedule Pursuant to

Point (b) of Article 2.6(2)) are not altered; consultations pursuant to this point shall not

replace consultations pursuant to Chapter 22 (Dispute Settlement) or dialogues under Chapter

21 (Bilateral Dialogue Mechanism), unless the Parties agree otherwise;

(f) monitoring preference utilisation rates and statistics, data on which may be presented for an

exchange of views to the Trade Committee;

(g) where appropriate, referring matters taken under consideration to the Trade Committee,

including any recommendations or conclusions; and

(h) on request of a Party, reviewing and exchanging statistical information on each Party's rates

of approval and denial of import licences.

& /en 33

CHAPTER 3

RULES OF ORIGIN AND ORIGIN PROCEDURES

SECTION A

RULES OF ORIGIN

ARTICLE 3.1

Definitions

For the purposes of this Chapter:

(a) "classified" refers to the classification of a product or material under a particular chapter,

heading, or sub-heading of the Harmonized System;

(b) "competent authority" means:

(i) in the case of the Union, the customs authorities; and

(ii) in the case of Indonesia, the Ministry of Trade or the customs authority, as appropriate;

& /en 34

(c) "consignment" means products which are either sent simultaneously from one exporter to one

consignee or covered by a single transport document for their shipment from the exporter to

the consignee or, in the absence of such a document, covered by a single invoice;

(d) "customs value" means the value as determined in accordance with the Agreement on

Implementation of Article VII of the GATT 1994, contained in Annex 1A to the WTO

Agreement;

(e) "EXW" or "ex-works price" means:

(i) the price of the product paid or payable to the producer1 in whose undertaking the last

working or processing is carried out, provided that the price includes the value of all the

materials used and all other costs incurred in the production of the product, minus any

internal taxes which are, or may be, repaid if the product obtained is exported; or

(ii) if there is no price paid or payable or if the actual price paid does not reflect all costs

related to the production of the product which are actually incurred in the production of

the product, the value of all the materials used and all other costs incurred in the

production of the product in the exporting Party:

(A) including selling, general and administrative expenses, as well as profit, that can

reasonably be allocated to the product; and

1 For the purposes of point (i), if the last production has been contracted to a producer, the term

"producer" refers to the person who has employed the subcontractor.

& /en 35

(B) excluding the cost of freight, insurance, all other costs incurred in transporting the

product and any internal taxes of the exporting Party which are, or may be, repaid

if the product obtained is exported;

(f) "exporter" means a person, located in a Party, who, in accordance with the requirements laid

down in the laws and regulations of the Party, exports or produces the originating product and

makes out a statement on origin;

(g) "importer" means a person, located in a Party, who, in accordance with the requirements laid

down in the laws and regulations of that Party, imports the originating product and claims

preferential tariff treatment for it;

(h) "material" means any ingredient, component, part or product used in the production of another

product;

(i) "preferential tariff treatment" means the rate of customs duties applicable to an originating

good in accordance with Article 2.5;

(j) "product" means the result of production;

(k) "production" means any method of obtaining or processing goods, including growing,

breeding, mining, extracting, raising, harvesting, gathering, collecting, fishing, trapping,

hunting, capturing, manufacturing, assembling or disassembling a product; and

& /en 36

(l) "value of materials" means the customs value at the time of importation of the non-

originating materials used or, if this is not known and cannot be ascertained, the first

ascertainable price paid for the materials in the Union or in Indonesia.

ARTICLE 3.2

Requirements for originating goods

1. For the purposes of applying the preferential tariff treatment by a Party to the originating

goods of the other Party in accordance with this Agreement, provided that the products satisfy all

other applicable requirements of this Chapter, the following products shall be considered as

originating in the other Party:

(a) products which are wholly obtained in that Party pursuant to Article 3.4;

(b) products produced in that Party exclusively from originating materials in that Party; and

(c) products produced in that Party incorporating non-originating materials provided they satisfy

the requirements set out in Annex 3-B (Product-Specific Rules of Origin).

2. If a product has acquired originating status, the non-originating materials used in the

production of that product shall not be considered as non-originating when that product is

incorporated as a material in another product.

& /en 37

3. The acquisition of originating status shall be fulfilled without interruption in Indonesia or the

Union.

ARTICLE 3.3

Cumulation of origin

1. Notwithstanding Article 3.2, products shall be considered as originating in a Party if such

products are obtained there by incorporating materials originating in the other Party, provided that

the working or processing carried out goes beyond the operations referred to in Article 3.6.

2. Materials originating in Japan and in third countries that are member of the Association of

Southeast Asian Nations (hereinafter referred to as "ASEAN Member States") shall be considered,

in accordance with Appendix 2 to Annex 3-B (Product-Specific Rules of Origin), as materials

originating in Indonesia when further processed and incorporated into one of the products listed in

Appendix 2 to Annex 3-B (Product-Specific Rules of Origin), provided that they have undergone

working or processing in Indonesia which goes beyond the operations referred to in Article 3.6.

3. For the purposes of paragraph 2, the origin of the materials shall be determined according to

the preferential rules of origin applicable in the framework of the Agreement between the European

Union and Japan for an Economic Partnership signed in Tokyo on 17 July 2018

and to ASEAN Member States.

& /en 38

4. For the purposes of paragraph 2, the originating status of materials exported from Japan or

ASEAN Member States to Indonesia to be used in further working or processing shall be

established by a proof of origin under which these materials could be exported directly to the

Union.

5. Statements of origin drawn up by application of paragraph 2 shall bear the following entry:

"Application of Article 3.3(2) of Chapter 3 of the EU-Indonesia CEPA with XXX [Country(ies) of

cumulation]".

6. Paragraphs 2 to 5 shall apply if:

(a) Japan and the ASEAN Member States apply with the Union to a preferential trade agreement

in accordance with Article XXIV of GATT 1994; and

(b) Japan, the ASEAN Member States and Indonesia have undertaken and notified to the Union

their undertaking to:

(i) ensure compliance with the cumulation provided for by this Article;

(ii) establish a proof of origin on the originating status of materials from Japan and ASEAN

Member States; and

(iii) provide the administrative cooperation necessary to ensure the correct implementation

of this Chapter both within the Union and between themselves.

& /en 39

ARTICLE 3.4

Wholly obtained products

1. The following shall be considered as wholly obtained in a Party:

(a) plant or plant products grown, cultivated, harvested, picked or gathered in the territory of that

Party;

(b) live animals born and raised in the territory of that Party;

(c) products obtained from live animals raised in the territory of that Party;

(d) products obtained from slaughtered animals born and raised in the territory of that Party;

(e) products obtained by hunting, trapping, fishing, gathering or capturing conducted in in the

territory of that Party, but not beyond the outer limits of the Party's territorial sea;

(f) products obtained from aquaculture in the territory of that Party, where aquatic organisms,

including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants are born

or raised from seed stock such as eggs, roes, fry, fingerlings or larvae, by intervention in the

rearing or growth processes to enhance production such as regular stocking, feeding or

protection from predators;

& /en 40

(g) minerals or other naturally occurring substances, other than those included in points (a) to (f),

extracted or taken from the soil or the seabed not going beyond the limits of the Party's

territorial sea;

(h) products of sea fishing and other products taken from the sea outside any territorial seas by

their vessels;

(i) products made aboard their factory ships exclusively from products referred to in point (h);

(j) products other than fish, shellfish and other marine life extracted from the seabed or subsoil

which is situated outside any territorial sea but where the Party has exploitation rights in

accordance with international law;

(k) a product that is:

(i) waste or scrap derived from manufacture there; or

(ii) waste or scrap derived from used products collected there, provided that those products

are fit only for the recovery of raw materials.

(l) a product produced there exclusively from products referred to in points (a) to (k), or from

their derivatives.

& /en 41

2. The terms "vessels" and "factory ships" in points (h) and (i) of paragraph 1 shall apply only to

vessels and factory ships:

(a) which are registered in a Member State of the Union or in Indonesia;

(b) which sail under the flag of a Member State of the Union or of Indonesia; and

(c) which are owned:

(i) at least 50 % by a national of a Member State of the Union or of Indonesia; or

(ii) by juridical persons:

(A) which have their head office and their main place of business in a Member State

of the Union or Indonesia; and

(B) which are at least 50 % owned by a Member State of the Union or by Indonesia,

or by a public entity or a national of one of those Parties.

& /en 42

ARTICLE 3.5

Tolerances

1. If a non-originating material used in the production of a product does not satisfy the

requirements set out in Annex 3-B (Product-Specific Rules of Origin), that material may be used if:

(a) for a product classified under Chapters 2 and 4 to 24 of the Harmonized System, other than

processed fishery products of Chapter 16, the total value of those materials does not exceed

10 % of the ex-works price of the product;

(b) for a product classified under Chapter 1, Chapter 3, processed fishery products of Chapter 16,

Chapters 25 to 49 or Chapters 64 to 97 of the Harmonized System, the total value of those

materials does not exceed 15 % of the ex-works price of the product; or

(c) for a product classified under Chapters 50 to 63 of the Harmonized System, tolerance shall

apply as stipulated in Note 7 and 8 of Annex 3-A (Introductory Notes to the List in Annex 3-

B (Product Specific Rules of Origin)).

2. Paragraph 1 shall not apply if the total value or weight of non-originating materials exceeds

any of the percentage specified in Annex 3-B (Product-Specific Rules of Origin).

& /en 43

3. Paragraph 1 shall not apply to product that meet the requirements of Article 3.4(1). If

Annex 3-B (Product-Specific Rules of Origin) requires that the materials used in the production of

that product meet the requirements of Article 3.4(1), the tolerance provided for in paragraph 1

applies to the sum of these materials.

ARTICLE 3.6

Insufficient working or processing

1. By way of derogation from point (c) of Article 3.2(1), a product shall not be considered as

originating in a Party if the working or processing carried out in that Party consists only of one or

more of the following operations conducted on non-originating materials:

(a) preserving operations to ensure that the products remain in good condition during transport

and storage;

(b) breaking and assembly of packages;

(c) washing, cleaning or removal of dust, oxide, oil, paint or other coverings;

(d) ironing or pressing of textiles and textile articles;

(e) simple painting and polishing operations;

& /en 44

(f) husking and partial or total milling of rice or polishing and glazing of cereals and rice;

(g) colouring or flavouring sugar or form sugar lumps or partial or total milling of crystal sugar;

(h) peeling, stoning and shelling, of fruits, nuts and vegetables;

(i) sharpening, simple grinding or simple cutting;

(j) simple sifting, screening, sorting, classifying, grading, matching, including the making-up of

sets of articles;

(k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all

other simple packaging operations;

(l) affixing or printing marks, labels, logos and other distinguishing signs on products or their

packaging;

(m) simple mixing of products, whether or not of different kinds or mixing of sugar with any

material;

(n) simple addition of water or dilution or dehydration or denaturation of products;

(o) simple assembly of parts of articles to constitute a complete article or disassembly of products

into parts; and

& /en 45

(p) slaughter of animals.

2. For the purposes of paragraph 1, operations shall be considered simple when neither special

skills nor machines, apparatus or tools especially produced or installed for those operations are

required for their performance.

ARTICLE 3.7

Unit of qualification

1. The unit of qualification for the application of this Chapter shall be the particular product

which is considered as the basic unit when determining classification according to the nomenclature

of the Harmonized System.

2. When a consignment consists of a number of identical products classified under the same

heading of the Harmonized System, each individual item shall be taken into account for the purpose

of applying this Chapter.

& /en 46

ARTICLE 3.8

Accessories, spare parts and tools and instructional or other information materials

1. This Article applies to accessories, spare parts, tools, and instructional or other information

materials if:

(a) the accessories, spare parts, tools and instructional or other information materials are

classified with, delivered with and not invoiced separately from the product; and

(b) the types, quantities, and value of the accessories, spare parts, tools and instructional or other

information materials are customary for that product.

2. If the product is originating in accordance with Article 3.4(1), or if the product satisfies a

process or change in tariff classification requirement as set out in Annex 3-B (Product-Specific

Rules of Origin), accessories, spare parts, tools and instructional or other information materials as

described in paragraph 1 shall be disregarded.

3. In determining whether a product meets a value requirement set out in Annex 3-B (Product-

Specific Rules of Origin), the value of accessories, spare parts, tools and instructional or other

information materials as described in paragraph 1, shall be taken into account in calculating the

value requirement of the product as originating or non-originating materials, as the case may be.

& /en 47

4. A product's accessories, spare parts, tools or instructional or other information materials, as

described in paragraph 1, shall have the originating status of the product with which they are

delivered.

ARTICLE 3.9

Sets

A set, as defined in General Rule 3 of the Harmonized System, shall be considered as originating

when all component products are originating. If a set is composed of originating and non-

originating components the set as a whole shall be considered as originating, provided that the value

of the non-originating components does not exceed 20 % of the ex-works price of the set.

ARTICLE 3.10

Neutral materials and elements

In order to determine whether a product qualifies as an originating product of a Party, the origin of

the following elements shall be disregarded:

(a) energy and fuel;

& /en 48

(b) plant and equipment, including materials used and to be used for their maintenance;

(c) machines and tools and dies and moulds;

(d) spare parts and materials used in the maintenance of equipment and buildings;

(e) lubricants, greases, compounding materials and other materials used in manufacture or used to

operate equipment and buildings;

(f) gloves, glasses, footwear, clothing, safety equipment and supplies;

(g) equipment, devices and supplies used for testing or inspecting the materials or product;

catalyst and solvent; and

(h) other materials which are not incorporated into the final composition of the product but whose

use in the production of the product can be reasonably demonstrated to be a part of that

production.

& /en 49

ARTICLE 3.11

Accounting segregation

1. Originating and non-originating fungible materials shall be physically segregated, during

storage in order to maintain their originating status.

2. For the purposes of this Article, "fungible materials" means materials that are of the same

kind and commercial quality, with the same technical and physical characteristics, and which

cannot be distinguished from one another once they are incorporated into the finished product.

3. Notwithstanding paragraph 1, originating and non-originating fungible materials may be used

in the working or processing of a product without being physically segregated provided that an

accounting segregation method is used.

4. The application of the accounting segregation method for managing stock provided for in

paragraph 3 shall be applied in conformity with an inventory management method under accounting

principles which are generally accepted in the Party.

5. A Party may require that the use of the accounting segregation method pursuant to

paragraph 3 is subject to prior authorisation by the competent authority of that Party. The competent

authority may grant the authorisation subject to any conditions deemed appropriate. The competent

authority shall monitor the use of the authorisation and may withdraw it at any time if the

beneficiary makes improper use of it or fails to fulfil any of the other conditions in this Chapter.

& /en 50

6. The accounting segregation method shall ensure that at any time no more materials receive

originating status than would be the case if the materials had been physically segregated.

ARTICLE 3.12

Packing materials and containers for retail sale

1. Packaging materials and containers in which a product is packaged for retail sale, if classified

with the good, shall be disregarded in determining whether all the non-originating materials used in

the production of the product have undergone the applicable change in tariff classification or a

specific manufacturing or processing operation set out in Annex 3-B (Product-Specific Rules of

Origin) or whether the good meets the requirements of Article 3.4(1).

2. If a product is subject to a value requirement set out in Annex 3-B (Product-Specific Rules of

Origin), the value of the packaging materials and containers in which the product is packaged for

retail sale, if classified with the good, shall be taken into account as originating or non-originating,

as the case may be, in calculating the value requirement of the product.

& /en 51

ARTICLE 3.13

Packing materials and containers for shipment

Packing materials and containers for shipment that are used to protect a good during transportation

shall be disregarded in determining whether a product is originating.

ARTICLE 3.14

Non-alteration

1. An originating product declared for importation in a Party shall be the same product as

exported from the other Party in which it obtained originating status. It shall not have been altered,

transformed in any way or subjected to operation other than to preserve it in good condition or than

adding or affixing marks, labels, seals or any other documentation to ensure compliance with

specific requirements of the importing Party, prior to being declared for importation in a Party.

2. The storage or exhibition of products may take place in a third country provided that they

remain under customs supervision in that third country.

3. Without prejudice to the provisions of Article 3.24, the splitting of consignments may take

place in the territory of a third country if carried out by the exporter or under its responsibility

provided the consignments remain under customs supervision in the third country.

& /en 52

4. If the customs authority of the importing Party has reason to believe that a conditions set out

in paragraphs 1, 2 or 3 are not complied with, they may request the declarant to provide evidence of

compliance, which may be given by any means, including contractual transport documents such as

bills of lading or factual or concrete evidence based on marking or numbering of package or any

evidence related to the good themselves.

ARTICLE 3.15

Returned product

If an originating product exported from a Party to a third country returns to the originating country,

it shall be considered as non-originating, unless it can be demonstrated to the satisfaction of the

customs authority that the returning product:

(a) is the same as that exported; and

(b) has not undergone any operation beyond that necessary to preserve it in good condition while

in that third country or while being exported.

& /en 53

SECTION B

ORIGIN PROCEDURES

ARTICLE 3.16

Claim for preferential tariff treatment

1. The importing Party shall grant preferential tariff treatment to a product originating in the

other Party within the meaning of this Chapter on the basis of a claim by the importer for

preferential tariff treatment. The importer shall be responsible for the correctness of the claim for

preferential tariff treatment and for compliance with the requirement provided for in this Chapter.

2. A claim for preferential tariff treatment shall be based on a statement on origin, declaring that

the product is originating, drawn up by the exporter.

3. Notwithstanding paragraph 2, a Party may allow in accordance with its laws and regulations a

claim for preferential tariff treatment to be based on the importer's knowledge that the product is

originating in accordance with Article 3.20.

4. The importer making a claim for preferential tariff treatment based on a statement on origin

referred to in paragraph 2 shall keep the statement on origin and provide such statement or a copy

thereof to the customs authority of the importing Party in accordance with its laws and regulations.

& /en 54

ARTICLE 3.17

Timing of the claim for preferential tariff treatment

1. The claim for preferential tariff treatment, and its basis as referred to in Article 3.16(2) and

(3), shall be included in the customs declaration at the time of importation, in accordance with the

laws and regulations of the importing Party.

2. Notwithstanding paragraph 1, if the importer did not make a claim for preferential tariff

treatment at the time of importation, the importing Party shall grant preferential tariff treatment and

repay or remit any excess customs duty paid or release guarantee, provided that:

(a) the claim for preferential tariff treatment is made within the time period specified in the laws

and regulations of the importing Party;

(b) the importer provides the basis for the claim as referred to in Article 3.16(2) and (3); and

(c) the product would have been considered originating of this Chapter if preferential tariff

treatment had been claimed by the importer at the time of importation.

3. Without prejudice to paragraph 2, the obligations applicable to the importer pursuant to

Article 3.16 shall apply for the purposes of this paragraph.

& /en 55

4. Paragraph 2 shall apply under the condition that Indonesia has notified the Union that the laws

and regulations in Indonesia allow the granting of preferential tariff treatment and the repayment or

remission of any excess customs duty paid after importation.

ARTICLE 3.18

Statement on origin

1. A statement on origin shall be made out by an exporter of a product on the basis of

information demonstrating that the product is originating from a Party, including, if applicable,

information on the originating status of materials used in the production of the product. The

exporter shall be responsible for the correctness of the statement on origin made out and the

information provided.

2. A statement on origin shall be made out in one or more of the linguistic versions included in

Annex 3-C (Text of the Statement on Origin), at least one of which shall be English, on an invoice,

or on any other document describing the originating product in sufficient detail to enable its

identification. The importing Party shall not require the importer to submit a translation of the

statement on origin. The Union shall notify any other linguistic version of the statement on origin to

Indonesia at the latest on the accession of a new Member State to the Union.

3. A statement on origin shall be valid for 12 months from the date it was made out.

& /en 56

4. A statement on origin shall apply to a single shipment of one or more products into a Party.

The customs authority of the importing Party may allow the application of a statement on origin to

multiple shipments of identical originating products that take place within a period of time that does

not exceed 12 months as set out by the exporter in that statement.

5. The importing Party shall, at the request of the importer and subject to requirements and

conditions provided by the Party, allow a single statement on origin to be used for unassembled or

disassembled products within the meaning of General Rule 2(a) of the Harmonized System falling

within Sections XVI and XVII or headings 7308 and 9406 of the Harmonized System when

imported in instalments.

6. Paragraph 4 shall apply under the condition that Indonesia has notified the Union that the laws

and regulations in Indonesia allow the application of a statement on origin to multiple shipments of

identical originating products.

ARTICLE 3.19

Discrepancies and minor errors

The customs authority of the importing Party shall not reject a claim for preferential tariff treatment

due to minor errors or discrepancies in the statement on origin.

& /en 57

ARTICLE 3.20

Importer's knowledge

The importer's knowledge that a product is originating shall be based on information demonstrating

that the product is originating within the meaning of this Chapter.

ARTICLE 3.21

Record keeping requirements

1. An importer claiming preferential tariff treatment for a product imported into a Party shall:

(a) if the claim is based on a statement on origin, keep the statement on origin or a copy of the

statement on origin made out by the exporter for a minimum of three years from the date of

the claim for preferential tariff treatment, unless a longer period is required by a Party's laws

and regulations; and

(b) if the claim is based on the importer's knowledge, keep the information demonstrating that the

product satisfies the requirements to obtain originating status for a minimum of three years

from the date of the claim for preferential tariff treatment, unless a longer period is required

by a Party's laws and regulations.

& /en 58

2. An exporter who made out a statement on origin shall, for a minimum of four years following

the drawing up of that statement on origin, unless a longer period is required by a Party's laws and

regulations keep copies of statement on origins and all other records demonstrating that the product

satisfies the requirements to obtain originating status.

3. The records to be kept pursuant to this Article may be held in electronic format.

ARTICLE 3.22

Small consignments

1. Notwithstanding Articles 3.16 to 3.20, the importing Party shall grant preferential tariff

treatment to:

(a) a product sent in a small package from a private person to a private person; and

(b) a product forming part of a traveller's personal luggage;

provided the product has been declared as meeting the requirements of this Chapter, and the

customs authority of the importing Party has no doubts as to the veracity of such declaration.

& /en 59

2. The following products are excluded from the application of paragraph 1:

(a) a product imported by way of trade; for greater clarity, imports which are occasional and

consist solely of products for the personal use of the recipients or travellers or their families

shall not be considered as imports by way of trade if it is evident from the nature and quantity

of the products that the products have no commercial purpose;

(b) products whose importation forms part of a series of importations that may reasonably be

considered to have been made separately for the purpose of avoiding the requirements of

Article 3.16; and

(c) products for which the total value exceeds the limits set under the relevant laws and

regulations of a Party.

3. Each Party shall notify the limits referred to in point (c) of paragraph 2 and any subsequent

modification thereof to the other Party. For the Union, the European Commission shall be

responsible for those notifications.

4. The importer shall be responsible for the correctness of the declaration and for compliance

with the requirements of this Chapter. The record-keeping requirements set out in Article 3.21 shall

not apply to the importer under this Article.

& /en 60

ARTICLE 3.23

Verification

1. The customs authority of the importing Party may conduct a verification as to whether a

product is originating or the other requirements of this Chapter are met based on risk assessment

methods, which may include random selection. Such verification may be conducted by means of a

request for information to the importer who made the claim referred to in Article 3.16, at the time

the import declaration is submitted, before the release of the products, or after the release of the

products.

2. The information requested pursuant to paragraph 1 shall not cover more than:

(a) the statement on origin referred to Article 3.16(2), where such a statement was the basis of the

claim;

(b) information pertaining to the fulfilment of origin criteria, that:

(i) for products meeting the requirements of Article 3.4(1): the applicable category (such as

harvesting, mining, fishing) and place of production;

(ii) if the origin criterion is based on change of tariff classification: a list of all the non-

originating materials including their tariff classification (in two, four or six digit format,

depending on the origin criterion);

& /en 61

(iii) if the origin criterion is based on a value method: the value of the final product as well

as the value of all the non-originating materials used in the production of that final

product;

(iv) if the origin criterion is based on weight: the weight of the final product as well as the

weight of the relevant non-originating materials used in that final product; and

(v) if the origin criterion is based on a specific production process: a specific description of

that process; and

(c) information relating to compliance with Article 3.14.

3. When providing the requested information, the importer may add any other information that

they consider relevant for the purpose of verification.

4. If the claim for preferential tariff treatment is based on a statement on origin, the importer

shall provide that statement on origin but may reply to the customs authority of the importing Party

that the importer is not in a position to provide the information referred to in point (b) of

paragraph 2.

& /en 62

5. Where the claim for preferential tariff treatment is based on the importer's knowledge referred

to in Article 3.16(3), after having first requested information pursuant to paragraph 1, the customs

authority of the importing Party conducting the verification may send a request for information to

the importer when it considers that additional information is required for verifying the originating

status of the product or whether the other requirements of this Chapter are met. The customs

authority of the importing Party may request the importer for specific documentation and

information, where appropriate.

6. If the customs authority of the importing Party decides to suspend the granting of preferential

tariff treatment to the products concerned while awaiting the results of the verification, release of

the products shall be offered to the importer. As a condition for such release, the Party may require

payment of applied most-favoured-nation customs duties, a guarantee or other appropriate

precautionary measure. Any suspension of preferential tariff treatment shall be terminated and

preferential tariff treatment shall be granted as soon as possible after the customs authority of the

importing Party has ascertained the originating status of the products concerned, or the fulfilment of

the other requirements of this Chapter.

& /en 63

ARTICLE 3.24

Administrative cooperation

1. In order to ensure the proper application of this Chapter, the Parties shall cooperate with each

other, through their respective competent authority, to verify whether products are originating and

whether the other requirements provided for in this Chapter are met.

2. Where the claim for preferential tariff treatment is based on a statement on origin referred to

in of Article 3.16(2), the customs authority of the importing Party conducting the verification may

request documentation or information to the competent authority of the exporting Party within two

years from the date of the claim for preferential tariff treatment, when the customs authority of the

importing Party conducting the verification considers that it requires information additional to the

information provided by the importer for verifying the originating status of the product or whether

the other requirements provided for in this Chapter are met.

3. If a request is made pursuant to paragraph 2, the customs authority of the importing Party

shall include the following information:

(a) the statement on origin;

(b) the identity of the customs authority issuing the request;

(c) the name of the exporter;

& /en 64

(d) the subject and scope of the verification; and

(e) where applicable any relevant documentation.

In addition, the customs authority of the importing Party may request the competent authority of the

exporting Party to provide specific documentation and information.

4. The competent authority of the exporting Party may, in accordance with its laws and

regulations, request documentation or examination by calling for any evidence, or visit the premises

of the exporter to review records and observe the facilities used in the production of the product.

5. The competent authority of the exporting Party following the request referred to in

paragraph 2 shall provide the following information:

(a) the requested documentation, where available;

(b) an opinion on the originating status of the product;

(c) the description of the product subject to examination and the tariff classification relevant to

the application of the rules of origin;

(d) a description and explanation of the production process to support the originating status of the

product;

& /en 65

(e) information on the manner in which the examination was conducted; and

(f) any relevant supporting documentation.

6. The competent authority of the exporting Party shall not transmit the information referred to

in paragraph 5 to the customs authority of the importing Party before having received the consent of

the exporter.

7. The Parties shall provide each other, through the Committee on Trade in Goods, Customs

matters, and Sanitary and Phytosanitary matters in its specific configuration for Chapters 3 (Rules

of Origin and Origin Procedures), 4 (Customs and Trade Facilitation) and 12 (Intellectual Property)

for issues related to border enforcement (hereinafter referred to as the "Committee" for the purposes

of this Chapter), the contact details of their respective competent authorities and any modification

thereof within 30 days after such modification.

ARTICLE 3.25

Denial of preferential tariff treatment

1. Without prejudice to paragraph 3, the customs authority of the importing Party may deny

preferential tariff treatment if:

(a) within three months or a shorter period in accordance with the laws and regulations of the

importing Party, following the request for information pursuant to Article 3.23(1):

& /en 66

(i) no reply is provided by the importer;

(ii) if the claim for preferential tariff treatment is based on a statement on origin, the

statement on origin is not provided, unless the statement on origin has already been

provided pursuant to Article 3.18(5); or

(iii) if the claim for preferential tariff treatment is based on the importer's knowledge in

accordance with Article 3.20, the information provided by the importer is inadequate to

confirm that the product is originating in a Party;

(b) within three months following the request for additional information pursuant to

Article 3.23(5):

(i) the importer did not provide a reply; or

(ii) the information provided by the importer is inadequate to confirm that the product is

originating in a Party;

(c) within 10 months following the request for information pursuant to Article 3.24(2):

(i) the competent authority of the exporting Party did not provide a reply; or

(ii) the information provided by the competent authority of the exporting Party is

inadequate to confirm that the product is originating.

& /en 67

2. The customs authority of the importing Party may deny preferential tariff treatment to a

product if the importer fails to comply with requirements in Article 3.14.

3. If the customs authority of the exporting Party provided an opinion pursuant to point (b) of

Article 3.24(5) confirming the originating status of the products, but the customs authorities of the

importing Party has sufficient justification to deny preferential tariff treatment, the customs

authority of the importing Party shall send to the customs authority of the exporting Party a copy of

its decision to deny the preference.

ARTICLE 3.26

Confidentiality

1. Each Party shall maintain, in accordance with its laws and regulations, the confidentiality of

information provided to it by the other Party, pursuant to this Chapter, and shall protect that

information from disclosure.

2. Information obtained by the authority of the importing Party pursuant to this Chapter may

only be used by that authority for the purposes of this Chapter. Information collected pursuant to

this Chapter shall be allowed for the purposes of any administrative, judicial, or quasi-judicial

proceedings instituted for failure to comply with this Chapter if the person or Party who provided

the information is notified in advance.

& /en 68

3. Confidential business information obtained from the exporter by the competent authority of

the exporting Party or by customs authority of the importing Party pursuant to Articles 3.23 and

3.24 shall not be disclosed unless otherwise provided for in this Chapter.

4. Information obtained by the customs authority of the importing Party pursuant to this Chapter

shall not be used by the importing Party in any criminal proceedings carried out by a court or a

judge, if permission to use such information is granted to the importing Party on its request through

the diplomatic channels or other channels established in accordance with the laws and regulations of

the exporting Party.

ARTICLE 3.27

Administrative measures and sanctions

Each Party shall ensure that administrative measures, and sanctions where appropriate, may be

imposed in accordance with its respective laws and regulations, on a person who draws up a

document, or causes a document to be drawn up, which contains incorrect information provided for

the purpose of obtaining a preferential tariff treatment to a product, who does not comply with the

requirements of Article 3.21, or who does not provide the evidence requested or refuses a visit

referred to in Article 3.24(4).

& /en 69

SECTION C

FINAL PROVISIONS

ARTICLE 3.28

Ceuta and Melilla

1. For the purposes of this Chapter, the term "Union" does not include Ceuta and Melilla.

2. Products originating in Indonesia, when imported into Ceuta and Melilla, shall in all respects

be subject to the same customs regime, including preferential tariff treatment, as it applies to

products originating in the customs territory of the Union pursuant to Protocol 2 of the Act of

Accession of the Kingdom of Spain and the Portuguese Republic to the European Communities.

3. Indonesia shall apply to imports of products covered by this Agreement and originating in

Ceuta and Melilla the same customs regime, including preferential tariff treatment, as it applies to

products imported from and originating in the Union.

4. The rules of origin applicable to Indonesia under this Chapter shall apply in determining the

origin of products exported from Indonesia to Ceuta and Melilla. The rules of origin applicable to

the Union under this Chapter shall apply in determining the origin of products exported from Ceuta

and Melilla to Indonesia.

& /en 70

5. The provisions on cumulation of origin of this Chapter shall apply to the import and export of

products between the Union, Indonesia and Ceuta and Melilla.

6. Ceuta and Melilla shall be considered as a single territory.

7. The Spanish customs authority shall be responsible for the application of this Chapter in

Ceuta and Melilla.

ARTICLE 3.29

Committee on Trade in Goods, Customs matters, and Sanitary and Phytosanitary matters

meeting in its specific configuration for Chapter 3 (Rules of Origin and Origin Procedures),

4 (Customs and Trade Facilitation), and 12 (Intellectual Property)

1. This Article complements and further specifies Article 24.4.

& /en 71

2. The Committee on Trade in Goods, Customs matters, and Sanitary and Phytosanitary matters

meeting in its specific configuration for Chapters 3 (Rules of Origin and Origin Procedures), 4

(Customs and Trade Facilitation), and 12 (Intellectual Property) for issues related to border

enforcement (hereinafter "the Committee" for the purposes of this Chapter), shall be responsible for

the effective implementation and operation of this Chapter and shall have the following functions

for the purposes of this Chapter:

(a) reviewing and making appropriate recommendations, as necessary, to the Trade Committee

on:

(i) the implementation and operation of this Chapter; and

(ii) any amendments, pursuant to Article 24.2, of the provisions of this Chapter and Annex

3-A (Introductory Notes to the list in Annex 3-B) including its Appendices, Annex 3-B

(Product-specific Rules of Origin), Annex 3-C (Text of the Statement on Origin), Annex

3-D (Explanatory Notes), Annex 3-E (On the Principality of Andorra) and Annex 3-F

(On the Republic of San Marino), proposed by a Party;

(b) adopting by decision explanatory notes pursuant to Article 3.30; and

(c) considering any other matter related to this Chapter as the representatives of the Parties may

agree.

& /en 72

ARTICLE 3.30

Explanatory notes

The Parties may agree by decision on explanatory notes regarding the interpretation and application

of this Chapter within the Committee.

ARTICLE 3.31

Transitional provisions for products in transit or storage

The Parties may apply this Agreement to products which comply with this Chapter and which on

the date of entry into force of this Agreement are either in transit from the exporting Party to the

importing Party, or under customs control in the importing Party, without payment of import duties

and taxes, if the importer submits a claim for preferential tariff treatment in accordance with

Article 3.16 to the customs authority of the importing Party, within 12 months of the date of entry

into force of this Agreement.

& /en 73

CHAPTER 4

CUSTOMS AND TRADE FACILITATION

ARTICLE 4.1

Objectives

1. The Parties recognise the importance of customs and trade facilitation matters in the evolving

global trading environment. Each Party shall reinforce cooperation in this area with a view to

ensuring that the relevant customs laws and regulations and procedures, as well as the

administrative capacity of the customs administrations, fulfil the objectives of promoting trade

facilitation while ensuring effective customs controls. This may involve the following actions:

(a) ensuring predictability, consistency and transparency in the application of their customs laws

and regulations;

(b) promoting efficient administration of customs procedures and the expeditious clearance of

goods;

(c) simplifying their customs procedures and harmonising them with relevant international

standards, to the extent possible; and

(d) promoting cooperation between their respective customs authorities.

& /en 74

2. The Parties agree that their laws and regulations shall be non-discriminatory and that customs

procedures shall be based on the use of efficient methods and effective controls to combat fraud and

to promote legitimate trade.

3. The Parties recognise that legitimate public policy objectives, including in relation to security,

safety and the fight against fraud as set out in Chapter 23, shall not be compromised.

ARTICLE 4.2

Scope

This Chapter shall apply to matters relating to the Parties' customs and other trade-related laws and

regulations enforced by customs, including their application to goods traded between the Parties, as

well as to the cooperation between the Parties on customs matters.

ARTICLE 4.3

Definitions

For the purposes of this Chapter, "Customs Valuation Agreement" means the Agreement on

Implementation of Article VII of GATT 1994 contained in Annex 1-A to the WTO Agreement;

& /en 75

ARTICLE 4.4

Customs cooperation and mutual administrative assistance

1. The Parties shall cooperate on customs matters between their respective authorities, as

deemed appropriate, to ensure that the objectives set out in Article 4.1 are attained including

through:

(a) exchanging information concerning customs laws and regulations, their implementation and

customs procedures, particularly in the following areas:

(i) simplification and modernisation of customs procedures;

(ii) enforcement of intellectual property rights by their respective customs authorities, and

the fight against illicit trade;

(iii) facilitation of transit movements and transhipment;

(iv) relations with the business community; and

(v) supply chain security and risk management.

& /en 76

(b) working together on the customs-related aspects of securing and facilitating international

trade supply chains in accordance with relevant best practices, standards and techniques, in

particular those developed by the World Customs Organization (hereinafter referred to as

"WCO") insofar as they have been ratified or adopted by the Parties;

(c) considering initiatives on best practices and techniques relating to customs matters, including

technical assistance, efforts towards the simplification and harmonisation of customs

procedures, as well as on providing effective services to the business community;

(d) developing cooperation in areas of mutual interest in the field of customs in international

organisations such as the WTO and the WCO;

(e) establishing, where relevant and appropriate, mutual recognition of trade partnership

programmes and customs controls, including equivalent trade facilitation measures;

(f) exchanging, where relevant and appropriate, through a structured and recurrent

communication between the customs authorities of the Parties, certain categories of customs-

related information for the purpose of improving risk management and the effectiveness of

customs controls, targeting goods at risk in terms of revenue collection or safety and security,

and facilitating legitimate trade; such exchanges shall be without prejudice to exchanges of

information that may take place between the Parties pursuant to the Protocol on Mutual

Administrative Assistance in Customs Matters;

& /en 77

(g) fostering, where relevant and appropriate, cooperation between customs authorities and other

government authorities on authorised operator programmes; this collaboration may be

achieved, among others, by aligning requirements, facilitating access to benefits and

minimising unnecessary duplications; and

(h) such other issues as the Parties may mutually determine.

2. The Parties shall provide each other with mutual administrative assistance in customs matters

in accordance with the provisions of the Protocol on Mutual Administrative Assistance in Customs

Matters.

ARTICLE 4.5

Customs laws and regulations and procedures

1. Each Party shall ensure that its customs procedures as well as the implementation thereof, are

predictable, consistent, transparent, trade-facilitating, while ensuring effective controls, and based

on:

(a) international instruments and standards applicable in the area of customs and trade, notably

those concluded in the context of the WTO and the WCO, and compliant with, to the extent

permitted by its customs laws and regulations, the recommended practices of the WCO;

& /en 78

(b) customs laws and regulations and the implementation thereof that:

(i) are proportionate and non-discriminatory;

(ii) avoid unnecessary burdens on economic operators;

(iii) provide further facilitation for operators with high levels of compliance, including

favourable treatment with respect to customs controls prior to the release of goods; and

(iv) ensure safeguards against fraud and illicit or damaging activities; and

(c) rules that ensure that any penalty imposed for breaches of customs laws and regulations or

procedural requirements is proportionate and non-discriminatory and that their application

does not unduly delay the release of the goods.

2. Each Party should periodically review its customs laws and regulations and customs

procedures with a view to their simplification to facilitate trade and ensure effective controls.

3. In order to improve working methods, as well as to ensure non-discrimination, transparency,

efficiency, integrity and accountability of its operations, each Party shall:

(a) simplify and review requirements and formalities wherever possible with a view to the rapid

release and clearance of goods; and

& /en 79

(b) work towards the further simplification and standardisation of data and documentation

required by customs authorities and other agencies.

ARTICLE 4.6

Release of goods

1. Each Party shall adopt or maintain customs procedures that provide for goods to be released

as rapidly as possible within a period that is no longer than necessary to ensure compliance with its

laws and regulations. Each Party shall work to further reduce release times and shall release the

goods without undue delay. Notwithstanding the first sentence of this paragraph, each Party may

require additional time to ensure compliance with its laws and regulations if one of the following

situations arises:

(a) the importer fails to provide any information required by the importing Party at the time of

first entry;

(b) the information contains an error;

(c) the goods are selected for closer examination by the customs authorities of the importing

Party through the application of a risk management system for customs control; or

(d) due to force majeure, the necessary customs procedures could not be completed without

undue delay or the release of the goods is otherwise delayed.

& /en 80

2. If any goods are selected for closer examination in accordance with point (c) of paragraph 1,

the closer examination shall be limited to what is reasonable and necessary, and conducted and

completed without undue delay.

3. Each Party shall provide for advance electronic submission and processing of documentation

and any other required information prior to the arrival of the goods, to enable the release of goods

upon arrival, provided that the necessary conditions for the release of the goods are fulfilled.

4. Each Party shall adopt or maintain customs procedures that allow for the release of goods

prior to the final determination of the applicable customs duties, taxes, fees and charges, if such a

determination is not done prior to, or upon arrival, or as rapidly as possible after arrival and

provided that all other regulatory requirements have been met.

5. As a condition for the release of goods prior to a final determination, each Party may require a

guarantee for any amount not yet determined in the form of a surety, a deposit or another

appropriate instrument provided for in its customs laws and regulations. Such guarantee shall not be

greater than the amount the Party requires to ensure payment of customs duties, taxes, fees and

charges ultimately due for the goods covered by the guarantee. The guarantee shall be discharged

when it is no longer required.

& /en 81

ARTICLE 4.7

Simplified customs procedures

Each Party shall provide for simplified customs procedures that are transparent and efficient in

order to reduce costs and increase predictability for economic operators, including for SMEs.

ARTICLE 4.8

Transit and transhipment

1. Each Party shall ensure the facilitation and effective control of transhipment operations and

transit movements through its territory.

2. Each Party shall promote and implement regional transit arrangements with a view to

facilitating trade.

3. Each Party shall ensure cooperation and coordination between all concerned authorities and

agencies in its territory to facilitate transit.

4. Each Party shall allow goods intended for import to be moved within its territory under

customs control from a customs office of entry to another customs office in its territory from where

the goods would be released or cleared.

& /en 82

ARTICLE 4.9

Risk management

1. Each Party shall adopt or maintain a risk management system for customs control.

2. Each Party shall design and apply risk management so as to avoid arbitrary or unjustifiable

discrimination, or disguised restrictions to international trade.

3. Each Party shall concentrate customs control and, to the extent possible, other relevant border

controls on high-risk consignments and expedite the release of low-risk consignments. Each Party

may also select, on a random basis, consignments for such controls as part of its risk management.

4. Each Party shall base risk management on assessment of risk through appropriate selectivity

criteria.

ARTICLE 4.10

Post-clearance audit

1. With a view to expediting the release of goods, each Party shall adopt or maintain post-

clearance audits to ensure compliance with customs and other related laws and regulations.

& /en 83

2. Each Party shall select a person or a consignment for post-clearance audit in a risk-based

manner, which may include appropriate selectivity criteria. Each Party shall conduct post-clearance

audits in a transparent manner. If a person is involved in the audit process and conclusive results

have been achieved, the Party shall, without delay, notify the person whose record is audited of the

results, the person's rights and obligations and the reasons for the results.

3. The Parties acknowledge that the information obtained in post-clearance audits may be used

in further administrative or judicial proceedings.

4. Each Party shall, wherever practicable, use the results of post-clearance audits in applying risk

management.

ARTICLE 4.11

Authorised operators

1. Each Party shall provide additional trade facilitation measures related to import, export or

transit formalities and procedures, pursuant to paragraph 3 of this Article, to operators who meet

specified criteria (hereinafter referred to as "authorised operators"). Alternatively, a Party may offer

such trade facilitation measures through customs procedures generally available to all operators

and, in this case not required to establish a separate scheme.

& /en 84

2. The specified criteria to qualify as an authorised operator shall be related to compliance, or

the risk of non-compliance, with requirements specified in the respective laws, regulations or

procedures of each Party. The specified criteria, which shall be published, may include:

(a) an appropriate record of compliance with customs and other related laws and regulations;

(b) a system of managing records to allow for necessary internal controls;

(c) financial solvency, including, where appropriate, provision of a sufficient security or

guarantee; and

(d) supply chain security.

3. The specified criteria to qualify as an authorised operator shall not be designed or applied so

as to afford or create arbitrary or unjustifiable discrimination between operators where the same

conditions prevail and, to the extent possible, shall allow the participation of SMEs.

4. The trade facilitation measures provided pursuant to paragraph 1 of this Article shall include

at least three of the following measures:

(a) low documentary and data requirements, as appropriate;

(b) low rate of physical inspections and examinations, as appropriate;

& /en 85

(c) rapid release time, as appropriate;

(d) deferred payment of duties, taxes, fees, and charges;

(e) use of comprehensive guarantees or reduced guarantees;

(f) a single customs declaration for all imports or exports in a given period;

(g) clearance of goods at the premises of the authorised operator or another place authorised by

customs;

(h) prior notification in case of selection for physical or other customs control; and

(i) priority treatment if selected for control.

5. Each Party is encouraged to develop authorised operator schemes on the basis of international

standards, where such standards exist, except when such standards would be an inappropriate or

ineffective means for the fulfilment of the legitimate objectives pursued.

& /en 86

ARTICLE 4.12

Publication and availability of information

1. Each Party shall promptly publish the following information in a non-discriminatory and

easily accessible manner:

(a) relevant notices of an administrative nature;

(b) importation, exportation and transit procedures (including port, airport and other entry-point

procedures) and required forms and documents;

(c) applied rates of duties and taxes of any kind imposed on or in connection with importation or

exportation;

(d) fees and charges imposed by or for governmental agencies on or in connection with

importation, exportation or transit;

(e) rules for the classification or valuation of products for customs purposes;

(f) laws, regulations and administrative rulings of general application relating to rules of origin;

(g) import, export or transit restrictions or prohibitions;

& /en 87

(h) penalty provisions against breaches of import, export or transit formalities;

(i) appeal procedures;

(j) agreements or parts thereof with any country or countries relating to importation, exportation

or transit;

(k) procedures relating to the administration of tariff quotas; and

(l) hours of operation and operating procedures for customs offices at ports, airports and border

crossing points.

2. Each Party shall, to the extent possible, ensure there is a reasonable time period between the

publication of new or amended laws and regulations, customs procedures, or fees or charges, and

their respective entry into force.

3. Each Party shall make available online, and update to the extent possible and appropriate, the

following:

(a) a description of its importation, exportation and transit procedures, including appeal

procedures, informing of the practical steps needed for import and export, and for transit;

(b) the forms and documents required for importation into, exportation from, or transit through

the territory of that Party; and

& /en 88

(c) contact information on CEPA contact points.

ARTICLE 4.13

Enquiry points

Each Party shall within its available resources, establish or maintain one or more enquiry points to

answer, within a reasonable time, reasonable enquiries of the other Party, traders and other

interested parties on customs and other trade-related matters. The Parties shall not require the

payment of a fee for answering enquiries.

ARTICLE 4.14

Advance rulings

1. Each Party, through its customs authorities, shall issue advance rulings upon application by

economic operators setting out the treatment to be accorded to the goods concerned. Such rulings

shall be issued in writing or in electronic format within a reasonable period of time and shall

contain all necessary information in accordance with the laws and regulations of the issuing Party.

& /en 89

2. Advance rulings shall be valid for a period of at least three years from the date of issuance or

such other period as specified in the ruling, unless the ruling is no longer in accordance with the

issuing Party's laws and regulations, or the facts or circumstances supporting the original ruling

have changed.

3. A Party may refuse to issue an advance ruling if the question raised in the application is the

subject of an administrative or judicial review, or if the application does not relate to any intended

use of the advance ruling or any intended use of a customs procedure. If a Party declines to issue an

advance ruling, it shall notify the applicant in writing, setting out the relevant facts and the basis for

its decision.

4. Each Party shall publish, at least:

(a) the requirements for the application for an advance ruling, including the information to be

provided and the format;

(b) the time period by which it will issue an advance ruling; and

(c) the length of time for which the advance ruling is valid.

5. If a Party revokes, modifies, invalidates or annuls an advance ruling, it shall provide written

notice to the applicant setting out the relevant facts and the basis for its decision. A Party may only

revoke, modify, invalidate or annul an advance ruling with retroactive effect if the ruling was based

on incomplete, incorrect, false or misleading information.

& /en 90

6. An advance ruling issued by a Party shall be binding on that Party in respect of the applicant

that sought it. The advance ruling shall also be binding on the applicant.

7. Each Party shall provide, upon written request from the applicant, a review of the advance

ruling or of the decision to revoke, modify, invalidate or annul it.

8. Each Party shall, to the extent practicable, make publicly available information on advance

rulings which it considers to be of significant interest to other interested parties, taking into account

the need to protect personal and commercially confidential information.

9. Advance rulings shall be issued in accordance with the laws and regulations of the issuing

Party, and with regard to:

(a) the tariff classification of goods;

(b) the origin of goods; and

(c) any other matter the Parties may agree upon.

& /en 91

ARTICLE 4.15

Fees and charges

The following requirements shall apply in conjunction with the requirements of Article 2.7:

(a) the Parties' customs authorities shall not impose fees and charges for the performance of

customs controls or any other application of their customs laws and regulations during the

official opening hours of their competent customs offices; or

(b) the Parties' customs authorities may impose fees and charges or recover costs where specific

services are rendered, as provided in the relevant Party's laws and regulations and procedures.

ARTICLE 4.16

Customs brokers

A Party shall not require the mandatory use of customs brokers. Each Party shall notify and publish

its measures on the use of customs brokers. Each Party shall apply transparent, non-discriminatory

and proportionate rules if and when licensing customs brokers.

& /en 92

ARTICLE 4.17

Customs valuation

Each Party shall determine the customs value of goods of the other Party imported into its territory

in accordance with Article VII of the GATT 1994 and the Customs Valuation Agreement. To this

end, Article VII of the GATT 1994, including its Notes and Supplementary Provisions, and

Articles 1 to 17 of the Customs Valuation Agreement, including its Interpretative Notes, are

incorporated into and made part of this Agreement, mutatis mutandis.

ARTICLE 4.18

Preshipment inspections

A Party shall not require the mandatory use of preshipment inspections as defined in the Agreement

on Preshipment Inspection, contained in Annex 1A to the WTO Agreement, or any other inspection

activity performed at destination, before customs clearance, by private companies.1

1 This Article is without prejudice to inspections carried out pursuant to provisions and

procedures other than customs under the Agreement on Preshipment Inspection, contained in

Annex 1A to the WTO Agreement.

& /en 93

ARTICLE 4.19

Review and appeal

1. Each Party shall, in accordance with its laws and regulations, provide effective, prompt, non-

discriminatory and easily accessible procedures to guarantee the right of review and appeal against

administrative actions, rulings and decisions of customs authorities.

2. Each Party shall ensure that any person with respect to whom it takes an administrative action

or issues a ruling or decision, as applicable, has the right, within that Party's territory, to:

(a) an administrative appeal to or review by an administrative authority higher than or

independent of the official or office that took the administrative action or issued the ruling or

decision;

(b) a judicial appeal or review of the decision, administrative action, ruling or decision.

3. The laws and regulations of a Party may require that an administrative appeal or review be

initiated prior to a judicial appeal or review.

4. Each Party shall ensure that its procedures for an administrative or judicial appeal or review

are carried out in a non-discriminatory manner.

& /en 94

5. Each Party shall ensure that, in cases where the decision on administrative appeal or review

pursuant to point (a) of paragraph 2 is not issued within the period of time provided for in its laws

or regulations or not issued without undue delay, the petitioner has the right to further

administrative or judicial appeal or review or any other recourse to the judicial authority in

accordance with the laws and regulations of that Party.

6. Each Party shall ensure that the person referred to in paragraph 2 is provided with the reasons

for the administrative action, ruling or decision, as applicable, so as to enable that person to have

recourse to procedures for appeal or review where necessary.

ARTICLE 4.20

Relations with the business community

1. Each Party shall, to the extent possible and in accordance with its laws and regulations,

provide for regular consultations between its administration and the business community on

legislative proposals and general procedures related to customs and trade facilitation issues.

2. Each Party shall ensure that its respective customs and related requirements and procedures

continue to meet the needs of the business community, follow best practices, and remain as least

trade-restrictive as possible.

& /en 95

ARTICLE 4.21

Temporary admission

1. For the purposes of this Chapter, the term "temporary admission" means the customs

procedure under which certain goods, including means of transport, can be brought into the territory

of a Party with conditional relief from payment of import duties and taxes and without application

of import prohibitions or restrictions of an economic character, provided that the goods are

imported for a specific purpose and intended for re-exportation within a specified period without

having undergone any change, except normal depreciation, due to the use made of them in the

territory of the Party into which they are brought.

2. Each Party shall grant temporary admission, as provided for in paragraph 1, among others, to

the following goods:

(a) goods for display or use at exhibitions, fairs, meetings or similar events;

(b) professional equipment;

(c) containers, pallets, packings, samples and other goods imported in connection with a

commercial operation;

(d) goods imported in connection with a manufacturing operation;

& /en 96

(e) goods imported for educational, scientific or cultural purposes;

(f) travellers' personal effects and goods imported for sports purposes;

(g) tourist publicity material;

(h) goods imported for humanitarian purposes;

(i) means of transport; and

(j) animals imported for specific purposes.

ARTICLE 4.22

Committee on Trade in Goods, Customs matters, and Sanitary and Phytosanitary matters

in its specific configuration for Chapters 3 (Rules of Origin and Origin Procedures),

4 (Customs and Trade Facilitation), and 12 (Intellectual Property)

1. This Article complements and further specifies Article 24.4.

& /en 97

2. The Committee on Trade in Goods, on Customs matters, and on Sanitary and Phytosanitary

matters in its specific configuration for Chapters 3 (Rules of Origin and Origin Procedures), 4

(Customs and Trade Facilitation), and 12 (Intellectual Property) for issues related to border

enforcement established pursuant to Article 24.4 (hereinafter referred to as the "Committee" for the

purposes of this Chapter) shall consist of representatives of the customs and other competent

authorities of the Parties. The Committee shall ensure the proper functioning of this Chapter, the

enforcement of Intellectual Property Rights by Customs in Section D (Border Enforcement) of

Chapter 12 (Intellectual Property), Chapter 3 (Rules of Origin and Origin Procedures), the Protocol

on Mutual Administrative Assistance in Customs Matters and any additional customs-related

provisions agreed between the Parties, and examine all issues arising from their application.

2. The functions of the Committee shall include:

(a) monitoring the implementation and administration of this Chapter and of Chapter 3 (Rules of

Origin and Origin Procedures);

(b) providing a forum to consult and discuss all issues concerning customs, including in particular

customs procedures, customs valuation, tariff regimes, customs nomenclature, customs

cooperation and mutual administrative assistance in customs matters and also relating to rules

of origin and administrative cooperation; and

& /en 98

(c) enhancing cooperation on the development, application and enforcement of customs

procedures, mutual administrative assistance in customs matters, rules of origin and

administrative cooperation.

3. The Committee may adopt decisions in relation to the areas referred to in point (a) of

Article 4.4(1), including, where it considers it necessary, for the purposes of implementing points

(e) and (f) of paragraph 1 of that Article.

4. Parties may agree to hold ad hoc meetings of the Committee for the purposes of customs

cooperation, rules of origin or mutual administrative assistance.

& /en 99

CHAPTER 5

TRADE REMEDIES

SECTION A

ANTI-DUMPING AND COUNTERVAILING MEASURES

ARTICLE 5.1

General provisions

1. The Parties affirm their rights and obligations under Article VI of GATT 1994, the Anti-

Dumping Agreement, and the SCM Agreement. The anti-dumping and countervailing measures

shall be used in full compliance with all relevant WTO requirements and shall be based on a fair

and transparent system in full respect of the Parties' interests and rights of defence.

2. For the purposes of this Section, the preferential rules of origin under Chapter 3 (Rules of

Origin and Origin Procedures) shall not apply to anti-dumping and countervailing measures.

& /en 100

ARTICLE 5.2

Notification and consultation

1. Upon receipt by a Party's investigating authority of a properly documented anti-dumping

application with respect to imports from the other Party and to the extent possible at least seven

days before initiating an anti-dumping investigation, the Party shall provide written notification to

the other Party of its receipt of the application.

2. Upon receipt by a Party's investigating authority of a properly documented countervailing

application with respect to imports from other Party, and before initiating an investigation, the Party

shall provide written notification to the other Party of its receipt of the application. That notification

shall normally take place at least 14 days before the date of initiation and include an invitation for

consultations on the application.

3. If as part of their investigation with respect to imports from the other Party, the investigating

authority of a Party determines to conduct an on-site verification of information provided by the

respondent1, they shall endeavour to notify that respondent as soon as possible.

1 For the purposes of this paragraph, "respondent" means a producer, manufacturer, exporter,

importer, and, where appropriate, a government or government entity of a Party, that is

required by the other Party's investigating authority to respond to an anti-dumping or

countervailing measures questionnaire.

& /en 101

4. Without prejudice to Article 6.5 of the Anti-Dumping Agreement and Article 12.4 of the

SCM Agreement, the Parties shall ensure, immediately after any imposition of provisional measures

and in any case before a final determination is made, full and meaningful disclosure to interested

parties of all essential facts and considerations which form the basis for applying measures. Those

disclosures shall be made in writing and allow interested parties sufficient time to make their

comments.

5. The Parties affirm their rights and obligations under Annex II of the Anti-Dumping

Agreement and in particular its paragraph 5, and under Articles 12.7 and 12.8 of the SCM

Agreement. If an investigating authority of a Party intends to make the determination on the basis of

the facts available pursuant to Article 6.8 of the Anti-Dumping Agreement or Article 12.7 of the

SCM Agreement, it shall provide a reasoned and adequate explanation:

(a) that indicates the conditions under which the facts available can be used;

(b) of the information which an interested party has failed to submit to the investigating authority;

and

(c) of the facts with which the investigating authority decided to replace the information referred

to in point (b).

& /en 102

ARTICLE 5.3

Investigation after termination

1. If an anti-dumping investigation in respect of goods from the other Party is terminated with a

negative final determination, an investigation shall not be initiated on the same goods by the

importing Party within 12 months from the date of termination of the previous investigation.

2. Each Party shall avoid initiating an anti-dumping investigation on a good originating in the

other Party on which anti-dumping measures have been terminated within the previous 12 months

as a result of a review.

3. Notwithstanding paragraphs 1 and 2, the investigation authority of the importing Party may

initiate an investigation if the circumstances relevant to the initiation of the previous investigation

have changed.

& /en 103

ARTICLE 5.4

Review

An expiry review under Article 11.3 of the Anti-Dumping Agreement shall be initiated at an

appropriate time during the final year of the period of application of the anti-dumping duties as

defined in each Party's laws and regulations. Each Party shall endeavour to provide special

consultations on issues arising from a subsequent expiry review investigation and to avoid applying

the perpetual imposition of anti-dumping and countervailing measures.

ARTICLE 5.5

Consideration of public interest

The investigating authority of a Party shall, in accordance with its laws and regulations, provide

opportunities for all domestic interested parties to submit their views in writing with regard to an

anti-dumping and countervailing investigation. That investigating authority or other relevant

competent public authorities of the Party shall take into account this information in its assessment

of the public interest before imposing an anti-dumping or countervailing duty.

& /en 104

ARTICLE 5.6

Lesser duty rule

An anti-dumping or countervailing duty imposed by a Party shall not exceed the margin of dumping

or countervailable subsidy, and that Party shall endeavour to ensure that the amount of this duty is

less than that margin if such lesser duty would be adequate to remove the injury to the domestic

industry.

ARTICLE 5.7

Anti-circumvention

1. The investigating authority of a Party shall carry out anti-circumvention investigations in a

transparent way and respect the interests and rights of defence of all interested parties concerned by

the investigation.

2. The investigating authority conducting an anti-circumvention investigation shall, upon request

from the other Party, provide it with non-confidential information regarding the companies under

investigation.

& /en 105

3. In any proceeding in which a Party determines to conduct an on-site verification on the

territory of the other Party, it shall notify the investigated company at least 14 working days in

advance of the inspection. The other Party's relevant authorities may participate in the on-site

verification.

4. The Party conducting an anti-circumvention investigation shall, before a final determination is

made, inform all interested parties on the territory of the other Party of the essential facts under

consideration, which form the basis for the assessment of whether to extend the measures or to

grant an exemption. All interested parties shall be provided with an adequate opportunity to

comment on such assessment. Such disclosure of essential facts should take place within a

reasonable period of time for the interested parties to defend their interests. Interested parties may

also apply to be heard.

5. An anti-circumvention investigation shall be completed within nine months of its date of

initiation.

ARTICLE 5.8

Non-application of dispute settlement

Chapter 22 (Dispute Settlement) does not apply to this Section.

& /en 106

ARTICLE 5.9

Cooperation on trade remedies matters

1. The Parties shall cooperate in the form of a best practice dialogue on trade remedies between

the representatives of their respective authorities responsible for trade remedies at the appropriate

level.

2. The purpose of this cooperation shall be, to the extent possible, to:

(a) enhance the Parties' knowledge and understanding of each other Party's trade remedy laws,

policies and practices;

(b) oversee the implementation of this Chapter;

(c) improve cooperation between the Parties' relevant trade remedies authorities;

(d) exchange information to the extent possible on issues relating to anti-dumping, subsidies and

countervailing investigations and measures and to discuss other relevant topics of mutual

interest as the Parties agree;

(e) develop capacity building programmes and specific training related to trade remedies laws

and practices; and

& /en 107

(f) enhance the Parties' knowledge and understanding of anti-circumvention in the

implementation of anti-dumping and countervailing measures.

3. The best practice dialogue shall be conducted, as requested by either Party and when

necessary.

ARTICLE 5.10

Use of the English language

In order to ensure maximum efficiency in the application of the trade remedies rules under this

Section, the investigating authorities of the Parties should use the English language for

communications1 in the context of trade remedies investigations between the Parties.

1 For the purposes of this Article, "communications" means questionnaire replies, written

submissions, and letters.

& /en 108

SECTION B

GLOBAL SAFEGUARD MEASURES

ARTICLE 5.11

General provisions

1. The Parties affirm their rights and obligations under Article XIX of GATT 1994, the

Safeguards Agreement and Article 5 of the Agreement on Agriculture.

2. A Party shall not apply with respect to the same good at the same time:

(a) a bilateral safeguard measure under Section C (Bilateral Safeguard Clause) of this Chapter;

and

(b) a measure under Article XIX of GATT 1994 and the Safeguards Agreement.

& /en 109

ARTICLE 5.12

Transparency

1. Without prejudice to Article 3.2 of the Safeguards Agreement, a Party shall at the request of

the other Party and provided that it has a substantial interest, promptly notify and provide to the

other Party all pertinent information upon:

(a) the initiation of an investigation;

(b) any preliminary determination; and

(c) making a final finding.

2. When imposing global safeguard measures, the Parties shall endeavour to impose them in a

way that least affects bilateral trade.

3. For the purposes of paragraph 2, if a Party considers that the legal requirements for the

imposition of definitive safeguard measures are met, it shall notify the other Party and give the

possibility to hold consultations. If a satisfactory solution has not been reached within 30 days of

the notification, the Party may adopt the definitive global safeguard measures.

& /en 110

ARTICLE 5.13

Non-application of dispute settlement

Chapter 22 (Dispute Settlement) does not apply to this Section.

ARTICLE 5.14

Use of the English language

In order to ensure maximum efficiency in the application of the trade remedies rules under this

Section, the investigating authorities of the Parties should use the English language for

communications1 in the context of trade remedies investigations between the Parties.

1 For the purposes of this Article, "communications" mean written submissions and letters.

& /en 111

SECTION C

BILATERAL SAFEGUARD CLAUSE

ARTICLE 5.15

Definitions

For the purposes of this Section:

(a) "domestic industry" shall be understood in accordance with Article 4.1(c) of the Agreement

on Safeguards; to this end, Article 4.1(c) is incorporated into and made part of this

Agreement, mutatis mutandis;

(b) "serious injury" and "threat of serious injury" shall be understood in accordance with

Article 4.1(a) and (b) of the Agreement on Safeguards; to this end, Article 4.1(a) and (b) is

incorporated into and made part of this Agreement, mutatis mutandis; and

(c) "transition period" means a period of 10 years from the date of entry into force of this

Agreement for products being liberalised in less than 10 years; for all products being

liberalised in 10 years or more, the transition period shall be the liberalisation period plus

three years.

& /en 112

ARTICLE 5.16

Application of a bilateral safeguard measure

1. During the transition period, the importing Party may apply the measures provided for in

paragraph 2 in accordance with the conditions and procedures laid down in this Section, except as

otherwise provided under point (c) of Article 5.17(5) if, as a result of the reduction or elimination of

a customs duty under this Agreement, any good originating in the territory of the other Party is

being imported into its territory in such increased quantities, in absolute terms or relative to

domestic production, and under such conditions as to cause or threaten to cause serious injury to its

domestic industry producing like or directly competitive goods.

2. The importing Party may apply a bilateral safeguard measure which:

(a) suspends further reduction of the rate of customs duty on the good concerned provided for

under Chapter 2 (National Treatment and Market Access for Goods); or

(b) increases the rate of customs duty on the good to a level which does not exceed the lesser of:

(i) the most-favoured-nation applied rate of customs duty on the good in effect at the time

the measure is taken; or

(ii) the base rate of customs duty specified in the Schedules included in Annex 2-A

(Elimination of Customs Duties) pursuant to Article 2.5.

& /en 113

ARTICLE 5.17

Conditions and limitations

1. A Party shall notify the other Party in writing of the initiation of an investigation described in

paragraph 2 and consult with the other Party before applying a bilateral safeguard measure, with a

view to reviewing the information arising from the investigation and exchanging views on the

measure.

2. A Party shall apply a bilateral safeguard measure only following an investigation by its

investigating authorities in accordance with Articles 3 and 4.2(c) of the Safeguards Agreement.

Articles 3 and 4.2(c) of the Safeguards Agreement shall apply, mutatis mutandis.

3. In carrying out an investigation pursuant to paragraph 2, the Party shall comply with the

requirements of Article 4.2(a) of the Safeguards Agreement, which to this end, shall apply, mutatis

mutandis.

4. Each Party shall ensure that its investigating authorities complete any such investigation

within one year of its date of initiation.

5. A Party shall not apply a bilateral safeguard measure:

(a) except to the extent, and for such time, as may be necessary to prevent or remedy serious

injury and to facilitate adjustment;

& /en 114

(b) for a period exceeding three years, which may be extended by up to two years, if the

investigating authorities of the importing Party determine, in conformity with the procedures

specified in this Article, that the bilateral safeguard measure continues to be necessary to

prevent or remedy serious injury and to facilitate adjustment and if there is evidence that the

industry is adjusting, provided that the total period of application of a bilateral safeguard

measure, including the period of initial application and any extension thereof, shall not exceed

five years; and

(c) beyond the expiration of the transition period, except with the consent of the other Party.

6. In order to facilitate adjustment in a situation where the expected duration of a bilateral

safeguard measure is more than three years, the Party applying the measure shall progressively

liberalise it at regular intervals during the period of application.

7. If a Party terminates a bilateral safeguard measure, the rate of customs duty shall be the rate

that, according to its Schedule included in Annex 2-A (Elimination of Customs Duties), would have

been in effect in the absence of the measure.

& /en 115

ARTICLE 5.18

Provisional measures

1. In critical circumstances where a delay would cause damage that would be difficult to repair,

a Party may apply a bilateral safeguard measure on a provisional basis on the basis of a preliminary

determination that there is clear evidence that imports of an originating good from the other Party

have increased as the result of the reduction or elimination of a customs duty under this Agreement,

and such imports cause serious injury, or threat thereof, to the domestic industry.

2. The duration of any provisional measure shall not exceed 200 days, during which time the

Party applying the measure shall publish its preliminary determination and comply with the

requirements of Article 5.17(3).

3. The Party applying the measure shall promptly refund any tariff increases it has applied, if the

investigation described in Article 5.17(2) does not result in a determination that the requirements of

Article 5.16(1) are met.

4. The duration of any provisional measure shall be counted as part of the period prescribed by

point (b) of Article 5.17(5).

& /en 116

ARTICLE 5.19

Compensation

1. A Party applying a bilateral safeguard measure shall consult with the other Party in order to

mutually agree on appropriate trade liberalising compensation in the form of concessions having

substantially equivalent trade effects or equivalent to the value of the additional duties expected to

result from the bilateral safeguard measure. The Party applying a bilateral safeguard measure shall

provide an opportunity for such consultations no later than 30 days after the application of the

bilateral safeguard measure.

2. If the consultations pursuant to paragraph 1 do not result in an agreement on trade liberalising

compensation within 30 days after the consultations begin, the Party whose goods are subject to the

safeguard measure may suspend the application of concessions with substantially equivalent trade

effects to the safeguard measure with respect to originating goods of the Party applying a bilateral

safeguard measure. The applying Party's obligation to provide compensation and the other Party's

right to suspend concessions pursuant to this paragraph shall terminate on the date the safeguard

measure terminates.

3. The right of suspension pursuant to paragraph 2 shall not be exercised for the first 36 months

during which a bilateral safeguard measure is in effect, provided that the safeguard measure

complies with the provisions of this Agreement.

& /en 117

ARTICLE 5.20

Use of the English language

In order to ensure maximum efficiency in the application of the trade remedies rules under this

Section, the investigating authorities of the Parties should use the English language for

communications1 in the context of trade remedies investigations between the Parties.

CHAPTER 6

SANITARY AND PHYTOSANITARY MEASURES

ARTICLE 6.1

Objectives

The objectives of this Chapter are to:

(a) further the implementation of the principles and disciplines contained within the SPS

Agreement and applicable international standards, guidelines and recommendations as

developed by relevant international organisations;

1 For the purposes of this Article, "communications" means written submissions and letters.

& /en 118

(b) protect human, animal or plant life or health in the territory of each Party while facilitating

trade between the Parties and to ensure that sanitary and phytosanitary (hereinafter referred to

as "SPS") measures imposed by each Party do not create unjustified barriers to trade;

(c) strengthen communication, cooperation and resolution on SPS issues that may affect trade

between the Parties and other agreed matters of interest to the Parties;

(d) promote greater transparency and understanding of the application of each Party's SPS

measures; and

(e) enhance collaboration between the Parties on animal welfare issues and antimicrobial

resistance.

ARTICLE 6.2

Scope

1. This Chapter applies to all SPS measures of a Party that may, directly or indirectly, affect

trade between the Parties.

2. This Chapter includes collaboration activities on animal welfare and antimicrobial resistance.

& /en 119

3. This Chapter does not affect the rights of the Parties under the TBT Agreement with respect

to measures that are not within the scope of this Chapter.

ARTICLE 6.3

Definitions

1. For the purposes of this Chapter:

(a) the definitions contained in Annex A of the SPS Agreement shall apply;

(b) "competent authorities" means those organisations recognised by each Party as responsible for

developing, implementing and administering the SPS measures within its territory;

(c) "import conditions" means any SPS measures as set out in Annex A of the SPS Agreement

with which imports must comply to reach the appropriate level of protection of the importing

Party; and

(d) "protected zone" means, for a specific regulated pest, an officially defined geographical area

in the Union in which that organism is not established in spite of favourable conditions and its

presence in other parts of the territory of the Union.

& /en 120

2. The Parties may agree on other definitions for the application of this Chapter, taking into

consideration the glossaries and definitions of relevant international organisations, such as the

Codex Alimentarius, the World Organisation for Animal Health (hereinafter referred to as

"WOAH"), and the International Plant Protection Convention (hereinafter referred to as "IPPC"). If

there is an inconsistency between the definitions agreed by the Parties and the definitions set out in

the SPS Agreement, the definitions set out in the SPS Agreement shall prevail.

ARTICLE 6.4

General provisions

1. The Parties affirm their rights and obligations relating to SPS measures under the SPS

Agreement.

2. Each Party shall ensure that the principles of the SPS Agreement apply in the development,

application or recognition of any SPS measure with the aim of facilitating trade between the Parties

while protecting human, animal or plant life or health in the territory of each Party.

3. SPS measures shall not be used to create unjustified barriers to trade.

& /en 121

4. The Parties shall ensure that procedures that fall within the scope of this Chapter are

undertaken and completed without undue delay and that they are not applied in a manner which

would constitute a means of arbitrary or unjustifiable discrimination against the other Party where

the same conditions prevail.

5. The Parties shall not use the procedures referred to in paragraph 4 or requests for additional

information to delay access to their markets without scientific or technical justification.

ARTICLE 6.5

Competent authorities and contact points

1. As of the date of entry into force of this Agreement, the Parties shall provide each other with a

description of the competent authorities for the implementation of this Chapter and a contact point

for communication on all matters covered by this Chapter.

2. The Parties shall inform each other of any significant changes in the structure, organisation

and division of competences of their competent authorities and ensure that the information on

contact points is kept up to date.

& /en 122

ARTICLE 6.6

Import conditions and procedures and trade facilitation

1. Each Party shall apply its import conditions and procedures to the entire territory of the

exporting Party.

2. The importing Party shall:

(a) give consideration to any request of the exporting Party for a review of the import conditions

and procedures existing between the Parties on the date of entry into force of this Agreement;

and

(b) ensure full transparency of its import conditions and procedures and the frequency of import

checks carried out on products from the other Party.

3. Each Party shall ensure that import conditions and procedures on food safety, animal health

and plant health are not more burdensome or trade restrictive than necessary. These import

conditions and procedures shall be established with the objective of minimising negative trade

effects and of simplifying and expediting the clearance process while meeting the importing Party's

requirements.

& /en 123

4. With respect to any import conditions and procedures, to check and ensure the fulfilment of

SPS measures, including approval and clearance processes, each Party shall ensure that:

(a) such import conditions and procedures are simplified, expedited and completed without undue

delay, in accordance with the SPS Agreement;

(b) such import conditions and procedures are not applied in a manner which would constitute an

arbitrary or unjustifiable discrimination against the other Party;

(c) the standard processing period of each import condition and procedure is published or the

anticipated processing period is communicated to the applicant upon request; and

(d) information requirements are limited to what is necessary for appropriate control, inspection

and approval procedures, including for the approval of the use of additives or for the

establishment of tolerances for contaminants in food, beverages or feedstuffs.

5. In accordance with applicable International Standard for Phytosanitary Measures (hereinafter

referred to as "ISPM") agreed under the IPPC, each Party shall maintain adequate information on

their pest status, including surveillance, eradication and containment programmes and their results,

in order to support the categorisation of pests and to justify establishing or maintaining import

phytosanitary measures.

& /en 124

6. Each Party shall establish lists of regulated pests and regulated products where a

phytosanitary concern exists. The lists shall contain:

(a) the pests not known to occur within any part of the Party's own territory;

(b) the pests known to occur within any part of the Party's own territory and under official

control; and

(c) the pests known to occur within any part of the Party's own territory, under official control

and for which pest-free areas are established.

7. A Party may establish a list of plants considered to be of high phytosanitary risk for its

territory on the basis of a preliminary risk assessment and may require that the import of such plants

shall be subject to an approval procedure based on a pest risk assessment carried out in accordance

with the relevant ISPM. Any preliminary risk assessment shall take into account available scientific

and technical information as well as the intended use of the plant under consideration.

8. Each Party shall make available to the other Party its lists of regulated pests, regulated

products and the phytosanitary import requirements for all regulated products and articles. This

information shall include, as appropriate, the additional declarations as required by the importing

Party.

& /en 125

9. Where a range of alternative SPS measures may be available to attain the appropriate level of

protection of the importing Party, the importing Party shall, upon request of the exporting Party,

consider selecting the more practicable and less trade-restrictive solution.

10. Where official SPS certificates are required, these shall be agreed between the Parties and

shall be established in line with the principles laid down in the international standards, guidelines or

recommendations of Codex Alimentarius, the WOAH and the IPPC. The importing Party shall not

put in place any additional procedure that unnecessarily hampers trade or duplicates the official

certificate.

11. Each Party shall promote the implementation of electronic certification and other technologies

to facilitate trade. Consignments of products subject to SPS provisions shall be accepted by the

importing Party on the basis of adequate guarantees by the exporting Party, without:

(a) pre-clearance programmes; or

(b) phytosanitary protocols or work plans required by the importing Party.

Having regard to point (a), control activities in the country of origin performed by the National

Plant Protection Organisation (hereinafter referred to as "NPPO") of the country of destination

should not be applied as a permanent import measure and shall only be carried out to facilitate new

trade. On a voluntary basis, the NPPO of the country of origin may request pre-clearance within the

inspection activities carried out by the importing Party as part of an audit carried out by the

importing Party pursuant to Article 6.7.

& /en 126

12. For greater certainty, the Parties shall not make the importation of products conditional on

issuing import permits or import licenses laying down SPS requirements other than those laid down

in the applicable certification or import conditions and procedures for the products concerned. Each

Party shall grant import permits or import licenses in a non-discretionary manner.

13. The exporting Party shall ensure that products exported to the importing Party meet the

appropriate level of protection of the importing Party. The responsibility for the implementation of

adequate control measures and inspections lies with the exporting Party. The importing Party may

require that the relevant competent authority of the exporting Party objectively demonstrates, to the

satisfaction of the importing Party, that the import conditions and procedures are fulfilled.

14. The importing Party shall have the right to carry out import checks based on the SPS risks

associated with importations. These checks shall be carried out without undue delay and with

minimum trade disrupting effects. When products do not conform to the requirements of the

importing Party, any action taken by the importing Party shall follow international standards and

should be proportionate to the risk involved.

15. Any fees imposed for procedures on imported products from the exporting Party, including

fees for desk evaluations of export applications, shall be equitable in relation to any fees charged on

like domestic products and shall not be higher than the actual cost of the service.

& /en 127

ARTICLE 6.7

Audit

1. In order to attain and maintain confidence in the effective implementation of the provisions of

this Chapter, the importing Party, within the scope of this Chapter, has the right to carry out audits,

including:

(a) of all or part of the exporting Party's control and certification system, in accordance with the

relevant international standards, guidelines and recommendations of the Codex Alimentarius,

WOAH and IPPC; and

(b) by requiring information from the exporting Party about its control and certification system

and by being informed of the results of the controls carried out thereunder.

Pursuant to point (a), the importing Party shall have the right to conduct audit visits to the exporting

Party.

2. For the purposes of the carrying out of an audit pursuant to paragraph 1, the exporting Party

shall give reasonable access to the importing Party for inspection, verification, testing, and other

relevant procedures.

3. Each Party shall provide the other Party with the results and conclusions of the audit visit

carried out in the territory of the other Party.

& /en 128

4. If the importing Party decides to carry out an audit visit to the exporting Party pursuant to

paragraph 1, the importing Party shall notify the exporting Party of this audit visit at least 60 days

before the audit visit is to be carried out, unless otherwise agreed by the Parties. Any change

regarding the arrangements for such an audit visit shall be agreed by the Parties.

5. The draft report of an audit pursuant to paragraph 1 shall be shared with the exporting Party

within 60 days of the completion of that audit. The exporting Party shall have 30 days to comment

on the draft report. Any comments made by the exporting Party shall be attached to and, where

appropriate, included in the final report. If a significant public, animal or plant health risk has been

identified during an audit visit by the importing Party, it shall inform the exporting Party as soon as

possible and in any case not later than 15 days after the end of an audit.

6. The costs incurred in carrying out an audit pursuant to paragraph 1 shall be borne by the

importing Party.

ARTICLE 6.8

Procedure for the listing of establishments or facilities

1. Where an importing Party requires the listing of establishments or facilities, it shall approve

establishments or facilities situated in the territory of the exporting Party without prior inspection if:

(a) the exporting Party has requested such an approval for a given establishment or facility;

& /en 129

(b) the import of products has been authorised, if so required by the competent authority of the

importing Party;

(c) the establishment or facility concerned has been approved by the competent authority of the

exporting Party;

(d) the competent authority of the exporting Party has the authority to suspend or withdraw the

approval of the establishment or facility; and

(e) the exporting Party has provided any relevant information and appropriate guarantees

requested by the importing Party.

Unless it requests additional information on a given establishment or facility of the exporting Party,

the importing Party shall take the necessary legislative or administrative measures in accordance

with its applicable legal procedures to allow imports of the products of that establishment or facility

within 60 days of the receipt of the request for approval referred to in point (a) of paragraph 1. If the

importing Party rejects that request, it shall inform the exporting Party without delay of the reasons

upon which the decision was based.

2. The importing Party shall make its lists of approved establishments or facilities publicly

available.

& /en 130

ARTICLE 6.9

Adaptation to regional conditions

1. For animals, animal products and animal by-products:

(a) the Parties acknowledge the official animal health status as determined by the WOAH and

also recognise the principles of zoning and compartmentalisation which they agree to apply in

trade between them;

(b) the importing Party shall decide whether to recognise the health status applied by the

exporting Party in accordance with the provisions of the WOAH Terrestrial Animal Health

Code and the WOAH Aquatic Animal Health Code;

(c) the exporting Party shall identify and communicate disease-free areas or areas of low-disease

prevalence within its territory to the importing Party and shall, if requested by the importing

Party, provide the necessary evidence thereof, including a thorough explanation and

supporting data; the importing Party shall assess this information within 30 days of its receipt;

(d) any audit the importing Party may require shall be carried out in accordance with Article 6.7;

if the importing Party requires an audit, it shall be carried out within 30 days following the

receipt of the request for the audit, unless otherwise agreed between the Parties;

& /en 131

(e) if the importing party requires additional information pursuant to point (c) or an audit

pursuant to point (d), the overall procedures including the decisions shall be finalised within

180 days, unless otherwise agreed between the Parties; and

(f) the Committee on Trade in Goods, Customs matters, and Sanitary and Phytosanitary matters

in its specific configuration for Chapter 6 (Sanitary and Phytosanitary measures) (hereinafter

referred to as the "Committee" for the purposes of this Chapter) may provide guidance on the

procedure for the mutual recognition of such areas as referred to in paragraph 1, taking into

account the SPS Agreement and WOAH standards, guidelines or recommendations; such

guidance may include situations related to outbreaks of diseases.

2. For plants and plant products, the importing Party shall acknowledge the determination of

phytosanitary status made by the exporting Party as follows:

(a) the Parties recognise the concepts of pest-free areas, pest-free places of production and pest-

free production sites, as well as areas of low pest prevalence as specified in relevant ISPM of

the IPPC and of protected zones which they agree to apply in trade between them;

(b) when establishing or maintaining phytosanitary measures, the importing Party shall take into

account pest-free areas, pest-free places of production, pest-free production sites, areas of low

pest prevalence, as well as protected zones established by the exporting Party;

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(c) the exporting Party shall identify and communicate pest-free areas, pest-free places of

production, pest-free production sites, areas of low pest prevalence or protected zones to the

importing Party and, upon request of the importing Party, provide additional information,

including a full explanation and supporting data as provided for in the relevant ISPM or as

deemed appropriate by the importing Party; unless the importing Party requests consultations

within 120 days of the notification of that request, a regionalisation decision on pest-free

areas, pest-free places of production, pest-free production sites, areas of low pest prevalence

or protected zone which is notified to the exporting Party shall be deemed to be accepted by

the importing Party;

(d) if additional information is required pursuant to point (c), the importing Party shall assess this

additional information requested within 120 days after the date of its receipt; and

(e) any verification the importing Party may request shall be carried out in accordance with

Article 6.7 and within three months following receipt of the request for verification unless

otherwise agreed between the Parties, taking into account the biology of the pest and the crop

concerned; if the importing Party requests such verifications, the deadline for assessing

additional information shall be interrupted.

3. If a Party considers that it has a special status with respect to any other disease which are not

covered by paragraphs 1 and 2, it may request recognition of this status.

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ARTICLE 6.10

Transparency and exchange of information

1. The Parties shall:

(a) ensure transparency as regards SPS measures applicable to trade between them;

(b) enhance mutual understanding of each Party's SPS measures and their application;

(c) exchange information on matters related to the development and application of SPS measures,

including progress on newly available scientific evidence, that affect, or may affect, trade

between them, with a view to minimising negative trade effects;

(d) upon request of a Party, communicate the requirements that apply to the import of specific

products within 15 working days; and

(e) upon request of a Party, communicate the progress of the procedure for the authorisation of

specific products within 15 working days.

2. Each Party shall notify the other Party in writing within two working days of any serious or

significant human, animal or plant life or health risk, including any food emergencies, affecting

products for which trade takes place between the Parties.

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3. Where the information referred to in this Article has been made available by notification to

the WTO in accordance with the relevant rules or by publication on the official, publicly accessible

and fee-free websites of the Parties, the addresses of which are communicated to the other Party, the

information exchange shall be considered to have taken place.

4. All notifications under this Chapter shall be made to the contact points referred to in

Article 6.5.

ARTICLE 6.11

Technical consultations

1. Where a Party has significant concerns regarding human, animal, or plant life or health in the

other Party or concerns about SPS measures proposed or implemented by the other Party, it may

request technical consultations.

2. The Party that receives the request shall:

(a) respond to such a request no later than 30 days after its receipt, unless otherwise agreed by the

Parties;

(b) engage in technical consultations to address those concerns; and

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(c) make every effort to reach a mutually acceptable resolution of the concerns referred to in

paragraph 1.

3. Each Party shall endeavour to provide the necessary information to avoid a disruption in trade

between them and to reach a mutually acceptable resolution of the concerns referred to in

paragraph 1.

4. Where the Parties have established communication mechanisms that may be used for the

purposes of carrying out technical consultations, they shall utilise them to the extent possible in

order to avoid unnecessary duplication, without prejudice to communications between the contact

points established in Article 6.5.

5. The provisions of this Article do not preclude the Committee from considering the concerns

referred to in paragraph 1.

6. Technical consultations pursuant to this Article shall not replace consultations pursuant to

Article 22.4 or dialogues under Chapter 21 (Bilateral Dialogue Mechanism), unless the Parties

agree otherwise.

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ARTICLE 6.12

Emergency measures

1. A Party may adopt emergency measures that are necessary for the protection of human,

animal or plant life or health. If a Party adopts such an emergency measure, the competent authority

of that Party shall:

(a) immediately, and in any case within 24 hours, notify the competent authorities of the other

Party and the contact point designated in accordance with Article 6.5 of the adoption of that

emergency measure;

(b) allow the other Party to make comments in writing;

(c) engage, if necessary, in technical consultations as referred to in Article 6.11; and

(d) take into account the comments referred to in point (b) and the results of technical

consultations referred to in point (c).

2. In order to avoid unnecessary disruptions to trade, the importing Party shall consider

information provided in a timely manner by the exporting Party when making decisions with

respect to consignments that, at the time of adoption of emergency measures, are being transported

between the Parties.

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3. The importing Party shall ensure that any emergency measure taken pursuant to paragraph 1

is not maintained without scientific evidence. It shall review the measure with a view to avoiding

unnecessary disruption to trade, to minimising its negative effect or to replace it by a permanent

measure.

ARTICLE 6.13

Collaboration

1. The Parties shall promote their collaboration in all relevant multilateral fora, in particular with

the bodies responsible for the setting of international standards.

2. In accordance with Article 3 of the SPS Agreement and the decisions for the implementation

of that Article adopted by the WTO SPS Committee, each Party shall take into account standards,

guidelines and recommendations developed by the relevant international organisations when

developing its respective SPS measures.

3. The Parties recognise that antimicrobial resistance is a serious threat to human and animal

health and that antibiotic use in animal production can contribute to antimicrobial resistance that

may represent a risk to humans. The Parties recognise that the nature of the threat requires a

transnational and "One Health" approach.

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4. The Parties shall foster their cooperation, collaboration and exchange of information in

relation to antimicrobial resistance. Each Party shall endeavour to coordinate with regional or

multilateral work programmes for reducing the use of antibiotics in animal production and to ban

their use as growth promotors with the aim to combat antibiotic resistance.

5. The Parties shall collaborate in the preparation of and follow existing and future guidelines,

standards, recommendations and actions developed in relevant international organisations initiatives

and national plans aiming to promote the prudent and responsible use of antibiotics in animal

husbandry and veterinary practices. The Parties shall foster their collaboration on animal welfare

issues. The technical discussions shall take place between experts in the field and in accordance

with the guidance provided by the Committee.

6. The Parties may collaborate on matters other than those referred to in paragraph 5, in

particular on fighting and preventing fraud, related to SPS measures.

7. The Committee shall exchange information, expertise, experiences and good practices on the

matters covered by this Article.

8. Collaboration activities on animal welfare and antimicrobial resistance between the Parties

shall be carried out by the relevant technical experts.

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ARTICLE 6.14

Equivalence

1. The Parties recognise that the principle of equivalence as set out in Article 4 of the SPS

Agreement, in the WTO SPS Committee decisions and in other relevant international standards is

an important tool for trade facilitation and has mutual benefits for both Parties. A determination of

equivalence may be made by an importing Party in respect of partial or full equivalence of the

exporting Party's SPS measures.

2. The importing Party shall accept an exporting Party's SPS measures as equivalent if the

exporting Party objectively demonstrates to the importing Party that its measures achieve the

importing Party's appropriate level of SPS protection. To facilitate a determination of equivalence,

the importing Party shall, upon request, advise the other Party of the objective of any relevant SPS

measures. For this purpose, reasonable access shall be given by the exporting Party, upon request,

to the importing Party for inspection, testing and other relevant procedures.

3. Each Party shall, upon request, enter into consultations with the aim of achieving bilateral

arrangements on a determination of equivalence of specified SPS measures.

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4. The Parties shall, within three months after receipt of a request from the exporting Party,

initiate the consultations referred to in paragraph 3. The determination of equivalence shall be

finalised without undue delay by the importing Party after the demonstration of equivalence of the

proposed measures by the exporting Party. The importing Party shall accelerate the assessment

taking into account any knowledge and past experience it has in trading with the exporting Party to

make the determination as efficiently as possible.

5. In case of multiple requests from the exporting Party, the Parties shall agree within the

Committee on a timeline in which they shall initiate the consultations referred to in paragraph 3.

6. The consideration by a Party of a request from the other Party for recognition of the

equivalence of its measures with regard to a specific product shall not be in itself a reason to disrupt

or suspend ongoing imports from that Party of the product in question. If an equivalence

determination is made, it shall be formally recorded and apply to the trade between the Parties in the

relevant area without delay.

7. Where equivalence has been determined for a specific product, the Parties may agree on

alternative import conditions and procedures.

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ARTICLE 6.15

Committee on Trade in Goods, Customs matters, and Sanitary and Phytosanitary matters

in its specific configuration for Chapter 6 (Sanitary and Phytosanitary measures)

1. This Article complements and further specifies Article 24.4.

2. The Committee shall be responsible for the effective implementation and operation of this

Chapter. The Committee shall be composed of representatives of the Parties who are responsible for

SPS measures and have the relevant expertise.

3. The Committee shall meet in person within one year of the entry into force of this Agreement

and shall meet at least annually thereafter or as otherwise agreed by the representatives of the

Parties.

4. The Committee shall establish its rules of procedures at its first meeting.

5. The Committee may propose to the Trade Committee to establish working groups to identify

and address technical and scientific issues arising from this Chapter and explore opportunities for

further collaboration on SPS matters of mutual interest.

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6. The Committee shall have the power to address any matter related to the effective functioning

of this Chapter including to facilitate communication and strengthening collaboration between the

Parties. In particular, it shall have the following responsibilities and functions:

(a) developing the necessary procedures or arrangements for the implementation of this Chapter;

(b) monitoring the progress of implementation of this Chapter;

(c) providing a forum for discussion of problems arising from the application of certain SPS

measures with a view to reaching mutually acceptable solutions and promptly addressing any

matters that may create unnecessary obstacles to trade between the Parties;

(d) providing a forum to exchange information, expertise and experiences in the field of SPS

matters;

(e) identifying areas for possible technical assistance projects and activities between the Parties;

and

(f) any other function that is agreed by the Parties.

7. The Committee may make recommendations to the Trade Committee for decisions to be taken

by the Trade Committee pursuant to Article 24.2 on the authorisation of imports, exchange of

information, transparency, recognition of regionalisation, equivalency and alternative measures

under this Chapter.

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ARTICLE 6.16

Technical assistance

1. The Parties shall explore whether to provide technical assistance on SPS issues, with a view

to enhancing the mutual understanding of their respective regulatory systems and facilitating access

to each other's markets.

2. Each Party, upon request, shall give due consideration to the provision of technical assistance

in relation to SPS issues. Such technical assistance on specific issues shall be provided on mutually

agreed terms and conditions.

3. The Committee shall decide on the fields for which technical assistance may be provided.

Technical assistance may be provided to address specific needs concerning compliance with SPS

measures including food safety, plant health and animal health, and international standards.

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CHAPTER 7

TECHNICAL BARRIERS TO TRADE

ARTICLE 7.1

Objective

The objectives of this Chapter are to increase and to facilitate trade in goods by preventing,

identifying and eliminating unnecessary technical barriers to trade, and enhancing cooperation

between the Parties.

ARTICLE 7.2

Scope

1. This Chapter applies to the preparation, adoption and application of standards, technical

regulations and conformity assessment procedures as defined in Annex 1 of the TBT Agreement,

which may affect trade in goods between the Parties.

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2. Notwithstanding paragraph 1, this Chapter does not apply to:

(a) purchasing specifications prepared by governmental bodies for production or consumption

requirements of those bodies; and

(b) sanitary and phytosanitary measures as defined in Annex A of the SPS Agreement that are

covered by Chapter 6 (Sanitary and Phytosanitary Measures).

ARTICLE 7.3

Reaffirmation on the TBT Agreement and incorporation of certain of its provisions

1. The Parties reaffirm their rights and obligations under the TBT Agreement. Articles 2 to 9 and

Annexes 1 and 3 of the TBT Agreement are incorporated into and made part of this Agreement,

mutatis mutandis.

2. References to "this Agreement" in the TBT Agreement, as incorporated into this Agreement,

are to be read, as appropriate, as references to this Agreement.

3. The term "Members" in the TBT Agreement as incorporated into this Agreement, shall mean

the Parties to this Agreement.

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ARTICLE 7.4

Technical regulations

1. Each Party shall carry out, in accordance with its respective rules and procedures, a regulatory

impact assessment of planned technical regulations.

2. Each Party shall, in accordance with its respective rules and procedures, assess the available

regulatory and non-regulatory alternatives to the proposed technical regulation that may fulfil its

legitimate objectives, in accordance with Article 2.2 of the TBT Agreement.

3. Each Party shall use relevant international standards if they exist or their completion is

imminent, as a basis for its technical regulations, except when the Party developing the technical

regulation can demonstrate that such relevant international standards would be an ineffective or

inappropriate means for the fulfilment of the legitimate objectives pursued.

4. International standards developed by the organisations listed in Annex 7-A (List of

International Standardising Bodies) shall be considered to be the relevant international standards

within the meaning of Articles 2 and 5 and Annex 3 of the TBT Agreement, provided that in their

development those organisations have complied with the principles and procedures set out in the

Decision of the Committee on Principles for the Development of International Standards, Guides

and Recommendations with relation to Articles 2 and 5 and Annex 3 of the Agreement in the

Decisions and Recommendations adopted by the WTO Committee on Technical Barriers to Trade

Since 1 January 1995 (G/TBT/1/Rev.15).

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5. On request of either Party, the Trade Committee shall consider updating the list in, and may

adopt a decision to amend, Annex 7-A (List of International Standardising Bodies paragraph 1 of

Annex 7-B (Supplier's Declaration of Conformity - Fields and Modalities) and Annex 7-C (Motor

Vehicles and Equipment and Parts Thereof) pursuant to Article 24.2.

6. If a Party has not used international standards as a basis for its technical regulations, that Party

shall, on request from the other Party, identify any substantial deviation from the relevant

international standards and explain the reasons why those standards were deemed to be

inappropriate or ineffective for the objectives pursued, and provide the scientific or technical

evidence on which this assessment was based.

7. In addition to Articles 2.3 and 2.4 of the TBT Agreement, each Party shall review its technical

regulations with a view to increasing their convergence with relevant international standards. Each

Party shall take into account any new developments in the relevant international standards and

whether the circumstances that have given rise to divergences from any relevant international

standards continue to exist.

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8. In accordance with its respective rules and procedures and without prejudice to Chapter 19

(Good Regulatory Practices),when developing major technical regulations which may have a

significant effect on trade, each Party shall ensure that transparency procedures, exist that allow

persons of a Party to provide input through a public consultation process, except where urgent

problems of safety, health, environmental protection or national security arise or threaten to arise.

Each Party shall allow persons of the other Party to participate in that public consultation process on

terms that are no less favourable than those accorded to its own persons, and endeavour to make the

results of that consultation process public1.

9. Each Party shall aim to apply its technical regulations uniformly and shall apply those

technical regulations consistently to its whole territory in a manner consistent with the TBT

Agreement.

ARTICLE 7.5

Standards

1. With a view to harmonising standards on as wide a basis as possible, each Party shall

encourage the standardising bodies within its territory, and, if applicable, the regional standardising

bodies of which it or its standardising bodies within its territory are members to:

(a) participate, within the limits of their resources, in the preparation of international standards by

relevant international standardising bodies;

1 For greater certainty, nothing in this Article shall be construed so as to require a certain

manner or mechanism for the publication of the results of the consultation.

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(b) use relevant international standards as a basis for the standards they develop, except where

those international standards would be ineffective or inappropriate, for instance because of an

insufficient level of protection, fundamental climatic or geographical factors, or fundamental

technological problems;

(c) avoid duplication of, or overlap with, the work of international standardising bodies;

(d) review national and, if applicable, regional standards not based on relevant international

standards at regular intervals, with a view to increasing their convergence with relevant

international standards;

(e) cooperate with the relevant standardising bodies of the other Party in international

standardisation activities; that cooperation may be undertaken in the international

standardisation bodies or at regional level; and

(f) foster bilateral cooperation with the standardising bodies of the other Party.

2. The Parties should exchange information on:

(a) their use of standards in support of technical regulations; and

(b) each other's standardising processes, and the extent to which they use international standards

and regional standards as a basis for their national standards.

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3. If a Party requires compliance with a standard through incorporation of, or reference to, a

standard in a technical regulation or a conformity assessment procedure, the Party shall, in

developing the draft technical regulation or conformity assessment procedure comply with the

transparency obligations set out in Article 7.7 and in Articles 2 or 5 of the TBT Agreement.

ARTICLE 7.6

Conformity assessment

1. Without prejudice to Articles 5, 6 and 7 of the TBT Agreement, the provisions set out in

Article 7.4 with respect to the preparation, adoption, and application of technical regulations shall

also apply, mutatis mutandis, to conformity assessment procedures.

2. If a Party requires conformity assessment as a positive assurance that a product conforms with

a technical regulation, it shall:

(a) select conformity assessment procedures proportionate to the risks involved as determined on

the basis of a risk assessment in accordance with that Party's rules;

(b) consider the use of a supplier's declaration of conformity1, as assurance of conformity among

the options for showing compliance with a technical regulation; and

1 A supplier's declaration of conformity is a first party attestation of conformity issued by the

manufacturer on its sole responsibility based on the results of an appropriate type of

conformity assessment activity and excluding mandatory third party assessment.

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(c) if requested, provide information to the other Party on the criteria used to select the

conformity assessment procedures for specific products.

3. If a Party requires a third party conformity assessment as a positive assurance that a product

conforms with a technical regulation, and it has not reserved this task to a governmental body as

specified in paragraph 4, it shall:

(a) use accreditation as the preferred means to qualify conformity assessment bodies;

(b) make best use of international standards for accreditation and conformity assessment, as well

as international agreements in which each Party's accreditation body participates, for example,

through the mechanisms of the International Laboratory Accreditation Cooperation ("ILAC")

and the International Accreditation Forum ("IAF");

(c) join or, as applicable, encourage its conformity assessment bodies to join any functioning

international agreements or arrangements for harmonisation or facilitation of acceptance of

conformity assessment results;

(d) ensure that economic operators have a choice among the conformity assessment bodies

designated by the authorities for a particular product or set of products;

(e) ensure that conformity assessment bodies carry out their activities in an independent manner

in respect of economic operators and that there are no conflicts of interest between

accreditation bodies and conformity assessment bodies;

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(f) allow, to the extent possible, conformity assessment bodies to use subcontractors to perform

testing or inspections in relation to the conformity assessment, including subcontractors

located in the territory of the other Party; nothing in this point shall prohibit a Party from

requiring subcontractors to meet the same requirements that the conformity assessment body

itself must meet to perform testing or inspections; and

(g) publish by electronic means, preferably on a single website, a list of the bodies that it has

designated to perform such conformity assessment and the relevant information on the scope

of each body's designation.

4. Nothing in this Article shall preclude a Party from requesting that conformity assessments in

relation to specific products is to be performed by specified government authorities of the Party. In

those cases, the Party shall:

(a) limit the conformity assessment fees to the approximate cost of the services rendered and,

upon the request of an applicant for conformity assessment, explain how any fees it imposes

for such conformity assessment are limited in amount to the approximate cost of the services

rendered; and

(b) make the conformity assessment fees publicly available.

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5. Notwithstanding paragraphs 2, 3 and 4, in the fields listed in Annex 7-B (Supplier's

Declaration of Conformity - Fields and Modalities), in the cases in which the Union accepts a

supplier's declaration of conformity as proof of compliance with existing Union technical

regulations, and Indonesia requires mandatory third party conformity assessment, Indonesia shall,

subject to its laws and regulations, accept certificates and test reports issued by conformity

assessment bodies that are located in the Union territory and which have been accredited for the

relevant scopes by accreditation bodies that are established in the Union and are ILAC or IAF

members, as proof of compliance with its existing technical regulations.

ARTICLE 7.7

Transparency

1. Each Party shall allow a period of at least 60 days following its transmission to the WTO

Central Registry of Notifications of proposed technical regulations and conformity assessment

procedures for the other Party to provide written comments, except where urgent problems of

safety, health, environmental protection or national security arise or threaten to arise. Where

practicable, a Party shall give positive consideration to a reasonable request to extend the comment

period.

2. Each Party shall provide, if the notified text is not in one of the official WTO languages, a

clear and comprehensive description of the content of the measure in the WTO notification format.

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3. If a Party receives written comments on its proposed technical regulation or conformity

assessment procedure from the other Party, it shall:

(a) if requested by the other Party, discuss the written comments with the participation of its

competent regulatory authority, at a time when the written comments can be taken into

account; and

(b) reply in writing to the comments no later than the date of publication of the adopted technical

regulation or conformity assessment procedure.

4. Each Party shall publish on a website its responses to comments it received on its TBT

notifications no later than the date of publication of the adopted technical regulation or conformity

assessment procedure.

5. Each Party shall, if requested by the other Party, provide information regarding the objectives

of, and the legal basis and rationale for, a technical regulation or conformity assessment procedure

that the Party has adopted or is proposing to adopt.

6. Each Party shall ensure that its adopted technical regulations and conformity assessment

procedures are published on a website that is accessible free of charge.

7. Each Party shall provide information on the adoption and the entry into force of the technical

regulations or conformity assessment procedures, and the adopted final texts through an addendum

to the original notification to the WTO.

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8. Each Party shall allow a reasonable period of time between the publication of technical

regulations or conformity assessment procedures and their entry into force for economic operators

of the other Party to adapt. A "reasonable period of time" shall be understood to normally mean a

period of no less than six months, except when this would be ineffective in fulfilling the legitimate

objectives pursued.

9. A Party shall give positive consideration to a reasonable request from the other Party,

received prior to the end of the comment period following the transmission of a proposed technical

regulation or conformity assessment procedure to extend the period of time between the publication

of the technical regulation or conformity assessment procedure and its entry into force. This

obligation shall not apply if the delay would be ineffective in fulfilling the legitimate objectives

pursued.

ARTICLE 7.8

Marking and labelling

1. The Parties affirm that their technical regulations, including or dealing exclusively with

mandatory marking or labelling, shall follow the principles of Article 2 of the TBT Agreement.

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2. Unless it is necessary in view of the legitimate objectives referred to in Article 2.2 of the TBT

Agreement, the Parties agree that where a Party requires mandatory marking or labelling of

products:

(a) the Party shall only require information which is relevant for consumers or users of the

product or to indicate the product's conformity with the mandatory technical requirements;

(b) the Party shall not require any prior approval, registration or certification of the labels or

markings of products, nor any fee disbursement, as a precondition for placing on its market

products that otherwise comply with its mandatory technical requirements;

(c) where the Party requires the use of a unique identification number by economic operators, the

Party shall issue the unique identification number to the economic operators of the other Party

without undue delay and on a non-discriminatory basis;

(d) provided it is not misleading, contradictory or confusing in relation to the information

required in the importing Party, the Party shall permit the following:

(i) information in other languages in addition to the language required in the importing

Party of the goods;

(ii) internationally accepted nomenclatures, pictograms, symbols or graphics, as defined by

organisations listed in, but not limited to, Annex 7-A (List of International

Standardising Bodies); and

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(iii) additional information to that required in the importing Party of the goods;

(e) the Party shall accept that labelling, including supplementary labelling or corrections to

labelling, may take place in customs warehouses or other designated areas in the customs

territory of the importing Party unless such labelling is required to be carried out by

competent authorities or by approved entities, as applicable, for reasons of public health or

safety; and

(f) the Party shall endeavour to the extent possible to accept non-permanent or detachable labels,

or inclusion of relevant information in the accompanying documentation, rather than labels

physically attached to the product.

3. Paragraph 2 shall not apply to marking or labelling of medicinal products as defined by the

laws and regulations of the respective Party.

ARTICLE 7. 9

Cooperation on market surveillance1

1. The Parties recognise the importance of cooperation on market surveillance, safety and

compliance for the facilitation of trade and for the protection of consumers and other users, and of

building mutual trust based on timely shared information.

1 "Market surveillance" is the activity carried out by relevant public authorities to ensure that

products on the market conform and comply with the applicable laws and regulations of the

respective Party.

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2. Each Party shall ensure that:

(a) market surveillance functions are carried out by the competent authorities and that no

conflicts of interest exist between the market surveillance function and the conformity

assessment function; and

(b) there are no conflicts of interest between market surveillance bodies and the economic

operators subject to control or supervision.

3. The Parties may cooperate and exchange views and information on matters related to market

surveillance and enforcement activities.

4. The Union may provide Indonesia with selected information from its rapid alert system, or its

successor, with respect to consumer products as referred to in Regulation (EU) 2023/988 of the

European Parliament and of the Council of 10 May 2023 on general product safety, amending

Regulation (EU) No 1025/2012 of the European Parliament and of the Council and Directive (EU)

2020/1828 of the European Parliament and the Council, and repealing Directive 2001/95/EC of the

European Parliament and of the Council and Council Directive 87/357/EEC or its successor, and

Indonesia may provide the Union with selected information from its relevant databases with respect

to consumer products as referred in its laws and regulations, on the safety of consumer products and

on preventive, restrictive and corrective measures taken. The information exchange may take the

form of:

(a) non-systematic exchanges, in duly justified and specific cases, excluding personal data; or

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(b) systematic exchanges, based on relevant arrangements on the safety of consumer products, as

established by the Trade Committee which may decide to adopt those arrangements as an

Annex, pursuant to Article 24.2.

5. The Parties may, subject to their respective laws and regulations, systematically exchange

information on non-compliant products, including by electronic means, based on arrangements

established by the Trade Committee which may decide to adopt those arrangements as an Annex,

pursuant to Article 24.2.

6. Within the context of this Agreement, the Parties shall use the information obtained pursuant

to paragraphs 3, 4 and 5 of this Article for the sole purpose of the protection of consumers, health,

safety or the environment, and treat it as confidential.

7. The arrangements referred to in paragraphs 4 and 5 shall specify the type of information to be

exchanged, the modalities for the exchange and the application of confidentiality and personal data

protection rules.

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ARTICLE 7.10

Technical discussions and consultations

1. Each Party may request technical discussions on any draft or proposed technical regulation or

conformity assessment procedure of the other Party that the Party considers may significantly

adversely affect trade between the Parties. The request shall be made in writing and identify:

(a) the measure at issue;

(b) the provisions of this Chapter to which the concerns relate; and

(c) the reasons for the request, including a description of the requesting Party's concerns

regarding the measure.

2. A Party shall deliver its request to the TBT Chapter Coordinator of the other Party designated

pursuant to Article 7.11.

3. On request of either Party, the Parties shall meet to discuss the concerns raised in the request,

in person or via video or teleconference, within 60 days of the date of the request and shall

endeavour to resolve the matter as expeditiously as possible. If the requesting Party believes that the

matter is urgent, it may request that any meeting take place within a shorter time period. In that

case, the responding Party shall give positive consideration to that request.

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4. A Party may request consultations with the other Party regarding any matter arising under this

Chapter by delivering a written request to the TBT Chapter coordinator of the other Party. The

Parties shall make every attempt to arrive at a mutually satisfactory resolution of the matter.

5. For greater certainty, consultations pursuant to this Article shall not replace consultations

pursuant to Article 22.4 or dialogues under Chapter 21 (Bilateral Dialogue Mechanism), unless the

Parties agree otherwise.

ARTICLE 7.11

TBT Chapter Coordinator

1. Each Party shall nominate a TBT Chapter Coordinator and inform the other Party of the

contact details and of any changes. The TBT Chapter Coordinators shall work jointly to facilitate

the implementation of this Chapter and the cooperation between the Parties in all TBT matters.

2. The functions of the TBT Chapter Coordinators shall include:

(a) monitoring the implementation and administration of this Chapter, promptly addressing any

issue that either Party raises related to the development, adoption, application or enforcement

of standards, technical regulations and conformity assessment procedures, and upon either

Party's request, consulting on any matter arising under this Chapter;

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(b) enhancing cooperation in the development and improvement of standards, technical

regulations and conformity assessment procedures;

(c) arranging the establishment of technical discussions as appropriate in accordance with

Article 7.10; and

(d) exchanging available information on developments in non-governmental, regional, and

multilateral fora related to standards, technical regulations, and conformity assessment

procedures.

3. The TBT Chapter Coordinators shall communicate with one another by any agreed method

that is appropriate to carry out their functions.

ARTICLE 7.12

Committee on Trade in Goods, Customs Matters and Sanitary and Phytosanitary matters

in its specific configuration for Chapters 2 (National Treatment and Market Access for Goods),

5 (Trade Remedies), and 7 (Technical Barriers to Trade)

1. This Article complements and further specifies Article 24.4.

& /en 163

2. The Committee on Trade in Goods, Customs matters and Sanitary and Phytosanitary matters

meeting in its specific configuration for Chapters 2 (National Treatment and Market Access for

Goods), 5 (Trade Remedies), and 7 (Technical Barriers to Trade) established pursuant to Article

24.4, (hereinafter referred to as the "Committee" for the purposes of this Chapter), shall consider

any matter relating to the effective implementation and operation of this Chapter.

3. The Committee shall have the following functions:

(a) on request of either Party, reviewing Annex 7-A (List of International Standardising Bodies)

and proposing any amendments to the Trade Committee for adoption pursuant to Article 24.2;

(b) reviewing paragraph 1 of Annex 7-B (Supplier's Declaration of Conformity - Fields and

Modalities) and proposing any amendments to the Trade Committee for adoption pursuant to

Article 24.2;

(c) decides, on the basis of a recommendation of the Working Group on Motor Vehicles and

Equipment and Parts Thereof made pursuant to point (c) of paragraph 21 of Annex 7-C

(Motor Vehicles and Equipment and Parts Thereof), to propose amendments to Annex 7-C

(Motor Vehicles and Equipment and Parts Thereof) to the Trade Committee for adoption

pursuant to Article 24.2;

(d) cooperating and exchanging information on any issues relevant for the implementation of

Annex 7-C (Motor Vehicles and Equipment and Parts Thereof); and

(e) considering any other matter related to this Chapter agreed by the Parties.

& /en 164

CHAPTER 8

LIBERALISATION OF INVESTMENT AND TRADE IN SERVICES

SECTION A

GENERAL PROVISIONS

ARTICLE 8.1

Objectives

The Parties, reaffirming their respective commitments under the WTO Agreement and their

commitment to create better conditions for the development of trade and investment between them,

hereby lay down the necessary arrangements for the progressive liberalisation of investment and

trade in services.

& /en 165

ARTICLE 8.2

Right to regulate

The Parties reaffirm the right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public health, safety, environment including tackling climate

change, public morals, social or consumer protection, privacy and data protection, sustainable

development, or promotion and protection of cultural diversity.

ARTICLE 8.3

Coverage

1. This Chapter applies to measures adopted or maintained by:1

(a) central, regional, or local governments and authorities; and

(b) non-governmental bodies in the exercise of powers delegated by central, regional, or local

governments or authorities.

2. This Agreement shall not apply to measures affecting natural persons seeking access to the

employment market of a Party, nor shall it apply to measures regarding citizenship, residence or

employment on a permanent basis.

1 For greater certainty, the entities listed under points 1 (a) and (b) can adopt or maintain a

measure by instructing or directing other entities with regard to the measure.

& /en 166

2bis. Nothing in this Agreement shall prevent a Party from applying measures to regulate the entry

of natural persons into, or their temporary stay in, its territory, including those measures necessary

to protect the integrity of, and to ensure the orderly movement of natural persons across its borders,

provided that such measures are not applied in such a manner as to nullify or impair the benefits1

accruing to any Party under the terms of a specific commitment in this Chapter and its Annexes.

3. This Chapter shall not apply to:

(a) government procurement of goods or services, or any combination thereof, for governmental

purposes and not with a view to commercial sale or resale or use in the production or supply

of goods or services for commercial sale or resale; and

(b) without prejudice to Article 8.11(2), subsidies or grants provided by authorities of a Party,

including government-supported loans, guarantees, and insurance.

1 The sole fact of requiring a visa for natural persons of certain countries and not for those of

others shall not be regarded as nullifying or impairing benefits under a specific commitment.

& /en 167

ARTICLE 8.4

Definitions

1. For the purposes of this Chapter:

(a) "activities performed or services supplied in the exercise of governmental authority" means

activities performed or services supplied neither on a commercial basis nor in competition

with one or more economic operators;

(b) "aircraft repair and maintenance services" means such activities when undertaken on an

aircraft or a part thereof while it is withdrawn from service and do not include so-called line

maintenance;

(c) "computer reservation system (CRS) services" or "CRS services" means services provided by

computerised systems that contain information about air carriers' schedules, availability, fares,

and fare rules, through which reservations can be made or tickets may be issued;

& /en 168

(d) "covered enterprise" means an enterprise which is owned, directly or indirectly, or controlled,

directly or indirectly, by investors of one Party in the territory of the other Party made in

accordance with applicable laws1, whether established before or after the entry into force of

this Agreement. A juridical person is:

(i) "owned" by a natural or juridical person of a Party if more than 50 % of the equity

interest is beneficially owned by natural or juridical person of that Party; or

(ii) "controlled" by a natural or juridical person of a Party if that natural or juridical person

has the power to appoint a majority of its directors or otherwise to legally direct its

actions;

(e) "cross-border supply of services" means the supply of a service:

(i) from the territory of a Party into the territory of the other Party; or

(ii) in the territory of a Party to the service consumer of the other Party;

(f) "economic activities" means activities of an industrial, commercial, or professional character

and activities of craftsmen, including the supply of services, except for activities performed or

services supplied in the exercise of governmental authority;

(g) "enterprise" means a juridical person, branch, or representative office set up through

establishment;

1 In the case of investments made in Indonesia, in accordance with applicable laws may include

specific approval in writing if applicable.

& /en 169

(h) "establishment" means the setting up or the acquisition of an enterprise in Indonesia or in the

Union, respectively, with a view to creating or maintaining lasting economic links;

(i) "ground handling services" means the supply at an airport of the following services: airline

representation, administration and supervision; passenger handling; baggage handling; ramp

services; catering; air cargo and mail handling; fuelling of an aircraft, aircraft servicing and

cleaning; surface transport; flight operation, crew administration and flight planning.

Ground handling services do not include security, aircraft repair and maintenance, or

management or operation of essential centralised airport infrastructure such as de-icing

facilities, fuel distribution systems, baggage handling systems, and fixed intra-airport

transport systems;

(j) "juridical person of a Party" means:

(i) for the Union, a juridical person set up in accordance with the laws and regulations of

the Union or of a Member State of the Union and engaged in substantive business

operations1 in the territory of the Union; and

(ii) for Indonesia, a juridical person set up in accordance with the laws and regulations of

Indonesia and engaged in substantive business operations in the territory of Indonesia.

1 In line with its notification of the Treaty establishing the European Community to the WTO

(WT/REG39/1), the Union understands that the concept of "effective and continuous link"

with the economy of a Member State enshrined in Article 54 of the TFEU is equivalent to the

concept of "substantive business operations".

& /en 170

Notwithstanding paragraph (m) of this Article, shipping companies established outside the

Union or Indonesia and controlled by natural persons of a Member State of the Union or of

Indonesia, respectively, shall also be beneficiaries of the provisions of this Chapter if their

vessels are registered in accordance with their respective legislation, in that Member State or

in Indonesia and fly the flag of a Member State or of Indonesia;

(k) "measure" means any measure by a Party, whether in the form of a law, regulation, rule,

procedure, decision, administrative action, or any other form;

(l) "operation" includes the conduct, management, maintenance, use, enjoyment, sale or other

disposal of an enterprise by an investor of one Party in the territory of the other Party;

(m) "selling and marketing of air transport services" means opportunities for the air carrier

concerned to sell and market freely its air transport services including all aspects of marketing

such as market research, advertising and distribution. These activities do not include the

pricing of air transport services nor the applicable conditions; and

(n) "service" includes any service in any sector but not services supplied in the exercise of

governmental authority.

& /en 171

ARTICLE 8.5

Denial of benefits

A Party may deny the benefits of this Chapter to an investor or a service supplier of the other Party

or to a covered enterprise if the denying Party adopts or maintains measures related to the

maintenance of international peace and security, including measures to address serious human

rights violations and abuses, which:

(a) prohibit transactions with that investor, service supplier, or covered enterprise; or

(b) would be violated or circumvented if the benefits of this Chapter were accorded to that

investor, service supplier or covered enterprise, including where the measures prohibit

transactions with a natural or juridical person who owns or controls any of them.

& /en 172

SECTION B

LIBERALISATION OF INVESTMENTS

ARTICLE 8.6

Scope

1. This Section applies to measures adopted or maintained by a Party affecting the establishment

of an enterprise or the operation of a covered enterprise for the pursuit of economic activities by an

investor of the other Party in its territory.

2. The provisions of this Section do not apply to:

(a) audio-visual services;

(b) national maritime cabotage1; and

(c) domestic and international air transport services, whether scheduled or non-scheduled, and

services directly related to the exercise of traffic rights, other than:

(i) aircraft repair and maintenance services;

1 Without prejudice to the scope of activities which may be considered as cabotage under the

relevant laws and regulations of a Party, national maritime cabotage under this Chapter covers

transportation of passengers or goods between a port or point located in Indonesia or in a

Member State and another port or point located respectively in Indonesia including its

continental shelf, archipelagic waters and exclusive economic zone or in that same Member

State, including on its continental shelf, as provided in UNCLOS, and traffic originating and

terminating in the same port or point located in Indonesia or in a Member State.

& /en 173

(ii) the selling and marketing of air transport services;

(iii) CRS services; and

(iv) groundhandling services.

ARTICLE 8.7

Market access

1. With respect to market access through establishment or operation in its territory, each Party

shall accord to investors of the other Party and to covered enterprises treatment no less favourable

than that provided for under the terms, limitations, and conditions agreed and specified in the

schedule of specific commitments contained in Annex 8-B (Schedule of Specific Commitments on

Liberalisation of Investment – Union) or Annex 8-F (Schedule of Specific Commitments on

Liberalisation of Investment – Indonesia).

& /en 174

2. In sectors where market access commitments are undertaken, the measures which a Party

shall not adopt or maintain on the basis of a regional subdivision or on the basis of its entire

territory, unless otherwise specified in its schedule of specific commitments contained in Annex 8-

B (Schedule of Specific Commitments on Liberalisation of Investment – Union) or Annex 8-F

(Schedule of Specific Commitments on Liberalisation of Investment – Indonesia), are defined as:

(a) limitations on the number of enterprises, whether in the form of numerical quotas,

monopolies, exclusive rights, or other requirement relating to establishment, such as

economic needs tests;

(b) limitations on the total value of transactions or assets in the form of numerical quotas or the

requirement of an economic needs test;

(c) limitations on the total number of service operations or on the total quantity of service output

expressed in terms of designated numerical units in the form of quotas or the requirement of

an economic needs test;1

(d) limitations on the participation of foreign capital in terms of maximum percentage limit on

foreign shareholding or the total value of individual or aggregate foreign investment;

(e) measures which restrict or require specific types of legal entity or joint venture through which

an investor of the other Party may carry out an economic activity; or

1 Points (a), (b) and (c) of this paragraph do not cover measures taken in order to limit the

production of an agricultural or fishing product.

& /en 175

(f) limitations on the total number of natural persons that may be employed in a particular sector

or that an enterprise may employ and who are necessary for, and directly related to, the

performance of economic activity in the form of numerical quotas or the requirement of an

economic needs test.

ARTICLE 8.8

National treatment

1. In the sectors inscribed in the schedule of specific commitments in Annex 8-B (Schedule of

Specific Commitments on Liberalisation of Investment – Union) or Annex 8-F (Schedule of

Specific Commitments on Liberalisation of Investment – Indonesia) and subject to any conditions

and qualifications set out therein, each Party shall accord to investors of the other Party and to

covered enterprises, as regards their establishment in its territory, treatment no less favourable than

the treatment it accords, in like situations, to its own investors and their enterprises.

2. Each Party shall accord to investors of the other Party and to covered enterprises, as regards

their operation in its territory, treatment no less favourable than the treatment it accords, in like

situations, to its own investors and their enterprises.

3. The treatment to be accorded by a Party pursuant to paragraphs 1 and 2 means, with respect to

a government of a subnational region of Indonesia, treatment no less favourable than the most

favourable treatment accorded in like situations, by that government to investors, and to enterprises

of investors, of that subnational government.

& /en 176

4. The treatment to be accorded by a Party pursuant to paragraphs 1 and 2 means, with respect to

a government of or in a Member State, treatment no less favourable than the most favourable

treatment accorded in like situations, by that government to investors of that Member State and to

their enterprise in its territory.

ARTICLE 8.9

Most-favoured-nation treatment

1. Each Party shall accord to investors of the other Party and to covered enterprises, as regards

their establishment in its territory, treatment no less favourable than the treatment it accords, in like

situations, to investors and enterprises of any third country.

2. Each Party shall accord to investors of the other Party and to covered enterprises, as regards

their operation in its territory, treatment no less favourable than the treatment it accords, in like

situations, to investors and enterprises of any third country.

3. Notwithstanding paragraphs 1 and 2, a Party shall not be obliged to extend to investors of the

other Party or to their covered enterprises the benefits of any treatment accorded to investors and

enterprises of any third country pursuant to any international investment treaty or other trade

agreement in force or signed prior to the date of entry into force of this Agreement.

& /en 177

4. Paragraphs 1 and 2 shall not be construed as obliging a Party to extend to the investors of the

other Party the benefit of any treatment resulting from:

(a) an international agreement for the avoidance of double taxation or other international

agreements or arrangements relating wholly or mainly to taxation; or

(b) measures providing for the recognition of qualifications, licences or prudential measures as

provided for in Article VII of GATS or its Annex on Financial Services.

5. For greater certainty, the "treatment" referred to in paragraphs 1 and 2 does not include

dispute settlement procedures provided for in other international investment treaties and other trade

agreements.

6. The substantive provisions in other international investment or trade agreements do not in

themselves constitute "treatment" as referred to in paragraphs 1 and 2, and thus shall not give rise to

a breach of this Article. However, measures applied pursuant to such provisions may constitute

"treatment" as referred to in paragraphs 1 and 2, and thus give rise to a breach of this Article.

& /en 178

ARTICLE 8.10

Schedule of specific commitments

1. The sectors liberalised by each of the Parties pursuant to this Section and the terms,

limitations, conditions and qualifications referred to in Articles 8.7, 8.8, 8.9 and 8.11 are set out in

the schedule of commitments included in Annex 8-B (Schedule of Specific Commitments on

Liberalisation of Investment – Union) and Annex 8-F (Schedule of Specific Commitments on

Liberalisation of Investment – Indonesia).

2. Each Party shall identify in its schedules of commitments the sectors or subsectors that it

commits for future liberalisation.

3. If a Party amends a measure relevant for a commitment in a sector or subsector referred to in

paragraph 2, in a manner that reduces or eliminates the inconsistency of that measure with Articles

8.7, 8.8 or 8.11, as it existed immediately before the amendment, that Party shall not subsequently

amend that measure in a manner that increases the measure's inconsistency with Articles 8.7, 8.8 or

8.11.

& /en 179

4. A Party may adopt a measure or series of measures that is consistent with the schedule of

commitments included in Annex 8-B (Schedule of Specific Commitments on Liberalisation of

Investment – Union) and Annex 8-F (Schedule of Specific Commitments on Liberalisation of

Investment – Indonesia), provided that such measure or series of measures does not require, directly

or indirectly an investor of the other Party, to sell, or otherwise dispose of, a covered enterprise that

exists at the time the measure or series of measures becomes effective.

ARTICLE 8.11

Performance requirements1

1. In the sectors set out in its schedule of specific commitments in Annex 8-B (Schedule of

Specific Commitments on Liberalisation of Investment – Union) or Annex 8-F (Schedule of

Specific Commitments on Liberalisation of Investment – Indonesia) and subject to any condition

and qualification set out therein, a Party shall not impose, or enforce any of the following

requirements, or enforce any commitment or undertaking, in connection with the establishment of

all enterprises or the operation of all enterprises in its territory, to:2

(a) export a given level or percentage of goods or services;

(b) achieve a given level or percentage of domestic content;

1 For greater certainty, paragraphs 1 and 2 shall not apply to any commitment, undertaking, or

requirement other than those set out in those paragraphs. 2 For greater certainty, a condition for the receipt or continued receipt of an advantage referred

to in paragraph 2 does not constitute a requirement or a commitment or undertaking for the

purpose of paragraph 1.

& /en 180

(c) purchase, use or accord a preference to goods produced or services provided in its territory, or

purchase goods or services from natural persons or enterprises in its territory;

(d) relate in any way the volume or value of imports to the volume or value of export or to the

amount of foreign exchange inflows associated with that enterprise;

(e) restrict sales of goods or services in its territory that such enterprise produces or provides by

relating such sales in any way to the volume or value of its exports or foreign exchange

earnings;

(f) transfer technology, a production process or other proprietary knowledge to a natural person

or an enterprise in its territory;

(g) supply exclusively from the territory of the Party a good produced or a service provided by

the enterprise to a specific regional market or the world market; and

(h) adopt:

(i) a rate or amount of royalty below a certain level; or

(ii) a given duration of the term of a licence contract1,

1 A licence contract referred to in this point means any contract concerning the licensing of

technology, a production process or other proprietary knowledge.

& /en 181

with regard to any licence contract in existence at the time the requirement is imposed or

enforced, or any commitment or undertaking is enforced, or with regard to any future licence

contract freely entered into between the enterprise and the natural or juridical person or any

other entity in its territory, if the requirement is imposed or enforced or the commitment or

undertaking is enforced, in a manner that constitutes a direct interference with that license

contract by the exercise of non-judicial governmental authority of a Party.1

2. In the sectors set out in its schedule of specific commitments in Annex 8-B (Schedule of

Specific Commitments on Liberalisation of Investment – Union) and Annex 8-F (Schedule of

Specific Commitments on Liberalisation of Investment – Indonesia) and subject to any condition

and qualification set out therein, a Party shall not condition the receipt or continued receipt of an

advantage, in connection with the establishment or the operation of any enterprise in its territory, on

compliance with any of the following requirements2:

(a) to achieve a given level or percentage of domestic content;

(b) to purchase, use or accord a preference to goods produced or services provided in its territory,

or to purchase goods or services from natural persons or enterprises in its territory;

(c) to relate in any way the volume or value of import to the volume or value of export, or to the

amount of foreign exchange inflow associated with that enterprise; or

1 For greater certainty, point (h) does not apply when the licence contract is concluded between

the enterprise and the Party. 2 For greater certainty, points (a) and (b) of paragraph 2 do not apply to requirements imposed

by an importing Party relating to the content of goods necessary to qualify for preferential

tariffs or preferential quotas.

& /en 182

(d) to restrict the sale of goods or services in its territory that such investment produces or

provides by relating that those sales in any way to the volume or value of its exports or

foreign exchange earnings.

3. Paragraph 2 shall not be construed as preventing a Party from conditioning the receipt or

continued receipt of an advantage, in connection with the establishment of all enterprises or the

operation of all enterprises in its territory, in compliance with a requirement to locate production,

provide a service, train or employ workers, construct or expand particular facilities, or carry out

research and development in its territory.

4. Points (f) and (h) of paragraph 1 do not apply when the requirement is imposed or the

commitment or undertaking is enforced by a court, administrative tribunal or competition authority

to remedy a restriction of competition or if a Party authorises the use of an intellectual property

right in accordance with Article 31 and 31bis of the TRIPS Agreement, or to measures requiring the

disclosure of proprietary information that fall within the scope of, and are consistent with, Article

39 of the TRIPS Agreement.

5. The provisions of points (a), (b) and (c) of paragraph 1 and points (a) and (b) of paragraph 2

do not apply to qualification requirements for goods or services with respect to participation in

export promotion and foreign aid programmes.

6. This Article does not apply to procurement by a procuring entity for goods and services

purchased for governmental purposes and not with a view to commercial resale or with a view to

use in the supply of goods and services for commercial sale.

& /en 183

7. Point (h) of paragraph 1 does not apply if the requirement is imposed or enforced, or the

commitment or undertaking is enforced, by a tribunal as equitable remuneration under a Party's

copyright laws.

8. This Article is without prejudice to the obligations of a Party under the WTO Agreement.

9. For greater certainty, this Article shall not be construed as requiring a Party to permit a

particular service to be supplied on a cross-border basis where that Party adopts or maintains

restrictions or prohibitions on such provision of services which are consistent with its schedules of

commitments referred to in Article 8.10.

10. This Article does not preclude enforcement of any commitment, undertaking, or requirement

between private parties other than a Party, if a Party did not impose or require the commitment,

undertaking, or requirement.

& /en 184

SECTION C

CROSS-BORDER SUPPLY OF SERVICES

ARTICLE 8.12

Scope and definitions

1. This Chapter applies to measures of the Parties affecting the cross-border supply of all

services sectors with the exception of:

(a) audio-visual services;

(b) national maritime cabotage1; and

(c) domestic and international air transport services, whether scheduled or non-scheduled, and

services directly related to the exercise of traffic rights, other than:

(i) aircraft repair and maintenance services during which an aircraft is withdrawn from

service;

1 Without prejudice to the scope of activities which may be considered as cabotage under the

relevant national legislation, national maritime cabotage under this Chapter covers

transportation of passengers or goods between a port or point located in Indonesia or in a

Member State and another port or point located also in Indonesia including its continental

shelf, archipelagic waters and exclusive economic zone or also in that same Member State,

including on its continental shelf, as provided in the UNCLOS, and traffic originating and

terminating in the same port or point located in Indonesia or in a Member State.

& /en 185

(ii) the selling and marketing of air transport services;

(iii) CRS services; and

(iv) groundhandling services.

ARTICLE 8.13

Market access

1. With respect to market access through the cross-border supply of services, each Party shall

accord services and service suppliers of the other Party treatment not less favourable than that

provided for under the terms, limitations and conditions agreed and specified in its schedule of

specific commitments in Annex 8-A (Schedule of Commitments on Cross-Border Supply of

Services – Union) or Annex 8-E (Schedule of Commitments on Cross-Border Supply of Services –

Indonesia).

& /en 186

2. In sectors where market access commitments are undertaken, the measures which a Party

shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire

territory, unless otherwise specified in the schedule of specific commitments in Annex 8-A

(Schedule of Commitments on Cross-Border Supply of Services – Union) or Annex 8-E (Schedule

of Commitments on Cross-Border Supply of Services – Indonesia), are defined as:

(a) limitations on the number of services suppliers, whether in the form of numerical quotas,

monopolies, exclusive service suppliers, or the requirements of an economic needs test1;

(b) limitations on the total value of service transactions or assets in the form of numerical quotas

or the requirement of an economic needs test; or

(c) limitations on the total number of service operations or on the total quantity of service output

expressed in terms of designated numerical units in the form of quotas or the requirement of

an economic needs test.

1 Point (a) of paragraph 2 includes measures which require a service supplier of the other Party

to have an enterprise within the meaning of point (g) of Article 8.4(1) or to be resident in a

Party's territory as a condition for the cross-border supply of a service.

& /en 187

ARTICLE 8.14

National treatment

1. In the sectors inscribed in its schedule of specific commitments in Annex 8-A (Schedule of

Commitments on Cross-Border Supply of Services – Union) or Annex 8-E (Schedule of

Commitments on Cross-Border Supply of Services – Indonesia) and subject to any conditions and

qualifications set out therein, each Party shall accord to services and service suppliers of the other

Party, in respect of all measures affecting the cross-border supply of services, treatment no less

favourable than that it accords to its own like services and services suppliers.

2. A Party may meet the requirement of paragraph 1 by according to services and service

suppliers of the other Party either formally identical treatment or formally different treatment to that

it accords to its own like services and service suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if

it modifies the conditions of competition in favour of services or service suppliers of the Party

compared to like services or service suppliers of the other Party.

4. This Article shall not be construed to require any Party to compensate for inherent

competitive disadvantages which result from the foreign character of the relevant services or

services suppliers.

& /en 188

ARTICLE 8.15

Most-favoured-nation treatment

1. Each Party shall accord to services and service suppliers of the other Party treatment no less

favourable than that which it accords, in like situations, to services and service suppliers of any

third country.

2. Notwithstanding paragraph 1, a Party shall not be obliged to extend to services and service

suppliers of the other Party the benefits of any treatment accorded to services and service suppliers

of any third country pursuant to any international investment treaty or other trade agreement signed

or in force prior to the date of entry into force of this Agreement.

3. Paragraphs 1 and 2 shall not be construed to oblige a Party to extend to the investors of the

other Party the benefit of any treatment resulting from:

(a) an international agreement for the avoidance of double taxation or other international

agreements or arrangements relating wholly or mainly to taxation; or

(b) measures providing for the recognition of qualifications, licences or prudential measures as

provided for in Article VII of GATS or its Annex on Financial Services.

& /en 189

4. The substantive provisions in other international investment or trade agreements do not in

themselves constitute "treatment" as referred to in paragraphs 1 and 2, and thus shall not give rise to

a breach of this Article. However, measures applied pursuant to such provisions may constitute

"treatment" as referred to in paragraphs 1 and 2, and thus give rise to a breach of this Article.

ARTICLE 8.16

Schedule of specific commitments

The sectors liberalised by each of the Parties pursuant to this Section and the terms, limitations,

conditions and qualifications referred to in Articles 8.13, 8.14, and 8.15 are set out in the schedules

of commitments included in Annex 8-A (Schedule of Commitments on Cross-Border Supply of

Services – Union), Annex 8-D (MFN Treatment) or Annex 8-E (Schedule of Commitments on

Cross-Border Supply of Services – Indonesia) respectively.

& /en 190

SECTION D

TEMPORARY PRESENCE OF NATURAL PERSONS FOR BUSINESS PURPOSES

ARTICLE 8.17

Scope and definitions

1. This Chapter applies to measures of the Parties concerning the entry and temporary stay in

their territories of natural persons for business purposes of the other party as provided in paragraph

2, subject to each Party's reservation as specified in Annex 8-C (Schedule of Commitments on

Temporary Presence of Natural Persons for Business Purposes – Union) or Annex 8-G (Schedule of

Commitments on Temporary Presence of Natural Persons for Business Purposes – Indonesia)

respectively in accordance with Article 8.3(2).

2. For the purposes of this Chapter:

(a) "business visitors for establishment purposes" means natural persons working in a senior

position within a juridical person of a Party who are responsible for setting up an enterprise of

that juridical person in the territory of the other Party, do not offer or supply services or

engage in any other economic activity than required for establishment purposes and do not

receive remuneration from a source located within the territory of that other Party;

& /en 191

(b) "contractual services suppliers" means natural persons employed by a juridical person of a

Party who itself is not an agency for placement and supply of personnel nor acting through

such an agency, who is not established in the territory of the other Party and who has

concluded a bona fide contract to supply services to a final consumer in the other Party,

requiring the presence on a temporary basis of its employees in that Party, in order to fulfil the

contract to supply services1;

(c) "independent professionals" means natural persons engaged in the supply of a service and

established as self-employed in the territory of a Party who are not established in the territory

of the other Party and who have concluded a bona fide contract (other than through an agency

for placement and supply of personnel) to supply services to a final consumer in the latter

Party, requiring their presence on a temporary basis in that Party in order to fulfil the contract

to supply services2;

(d) "installers and maintainers" means natural persons of a Party who are seeking entry and

temporary stay in the territory of the other Party, who possesses a specialised knowledge

essential to a contractual obligation of a seller or a lessor of a Party, supplying relevant

services, which may include training workers to perform relevant services, pursuant to a

warranty or other service contract incidental to the sale or lease of commercial or industrial

equipment or machinery, including computer software, purchased or leased from an enterprise

of the Party of which the installers and maintainers are natural persons, within the duration of

the warranty or service contract;

1 The contract to supply services referred to under points (b) and (c) shall comply with the laws,

regulations and requirements of the Party where the contract is executed. 2 The contract to supply services referred to under points (b) and (c) shall comply with laws,

regulations and requirements of the Party where the contract is executed.

& /en 192

(e) "intra-corporate transferees"1 means natural persons who have been employed by a juridical

person of a party or its branch or have been partners in it for at least one year and who are

temporarily transferred to an enterprise of the juridical person in the territory of the other

Party. The natural person concerned must belong to one of the following categories:

(i) "directors", "managers" or "executives"2, which means persons working in a senior

position within a juridical person of a Party, who primarily direct the management of

the enterprise in the territory of the other Party, receiving general supervision or

direction principally from the board of directors or from stockholders of the business or

their equivalent, including at least:

(A) directing the enterprise or a department or subdivision thereof;

(B) supervising and controlling the work of other supervisory, professional or

managerial employees; and

(C) having the personal authority to recruit and dismiss or to recommend recruitment,

dismissal or other personnel-related actions;

1 For greater certainty, managers, executives and specialists may be required to demonstrate

they possess the professional qualification and length of working experience needed in the

juridical person to which they are transferred. 2 For greater certainty, in Indonesia, managers and executives are not allowed to receive

direction directly from stockholders.

& /en 193

(ii) "specialists", which means persons working within a juridical person who possesses a

specialised knowledge essential to the enterprise's areas of activity, techniques or

management ; in assessing such knowledge, account shall be taken not only of

knowledge specific to the enterprise, but also of whether the person has a high level of

qualification, including adequate professional experience, referring to a type of work or

activity requiring specific technical knowledge, including possible membership of an

accredited profession;

(iii) "trainee employees", which means persons who have been employed by a juridical

person or its branch for at least one year, possess a university degree and are

temporarily transferred to obtain training in business techniques or methods1 for career

development purposes;

(f) "qualifications" means diplomas, certificates and other evidence (of formal qualification)

issued by an authority designated pursuant to legislative, regulatory or administrative

provisions and certifying successful completion of professional training; and

(g) "short term business visitors" means natural persons of a Party who are seeking entry and

temporary stay in the territory of the other Party, and who are allowed to engage in:

(i) meetings and consultations, such as natural persons attending meetings or conferences,

giving lectures or engaged in consultations with business associates; or

1 The recipient enterprise may be required to submit a training programme covering the

duration of the stay for prior approval, demonstrating that the purpose of the stay is for

training. For Austria, Czechia, Germany, Spain, France, and Hungary, training must be linked

to the university degree which has been obtained.

& /en 194

(ii) sales, as representatives of a supplier of services or goods taking orders or negotiating

the sale of services or goods or entering into agreements to sell services or goods for

that supplier, but not delivering goods or supplying services themselves, not being

commission agents and not engaging in making direct sales to the general public.

ARTICLE 8.18

Intra-corporate transferees and business visitors for establishment purposes

1. For every sector committed in accordance with Section B and subject to the relevant

conditions and qualifications specified in Annex 8-C (Schedule of Commitments on Temporary

Presence of Natural Persons for Business Purposes – Union) or Annex 8-G (Schedule of

Commitments on Temporary Presence of Natural Persons for Business Purposes – Indonesia)1,

(a) a Party shall allow:

(i) the entry and temporary stay of Business Visitors for Establishment Purposes and Intra-

Corporate Transferees; and

(ii) the employment in its territory of intra-corporate transferees of the other Party;

1 For greater certainty, if a Party set out a reservation in Annex 8-A (Schedule of Commitments

on Cross-Border Supply of Services – Union) or Annex 8-E (Schedule of Commitments on

Cross-Border Supply of Services – Indonesia) or Annex 8-B (Schedule of Specific

Commitments on Liberalisation of Investment – Union) or Annex 8-F (Schedule of Specific

Commitments on Liberalisation of Investment – Indonesia), the reservation also constitutes a

reservation to this Article to the extent that the measure set out in or permitted by the

reservation affects the treatment of a natural person for business purposes entering and

temporary staying in the territory of the other Party.

& /en 195

(b) a Party shall not maintain or adopt limitations in the form of numerical quotas or economic

needs tests on the total number of natural persons that, in a specific sector, are granted entry

as business visitors for establishment purposes or that an investor may employ as intra-

corporate transferees, either on the basis of a territorial subdivision or on the basis of its entire

territory; and

(c) a Party shall accord to intra-corporate transferees and business visitors for establishment

purposes of the other Party, with regard to their temporary stay in its territory, treatment no

less favourable than that it accords, in like situations, to its own natural persons.

2. The entry and temporary stay shall be for a period of up to three years for directors, managers,

executives and specialists, one year for trainee employees. For business visitors for establishment

purposes it shall be for a maximum of 60 days, extendable to 120 days, for Indonesia, and 90 days,

for the Union within any 12 month period.

& /en 196

ARTICLE 8.19

Short term business visitors, and installers and maintainers

1. For every sector committed in accordance with this Agreement subject to the relevant

conditions and qualifications specified in Annex 8-C (Schedule of Commitments on Temporary

Presence of Natural Persons for Business Purposes – Union) or Annex 8-G (Schedule of

Commitments on Temporary Presence of Natural Persons for Business Purposes – Indonesia), a

Party shall grant entry and temporary stay to short term business visitors and installers and

maintainers of the other Party, subject to the following conditions and relevant qualifications:

(a) the short term business visitors and installers and maintainers are not engaged in selling their

goods or supplying services to the general public; and

(b) the short term business visitors and installers and maintainers do not, on their own behalf,

receive remuneration from within the Party where they are staying temporarily.

2. Unless otherwise specified in Annex 8-C (Schedule of Commitments on Temporary Presence

of Natural Persons for Business Purposes – Union), or Annex 8-G (Schedule of Commitments on

Temporary Presence of Natural Persons for Business Purposes – Indonesia), a Party shall grant

entry of short term business visitors and installers and maintainers without the requirement of a

work permit, economic needs test, or other prior approval procedures of similar intent.

3. The permissible length of stay shall be for a period of up to 90 days in any 12 month period.

& /en 197

ARTICLE 8.20

Contractual service suppliers

1. The Parties reaffirm their respective obligations arising from their commitments under the

GATS with respect to the entry and temporary stay of contractual services suppliers.

2. For every sector listed below, each Party shall allow the supply of services into their territory

by contractual services suppliers of the other Party, subject to the conditions specified in paragraph

3 and any reservations listed in Annex 8-C (Schedule of Commitments on Temporary Presence of

Natural Persons for Business Purposes – Union) or Annex 8-G (Schedule of Commitments on

Temporary Presence of Natural Persons for Business Purposes – Indonesia) respectively.

3. The commitments undertaken by the Parties pursuant to paragraph 2 are subject to the

following conditions:

(a) the natural persons must be engaged in the supply of a service on a temporary basis as

employees of a juridical person, which has obtained a service contract not exceeding 12

months;

(b) the natural persons entering the other Party must possess, at the date of submission of an

application for entry into the other Party, at least five years of professional experience1 in the

sector of activity which is the subject of the contract. Natural persons should be offering such

services as employees of the juridical person supplying the services for at least two years

immediately preceding the date of submission of an application for entry into the other Party;

1 Obtained after having reached the age of majority.

& /en 198

(c) the natural persons entering the other Party must possess:

(i) a degree or a qualification demonstrating knowledge of an equivalent level;1 and

(ii) professional qualifications where this is required to exercise an activity pursuant to the

laws and regulations or legal requirements of the Party where the service is supplied;

(d) the natural person shall not receive remuneration for the provision of services in the territory

of the other Party other than the remuneration paid by the juridical person employing the

natural person;

(e) the entry and temporary stay of natural persons within the Party concerned shall be for a

period as set out in each schedule;

(f) access accorded under the provisions of this Article relates only to the service activity which

is the subject of the contract and does not confer entitlement to exercise the professional title

of the Party where the service is provided; and

(g) the number of persons covered by the service contract shall not be larger than necessary to

fulfil the contract pursuant to relevant laws and regulations of the Party where the service is

supplied.

1 Where the degree or qualification has not been obtained in the Party where the service is

supplied, that Party may evaluate whether this is equivalent to a university degree required in

its territory. In evaluating the qualification, that Party shall endeavour to take into account

relevant information that may be provided by relevant authority of the other Party.

& /en 199

ARTICLE 8.21

Independent professionals

1. For every sector listed in Annex 8-C (Schedule of Commitments on Temporary Presence of

Natural Persons for Business Purposes – Union) or Annex 8-G (Schedule of Commitments on

Temporary Presence of Natural Persons for Business Purposes – Indonesia), the Parties shall allow

the supply of services into their territory by independent professionals of the other Party, subject to

the conditions specified in paragraph 2, and any reservations listed in the relevant Annex.

2. The commitments undertaken by the Parties are subject to the following conditions:

(a) the natural persons must be engaged in the supply of a service on a temporary basis as self-

employed persons established in the other Party and must have obtained a service contract for

a period not exceeding 12 months;

(b) the natural persons entering the other Party must possess, at the date of submission of an

application for entry into the other Party, at least six years of professional experience in the

sector of activity which is the subject of the contract;

(c) the natural persons entering the other Party must possess:

(i) a degree or a qualification demonstrating knowledge of an equivalent level1 and

1 Where the degree or qualification has not been obtained in the Party where the service is

supplied, that Party may evaluate whether this is equivalent to a university degree required in

its territory. In evaluating the qualification, that Party shall endeavour to take into account

relevant information that may be provided by relevant authority of the other Party.

& /en 200

(ii) the professional qualifications if required to exercise an activity pursuant to the laws

and regulations of the Party where the service is supplied.

(d) the entry and temporary stay of natural persons within the Party concerned shall be for a

period as set out in each schedule; and

(e) access granted under the provisions of this Article relates only to the service activity which is

the subject of the contract and it does not confer entitlement to exercise the professional title

of the Party where the service is provided.

ARTICLE 8.22

Transparency

1. Each Party shall make publicly available information on relevant measures that pertain to the

entry and temporary stay of natural persons with respect to whom commitments are undertaken in

accordance with this Chapter.

2. The information referred to in paragraph 1 shall, to the extent possible, include inter alia the

following information:

(a) entry conditions;

& /en 201

(b) an indicative list of documentation required to verify the fulfilment of the conditions;

(c) indicative processing time;

(d) applicable fees;

(e) appeal procedures.

3. For greater certainty, paragraph 2 shall not be construed as to require any Party to provide an

appeal procedure that is inconsistent with its legal system.

ARTICLE 8.23

Non-application of dispute settlement

Chapter 22 (Dispute Settlement) does not apply to any refusal of granting temporary entry, unless

the matter involves a pattern of practice.

& /en 202

SECTION E

REGULATORY FRAMEWORK

SUB-SECTION 1

DOMESTIC REGULATION

ARTICLE 8.24

Scope and definitions

1. This Section applies to measures of the Parties relating to licencing requirements and

procedures and qualification requirements and procedures that affect:

(a) the cross-border supply of services;

(b) the supply of a service or pursuit of any other economic activity through the establishment of

an enterprise and operation of a covered enterprise;

(c) the supply of a service through temporary stay in their territory of categories of natural

persons as defined in Article 8.17(1).

& /en 203

2. This Section only applies to sectors for which the Party has undertaken specific commitments

and to the extent that these specific commitments apply.

3. This section does not apply to measures which constitute limitations subject to scheduling of

commitments pursuant to Articles 8.7 or 8.13 or Article 8.8 or 8.14 where applicable or Article 8.11

or Articles 8.18, 8.19, 8.20, 8.21.

4. For the purposes of this Section:

(a) "competent authority" means any central, regional or local government or authority or non-

governmental body in the exercise of powers delegated by central or regional or local

governments or authorities, which takes a decision concerning the authorisation to supply a

service, including through establishment, or concerning the authorisation to establish an

economic activity other than services;

(b) "licencing procedures" means administrative or procedural rules that a natural or a juridical

person, seeking authorisation to carry out the activities as referred to paragraph 1, including

the amendment or renewal of a licence, must adhere to in order to demonstrate compliance

with licencing requirements;

(c) "licencing requirements" means substantive requirements, other than qualification

requirements, which apply to a natural or a juridical person in order to obtain, amend or renew

authorisation to carry out the activities as defined in paragraph 1;

& /en 204

(d) "qualification procedures" means administrative or procedural rules that a natural person must

adhere to in order to demonstrate compliance with qualification requirements, for the purpose

of obtaining authorisation to supply a service; and

(e) "qualification requirements" means substantive requirements relating to the competence of a

natural person to supply a service, and which are required to be demonstrated for the purpose

of obtaining authorisation to supply a service.

ARTICLE 8.25

Conditions for licencing and qualification

1. Each Party shall ensure that measures relating to licencing requirements licencing procedures,

qualification requirements and qualification procedures are based on criteria which preclude the

competent authorities from exercising their power of assessment in an arbitrary manner.

2. The criteria referred to in paragraph 1 shall be:

(a) clear;

(b) objective and transparent; and

& /en 205

(c) pre-established and accessible to the public.

3. An authorisation or, subject to availability, a licence shall be granted as soon as it is

established, in the light of an appropriate examination, that the conditions for obtaining it have been

met.

4. Each Party shall maintain or institute judicial, arbitral or administrative tribunals or

procedures which provide, at the request of an affected investor or service supplier, for a prompt

review of, and where justified, appropriate remedies for, administrative decisions affecting

establishment, cross-border supply of services or temporary presence of natural persons for business

purposes. Where such procedures are not independent of the agency entrusted with the

administrative decision concerned, each Party shall ensure that the procedures provide for an

objective and impartial review.

5. The provisions of paragraph 4 shall not be construed as requiring a Party to institute such

tribunals or procedures where this would be inconsistent with the nature of its legal system.

6. Where the number of licences available for a given activity is limited because of the scarcity

of available natural resources or technical capacity, each Party shall apply a selection procedure to

potential candidates which provides full guarantees of impartiality and transparency, including, in

particular, adequate publicity about the launch, conduct and completion of the procedure.

& /en 206

7. Subject to the provisions specified by paragraph 6, each Party, when establishing the rules for

the selection procedure, may take into account legitimate policy objectives, including

considerations of health, safety, the protection of the environment and the preservation of cultural

heritage.

ARTICLE 8.26

Licencing and qualification procedures

1. Licencing and qualification procedures and formalities shall be clear, pre-established, and

made publicly available, and shall not in themselves constitute a restriction on the supply of a

service or the pursuit of any other economic activity. Each Party shall endeavour to make such

procedures and formalities as simple as possible and shall not unduly complicate or delay the

provision of the service. Any licencing fees1, except for financial services, which the applicants

may incur from their application, shall be reasonable and not restrict the supply of the relevant

service or the pursuit of the relevant economic activity.

2. With regard to financial services, each Party shall ensure that its competent authorities, with

respect to authorisation fees that they charge, provide applicants with a schedule of fees or

information on how fee amounts are determined, and do not use the fees as a means of avoiding the

Party's commitments or obligations under this Agreement.

1 Licencing fees do not include payments for auction, tendering or other non-discriminatory

means of awarding concessions, or mandated contributions to universal service provision.

& /en 207

3. Each Party shall ensure that the procedures applied by, and the decisions of, the competent

authority in the licencing or authorisation process are impartial. The competent authority should

reach its decision in an independent manner and not be accountable to any person supplying the

services or carrying out the economic activities for which the licence or authorisation is required.

4. In case specific time periods for applications exist, an applicant shall be allowed a reasonable

period for the submission of an application. The competent authority shall initiate the processing of

an application without undue delay. If possible, applications should be accepted in electronic format

under the same conditions of authenticity as paper submissions.

5. Each Party shall ensure that the processing of an application, including reaching a final

decision, is completed within a reasonable timeframe after the date of submission of a complete

application. Each Party shall endeavour to establish the normal timeframe for processing an

application.

6. The competent authority shall, within a reasonable period of time after the receipt of an

application which it considers incomplete, inform the applicant, identify to the extent feasible the

additional information required to complete the application, and provide the opportunity to correct

deficiencies.

7. Copies that are authenticated in accordance with the Party's domestic law should be accepted,

whenever possible, in place of original documents.

& /en 208

8. If an application is rejected by the competent authority, the applicant shall be informed in

writing and without undue delay. In line with each Party´s laws and regulations, the applicant shall,

upon formal request, also be informed of the reasons for rejection of the application and of the

timeframe for an appeal against this decision. An applicant shall be allowed, within reasonable time

limits, to resubmit an application.

9. Each Party shall ensure that a licence or an authorisation, once granted, enters into effect

without undue delay in accordance with the terms and conditions specified therein.

SUB-SECTION 2

PROVISIONS OF GENERAL APPLICATION

ARTICLE 8.27

Mutual recognition of professional qualifications

1. Nothing in this Article shall prevent a Party from requiring that natural persons possess the

necessary qualifications or professional experience required for the sector of activity concerned in

the territory where the service is supplied.

& /en 209

2. Where appropriate, the Parties shall encourage the establishment of dialogue between their

relevant experts, regulators or industry bodies to share and facilitate understanding of the respective

qualifications, registration requirements and processes.

3. The Parties shall encourage the relevant professional bodies or respective authorities, as

appropriate, in their respective territories to develop and provide a joint recommendation on mutual

recognition of professional qualifications to the Trade Committee. Such a joint recommendation

shall be supported by evidence of:

(a) the economic value of an envisaged arrangement on mutual recognition of professional

qualifications (hereinafter referred to as a "Mutual Recognition Arrangement"); and

(b) the compatibility of the respective regimes, i.e., the extent to which the criteria applied by

each Party for the authorisation, licencing, operation and certification of entrepreneurs and

service suppliers are compatible.

4. On receipt of a joint recommendation, the Trade Committee shall review its consistency with

this Chapter, within a reasonable period of time. The Trade Committee may, following such review,

develop and adopt a Mutual Recognition Arrangement1 by decision pursuant to Article 24.2.2

1 For greater certainty, nothing in this Article shall be construed as requiring the Parties to

establish automatic recognition of professional qualifications, and such Mutual Recognition

Arrangements shall establish the conditions for the competent authorities to grant recognition

in the mutual interest of both Parties. 2 For greater certainty, this paragraph shall be without prejudice to the right of the Trade

Committee to delegate the review and development of a Mutual Recognition Arrangement to

the Committee on Services, Investment, Digital Trade, Government Procurement, Intellectual

Property (hereinafter referred to as the "Committee" for the purposes of this Chapter). The

Committee retains the right to adopt a Mutual Recognition Arrangement.

& /en 210

5. Notwithstanding paragraph 3, the entry into force of the Mutual Recognition Arrangement

shall be that provided therein or in the decision.

6. The guidelines for arrangements on the recognition of professional qualifications set out in

Annex 8-H (Guidelines for Arrangements on the Mutual Recognition of Professional

Qualifications) shall be taken into account in the development of the joint recommendations

referred to in paragraph 2 and by the Trade Committee when assessing whether to adopt such a

Mutual Recognition Arrangement, as referred to in paragraph 3.

7. The Trade Committee may consider:

(a) issues of mutual interest relating to the supply of professional services; and

(b) the possibility of developing a comparison of European and Indonesian Qualifications

Frameworks to improve understanding of the Parties' respective qualification frameworks.

& /en 211

SUB-SECTION 3

DELIVERY SERVICES

ARTICLE 8.28

Scope and definitions

1. This Section sets out the principles of the regulatory framework for all delivery services.

2. For the purpose of this sub-Section:

(a) "delivery services" mean postal and courier or express services, which include the collection,

sorting, transport, and delivery of postal items;

(b) "express delivery services" means the collection, sorting, transport and delivery of postal

items at accelerated speed and reliability and may include value added elements such as

collection from point of origin, personal delivery to the addressee, tracing, possibility of

changing the destination and addressee in transit or confirmation of receipt;

(c) "express mail services" means international express delivery services supplied through the

EMS Cooperative, which is the voluntary association of designated postal operators under

Universal Postal Union (UPU);

& /en 212

(d) "license" means an authorisation, granted to a service supplier by a regulatory authority,

setting out procedures, obligations and requirements specific to the delivery services sector

pursuant to laws and regulations of each Party;

(e) "postal item" means an item up to 31,5 kg addressed in the final form in which it is to be

carried by any type of delivery service provider, whether public or private, and may include

items such as a letter, parcel, newspaper, catalogue, and others;

(f) "postal monopoly" means the exclusive right to supply specified delivery services within a

Party's territory pursuant to a legislative measure of the Party; and

(g) "universal service" means the permanent provision of a service of a specified quality at all

points in the territory of a Party at affordable prices for all users.

ARTICLE 8.29

Universal service

1. Each Party has the right to define the kind of universal service obligation it wishes to

maintain. Each Party that maintains a universal service obligation shall administer it in a

transparent, non-discriminatory and neutral manner with regard to all suppliers subject to the

obligation.

& /en 213

2. If a Party requires inbound Express Mail Services to be supplied on a universal service basis,

it shall not accord preferential treatment to this service over other international express delivery

services.

ARTICLE 8.30

Universal service funding

The Parties shall not impose discriminatory fees or other charges on the supply of a non-universal

delivery service for the purpose of funding the supply of a universal service.1

ARTICLE 8.31

Prevention of market distortive practices

Each Party shall ensure that a supplier of delivery services subject to a universal service obligation

or a postal monopoly does not engage in the following market distortive practices:

(a) using revenues derived from the supply of such service to cross-subsidize the supply of an

express delivery service or any non-universal delivery service;2

1 This paragraph does not apply to generally applicable taxation measures or administrative

fees. 2 Measures to demonstrate that revenues derived from the supply of delivery services subject to

universal service obligation or postal monopoly are not used to cross-subsidize the supply of

non-monopoly or non-universal delivery service may include maintaining separate accounts.

& /en 214

(b) unjustifiably differentiating among customers such as businesses, large volume mailers or

consolidators with respect to, for example, tariffs for the supply of a service subject to a

universal service obligation or a postal monopoly; or

(c) any other market distortive practice laid down in the laws and regulations of the Party in

which the service is supplied.

ARTICLE 8.32

Licences

1. If a Party requires a licence for the provision of delivery services, it shall make publicly

available:

(a) all licencing requirements and the period of time normally required to reach a decision

concerning an application for a licence; and

(b) the terms and conditions of the licences.

2. The procedures, obligations and requirements of a license shall be transparent, non-

discriminatory and based on objective criteria.

& /en 215

3. Each Party shall inform the applicant of the reasons for denial of the licence in writing. Each

Party shall ensure that it institutes or maintains an appeal procedure through a body that is

independent from the parties involved and that may be a court.

ARTICLE 8.33

Independence of the regulatory body

1. Each Party shall create or maintain a regulatory body which shall be legally distinct and

functionally independent from any supplier of delivery services. That body may be a government

institution.

2. Each Party shall ensure that regulatory bodies as referred to in paragraph 1 perform their tasks

in a transparent and timely manner. They shall ensure that regulatory bodies have adequate financial

and human resources to carry out the task assigned to them.

3. The decisions of and the procedures used by the regulatory body shall be impartial with

respect to all market participants.

4. A Party that retains ownership or control of undertakings providing delivery services, shall

ensure effective structural separation of the regulatory function from activities associated with

ownership or control.

& /en 216

SUB-SECTION 4

TELECOMMUNICATIONS SERVICES

ARTICLE 8.34

Scope

1. This Sub-Section sets out the principles of the regulatory framework for the provision of

public telecommunications networks and services, liberalised pursuant to Sections B and C of this

Chapter.

2. This Sub-Section does not apply to any measure adopted or maintained by a Party relating to

cable or broadcast distribution of radio or television programming.

& /en 217

ARTICLE 8.35

Definitions

For the purposes of this Sub-Section:

(a) "associated facilities" means services, physical infrastructures and other facilities associated

with a telecommunications network or service which enable or support the provision of

services via that network and/or service or have the potential to do so;

(b) "essential facilities" means facilities of a public telecommunications network or service that:

(i) are exclusively or predominantly provided by a single or limited number of suppliers;

and

(ii) cannot feasibly be economically or technically substituted in order to provide a service;

(c) "interconnection" means linking of public telecommunications networks providing public

telecommunications networks or services in order to allow the users of one supplier to

communicate with users of another supplier or to access services provided by another

supplier;

(d) "leased circuits" means telecommunications services or facilities that set aside capacity for the

dedicated use of, or availability to, a user between two or more designated points;

& /en 218

(e) "major supplier" means a supplier of telecommunications networks or services which has the

ability to materially affect the terms of participation, having regard to price and supply, in a

relevant market for telecommunications networks or services as a result of control over

essential facilities or the use of its position in that market;

(f) "network element" means a facility or equipment used in supplying a public

telecommunications service, including features, functions and capabilities provided by means

of that facility or equipment;

(g) "non-discriminatory" means treatment no less favourable than that accorded to any other user

of like public telecommunications networks or services in like situations;

(h) "public telecommunications network" means any telecommunications network used wholly or

mainly for the provision of public telecommunications services between network termination

points;

(i) "public telecommunications service" means any telecommunications service that is offered to

the public generally;

(j) "telecommunications" means the transmission and reception of signals by any

electromagnetic means;

& /en 219

(k) "telecommunications network" means transmission systems and, where applicable, switching

or routing equipment and other resources, including network elements which are not active,

which permit the transmission and reception of signals by wire, radio, optical, or other

electromagnetic means;

(l) "telecommunications regulatory authority" means the body or bodies charged by a Party with

the regulation of telecommunications networks and services covered by this Sub-Section;

(m) "telecommunications service" means a service which consists wholly or mainly of the

transmission and reception of signals, including of broadcasting signals, over

telecommunications networks, including over networks used for broadcasting.

Telecommunications services exclude services providing, or exercising, editorial control over

content transmitted using telecommunications networks and services;

(n) "universal service" means the minimum set of services of specified quality that must be made

available to all users in the territory of a Party regardless of their geographical location and at

an affordable price; and

(o) "user" means any legal entity or natural person using a public telecommunications network or

service.

& /en 220

ARTICLE 8.36

Telecommunications regulatory authority

1. Each Party shall ensure that its telecommunications regulatory authority is legally distinct and

functionally independent from any supplier of telecommunications networks, telecommunications

services or telecommunications equipment, and that the decisions of and the procedures used by the

telecommunications regulatory authority are impartial, with respect to all market participants. A

Party that retains ownership or control of suppliers of telecommunications networks or services

shall ensure effective structural separation of the regulatory function from activities associated with

ownership or control.

2. The telecommunications regulatory authority shall act independently and shall not seek or

take instructions from any other body in relation to the exercise of the tasks assigned to it pursuant

to national law to enforce the obligations set out in Articles 8.38, 8.39, 8.40, 8.42 and 8.43 of this

Sub-Section.

3. Each Party shall ensure that the telecommunications regulatory authority has the regulatory

power, as well as adequate financial and human resources, to carry out the tasks assigned to it to

enforce the obligations set out in this Sub-Section. Such power shall be exercised transparently and

in a timely manner. The tasks to be undertaken by a regulatory authority shall be made public in an

easily accessible and clear form, in particular where those tasks are assigned to more than one body.

& /en 221

4. Each Party shall provide its telecommunications regulatory authority with the power to ensure

that suppliers of telecommunications networks or services provide it, promptly upon request, with

all the information, including financial information, which is necessary to enable the

telecommunications regulatory authority to carry out its tasks in accordance with this Sub-Section.

Information requested shall be treated in accordance with the requirements of confidentiality.

5. Each Party shall ensure that a user or supplier of telecommunications networks or services

affected by a decision of the telecommunications regulatory authority has the right to appeal against

that decision before an appellate body that is independent of the telecommunications regulatory

authority and of the parties affected by the decision. Pending the outcome of the appeal, the

decision of the telecommunications regulatory authority shall stand, unless interim measures are

granted in accordance with national law.

ARTICLE 8.37

Authorisation to provide telecommunications services

1. If a Party requires an authorisation for the provision of telecommunications networks or

services, that Party shall make publicly available the types of services requiring authorisation, all

authorisation criteria, any terms and conditions generally associated with the authorisation, and the

applicable procedures.

& /en 222

2. If a Party requires a formal authorisation decision, that Party shall determine a reasonable

period of time normally required to obtain such a decision, shall communicate this in a transparent

manner and shall endeavour to ensure that the decision is taken within the stated period of time.

3. Any authorisation criteria and applicable procedures shall be as simple as possible, objective,

transparent, non-discriminatory and proportionate. Any obligations and conditions imposed on or

associated with an authorisation shall be non-discriminatory, transparent, proportionate and related

to the services provided.

4. Each Party shall ensure that an applicant receives in writing the reasons for the denial or the

revocation of an authorisation, or the imposition of supplier-specific conditions. In such cases, an

applicant shall be able to seek recourse before an appeal body.

5. Administrative fees imposed on suppliers, if any, shall be objective, transparent, non-

discriminatory and commensurate with the administrative costs reasonably incurred in the

management, control and enforcement of the obligations set out in this Sub-Section.1

1 Administrative fees do not include payments for rights to use scarce resources and mandated

contributions to universal service provision.

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ARTICLE 8.38

Interconnection

Each Party shall ensure that a supplier of public telecommunications networks or services has the

right and, when requested by another supplier of public telecommunications networks or services,

the obligation to negotiate interconnection for the purpose of providing public telecommunications

networks or services.

ARTICLE 8.39

Access and use

1. Each Party shall ensure that any service supplier of the other Party is accorded access to and

use of public telecommunications networks or services on reasonable and non-discriminatory terms

and conditions. This obligation shall be applied, inter alia, through paragraphs 2 to 5.

2. Each Party shall ensure that service suppliers of the other Party have access to and use of any

public telecommunications service offered within or across the border of that Party, including

private leased circuits, and shall ensure, subject to the provisions in paragraph 5, that such suppliers

are permitted:

(a) to purchase or lease and attach a terminal or other equipment which interfaces with the

network and which is necessary to supply a supplier's services;

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(b) to connect private leased or owned circuits with public telecommunications networks or with

circuits leased or owned by another service supplier; and

(c) to use operating protocols of their choice in the supply of any service, other than as necessary

to ensure the availability of telecommunications services to the public generally.

3. Each Party shall ensure that service suppliers of the other Party may use public

telecommunications networks and services for the movement of information within and across

borders, including for intra-corporate communications of such service suppliers, and for access to

information contained in data bases or otherwise stored in machine-readable form in the territory of

either Party.

4. Notwithstanding paragraph 3, a Party may take such measures as are necessary to ensure the

security and confidentiality of communications, subject to the requirement that such measures are

not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination

or a disguised restriction on trade in services.

5. Each Party shall ensure that no condition is imposed on access to and use of public

telecommunications services other than as necessary to:

(a) safeguard the public service responsibilities of suppliers of public telecommunications

networks or services, in particular their ability to make their services available to the public

generally; or

& /en 225

(b) protect the technical integrity of public telecommunications networks or services.

ARTICLE 8.40

Resolution of telecommunications disputes

1. Each Party shall ensure that, in the event of a dispute arising between suppliers of

telecommunications networks or services in connection with rights and obligations under this Sub-

Section, and at the request of either party involved in the dispute, the telecommunications

regulatory authority issues a binding decision within a reasonable timeframe to resolve the dispute.

2. Without prejudice to the requirements of business confidentiality, the decision issued by the

telecommunications regulatory authority shall be made available to the public. The parties

concerned shall be given a full statement of the reasons on which the decision is based and shall

have the right to appeal the decision, in accordance with Article 8.36(5).

3. The procedure referred to in paragraphs 1 and 2 shall not preclude any party concerned from

having recourse to relevant court.

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ARTICLE 8.41

Competitive safeguards

1. Each Party shall introduce or maintain appropriate measures for the purpose of preventing

suppliers of telecommunications networks or services which, alone or together, are a major supplier,

from engaging in or continuing anti-competitive practices. These anti-competitive practices shall

include in particular:

(a) engaging in anti-competitive cross-subsidisation;

(b) using information obtained from competitors with anti-competitive results; and

(c) not making available to other service suppliers on a timely basis technical information about

essential facilities and commercially relevant information which are necessary for them to

supply services.

2. For greater certainty, nothing in this Article shall prevent a Party from maintaining measures

for the purpose of preventing anti-competitive practices by suppliers of public telecommunications

networks or services which are not major suppliers.

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ARTICLE 8.42

Interconnection with major suppliers

1. Each Party shall ensure that major suppliers of public telecommunications networks or

services provide interconnection at any technically feasible point in the network. Such

interconnection shall be provided:

(a) under non-discriminatory terms and conditions (including as regards rates, technical

standards, specifications, quality and maintenance) and of a quality no less favourable than

that provided for the own like services of that major supplier, or for like services of its

subsidiaries or other affiliates;

(b) in a timely fashion, on terms and conditions (including as regards to rates, technical standards,

specifications, quality and maintenance) that are transparent, reasonable, having regard to

economic feasibility, and sufficiently unbundled so that the supplier is not required to pay for

network components or facilities that are not necessary for the provision of the service; and

(c) upon request, at network termination points additional to those offered to the majority of

users, subject to charges that reflect the cost of construction of necessary additional facilities.

2. The procedures applicable for interconnection to a major supplier shall be made publicly

available.

& /en 228

3. Major suppliers shall make publicly available either their interconnection agreements or their

reference interconnection offers, as appropriate.

ARTICLE 8.43

Access to major suppliers essential facilities

Each Party shall ensure that a major supplier in its territory makes its essential facilities available to

suppliers of telecommunications networks or services on reasonable and non-discriminatory terms

and conditions for the purpose of providing public telecommunications services, except when this is

not necessary to achieve effective competition on the basis of the facts collected and the assessment

of the market conducted by the telecommunications regulatory authority. The major supplier's

essential facilities may include network elements, leased circuits services and associated facilities.

ARTICLE 8.44

Scarce resources

1. Each Party shall ensure that the allocation and granting of rights of use of scarce resources,

including radio spectrum, numbers and rights of way, is carried out in an open, objective, timely,

transparent, non-discriminatory and proportionate manner, and in pursuit of general interest

objectives. Procedures, conditions and obligations attached to rights of use, shall be based on

objective, transparent, non-discriminatory and proportionate criteria.

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2. The current use of allocated frequency bands shall be made publicly available, detailed

identification of radio spectrum allocated for specific government uses is not required.

3. A Party's measures allocating and assigning spectrum and managing frequency are not

measures that are per se inconsistent with Articles 8.7 and 8.13. Accordingly, each Party retains the

right to establish and apply spectrum and frequency management measures that may have the effect

of limiting the number of suppliers of telecommunications services, provided that it does so in a

manner consistent with this Chapter. This includes the ability to allocate frequency bands taking

into account current and future needs and spectrum availability.

ARTICLE 8.45

Number portability

In accordance with Articles 8.8 and 8.14, each Party shall ensure that suppliers of public

telecommunications services provide number portability on reasonable terms and conditions to the

extent that such service is already provided in the territory of each Party.

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ARTICLE 8.46

Universal service

1. Each Party has the right to define the kind of universal service obligations it wishes to

maintain and to decide on their scope and implementation.

2. Universal service obligations shall not be regarded as anti-competitive, provided they are

administered in a proportionate, transparent, objective and non-discriminatory way. The

administration of such obligations shall be neutral with respect to competition and not be more

burdensome than necessary for the type of universal service defined by the Party.

3. Each Party shall ensure that procedures for the designation of universal service suppliers are

open to all suppliers of public telecommunications networks or services. The designation shall be

made through an efficient, transparent and non-discriminatory mechanism.

4. If a Party decides to compensate the universal service suppliers, that Party shall ensure that

such compensation does not exceed the net cost caused by the universal service obligation.

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ARTICLE 8.47

Confidentiality of information

1. Each Party shall ensure that suppliers that acquire information from another supplier in the

process of negotiating arrangements, pursuant to Articles 8.38, 8.39, 8.42 or 8.43, use that

information solely for the purpose for which it was supplied and respect at all times the

confidentiality of the information transmitted or stored.

2. Each Party shall ensure the confidentiality of telecommunications and related traffic data

transmitted in the use of public telecommunications networks or services, subject to the requirement

that measures applied to that end do not constitute a means of arbitrary or unjustifiable

discrimination or a disguised restriction on trade in services.

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SUB-SECTION 5

FINANCIAL SERVICES

ARTICLE 8.48

Scope and definitions

1. This Section sets out the principles of the regulatory framework for all financial services

liberalised pursuant to Sections B, C and D.

2. For the purposes of this Section and of Sections B, C and D of this Chapter:

(a) "financial service" means any service of a financial nature offered by a financial service

supplier of a Party. Financial services comprise the following activities:

(i) insurance and insurance-related services:

(A) direct insurance (including co-insurance):

(aa) life;

(bb) non-life;

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(B) reinsurance and retrocession;

(C) insurance inter-mediation, such as brokerage and agency; and

(D) services auxiliary to insurance, such as consultancy, actuarial, risk assessment and

claim settlement services.

(ii) banking and other financial services (excluding insurance):

(A) acceptance of deposits and other repayable funds from the public;

(B) lending of all types, including consumer credit, mortgage credit, factoring and

financing of commercial transaction;

(C) financial leasing;

(D) all payment and money transmission services, including credit, charge and debit

cards, travellers cheques and bankers drafts;

(E) guarantees and commitments;

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(F) trading for own account or for account of customers, whether on an exchange, in

an over-the-counter market or otherwise, the following:

(aa) money market instruments (including cheques, bills, certificates of

deposits);

(bb) foreign exchange;

(cc) derivative products including, but not limited to, futures and options;

(dd) exchange rate and interest rate instruments, including products such as

swaps, forward rate agreements;

(ee) transferable securities;

(ff) other negotiable instruments and financial assets, including bullion;

(G) participation in issues of all kinds of securities, including underwriting and

placement as agent (whether publicly or privately) and provision of services

related to such issues;

(H) money broking;

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(I) asset management, such as cash or portfolio management, all forms of collective

investment management, pension fund management, custodial, depository and

trust services;

(J) settlement and clearing services for financial assets, including securities,

derivative products, and other negotiable instruments;

(K) provision and transfer of financial information, and financial data processing and

related software by suppliers of other financial services; and

(L) advisory, intermediation and other auxiliary financial services to any of the

activities listed in points (A) to (K), including credit reference and analysis,

investment and portfolio research and advice, advice on acquisitions and on

corporate restructuring and strategy;

(b) "financial service supplier" means any natural or juridical person of a Party that seeks to

provide or provides financial services; the term "financial service supplier" does not include a

public entity;

& /en 236

(c) "public entity1" means:

(i) a government, a central bank or a monetary authority, of a Party, or an entity owned or

controlled by a Party, that is principally engaged in carrying out governmental functions

or activities for governmental purposes, and does not include an entity principally

engaged in supplying financial services on commercial terms; or

(ii) a private entity, performing functions normally performed by a central bank or

monetary authority, when exercising those functions;

(d) "new financial service" means a financial service including services related to existing and

new products or the manner in which a product is delivered, that is not supplied by any

financial service supplier in the territory of a Party but which is supplied and regulated in the

territory of the other Party;

(e) "self-regulatory organisation" means any non-governmental body, including any securities or

futures exchange or market, clearing agency, other organisation or association, that exercises

regulatory or supervisory authority over financial service suppliers by statute or delegation

from central, regional or local governments or authorities, where applicable.

1 For greater certainty, a public entity includes a financial regulatory or supervisory authority.

& /en 237

3. For the purposes of point (a) of Article 8.4(1), "services supplied in the exercise of

governmental authority" means the following:

(a) activities conducted by a central bank or a monetary authority or by any public entity in

pursuit of monetary or exchange rate policies;

(b) activities forming part of a statutory system or social security or public retirement plans; and

(c) other activities conducted by a public entity for the account or with the guarantee or using the

financial resources of a Party or its public entities.

ARTICLE 8.49

Prudential carve-out

1. Nothing in this Agreement shall prevent a Party from adopting or maintaining measures for

prudential reasons, such as:

(a) the protection of investors, depositors, policy-holders or persons to whom a fiduciary duty is

owed by a financial service supplier; or

(b) ensuring the integrity and stability of a Party's financial system.

& /en 238

2. If the measures referred to in paragraph 1 do not conform to the other provisions of this

Agreement, they shall not be used as a means of avoiding a Party's commitments or obligations

under such provisions.

3. Nothing in this Agreement shall be construed as requiring a Party to disclose information

relating to the affairs and accounts of individual consumers or any confidential or proprietary

information in the possession of public entities.

ARTICLE 8.50

Effective and transparent regulation

1. Each Party shall make available to financial services suppliers its requirements for completing

applications relating to the supply of financial services.

2. On the request of an applicant, the concerned Party shall inform the applicant of the status of

its application. If the concerned Party requires additional information from the applicant, that Party

shall notify the applicant without undue delay.

& /en 239

3. Each Party shall endeavour to ensure that internationally agreed standards for regulation and

supervision in the financial services sector and for the fight against tax evasion and avoidance and

against money laundering and terrorist financing are implemented and applied in its territory. Such

internationally agreed standards are, inter alia, those adopted by the G20, the Financial Stability

Board, the Basel Committee on Banking Supervision, the International Association of Insurance

Supervisors, the International Organisation of Securities Commissions, the Financial Action Task

Force and the Global Forum on Transparency and Exchange of Information for Tax Purposes.

ARTICLE 8.51

New financial services

Each Party shall permit a financial service supplier of the other Party established in its territory to

provide any new financial service that the former Party would permit its own financial service

suppliers to provide in accordance with its laws or regulations in like situations, provided that the

introduction of the new financial services does not require the adoption of a new law or

modification of an existing law. A Party may determine the institutional and legal form through

which the service may be provided and may require authorisation for the provision of the service.

When such authorisation is required, a decision on the authorisation shall be made in accordance

with Section E, Sub-Section 1, and the authorisation may only be refused for prudential reasons.

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ARTICLE 8.52

Specific exceptions

1. Nothing in this Chapter shall be construed as preventing a Party, including its public entities,

from exclusively conducting or providing in its territory activities or services forming part of a

public retirement plan or statutory system of social security, except when those activities may be

carried out, as provided by the laws and regulations of that Party, by financial service suppliers in

competition with public entities or private institutions.

2. This Agreement does not apply to activities conducted by a central bank or monetary

authority or by any other public entity in pursuit of monetary or exchange rate policies.

3. This Chapter shall not be construed as preventing a Party, including its public entities, from

exclusively conducting or providing in its territory activities or services for the account or with the

guarantee of, or using the financial resources of the Party, or its public entities, except when those

activities may be carried out, as provided by the laws and regulations of that Party, by financial

service suppliers in competition with public entities or private institutions.

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ARTICLE 8.53

Self-regulatory organisations

If a Party requires membership of, participation in, or access to, any self-regulatory organization in

order for financial service suppliers of the other Party to supply financial services in or into the

territory of the first Party, that Party shall ensure observance of the obligations under Articles 8.8

and 8.9 as well as Articles 8.14 and 8.15.

ARTICLE 8.54

Clearing and payment systems

Under terms and conditions that accord national treatment, each Party shall, subject to each Party's

access criteria, grant to financial service suppliers of the other Party established in its territory

access to payment and clearing systems operated by public entities and to official funding and

refinancing facilities available in the normal course of ordinary business. This Article is not

intended to confer access to the Party's lender of last resort facilities.

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ARTICLE 8.55

Regulatory dialogue in the area of financial services

1. The Parties hereby establish a dialogue on the regulation of the financial services sector with a

view to improving mutual knowledge of the Parties' respective regulatory systems and to co-

operating in the development of international standards.

2. Issues regarding financial services that a Party communicates to the other Party, shall be

agreed by the Parties prior to the dialogue.

3. The Parties may meet in person, including in the margins of international fora, or by any other

appropriate means of communication, such as videoconference or teleconference, as agreed by the

Parties.

4. Participants in the regulatory dialogue shall be financial services experts and representatives

of authorities in charge of financial services policy.

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SUB-SECTION 6

INTERNATIONAL MARITIME TRANSPORT SERVICES

ARTICLE 8.56

Scope, definitions and principles

1. In addition to Sections B, C and D1, this Sub-Section shall apply to measures of a Party

affecting the supply of international maritime transport services.

2. For the purposes of this Sub-Section and Sections B, C and D:

(a) "container station and depot services" means activities consisting in storing containers,

whether in port areas or inland, with a view to their stuffing or stripping, repairing and

making them available for shipments;

(b) "customs clearance services" or "customs house brokers services" means activities consisting

in carrying out for and on behalf of another party customs formalities concerning import,

export or through movement or storage of cargoes, whether this service is the main activity of

the service provider or a usual complement of its main activity;

1 For greater certainty, reference to Sections B, C and D in this Sub-Section includes the

relevant Annexes to this Chapter.

& /en 244

(c) "door-to-door or multimodal transport operations" means the transport of cargo using more

than one mode of transport, involving an international sea-leg, under a single transport

document;

(d) "feeder services" means, without prejudice to the scope of activities which might be

considered as cabotage under the relevant national legislation, the pre- and onward

transportation by sea of international cargo, between ports located in the territory of a Party

and provided such international cargo is "en route", that is, directed to a destination, or

coming from a port of shipment, outside the territory of that Party;

(e) "freight forwarding services" means the activity consisting of organising and monitoring

shipment operations on behalf of shippers, through the acquisition of transport and related

services, preparation of documentation and provision of business information;

(f) "international cargo" means cargo transported between a port of one Party and a port of the

other Party or of a third Party, or between a port of one Member State and a port of another

Member State;

(g) "international maritime transport services" means the transport of passengers or cargo by sea-

going vessels between a port of a Party and a port of the other Party or of a third country. This

includes the direct contracting with providers of other transport services, with a view to cover

door-to-door or multimodal transport operations under a single transport document, but not

the right to provide such other transport services;

& /en 245

(h) "maritime agency services" means activities consisting in representing, within a given

geographic area, as an agent the business interests of one or more shipping lines or shipping

companies, for the following purposes:

(i) marketing and sales of maritime transport and related services, from quotation to

invoicing, and issuance of bills of lading on behalf of the companies, acquisition and

resale of the necessary related services, preparation of documentation, and provision of

business information; or

(ii) acting on behalf of the companies organising the call of the ship or taking over cargoes

when required;

(i) "maritime auxiliary services" means maritime cargo handling services, customs clearance

services, container station and depot services, maritime agency services and maritime freight

forwarding services; and

(j) "maritime cargo handling services" means activities exercised by stevedore companies,

including terminal operators but not including the direct activities of dockers, when this

workforce is organised independently of the stevedoring or terminal operator companies; the

activities covered include the organisation and supervision of:

(i) the loading or discharging of cargo to or from a ship;

& /en 246

(ii) the lashing or unlashing of cargo; and

(iii) the reception or delivery, and safekeeping of cargoes before shipment or after discharge.

3. In view of the existing levels of liberalisation between the Parties in international maritime

transport:

(a) each Party, without prejudice to the limitations, conditions and qualifications set out in

Articles 8.10 and 8.17, shall apply effectively the principle of unrestricted access to the

international maritime markets and trades on a commercial and non-discriminatory basis; and

(b) each Party shall grant to ships flying the flag of the other Party or operated by service

suppliers of the other Party treatment no less favourable than that accorded to its own ships,

with regard to, inter alia, access to ports, use of infrastructure and services of ports, and use of

maritime auxiliary services, as well as related fees and charges, customs facilities and

assignment of berths and facilities for loading and unloading.

4. In applying the principles referred to in point (a) and (b) of paragraph 3, the Parties shall:

(a) not introduce cargo-sharing arrangements in future agreements with third countries

concerning maritime transport services, including dry and liquid bulk and liner trade, and

where identified, not implement and endeavour to terminate, within a reasonable period of

time, such cargo-sharing arrangements in case they exist in previous agreements; and

& /en 247

(b) upon the entry into force of this Agreement, endeavour to abolish, and abstain from

introducing any unilateral measures that could constitute a disguised restriction or have

discriminatory effects on the free supply of services in international maritime transport.

5. Each Party shall allow international maritime service suppliers of the other Party to establish

and operate an enterprise in its territory in accordance with the conditions laid down in the relevant

Annex to this Chapter.

6. Where available, the Parties shall provide access to international maritime transport suppliers

of the other Party, on reasonable and non-discriminatory terms and conditions, to the following

services at the port: pilotage, towing and tug assistance, provisioning, fuelling and watering,

garbage collecting and ballast waste disposal, port captains services, navigation aids, shore-based

operational services essential to ship operations, including communications, water and electrical

supplies, emergency repair facilities, anchorage, berth and berthing services.

7. Each Party, subject to the authorisation by the competent authority where applicable, shall

allow international maritime transport service suppliers of the other Party to provide feeder services.

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SUB-SECTION 7

COMPUTER SERVICES

ARTICLE 8.57

Understanding on computer services

1. The Parties subscribe to the understanding that, for the purposes of liberalising trade in

services in accordance with this Chapter, computer and related services, regardless of whether they

are delivered via a network, including the internet, include:

(a) consulting, strategy, analysis, planning, specification, design, development, installation,

implementation, integration, testing, debugging, updating, support, technical assistance, or

management of or for computers or computer systems;

(b) computer programmes defined as the sets of instructions required to make computers work

and communicate (in and of themselves), plus consulting, strategy, analysis, planning,

specification, design, development, installation, implementation, integration, testing,

debugging, updating, adaptation, maintenance, support, technical assistance, management or

use of or for computer programs;

(c) data processing, data storage, data hosting or database services;

& /en 249

(d) maintenance and repair services for office machinery and equipment, including computers; or

(e) training services for staff of clients, related to computer programmes, computers or computer

systems, and not elsewhere classified.

2. For greater certainty, services enabled by computer and related services, other than those

listed in paragraph 1, shall not be regarded as computer and related services in themselves.

CHAPTER 9

CAPITAL MOVEMENTS, PAYMENTS AND TRANSFERS

ARTICLE 9.1

Current account

Without prejudice to other provisions of this Agreement, each Party shall allow any payments, in a

freely convertible currency and in accordance with the provisions of the Articles of Agreement of

the International Monetary Fund, with regard to transactions on the current account of the balance

of payments between the Parties, which fall under the scope of this Agreement.

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ARTICLE 9.2

Capital movements

1. Without prejudice to other provisions of this Agreement, each Party shall allow, with regard

to transactions on the capital and financial account of the balance of payments, the free movement

of capital relating to investments and transactions liberalised in accordance with Section B of

Chapter 8 (Liberalisation of Investment and Trade in Services).

2. The Parties shall consult each other in the Committee on Services, Investment, Digital Trade,

Government Procurement, and Intellectual Property (hereinafter referred to as the "Committee" for

the purposes of this Chapter) with a view to facilitating the movement of capital between them in

order to promote trade and investment.

ARTICLE 9.3

Application of laws and regulations relating to capital movements, payments or transfers

1. Articles 9.1 and 9.2 shall not preclude a Party from applying its laws and regulations relating

to:

(a) bankruptcy, insolvency, the protection of the right of creditors, bank recovery and resolution,

or the prudential supervision of financial institutions;

& /en 251

(b) issuing, trading or dealing in financial instruments;

(c) financial reporting or record keeping of capital movements, payments or transfers if necessary

to assist law enforcement or financial regulatory authorities;

(d) criminal or penal offences, deceptive or fraudulent practices;

(e) ensuring compliance with orders or judgments in judicial proceeding; or

(f) social security, public retirement or compulsory savings schemes.

2. Laws and regulations as referred to in paragraph 1 shall not be applied in an arbitrary or

discriminatory manner, or in a manner which constitutes a disguised restriction on capital

movements, payments or transfers.

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ARTICLE 9.4

Temporary safeguard measures

In exceptional circumstances of serious difficulties for the operation of the economic and monetary

policies, in the case of Indonesia, or for the economic and monetary union, in the case of the Union,

or threat thereof, Indonesia or the Union, respectively, may adopt or maintain safeguard measures

with regard to capital movements, payments or transfers for a period not exceeding six months.1

Those measures shall be strictly necessary to address those difficulties.

ARTICLE 9.5

Restrictions in case of balance of payments and external financing difficulties

1. If a Party experiences serious balance-of-payments or external financial difficulties, or there

exists a threat thereof, it may adopt or maintain restrictive measures with regard to capital

movements, payments or transfers.2

1 For greater certainty, those measures can be renewed for additional periods of six months,

provided that they remain strictly necessary under the current circumstances. Those measures

are not subject to the notification and consultation procedure envisaged in paragraphs 5 to 7 of

Article 9.5. 2 In the case of the Union, those measures may be taken by a Member State in situations other

than those referred to in Article 9.4, which affect the economy of that Member State. For

greater certainty, serious balance-of-payments or external financial difficulties, or threat

thereof, may be caused among other factors by serious difficulties related to monetary or

exchange rate policies, or threat thereof.

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2. The measures referred to in paragraph 1 shall:

(a) be consistent with the Articles of Agreement of the International Monetary Fund, as

applicable;

(b) not exceed those necessary to deal with the situation referred to in paragraph 1;

(c) be temporary and shall be phased out progressively as the situation referred to in paragraph 1

improves;

(d) avoid unnecessary damage to the commercial, economic and financial interests of the other

Party; and

(e) not treat the other Party less favourably than third countries in like situations.

3. In the case of trade in goods, each Party may adopt restrictive measures in order to safeguard

its external financial position or balance-of-payments. Those measures shall be consistent with the

GATT 1994 and the Understanding on the Balance of Payments provisions of the GATT 1994.

4. In the case of trade in services, each Party may adopt restrictive measures in order to

safeguard its external financial position or balance of payments. Those measures shall be consistent

with Article XII of the GATS.

& /en 254

5. A Party that adopts or maintains measures as referred to in paragraphs 1 and 2 shall promptly

notify them to the other Party.

6. If a Party adopts or maintains restrictions pursuant to this Article, the Parties shall promptly

hold consultations in the Committee, unless consultations are held in other fora. The consultations

shall assess the balance-of-payments or external financial difficulty that led to the respective

measures, taking into account, amongst others, such factors as:

(a) the nature and extent of the difficulties;

(b) the external economic and trading environment; and

(c) alternative corrective measures which may be available.

7. The consultations pursuant to paragraph 6 shall address the compliance of any restrictive

measures with paragraphs 1 and 2 of this Article. All relevant findings of statistical or factual nature

presented by the IMF, where available, shall be accepted and conclusions shall take into account the

assessment by the IMF of the balance-of-payments and the external financial difficulties of the

Party concerned.

8. For greater certainty, consultations pursuant to paragraph 6 shall not replace consultations

pursuant to Article 22.4 or dialogues under Chapter 21 (Bilateral Dialogue Mechanism), unless the

Parties agree otherwise.

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CHAPTER 10

DIGITAL TRADE

SECTION A

GENERAL PROVISIONS

ARTICLE 10.1

Objective and scope

1. The Parties recognise the economic growth and opportunities provided by digital trade and the

importance of promoting consumer confidence in electronic commerce and facilitating its use and

development.

2. This Chapter applies to measures of a Party affecting trade enabled by electronic means.

3. This Chapter does not apply to data held or processed by or on behalf of a Party, or measures

related to such data1, including measures related to its collection, storage or processing.

1 For greater certainty, such measures include those relating to computing facilities or network

elements used for the collection, storage or processing of such data.

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4. Articles 10.5, 10.8, and 10.13 shall not prevent a Party from adopting or maintaining a

measure in accordance with the conditions inscribed in its schedule of Specific Commitments, as set

out in Annex 8-A (Schedule of Commitments on Cross-Border Supply of Services) and Annex 8-B

(Schedule of Specific Commitments on Liberalisation of Investment) for the Union, and Annex 8-E

(Schedule of Commitments on Cross-Border Supply of Services) and 8-F (Schedule of Specific

Commitments on Liberalisation of Investment) for Indonesia.

5. This Chapter does not apply to audio-visual services.

ARTICLE 10.2

Definitions

For the purpose of this Chapter:

(a) "consumer" means any natural person using or requesting a publicly available electronic

communications service for purposes other than trade, business, craft or profession;

(b) "covered person" means:

(i) a covered enterprise as defined in Article 1.3;

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(ii) an investor as defined in Article 1.3; or

(iii) a service supplier of a Party as defined in Article 1.3;

(c) "direct marketing communication" means any form of advertising by which a natural or

juridical person communicates marketing messages directly to end-users via a public

electronic communications network and covers at least electronic mail and text and

multimedia messages (SMS and MMS);

(d) "electronic authentication service" means a service that enables the confirmation of:

(i) the electronic identification of a person; or

(ii) the origin and integrity of data in electronic form;

(e) "electronic seal" means data in electronic form used by a juridical person which is attached to

or logically associated with other data in electronic form to ensure the latter's origin and

integrity;

(f) "electronic signature" means data in electronic form which is attached to or logically

associated with other electronic data and is:

(i) used by a natural person to agree on the electronic data to which it relates; and

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(ii) linked to the electronic data to which it relates in such a way that any subsequent

alteration in the data is detectable;

(g) "electronic trust service"1 means an electronic service consisting of the creation, verification,

and validation of electronic signatures, electronic seals, electronic time stamps, electronic

registered delivery, website authentication and electronic certificates related to those services;

(h) "end-user" means any natural or juridical person using or requesting a publicly available

electronic communications service, either as a consumer or for trade, business or professional

purposes; and

(i) "personal data" means any information relating to an identified or identifiable natural person.

ARTICLE 10.3

Right to regulate

The Parties affirm the right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public health, safety, the environment including climate

change, public morals, social or consumer protection, or the promotion and protection of cultural

diversity.

1 Electronic trust services may also refer to electronic services certified in accordance with

relevant laws and regulations of the Parties.

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ARTICLE 10.4

Exceptions

Nothing in this Chapter prevents Parties from adopting or maintaining measures in accordance with

Articles 8.49, 23.1 and 23.2 for the public interest reasons set out therein.

SECTION B

DATA FLOWS AND PERSONAL DATA PROTECTION

ARTICLE 10.5

Cross-border data flows

1. The Parties are committed to ensuring cross-border data flows to facilitate trade and recognise

that each Party may have its own regulatory requirements in this regard.

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2. To that end, cross-border data flows between the Parties for the conduct of the business of

covered persons shall not be restricted by a Party by1:

(a) requiring the use of computing facilities or network elements in that Party's territory for

processing, including by imposing the use of computing facilities or network elements that are

certified or approved in the territory of that Party2;

(b) requiring the localisation of data in that Party's territory for storage or processing;

(c) prohibiting storage or processing in the territory of the other Party; or

(d) making the cross-border transfer of data contingent upon use of computing facilities or

network elements in that Party's territory or upon localisation requirements in that Party's

territory.

3. Each Party shall keep the implementation of this Article under review and assess its

functioning within three years of the entry into force of this Agreement, unless the Parties agree

otherwise. A Party may at any time propose to the other Party a review of the list of restrictions

listed in paragraph 2. That proposal shall be accorded sympathetic consideration.

1 For greater certainty, the competent authority of a Party may require access to data for law

enforcement or regulatory oversight in accordance with paragraph 2 of this Article and if

relevant, subject to Articles 8.49, 23.1 and 23.2. 2 Recalling Article 10.3, the Parties reaffirm their respective right to regulate in accordance

with this Agreement to achieve legitimate policy objectives, including ensuring security and

stability of telecommunications infrastructure.

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ARTICLE 10.6

Protection of personal data and privacy

1. Each Party recognises that the protection of personal data and privacy is a fundamental right

and that high standards1 in this regard contribute to economic and social benefits, trust in the digital

economy and to the development of trade.

2. Each Party may adopt and maintain the legal framework it deems appropriate to ensure the

protection of personal data and privacy, including through the adoption and application of rules for

the cross-border transfer of personal data. This Agreement shall not affect the protection of personal

data and privacy afforded by the Parties' respective legal frameworks or otherwise require the

Parties to adopt or maintain a specific framework for the protection of personal data and privacy

protection.

3. Each Party shall inform the other Party about any legal framework it adopts or maintains as

referred to in paragraph 2.

1 For greater certainty, the Parties share the understanding that high standards of protection can

be ensured through different instruments and safeguards.

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SECTION C

SPECIFIC PROVISIONS

ARTICLE 10.7

Customs duties on electronic transmissions

1. A Party shall not impose customs duties on electronic transmissions.1

2. For greater certainty, the Parties agree that consistent with the principles of GATS, trade in

services is not subject to customs duties.

3. Paragraph 1 is in accordance with the WTO Ministerial Decision (WT/MIN (24)/38), adopted

on 2 March 2024, in relation to the WTO Work Programme on Electronic Commerce.

4. Paragraph 1 is without prejudice to Party's right to act in light of any further WTO Ministerial

Decisions or Agreement in relation to the Work Programme on Electronic Commerce. Such right

shall be without prejudice to that Party's commitments pursuant to Article 2.5.

1 Paragraph 1 is without prejudice to Parties' position on whether electronic transmissions

should be categorised as trade in services or goods.

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5. For greater certainty, paragraphs 1 to 4 shall not preclude a Party from applying customs

procedures for public policy purposes, or from imposing internal taxes, fees, or other charges on

electronic transmission, provided that such taxes, fees, or charges are imposed in a manner

consistent with the WTO Agreement.

ARTICLE 10.8

No prior authorisation

1. A Party shall not require prior authorisation solely on the grounds that a service is provided

by electronic means or adopt or maintain any other requirement having equivalent effect.

2. For greater certainty, a Party is not precluded from requiring prior authorisation for an online

service, or from adopting or maintaining any other requirement having an equivalent effect, based

on other policy grounds, such as consumer protection.

3. Paragraph 1 does not apply to:

(a) telecommunications services, broadcasting services, gambling services and legal

representation services; or

(b) services of notaries or equivalent professions or other relevant services, to the extent that they

involve a direct and specific connection with the exercise of public authority.

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ARTICLE 10.9

Conclusion of contracts by electronic means

Except as otherwise provided for under the laws and regulations of each Party, each Party shall

ensure that its legal system allows contracts to be concluded by electronic means and that the legal

requirements for contractual processes neither create obstacles for the use of electronic contracts

nor result in such contracts being deprived of legal effect and validity for having been made by

electronic means.1

ARTICLE 10.10

Electronic trust and authentication services

1. Except in circumstances otherwise provided for under its laws and regulations, a Party shall

not deny the legal effect and admissibility as evidence in legal proceedings of an electronic trust and

electronic authentication service solely on the basis that the service is in electronic form.

2. A Party shall not adopt or maintain measures regulating electronic trust and electronic

authentication services that would:

(a) prohibit parties to an electronic transaction from mutually determining the appropriate

electronic methods for their transaction; or

1 For greater certainty, certain requirements for the legal effect and validity of contracts as

provided in the laws and regulations of each Party shall not be considered as obstacles for the

use of electronic contracts.

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(b) prevent parties to an electronic transaction from having the opportunity to prove to judicial

and administrative authorities that their electronic transaction complies with any legal

requirements with respect to electronic trust and electronic authentication services.

3. Notwithstanding paragraph 2, a Party may require that, for a particular category of electronic

transactions, the method of electronic authentication meets certain performance standards which

shall be objective, transparent and non-discriminatory or is certified by an authority accredited in

accordance with its laws and regulations.

ARTICLE 10.11

Online consumer trust

1. The Parties recognise the importance of maintaining and adopting transparent and effective

measures that contribute to consumer trust, including measures that protect consumers from

fraudulent and deceptive commercial practices when they engage in electronic commerce.

2. For the purposes of paragraph 1, each Party shall adopt or maintain measures that contribute

to consumer trust, including measures that proscribe fraudulent and deceptive commercial practices.

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3. The Parties recognise the importance of cooperation between their respective national

consumer protection agencies or other relevant bodies on activities related to electronic commerce

in order to protect consumers and enhance consumer trust.

ARTICLE 10.12

Unsolicited direct marketing communications

1. Each Party shall ensure that end-users are effectively protected against unsolicited direct

marketing communications. To this end, the following paragraphs shall apply.

2. Each Party shall ensure that natural and juridical persons do not send direct marketing

communications to consumers who have not given their prior consent to receiving such market

communications.1

3. Notwithstanding paragraph 2, each Party shall allow natural and juridical persons who have

collected, in accordance with the laws and regulations of that Party, a consumer's contact details in

the context of the sale of a product or a service, to send direct marketing communications to that

consumer for their own similar products or services.

4. Each Party shall ensure that direct marketing communications are clearly identifiable as such,

clearly disclose on whose behalf they are made and contain the necessary information to enable

end-users to request cessation free of charge and at any moment.

1 Prior consent shall be defined in accordance with each Party's own laws and regulations.

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ARTICLE 10.13

Transfer of or access to source code

1. A Party shall not require the transfer of, or access to, the source code of software owned by a

juridical or natural person of the other Party as a condition for the import, export, distribution, sale

or use of such software, or of products containing such software, in its territory.

2. For greater certainty:

(a) Articles 8.49, 23.1 and 23.2 may apply to measures of a Party adopted or maintained, for

instance, in the context of a certification procedure;

(b) paragraph 1 does not apply to the voluntary transfer of or granting of access to source code on

a commercial basis by a person of the other Party, for instance in the context of a public

procurement transaction or a freely negotiated contract; and

(c) paragraph 1 does not affect the right of regulatory, law enforcement or judicial bodies of a

Party to require the modification of source code software to comply with its laws and

regulations that are not inconsistent with this Agreement.

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3. This Article shall not affect:

(a) the right of regulatory authorities, law enforcement, judicial or conformity assessment bodies1

of a Party to require the transfer of, or access to, source code of software, either prior to or

following import, export, distribution, sale or use of such software, for investigation,

inspection or examination, enforcement action or judicial proceeding purposes, to secure

compliance with its laws or regulations pursuing legitimate public policy objectives2, subject

to safeguards against unauthorised disclosure;

(b) requirements by a court, administrative tribunal, competition authority or other relevant body

of a Party to remedy a violation of competition laws; or requirements pursuant to that Party's

laws or regulations that are not inconsistent with the Agreement to provide proportionate and

targeted access to the source code of software that is necessary to address barriers to entry in

digital markets to ensure these markets remain competitive, fair, open and transparent;

(c) the protection and enforcement of intellectual property rights; or

(d) a public procurement transaction.

1 For the purposes of this Article, "conformity assessment body" means a relevant

governmental body or authority of a Party, or non-governmental body in the exercise of

powers delegated by a governmental body or authority of the Party, carrying out the

procedures of assessment of conformity with applicable laws or regulations of that Party. 2 For the purposes of this Article, "legitimate public policy objective" shall be interpreted in an

objective manner and shall enable the pursuit of objectives such as to protect public security,

public morals, or human, animal or plant life or health, to maintain public order, to protect

other fundamental interests of society such as cybersecurity, safe and trustworthy artificial

intelligence, or protecting against the dissemination of disinformation, or other similar

objectives of public interest, taking into account the evolving nature of digital technologies

and related challenges.

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ARTICLE 10.14

Cybersecurity

1. The Parties recognise that threats to cybersecurity undermine confidence in digital trade.

2. In order to identify and mitigate those threats and thereby facilitate digital trade, the Parties

recognise the importance of:

(a) building the capabilities of their respective national entities responsible for cybersecurity

incident response; and

(b) using collaboration mechanisms, as appropriate, to cooperate, anticipate, identify and mitigate

malicious intrusions or dissemination of malicious code that affect electronic networks of

Parties and use those mechanisms to swiftly address cybersecurity incidents, as well as for the

sharing of information for awareness and best practices.

3. Given the evolving nature of cybersecurity threats and their negative impact on electronic

commerce, the Parties recognise that risk-based approaches are generally effective in addressing

those threats and minimising trade barriers. Accordingly, each Party shall endeavour to employ, and

shall encourage enterprises within its jurisdiction to use, risk-based approaches that rely on open

and transparent standards and risk management best practices to identify and protect against

cybersecurity risks and to detect, respond to, and recover from cybersecurity incidents.

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ARTICLE 10.15

Regulatory cooperation

1. The Parties shall maintain a dialogue on regulatory issues raised by digital trade, which shall

among others address the following issues:

(a) the recognition and facilitation of interoperable cross-border electronic trust and

authentication services;

(b) the treatment of direct marketing communications;

(c) the protection of consumers in the ambit of electronic commerce including building consumer

confidence;

(d) the challenges for SMEs in digital trade; and

(e) any other matter relevant for the development of digital trade.

2. The dialogue referred to in paragraph 1 shall focus on the exchange of information on the

Parties' respective laws and regulations covering the matters referred to in points (a) to (e) of

paragraph 1 as well as on the implementation of those laws and regulations.

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3. Recognising the global nature of electronic commerce, the Parties shall endeavour to

cooperate to:

(a) assist SMEs to overcome obstacles to its use;

(b) exchange information and share views on consumer access to products and services offered

online; and

(c) encourage business sectors to develop methods or practices that enhance consumer confidence

to foster the use of electronic commerce.

4. Each Party shall, if appropriate, cooperate and participate actively in international fora to

promote the development of digital trade.

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CHAPTER 11

GOVERNMENT PROCUREMENT

ARTICLE 11.1

Scope and coverage

1. This Chapter applies to any measure relating to a covered procurement, whether or not it is

conducted exclusively or partially by electronic means.

2. For the purposes of this Chapter, "covered procurement" means procurement for

governmental purposes:

(a) of a good, a service, or any combination thereof:

(i) as specified in Annex 11-A (Government Procurement Market Access Schedule of the

Union) or Annex 11-B (Government Procurement Market Access Schedule of

Indonesia); and

(ii) not procured with a view to commercial sale or resale, or for use in the production or

supply of a good or a service for commercial sale or resale;

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(b) by any contractual means, including purchase, lease, and rental or hire purchase, with or

without an option to buy;

(c) for which the value, as estimated in accordance with paragraphs 6 to 8, equals or exceeds the

relevant threshold specified in Annex 11-A (Government Procurement Market Access

Schedule of the Union) or Annex 11-B (Government Procurement Market Access Schedule of

Indonesia), at the time of publication of a notice in accordance with Article 11.6;

(d) by a procuring entity as specified in Annex 11-A (Government Procurement Market Access

Schedule of the Union) or Annex 11-B (Government Procurement Market Access Schedule of

Indonesia); and

(e) that is not otherwise excluded from coverage in paragraph 3 or in Annex 11-A (Government

Procurement Market Access Schedule of the Union) or Annex 11-B (Government

Procurement Market Access Schedule of Indonesia).

3. Except as otherwise provided in Annex 11-A (Government Procurement Market Access

Schedule of the Union) or Annex 11-B (Government Procurement Market Access Schedule of

Indonesia), this Chapter does not apply to:

(a) the acquisition or rental of land, existing buildings or other immovable property or the rights

thereon;

(b) non-contractual agreements or any form of assistance that a Party provides, including

cooperative agreements, grants, loans, equity infusions, guarantees and fiscal incentives;

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(c) the procurement or acquisition of fiscal agency or depository services, liquidation and

management services for regulated financial institutions or services related to the sale,

redemption and distribution of public debt, including loans and government bonds, notes and

other securities;

(d) public employment contracts;

(e) goods or services that are procured in-house by a covered procuring entity;

(f) procurement conducted:

(i) for the specific purpose of providing international assistance, including development

aid;

(ii) under the particular procedure or condition of an international agreement relating to the

stationing of troops or relating to the joint implementation by the signatory countries of

a project; or

(iii) under the particular procedure or condition of an international organisation, or funded

by international grants, loans or other assistance.

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4. A procurement subject to this Chapter shall be all procurement covered by Annex 11-A

(Government Procurement Market Access Schedule of the Union) and Annex 11-B (Government

Procurement Market Access Schedule of Indonesia), in which each Party's commitments are set out

as follows:

(a) in Section A, the central government entities whose procurement is covered by this Chapter;

(b) in Section B, the sub-central government entities whose procurement is covered by this

Chapter;

(c) in Section C, all other entities whose procurement is covered by this Chapter;

(d) in Section D, the goods covered by this Chapter;

(e) in Section E, the services, other than construction services, covered by this Chapter;

(f) in Section F, the construction services covered by this Chapter;

(g) in Section G, any general notes, including transitional measures for the application of this

Chapter; and

(h) in Section H, the publication media in which the Party publishes its procurement notices,

award notices, and other information related to its public procurement system as set out in this

Chapter.

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5. If a procuring entity, in the context of covered procurement, requires other entities or a person

whose procurement is not covered under Annex 11-A (Government Procurement Market Access

Schedule of the Union) or Annex 11-B (Government Procurement Market Access Schedule of

Indonesia) to procure in accordance with particular requirements, Article 4 shall apply mutatis

mutandis to those requirements.

6. In estimating the value of a procurement for the purpose of ascertaining whether it is a

covered procurement, a procuring entity shall:

(a) neither divide a procurement into separate procurements nor select or use a particular

valuation method for estimating the value of a procurement with the intention of totally or

partially excluding it from the application of this Chapter; and

(b) include the estimated maximum total value of the procurement over its entire duration,

whether awarded to one or more suppliers, taking into account all forms of remuneration,

including:

(i) premiums, fees, commissions and interest; and

(ii) if the procurement provides for the possibility of options, the total value of those

options.

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7. If an individual requirement for a procurement results in the award of more than one contract,

or in the award of contracts in separate parts (hereinafter referred to as "recurring contracts") the

calculation of the estimated maximum total value shall be based on:

(a) the value of recurring contracts of the same type of good or service awarded during the

preceding 12 months or the procuring entity's preceding fiscal year, adjusted, if possible, to

take into account anticipated changes in the quantity or value of the good or service being

procured over the following 12 months; or

(b) the estimated value of recurring contracts of the same type of good or service to be awarded

during the 12 months following the initial contract award or the procuring entity's fiscal year.

8. In the case of procurement by lease, rental or hire purchase of a good or a service, or

procurement for which a total price is not specified, the basis for valuation shall be:

(a) in the case of a fixed-term contract:

(i) if the term of the contract is 12 months or less, the total estimated maximum value for

its duration; or

(ii) if the term of the contract exceeds 12 months, the total estimated maximum value,

including any estimated residual value;

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(b) if the contract is for an indefinite period, the estimated monthly instalment multiplied by 48;

and

(c) if it is not certain whether the contract is to be a fixed-term contract, point (b) shall be used.

ARTICLE 11.2

Definitions

For the purposes of this Chapter:

(a) "commercial goods or services" means goods or services of a type generally sold or offered

for sale in the commercial marketplace to, and customarily purchased by, non-governmental

buyers for non-governmental purposes;

(b) "construction service" means a service that has as its objective the realisation by whatever

means of civil or building works, based on Division 51 of the CPC;

(c) "electronic auction" means an iterative process that involves the use of electronic means for

the presentation by suppliers of new prices or, if applicable, new values for quantifiable non-

price elements of the tender related to the evaluation criteria resulting in a ranking or

re-ranking of tenders;

(d) "in writing" or "written" means any worded or numbered expression that can be read,

reproduced and later communicated, and may include electronically transmitted and stored

information;

& /en 279

(e) "limited tendering" means a procurement method whereby the procuring entity contacts a

supplier or suppliers of its choice;

(f) "measure" means any law, regulation, procedure, administrative guidance or practice, or any

action of a procuring entity relating to a covered procurement;

(g) "multi-use list" means a list of suppliers that a procuring entity has determined satisfy the

conditions for participation in that list, and that the procuring entity intends to use more than

once;

(h) "notice of intended procurement" means a notice published by a procuring entity inviting

interested suppliers to submit a request for participation, a tender, or both;

(i) "offset" means any condition or undertaking that encourages local development or improves a

Party's balance-of-payments accounts, such as the use of domestic content, the licensing of

technology, investment, counter-trade and similar action or requirement;

(j) "open tendering" means a procurement method whereby all interested suppliers may submit a

tender;

(k) "procuring entity" means an entity covered under a Party's market access schedule in

Sections A, B or C of Annex 11-A (Government Procurement Market Access Schedule of the

Union) or Annex 11-B (Government Procurement Market Access Schedule of Indonesia);

(l) "publish" means to disseminate information in paper format or by electronic means that is

distributed widely and is accessible to the general public;

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(m) "qualified supplier" means a supplier that a procuring entity recognises as having satisfied the

conditions for participation;

(n) "selective tendering" means a procurement method whereby only qualified suppliers are

invited by the procuring entity to submit a tender;

(o) "services" includes construction services, unless otherwise specified in this Chapter;

(p) "standard" means a document approved by a recognised body that provides for common and

repeated use, rules, guidelines or characteristics for goods or services, or related processes and

production methods, with which compliance is not mandatory and that may also include or

deal exclusively with terminology, symbols, packaging, marking or labelling requirements as

they apply to a good, service, process or production method;

(q) "supplier" means a person or group of persons that provides or could provide goods or

services to a procuring entity; and

(r) "technical specification" means a tendering requirement that:

(i) lays down the characteristics of goods or services to be procured, including quality,

performance, safety and dimensions, or the processes and methods for their production

or provision; or

(ii) addresses terminology, symbols, packaging, marking or labelling requirements, as they

apply to a good or service.

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ARTICLE 11.3

Security and general exceptions

1. Nothing in this Chapter shall be construed to prevent a Party from taking any action or from

not disclosing any information that it considers necessary for the protection of its essential security

interests relating to:

(a) the procurement of arms, ammunition or war material;

(b) procurement indispensable for national security; or

(c) procurement for national defence purposes.

2. Provided that the measures are not applied in a manner that would constitute a means of

arbitrary or unjustifiable discrimination between the Parties if the same conditions prevail or a

disguised restriction on international trade, nothing in this Chapter shall be construed to prevent a

Party from imposing or enforcing measures:

(a) necessary to protect public morals, order or safety;

(b) necessary to protect human, animal or plant life or health;

(c) necessary to protect intellectual property; or

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(d) relating to goods or services of persons with disabilities, of philanthropic institutions or of

prison labour.

ARTICLE 11.4

General principles

1. With respect to any measure regarding covered procurement, each Party, including its

procuring entities, shall accord immediately and unconditionally to the goods and services of the

other Party and to the suppliers of the other Party offering the goods or services of the other Party,

treatment no less favourable than the treatment the Party, including its procuring entities, accords to

its own goods, services and suppliers.

2. With respect to any measure regarding covered procurement, a Party, including its procuring

entities, shall not:

(a) treat a locally established supplier less favourably than another locally established supplier on

the basis of the degree of foreign affiliation or ownership; or

(b) discriminate against a locally established supplier on the basis that the goods or services

offered by that supplier for a particular covered procurement are goods or services of the other

Party.

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3. Each Party shall ensure that the suppliers of the other Party that have established a

commercial presence in its territory through the constitution, acquisition or maintenance of a

juridical person are accorded national treatment with regard to any government procurement of the

Party in its territory. This obligation applies irrespectively of whether or not the procurement is

covered by Annex 11-A (Government Procurement Market Access Schedule of the Union) or

Annex 11-B (Government Procurement Market Access Schedule of Indonesia) and is subject to the

general exceptions in Article 11.3.

4. When conducting covered procurement by electronic means, a procuring entity shall:

(a) ensure that the covered procurement is conducted using information technology systems and

software, including those related to authentication and encryption of information, that are

generally available and interoperable with other generally available information technology

systems and software; and

(b) maintain mechanisms that ensure the integrity of requests for participation and tenders,

including establishment of the time of receipt and the prevention of inappropriate access.

5. The Parties shall conduct covered procurement by electronic means to the widest extent

possible and shall endeavour to cooperate in developing and expanding the use of electronic means

in covered procurement systems. When conducting covered procurement by electronic means, a

procuring entity shall use electronic means of information and communication for the publication of

notices and tender documentation in covered procurement procedures and shall use electronic

means for the submission of tenders to the widest extent practicable.

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6. Each Party shall endeavour to establish a single electronic system to facilitate the procurement

process which covers procurement planning, procurement preparation, selection of suppliers,

contract management, and the award of contracts.

7. A procuring entity shall conduct covered procurement in a transparent and impartial manner

that:

(a) is consistent with this Chapter, using methods such as open tendering, selective tendering and

limited tendering;

(b) avoids conflicts of interest; and

(c) prevents corrupt practices.

8. Nothing in this Chapter shall prevent a Party, including its procuring entities, from developing

new procurement policies, procedures, or contractual means, provided that they are not inconsistent

with this Chapter.

9. For the purposes of covered procurement, a Party shall not apply rules of origin to goods or

services imported from or supplied from the other Party that are different from the rules of origin

the Party applies at the same time in the normal course of trade to imports or supplies of the same

goods or services from the Party.

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10. With regard to covered procurement, a Party, including its procuring entities, shall not seek,

take account of, impose or enforce any offset, unless otherwise provided in Annex 11-A

(Government Procurement Market Access Schedule of the Union) or Annex 11-B (Government

Procurement Market Access Schedule of Indonesia).

11. Paragraphs 1 and 2 shall be without prejudice to each Party's commitments under Chapter 2

(National Treatment and Market Access for Goods) and Chapter 8 (Liberalisation of Investment and

Trade in Services), and for greater certainty, those paragraphs shall not apply to customs duties and

charges of any kind imposed on or in connection with importation, the method of levying those

duties and charges, other import regulations or formalities, and measures affecting trade in services

other than measures governing covered procurement.

ARTICLE 11.5

Information on the procurement system

1. Each Party shall:

(a) promptly publish laws, regulations, judicial decisions, administrative rulings of general

application, standard contract clauses mandated by laws or regulations and incorporated by

reference in notices or tender documentation and procedures regarding covered procurement,

and any modifications thereof, in an officially designated electronic or paper medium that is

widely disseminated and remains readily accessible to the public; and

& /en 286

(b) on request of the other Party, provide an explanation thereof to the other Party.

2. Each Party shall list in Section H of Annex 11-A (Government Procurement Market Access

Schedule of the Union) or Annex 11-B (Government Procurement Market Access Schedule of

Indonesia) respectively:

(a) the electronic or paper media in which the Party publishes the information described in

paragraph 1;

(b) the electronic or paper media in which the Party publishes the notices required by Articles

11.6, 11.8(8), and 11.16(2); and

(c) the website address or addresses if the Party publishes its notices concerning awarded

contracts pursuant to Article 11.16(2).

3. Each Party shall promptly notify the Committee on Services, Investment, Digital Trade,

Government Procurement and Intellectual Property (hereinafter referred to as the "Committee" for

the purposes of this Chapter) of any modification to the Party's information listed in Section H of

Annex 11-A (Government Procurement Market Access Schedule of the Union) or Annex 11-B

(Government Procurement Market Access Schedule of Indonesia) respectively.

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ARTICLE 11.6

Notices

1. All notices (notices of intended procurement, summary notices and notices of planned

procurement), shall be directly accessible by electronic means free of charge through a single point

of access online. The notices may also be published in an appropriate paper medium which shall be

widely disseminated and shall remain readily accessible to the public, at least until expiration of the

time-period indicated in the notice. If notices are not available in English, at least summary notices

shall be made available in English.

2. For each covered procurement, a procuring entity shall publish a notice of intended

procurement, except in the circumstances described in Article 11.13.

3. Except as otherwise provided in this Chapter, each notice of intended procurement shall

include the following information, unless that information is provided in the tender documentation

that is made available free of charge to all interested suppliers at the same time as the notice of

intended procurement:

(a) the name and address of the procuring entity and other information necessary to contact the

procuring entity and obtain all relevant documents relating to the covered procurement, and

their cost and terms of payment, if any;

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(b) a description of the covered procurement, including the nature and the quantity of the goods

or services to be procured or, if the quantity is not known, the estimated quantity;

(c) for recurring contracts, an estimate, if possible, of the timing of subsequent notices of

intended covered procurement;

(d) a description of options, if any;

(e) the timeframe for delivery of goods or services or the duration of the contract;

(f) the procurement method that will be used and whether it will involve negotiation or electronic

auction;

(g) if applicable, the address and any final date for the submission of requests for participation in

the covered procurement;

(h) the address and the final date for the submission of tenders;

(i) the language or languages in which tenders or requests for participation may be submitted, if

they may be submitted in a language other than an official language of the Party of the

procuring entity;

(j) a list and brief description of any conditions for participation of suppliers, including any

requirements for specific documents or certifications to be provided by suppliers in

connection therewith, unless those requirements are included in tender documentation that is

made available to all interested suppliers at the same time as the notice of intended

procurement;

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(k) if, pursuant to Article 11.8, a procuring entity intends to select a limited number of qualified

suppliers to be invited to tender, the criteria that will be used to select them and, if applicable,

any limitation on the number of suppliers that will be permitted to tender; and

(l) an indication that the procurement is covered by this Chapter.

4. For each case of intended procurement, a procuring entity shall publish a summary notice that

is readily accessible, at the same time as the publication of the notice of intended procurement, in

English. The summary notice shall contain at least the following information:

(a) the subject-matter of the covered procurement;

(b) the final date for the submission of tenders or, if applicable, any final date for the submission

of requests for participation in the covered procurement or for inclusion on a multi-use list;

and

(c) the address from which documents relating to the covered procurement may be requested.

& /en 290

5. Procuring entities are encouraged to publish in the appropriate electronic and, if available,

paper medium listed in Section H of Annex 11-A (Government Procurement Market Access

Schedule of the Union) and Annex 11-B (Government Procurement Market Access Schedule of

Indonesia) as early as possible in each fiscal year a notice regarding their future procurement plans

(hereinafter referred to as the "notice of planned procurement"). The notice of planned procurement

shall also be published in the single point of access site listed in Section H of Annex 11-A

(Government Procurement Market Access Schedule of the Union) or Annex 11-B (Government

Procurement Market Access Schedule of Indonesia) respectively, subject to an appropriate paper

and electronic medium as listed in paragraph 1. The notice of planned procurement should include

the subject-matter of the covered procurement and the planned date of the publication of the notice

of intended procurement.

6. A procuring entity covered under Sections B or C of Annex 11-A (Government Procurement

Market Access Schedule of the Union) or Annex 11-B (Government Procurement Market Access

Schedule of Indonesia) may use a notice of planned procurement as a notice of intended

procurement provided that the notice of planned procurement includes as much of the information

referred to in paragraph 3 as is available to the procuring entity and a statement that interested

suppliers should express their interest in the covered procurement to the procuring entity.

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ARTICLE 11.7

Conditions for participation

1. A procuring entity shall limit any conditions for participation in a covered procurement to

those that are essential to ensure that a supplier has the legal and financial capacities and the

commercial and technical abilities to undertake the relevant covered procurement.

2. In establishing the conditions for participation, a procuring entity:

(a) shall not impose the condition that, in order for a supplier to participate in a covered

procurement, the supplier has previously been awarded one or more contracts by a procuring

entity of a Party;

(b) may require relevant prior experience if essential to meet the requirements of the covered

procurement; and

(c) shall not require prior experience in the territory of the Party to be a condition of the covered

procurement.

3. In assessing whether a supplier satisfies the conditions for participation, a procuring entity:

(a) shall evaluate the financial capacity and the commercial and technical abilities of a supplier

on the basis of that supplier's business activities both inside and outside the territory of the

Party of the procuring entity; and

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(b) shall base its evaluation on the conditions that the procuring entity has specified in advance in

notices or tender documentation.

4. If there is supporting evidence, a Party, including its procuring entities, may exclude a

supplier on grounds such as:

(a) bankruptcy;

(b) false declarations;

(c) significant or persistent deficiencies in performance of any substantive requirement or

obligation under a prior contract or contracts;

(d) final judgments in respect of serious crimes or other serious offences;

(e) professional misconduct or acts or omissions that adversely reflect on the commercial

integrity of the supplier; or

(f) failure to pay taxes.

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ARTICLE 11.8

Qualification of suppliers

1. A Party, including its procuring entities, may maintain a supplier registration system under

which interested suppliers are required to register and provide certain information, to the extent

possible, through electronic means.

2. If a Party or one of its procuring entities, pursuant to paragraph 1, maintains a supplier

registration system, it shall endeavour to ensure that interested suppliers have access to information

on the registration system, if possible through electronic means, and that they may request

registration at any time. The competent authority shall inform interested suppliers within a

reasonable period of time of the decision to grant or reject this request. If the request is rejected, the

decision must be duly motivated.

3. Each Party shall ensure that:

(a) its procuring entities make efforts to minimise differences in their qualification procedures;

and

(b) if its procuring entities maintain registration systems, the entities make efforts to minimise

differences in their registration systems.

4. A Party, including its procuring entities, shall not adopt or apply a registration system or

qualification procedure with the purpose or the effect of creating unnecessary obstacles to the

participation of suppliers of the other Party in its covered procurement.

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5. If a procuring entity intends to use selective tendering, the procuring entity shall:

(a) include in the notice of intended procurement at least the information specified in points (a),

(b), (f), (g), (j), (k) and (l) of Article 11.6(3) and invite suppliers to submit a request for

participation;

(b) provide, by the commencement of the time-period for tendering, at least the information in

points (c), (d), (e), (h) and (i) of Article 11.6(3) to the qualified suppliers that it notifies as

specified in point (b) of Article 11.11(3); and

(c) address invitations to submit a tender to a number of suppliers that is sufficient to ensure

effective competition.

6. A procuring entity shall allow all qualified suppliers to participate in a particular covered

procurement, unless the procuring entity states in the notice of intended procurement any limitation

on the number of suppliers that will be permitted to tender and the criteria for selecting the limited

number of suppliers.

7. If the tender documentation is not made publicly available from the date of publication of the

notice referred to in paragraph 5, a procuring entity shall ensure that those documents are made

available at the same time to all the qualified suppliers selected in accordance with paragraph 6.

& /en 295

8. A procuring entity may maintain a multi-use list of suppliers, provided that a notice inviting

interested suppliers to apply for inclusion on the list is made available in the appropriate medium

listed in Section H of Annex 11-A (Government Procurement Market Access Schedule of the

Union) and Annex 11-B (Government Procurement Market Access Schedule of Indonesia)

respectively.

9. The notice provided for in paragraph 8 shall include:

(a) a description of the goods or services, or categories thereof, for which the list may be used;

(b) the conditions for participation to be satisfied by suppliers for inclusion on the list and the

methods that the procuring entity will use to verify that a supplier satisfies the conditions;

(c) the name and address of the procuring entity and other information necessary to contact the

entity and obtain all relevant documents relating to the list; and

(d) the period of validity of the list and the means for its renewal or termination, or if the period

of validity is not provided, an indication of the method by which notice will be given of the

termination of use of the list.

10. A procuring entity shall allow suppliers to apply at any time for inclusion on a multi-use list

and shall include on the list all qualified suppliers within a reasonable period of time.

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11. A procuring entity shall promptly inform any supplier that submits an application for

inclusion on a multi-use list of the procuring entity's decision with respect to the request or

application.

12. If a procuring entity rejects a supplier's application for inclusion on a multi-use list, ceases to

recognise a supplier as qualified, or removes a supplier from a multi-use list, the entity shall

promptly inform the supplier and, on request of the supplier, promptly provide the supplier with a

written explanation of the reasons for its decision.

ARTICLE 11.9

Technical specifications and tender documentation

1. A procuring entity shall not prepare, adopt or apply any technical specification or prescribe

any conformity assessment procedure with the purpose or the effect of creating unnecessary

obstacles to trade between the Parties.

2. In prescribing the technical specifications for the goods or services being procured, a

procuring entity shall, if appropriate:

(a) set out the technical specification in terms of performance and functional requirements, rather

than design or descriptive characteristics; and

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(b) base the technical specification on international standards, if they exist; otherwise, on national

technical regulations, recognised national standards or building codes.

3. If design or descriptive characteristics are used in the technical specifications, a procuring

entity should indicate, if appropriate, that it will consider tenders of equivalent goods or services

that demonstrably fulfil the requirements of the covered procurement by including words such as

"or equivalent" in the tender documentation.

4. A procuring entity shall not prescribe technical specifications that require or refer to a

particular trademark or trade name, patent, copyright, design, type, specific origin, producer or

supplier, unless there is no other sufficiently precise or intelligible way of describing the covered

procurement requirements and provided that, in such a case, the entity includes words such as "or

equivalent" in the tender documentation.

5. A procuring entity shall not seek or accept, in a manner that would have the effect of

precluding competition, advice that may be used in the preparation or adoption of any technical

specification for a specific covered procurement from a person that may have a commercial interest

in the covered procurement.

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6. A procuring entity shall make available to suppliers tender documentation that includes all

information necessary to permit suppliers to prepare and submit responsive tenders. Unless already

provided in the notice of intended procurement, that documentation shall include a complete

description of:

(a) the covered procurement, including the nature and the quantity of the goods or services to be

procured or, if the quantity is not known, the estimated quantity and any requirements to be

fulfilled, including any technical specifications, conformity assessment certification, plans,

drawings or instructional materials;

(b) any conditions for participation of suppliers, including a list of information and documents

that suppliers are required to submit in connection with the conditions for participation;

(c) all evaluation criteria the entity will apply in the awarding of the contract, and, unless price is

the sole criterion, the relative importance of that criteria;

(d) if the procuring entity will conduct the covered procurement by electronic means, any

authentication and encryption requirements or other requirements related to the submission of

information by electronic means;

(e) if the procuring entity will hold an electronic auction, the rules, including identification of the

elements of the tender related to the evaluation criteria, on which the auction will be

conducted;

(f) if there will be a public opening of tenders, the date, time and place for the opening and, if

appropriate, the persons authorised to be present;

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(g) any other terms or conditions, including terms of payment and any limitation on the means by

which tenders may be submitted, such as whether on paper or by electronic means; and

(h) any dates for the delivery of goods or the supply of services.

7. In establishing any date for the delivery of goods or the supply of services being procured, a

procuring entity shall take into account factors such as the complexity of the covered procurement,

the extent of subcontracting anticipated and the realistic time required for production, de-stocking

and transport of goods from the point of supply or for supply of services.

8. The evaluation criteria set out in the notice of intended procurement or tender documentation

may include price and other cost factors, quality, technical merit, environmental characteristics and

terms of delivery. Those criteria, if applicable, shall be based on relevant and mutually recognised

international standards.

9. A procuring entity shall promptly:

(a) make available tender documentation to ensure that interested suppliers have sufficient time

to submit responsive tenders;

(b) provide, on request, the tender documentation to any interested supplier; and

(c) reply to any reasonable request for relevant information by any interested or participating

supplier, provided that such information does not give that supplier an advantage over other

suppliers.

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10. If, prior to the award of a contract, a procuring entity modifies the criteria or requirements set

out in the notice of intended procurement or tender documentation provided to participating

suppliers, or amends or reissues a notice or tender documentation, it shall transmit in writing all

those modifications or the amended or re-issued notice or tender documentation:

(a) to all suppliers that are participating at the time of the modification, amendment or re-

issuance, if those suppliers are known to the entity, and in all other cases, in the same manner

as the original information was made available; and

(b) in adequate time to allow those suppliers to modify and re-submit amended tenders, as

appropriate.

ARTICLE 11.10

Market consultations

1. Before launching a covered procurement, procuring entities may conduct market consultations

with a view to preparing the covered procurement, notably for the development of technical

specifications.

2. For that purpose, procuring entities may seek or accept advice from independent experts or

authorities or from market participants. That advice may be used in the planning and conduct of the

procurement procedure, provided that such advice does not have the effect of distorting competition

and does not result in violation of the principles as established in Article 11.4.

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ARTICLE 11.11

Time periods

1. A procuring entity shall, consistent with its own reasonable needs, provide sufficient time for

suppliers to prepare and submit requests for participation and responsive tenders, taking into

account such factors as:

(a) the nature and complexity of the covered procurement;

(b) the extent of subcontracting anticipated; and

(c) the time necessary for transmitting tenders by non-electronic means from foreign as well as

domestic points if electronic means are not used.

These time periods, including any extension of the time periods, shall be the same for all interested

or participating suppliers.

2. A procuring entity that uses selective tendering shall establish that the final date for the

submission of requests for participation is not, in principle, less than 25 days from the date of

publication of the notice of intended procurement. If a state of urgency duly substantiated by the

procuring entity renders that time period impracticable, the time period may be reduced to not less

than 10 days.

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3. Except as provided for in paragraphs 4, 5, 7 and 8, a procuring entity shall establish that the

final date for the submission of tenders is not less than 40 days from the date on which:

(a) in the case of open tendering, the notice of intended procurement is published; or

(b) in the case of selective tendering, the entity notifies suppliers that they will be invited to

submit tenders.

4. A procuring entity may reduce the time period for tendering referred to in paragraph 3 to not

less than 10 days if:

(a) the procuring entity has published a notice of planned procurement as described in

Article 11.6(6) at least 40 days and not more than 12 months in advance of the publication of

the notice of intended procurement, and the notice of planned procurement contains:

(i) a description of the covered procurement;

(ii) the approximate final dates for the submission of tenders or requests for participation;

(iii) a statement that interested suppliers should express their interest in the covered

procurement to the procuring entity;

(iv) the address from which documents relating to the covered procurement may be

obtained; and

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(v) as much of the information that is required for the notice of intended procurement under

Article 11.6(3), as is available;

(b) the procuring entity, for recurring contracts, indicates in an initial notice of intended

procurement that subsequent notices will provide time periods for tendering based on this

paragraph; or

(c) a state of urgency duly substantiated by the procuring entity renders the time period for

tendering referred to in paragraph 3 impracticable.

5. A procuring entity may reduce the time period for tendering referred to in paragraph 3 by five

days for each of the following circumstances:

(a) the notice of intended procurement is published by electronic means;

(b) all the tender documentation is made available by electronic means from the date of the

publication of the notice of intended procurement; and

(c) the procuring entity accepts tenders by electronic means.

6. The application of paragraph 5, in conjunction with paragraph 4, shall not result in the

reduction of the time period for tendering referred to in paragraph 3 to less than 10 days from the

date on which the notice of intended procurement is published.

& /en 304

7. Notwithstanding any other provision in this Article, if a procuring entity purchases

commercial goods or services, or any combination thereof, it may reduce the time period for

tendering referred to in paragraph 3 to not less than 13 days, provided that it publishes by electronic

means, at the same time, both the notice of intended procurement and the tender documentation. In

addition, if the procuring entity accepts tenders for commercial goods or services by electronic

means, it may reduce the time period established in accordance with paragraph 3 to not less than 10

days.

8. If a procuring entity covered under Sections B or C of Annex 11-A (Government Procurement

Market Access Schedule of the Union) or Annex 11-B (Government Procurement Market Access

Schedule of Indonesia) has selected all or a limited number of qualified suppliers, the time period

for tendering may be fixed by mutual agreement between the procuring entity and the selected

suppliers. In the absence of such agreement, the time period shall be not less than 10 days.

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ARTICLE 11.12

Negotiations

1. A Party may provide for its procuring entities to conduct negotiations with suppliers:

(a) if the entity has indicated its intent to conduct negotiations in the notice of intended

procurement required under Article 11.6(3); or

(b) if it appears from the evaluation that no tender is obviously the most advantageous in terms of

the specific evaluation criteria set out in the notice of intended procurement or tender

documentation.

2. A procuring entity shall:

(a) ensure that any elimination of suppliers participating in negotiations is carried out in

accordance with the evaluation criteria set out in the notice of intended procurement or tender

documentation; and

(b) if negotiations are concluded, provide a common deadline for the remaining participating

suppliers to submit any new or revised tenders.

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ARTICLE 11.13

Limited tendering

1. Provided that it does not use this provision for the purpose of avoiding competition among

suppliers or in a manner that discriminates against suppliers of the other Party or protects domestic

suppliers, a procuring entity may use limited tendering and may choose not to apply Articles 11.6,

11.7, 11.8, paragraphs 6 to 10 of Article 11.9, and Articles 11.11, 11.12, 11.14 and 11.15 under any

of the following circumstances:

(a) if in response to a notice of intended procurement and provided that the procuring entity does

not substantially modify the requirements of the tender documentation:

(i) no tenders were submitted or no suppliers requested participation;

(ii) no tenders that conform to the essential requirements of the tender documentation were

submitted;

(iii) no suppliers satisfied the conditions for participation; or

(iv) the tenders submitted have been collusive;

& /en 307

(b) if the goods or services can be supplied only by a particular supplier and no reasonable

alternative or substitute goods or services exist for any of the following reasons:

(i) the requirement is for a work of art;

(ii) the protection of patents, copyrights or other exclusive rights; or

(iii) due to an absence of competition for technical reasons;

(c) for additional deliveries by the original supplier of goods or services that were not included in

the initial procurement, if a change of supplier for those additional goods or services:

(i) cannot be made for economic or technical reasons such as requirements of

interchangeability or interoperability with existing equipment, software, services or

installations procured under the initial procurement; and

(ii) would cause significant inconvenience or substantial duplication of costs for the

procuring entity;

(d) if strictly necessary, for reasons of extreme urgency brought about by events unforeseeable by

the procuring entity, the goods or services could not be obtained in time using open tendering

or selective tendering;

(e) for goods purchased on a commodity market;

& /en 308

(f) if a procuring entity procures a prototype or a first good or service that is developed at its

request in the course of, and for, a particular contract for research, experiment, study or

original development; original development of a first good or service may include limited

production or supply in order to incorporate the results of field testing and to demonstrate that

the good or service is suitable for production or supply in quantity to acceptable quality

standards, but does not include quantity production or supply to establish commercial viability

or to recover research and development costs;

(g) for purchases made under exceptionally advantageous conditions that only arise in the very

short term in the case of unusual disposals such as those arising from liquidation, receivership

or bankruptcy, but not for routine purchases from regular suppliers;

(h) if a contract is awarded to a winner of a design contest provided that:

(i) the contest has been organised in a manner that is consistent with the principles of this

Chapter, in particular relating to the publication of a notice of intended procurement;

and

(ii) the participants are judged by an independent jury with a view to a design contract

being awarded to the winner; or

(i) for legal services, including the services of an arbitrator, the need for which was not

envisaged by the procuring entity but which are required to assist the procuring entity to

address matters that cannot be postponed.

& /en 309

2. The procuring entity shall prepare a report in writing on each contract awarded under

paragraph 1. The report shall include the name of the procuring entity, the value and kind of goods

or services procured and a statement indicating the circumstances and conditions described in

paragraph 1 that justified the use of limited tendering.

ARTICLE 11.14

Electronic auctions

If a procuring entity intends to conduct a covered procurement using an electronic auction, the

procuring entity shall, if applicable, provide each participant before commencing the electronic

auction, with:

(a) the automatic evaluation method, including the mathematical formula, that is based on the

evaluation criteria set out in the tender documentation and that will be used in the automatic

ranking or re-ranking during the auction;

(b) the results of any initial evaluation of the elements of its tender if the contract is to be

awarded on the basis of the most advantageous tender; and

(c) any other relevant information relating to the conduct of the auction.

& /en 310

ARTICLE 11.15

Treatment of tenders and award of contracts

1. A procuring entity shall receive, open and treat all tenders under procedures that guarantee the

fairness and impartiality of the procurement process, and the confidentiality of tenders.

2. A procuring entity shall not penalise any supplier whose tender is received after the time

specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring

entity.

3. If a procuring entity provides a supplier with an opportunity to correct unintentional errors of

form, the procuring entity shall provide the same opportunity to all participating suppliers.

4. To be considered for an award, a tender shall be submitted in writing and shall, at the time of

opening, comply with the essential requirements set out in the notices and tender documentation

and be submitted by a supplier that satisfies the conditions for participation.

5. Unless a procuring entity determines that it is not in the public interest to award a contract, the

procuring entity shall award the contract to the supplier that the procuring entity has determined to

be capable of fulfilling the terms of the contract and that, based solely on the evaluation criteria

specified in the notices and tender documentation, has submitted:

(a) the most advantageous tender; or

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(b) if price is the sole criterion, the lowest price.

6. If a procuring entity receives a tender with a price that is abnormally lower than the prices in

other tenders submitted, it may verify with the supplier that it satisfies the conditions for

participation and is capable of fulfilling the terms of the contract.

7. A procuring entity shall not use options, cancel a covered procurement or modify awarded

contracts in a manner that circumvents the obligations under this Chapter.

8. The Parties shall, as a general rule, provide for a standstill period between the award and the

conclusion of a contract in order to give sufficient time to unsuccessful bidders to review and

challenge the award decision.

ARTICLE 11.16

Transparency of procurement information

1. A procuring entity shall promptly inform participating suppliers of the procuring entity's

contract award decisions and, on request of a supplier, shall do so in writing. Subject to

Articles 11.17(2) and 11.17(3) a procuring entity shall, on request, provide an unsuccessful supplier

with an explanation of the reasons the procuring entity did not select that supplier's tender and the

relative advantages of the successful supplier's tender.

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2. Not later than 30 days after the award of each contract covered by this Chapter, a procuring

entity shall publish a notice in the appropriate paper or electronic medium listed in Section H of

Annex 11-A (Government Procurement Market Access Schedule of the Union) and Annex 11-B

(Government Procurement Market Access Schedule of Indonesia). If the procuring entity publishes

the notice only in an electronic medium, the information shall remain readily accessible for a

reasonable period of time. The notice shall include at least the following information:

(a) a description of the goods or services procured;

(b) the name of the procuring entity;

(c) the name and address of the successful supplier;

(d) the value of the successful tender or the highest and lowest offers taken into account in the

award of the contract;

(e) the date of award; and

(f) the type of procurement method used, and in cases if limited tendering was used in

accordance with Article 11.13, a description of the circumstances justifying the use of limited

tendering.

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3. Each procuring entity shall, for a period of at least three years from the date it awards a

contract, maintain:

(a) the documentation and reports of tendering procedures and contract awards relating to

covered procurement, including the reports required under Article 11.13; and

(b) data that ensure the appropriate traceability of the conduct of covered procurement by

electronic means.

4. The Parties shall exchange statistics on covered procurement on a regular basis.

ARTICLE 11.17

Disclosure of information

1. Upon request of a Party, the other Party shall provide promptly any information necessary to

determine whether a covered procurement was conducted fairly, impartially and in accordance with

this Chapter, including information on the characteristics and relative advantages of the successful

tender. In cases if release of the information would prejudice competition in future tenders, the

Party that receives the information shall not disclose it to any supplier, except after consulting with,

and obtaining the consent of, the Party that provided the information.

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2. Notwithstanding any other provision of this Chapter, a Party, including its procuring entities,

shall not provide to any particular supplier information that might prejudice fair competition

between suppliers.

3. Nothing in this Chapter shall be construed to require a Party, including its procuring entities,

authorities and review bodies, to disclose confidential information if disclosure:

(a) would impede law enforcement;

(b) might prejudice fair competition between suppliers;

(c) would prejudice the legitimate commercial interests of particular persons, including the

protection of intellectual property; or

(d) would otherwise be contrary to the public interest.

ARTICLE 11.18

Domestic review procedures

1. Each Party shall provide a timely, effective, transparent and non-discriminatory

administrative or judicial review procedure through which a supplier may challenge:

(a) a breach of a provision of this Chapter; or

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(b) if the supplier does not have a right to challenge directly a breach of the Chapter under the

laws and regulations of a Party, a failure to comply with a measure of a Party implementing a

provision of this Chapter;

arising in the context of a covered procurement, in which the supplier has, or has had, an interest.

The procedural rules for all challenges shall be in writing and made publicly available.

2. In the event of a complaint by a supplier, arising in the context of covered procurement in

which the supplier has, or has had, an interest, that there has been a breach or a failure as referred to

in paragraph 1, the Party of the procuring entity conducting the covered procurement shall

encourage the procuring entity and the supplier to seek resolution of the complaint through

consultations. The procuring entity shall accord impartial and timely consideration to any such

complaint in a manner that is not prejudicial to the supplier's participation in ongoing or future

covered procurement or its right to seek corrective measures under the administrative or judicial

review procedure.

3. Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge,

which shall be at least 10 days from the time when the basis of the challenge became known or

reasonably should have become known to the supplier.

4. Each Party shall establish or designate at least one impartial administrative or judicial

authority that is independent of its procuring entities to receive and review a challenge concerning

the result of a procurement process by a supplier arising in the context of a covered procurement.

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5. If a body other than an authority referred to in paragraph 4 initially reviews a challenge, the

Party shall ensure that the supplier may appeal the initial decision to an impartial administrative or

judicial authority that is independent of the procuring entity whose covered procurement is the

subject of the challenge.

6. Each Party shall ensure that a decision of a review body that is not a court shall be subject to

judicial review or that the review body has procedures that provide that:

(a) the procuring entity shall respond in writing to the challenge and disclose all relevant

documents to the review body;

(b) the participants to the proceedings (hereinafter referred to as "participants") shall have the

right to be heard prior to a decision of the review body being made on the challenge;

(c) the participants shall have the right to be represented and accompanied;

(d) the participants shall have access to all proceedings;

(e) the participants shall have the right to request that the proceedings take place in public and

that witnesses may be presented; and

(f) the review body shall make its decisions or recommendations in a timely fashion, in writing,

and shall include an explanation of the basis for each decision or recommendation.

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7. Each Party shall adopt or maintain procedures that provide for:

(a) rapid interim measures to preserve a supplier's opportunity to participate in the covered

procurement; those interim measures may result in suspension of the procurement process; the

procedures may provide that overriding adverse consequences for the interests concerned,

including the public interest, may be taken into account when deciding whether those interim

measures should be applied; just cause for not acting shall be provided in writing; and

(b) corrective action or compensation for the loss or damages suffered, if a review body has

determined that there has been a breach or a failure as referred to in paragraph 1.

ARTICLE 11.19

Cooperation on government procurement

1. The Parties shall cooperate, on mutually agreed terms, on matters relating to government

procurement with a view to:

(a) increasing the understanding of their respective government procurement systems and

markets; and

(b) improving the capacity of stakeholders of the Parties with an interest in government

procurement.

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2. Cooperation referred to in paragraph 1 shall include:

(a) sharing information on best practices for government procurement including on electronic

procurement systems, fostering the participation of SMEs in covered procurement;

(b) exchanging information on the Parties' laws, regulations, and procedures, and any

modifications thereof; and

(c) to the extent possible, the provision of training, technical assistance or capacity building and

sharing information thereon.

ARTICLE 11.20

Modifications and rectifications to coverage

1. The Union may modify or rectify Annex 11-A (Government Procurement Market Access

Schedule of the Union) and Indonesia may modify or rectify Annex 11-B (Government

Procurement Market Access Schedule of Indonesia), in accordance with paragraphs 2 to 9.

2. If a Party intends to modify its Annex referred to in paragraph 1, the Party shall:

(a) notify the other Party in writing; and

& /en 319

(b) include in the notification a proposal for appropriate compensatory adjustments to the other

Party to maintain a level of coverage comparable to that existing prior to the modification.

3. Notwithstanding point (b) of paragraph 2, a Party need not provide compensatory adjustments

if the modification covers a procuring entity over which the Party has effectively eliminated its

control or influence. Government control or influence over the covered procurement of procuring

entities listed in Annex 11-A (Government Procurement Market Access Schedule of the Union) or

Annex 11-B (Government Procurement Market Access Schedule of Indonesia) is deemed to be

effectively eliminated insofar as a procuring entity's procurement is concerned, if the procuring

entity performs a competitive activity.

4. If the other Party disputes that:

(a) an adjustment proposed under point (b) of paragraph 2 is appropriate; or

(b) the modification covers a procuring entity over which the Party has effectively eliminated its

control or influence under paragraph 3;

it must object in writing within 45 days of receipt of the notification referred to in point (a) of

paragraph 2. If no objection is submitted, the Party shall be deemed to have accepted the proposed

adjustment or modification.

& /en 320

5. The following changes to Annex 11-A (Government Procurement Market Access Schedule of

the Union) or Annex 11-B (Government Procurement Market Access Schedule of Indonesia) shall

be considered a rectification of a purely formal nature, provided that they do not affect the mutually

agreed coverage provided for in the relevant Annex:

(a) a change in the name of an entity;

(b) a merger of two or more entities listed within an Annex; and

(c) the separation of an entity listed in an Annex into two or more entities that are all added to the

entities listed in the same Annex.

6. In the case of proposed rectifications to an Annex as referred to in paragraph 1, the Party shall

notify the other Party every two years after the Trade Committee takes a decision to amend the

Annexes pursuant to Article 24.2.

7. A Party may notify the other Party of an objection to a proposed rectification within 45 days

having received a notification referred to in paragraph 6. If a Party submits an objection, it shall set

out the reasons it believes the proposed rectification is not a change as provided for in paragraph 5,

and describe the effect of the proposed rectification on the mutually agreed coverage provided for in

Annex 11-A (Government Procurement Market Access Schedule of the Union) or Annex 11-B

(Government Procurement Market Access Schedule of Indonesia). If no objection is submitted in

writing within 45 days after having received the notification, the Party shall be deemed to have

agreed to the proposed rectification.

& /en 321

8. If a Party objects to the proposed modification or the proposed compensatory adjustments

referred to in point (b) of paragraph 2 or to the proposed rectification referred to in paragraph 6, the

Parties shall seek to resolve the issue through consultations. If no agreement is found within 120

days of receipt of the objection, the Party seeking to modify or rectify its Annex as referred to in

paragraph 1 may refer the matter to dispute settlement in accordance with Chapter 22 (Dispute

Settlement), to determine whether the objection is justified.

9. The proposed modification or rectification shall take effect only when the Parties have agreed

or on the basis of a final decision of a panel established under Chapter 22 (Dispute Settlement).

ARTICLE 11.21

Committee on Services, Investment, Digital Trade, Government Procurement

and Intellectual Property

This Article complements and further specifies Article 24.4. For the purposes of the effective

implementation and operation of this Chapter, the functions of the Committee established in

accordance with Article 24.4 shall include:

(a) reviewing and monitoring the implementation and operation of this Chapter;

& /en 322

(b) exchanging views on laws and regulations, policies and practices, and other mutually agreed

issues regarding government procurement;

(c) discussing ways to facilitate cooperation between relevant entities of the Parties in the field of

government procurement;

(d) reporting the findings to the Trade Committee; and

(e) carrying out other functions as may be delegated by the Trade Committee in accordance with

Article 24.2.

ARTICLE 11.22

Non-application of dispute settlement1

Until the Trade Committee takes a decision to amend Annex 11-A (Government Procurement

Market Access Schedule of the Union) and Annex 11-B (Government Procurement Market Access

Schedule of Indonesia) in accordance with Article 24.2 following negotiations pursuant to

Article 11.23, Chapter 22 (Dispute Settlement) does not apply to any dispute arising from the

interpretation and application of this Chapter in relation to covered procurement.

1 The Parties share the understanding that the negotiations as referred to in Article 11.23

include the application of Chapter 22 (Dispute Settlement) to any dispute arising from the

interpretation and application of this Chapter in relation to covered procurement.

& /en 323

ARTICLE 11.23

Further negotiations

The Parties shall enter into negotiations on market access between the Parties, within five years and

not sooner than three years from the entry into force of this Agreement, unless the Parties agree

otherwise. Following these negotiations, the Trade Committee may decide pursuant to Article 24.2

to amend Annex 11-A (Government Procurement Market Access Schedule of the Union) and

Annex 11-B (Government Procurement Market Access Schedule of Indonesia).

ARTICLE 11.24

Technical consultations

1. The Parties shall seek to resolve any concerns arising from the implementation of this Chapter

through technical consultations pursuant to this Article prior to initiating dispute settlement

pursuant to Chapter 22 (Dispute Settlement). The technical consultations shall endeavour to arrive

at a mutually satisfactory resolution of the concerns.1

1 For greater certainty, technical consultations pursuant to this Article shall not replace

consultations pursuant to Article 22.4 or dialogues under Chapter 21 (Bilateral Dialogue

Mechanism), unless the Parties agree otherwise.

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2. For the purposes of paragraph 1, any Party may make a request (hereinafter referred to as

"requesting Party") to the other Party (hereinafter referred to as "requested Party") to hold technical

consultations. The request shall be made in writing1 and identify:

(a) the matter or measure at issue;

(b) the provisions of this Chapter to which the concerns relate; and

(c) the reasons for the request, including a description of the requesting Party's concerns

regarding the measures or matters.

3. Upon request of either Party, the Parties shall meet to discuss the concerns raised in the

request, in person or by any technological means available to the Parties. If the meeting is held in

person, it shall be held in the capital of the requested Party, unless the Parties agree otherwise.

4. The Parties shall endeavour to resolve the matter as expeditiously as possible within 60 days

from the date of receipt of the request. If the requesting Party believes that the matter is urgent and

require immediate settlement, it may request a shorter time frame. In those cases, the requested

Party shall give positive consideration to that request.

5. A Party may request or exchange further information relevant to paragraph 2, and the

information obtained or communications between the Parties under this Article shall be confidential

unless the Parties agree otherwise.

1 If the request is sent by electronic means, the requested Party shall promptly confirm the

receipt of that request and no later than within 14 calendar days of receipt.

& /en 325

6. Any resolution reached between the Parties as a result of technical consultations under this

Article shall be notified to the Trade Committee and shall be without prejudice to the rights of the

Parties in any further proceedings, and only be used in the framework of this Agreement.

ARTICLE 11.25

International assistance

Notwithstanding the provisions in point (f)(i) and point (f)(iii) of Article 11.1(3), with regard to any

procurement or part thereof funded by international grants, loans or other assistance of the other

Party, each Party shall grant national treatment to suppliers, goods and services of the Parties,

unless otherwise agreed by the Parties under a relevant grant or loan agreement. This obligation

applies irrespective of whether or not the procurement is covered by Annex 11-A (Government

Procurement Market Access Schedule of the Union) or Annex 11-B (Government Procurement

Market Access Schedule of Indonesia).

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CHAPTER 12

INTELLECTUAL PROPERTY

SECTION A

GENERAL PROVISIONS

ARTICLE 12.1

Objectives

1. The objectives of this Chapter are to:

(a) promote cooperation on the protection and enforcement of intellectual property rights;

(b) achieve an adequate and effective level of protection and enforcement of intellectual property

rights;

(c) promote the production and commercialisation of innovative and creative products in each

Party; and

& /en 327

(d) reduce impediments to trade in innovative and creative goods and services and incentivise

investments in a manner conducive to a more sustainable and inclusive economy.

2. The protection and enforcement of intellectual property rights should contribute to the

promotion of technological innovation and to the transfer and dissemination of technology, to the

mutual advantage of producers and users of technological knowledge and in a manner conducive to

social and economic welfare, and to the balance of rights and obligations pursuant to Article 7 of

the TRIPS Agreement.

ARTICLE 12.2

Nature and scope of obligations

1. This Chapter complements and further specifies the rights and obligations of each Party under

the TRIPS Agreement and other international agreements in the field of intellectual property, to

which they are parties.

2. For the purposes of this Chapter, intellectual property refers at least to all categories of

intellectual property that are covered by Sections 1 to 7 of Part II of the TRIPS Agreement or

Articles 12.9 to 12.44 of this Chapter. The protection of intellectual property includes protection

against unfair competition as referred to in Article 10bis of the Paris Convention for the Protection

of Industrial Property, adopted at Paris on 20 March 1883, as last revised at Stockholm on 14 July

1967 (hereinafter referred to as the "Paris Convention").

& /en 328

3. This Chapter does not preclude a Party from applying provisions of that Party's law providing

higher standards for the protection or enforcement of intellectual property rights than those required

by this Chapter, provided that they do not contravene this Chapter. Each Party shall be free to

determine the appropriate method of implementing this Chapter within its legal system and policies.

ARTICLE 12.3

TRIPS Agreement and public health

1. The Parties recognise the importance of the Declaration on the TRIPS Agreement and Public

Health, adopted on 14 November 2001 by the Ministerial Conference of the WTO at Doha

(hereinafter referred to as the "Doha Declaration"). In interpreting and implementing the rights and

obligations under this Chapter, each Party shall ensure consistency with the Doha Declaration.

2. Nothing in this Chapter shall limit a Party's rights and obligations pursuant to Article 31 and

Article 31bis of the TRIPS Agreement, and the Annex thereto and the Appendix to the Annex to the

TRIPS Agreement.

& /en 329

ARTICLE 12.4

Exhaustion

Each Party shall be free to establish its own regime for the exhaustion of intellectual property rights.

ARTICLE 12.5

National treatment

1. In respect of the intellectual property rights covered by this Chapter, each Party shall accord

to the nationals of the other Party treatment no less favourable than it accords to its own nationals

with regard to the protection of intellectual property rights, subject to the exceptions provided in,

respectively, the Paris Convention, the Berne Convention for the Protection of Literary and Artistic

Works, adopted at Bern on 9 September 1886, as revised at Paris on 24 July 1971 and amended on

28 September 1979 (hereinafter referred to as the "Berne Convention") , the International

Convention for the Protection of Performers, Producers of Phonograms and Broadcasting

Organisations, done at Rome on 26 October 1961 or the Treaty on Intellectual Property in Respect

of Integrated Circuits, done at Washington on May 26 1989. In respect of performers, producers of

phonograms and broadcasting organisations, this obligation only applies in respect of the rights

provided for under this Chapter.

& /en 330

2. A Party may avail itself of the exceptions permitted under paragraph 1 in relation to its

judicial and administrative procedures, including requiring a national of the other Party to designate

an address for service in its territory, or to appoint an agent in its territory, provided that those

exceptions are:

(a) necessary to secure compliance with laws and regulations of the Party that are not inconsistent

with this Chapter; and

(b) not applied in a manner that would constitute a disguised restriction on trade.

3. Paragraph 1 does not apply to procedures provided in multilateral agreements concluded

under the auspices of the World Intellectual Property Organisation (hereinafter referred to as

"WIPO") relating to the acquisition or maintenance of intellectual property rights.

ARTICLE 12.6

Genetic resources, traditional knowledge and traditional cultural expressions

1. The Parties recognise the importance and value of genetic resources and associated traditional

knowledge.

& /en 331

2. The Parties acknowledge that the disclosure of the origin or source of genetic resources and

associated traditional knowledge in patent applications may promote the transparency of the patent

system with regard to genetic resources and associated traditional knowledge.

3. The Parties affirm the importance of working towards a multilateral outcome on intellectual

property related aspects of genetic resources and associated traditional knowledge and of the work

carried out on traditional knowledge and traditional cultural expressions by the WIPO

Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional

Knowledge and Folklore.

ARTICLE 12.7

Transfer of technology

The Parties agree to exchange views and information on their law and international practices on the

protection and enforcement of intellectual property rights regarding the transfer of technology. This

shall in particular include exchanges on measures to facilitate information flows, business

partnerships and voluntary licensing and subcontracting agreements. Particular attention shall be

paid to the conditions necessary to create an adequate enabling environment for technology transfer

in the Party receiving the technology, including issues such as the legal framework of that Party and

the development of human capital.

& /en 332

ARTICLE 12.8

International agreements

1. Each Party shall comply with its commitments under the following international agreements:

(a) the TRIPS Agreement;

(b) the WIPO Copyright Treaty, adopted at Geneva on 20 December 1996;

(c) the WIPO Performances and Phonograms Treaty, adopted at Geneva on 20 December 1996;

and

(d) the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind,

Visually Impaired or Otherwise Print Disabled, adopted at Marrakesh on 28 June 2013.

2. Each Party shall make all reasonable efforts to ratify or accede to the following international

agreements:

(a) the Beijing Treaty on Audiovisual Performances, adopted at Beijing on 24 June 2012;

(b) the Trademark Law Treaty, adopted at Geneva on 27 October 1994 or the Singapore Treaty

on the Law of Trademarks, adopted at Singapore on 27 March 2006; and

& /en 333

(c) the Geneva Act of the Hague Agreement Concerning the International Registration of

Industrial Designs, adopted at Geneva on 2 July 1999.

3. Each Party shall ensure that the procedures provided under the following international

agreements are available in its territory:

(a) the Patent Cooperation Treaty, adopted at Washington on 19 June 1970, as amended on 28

September 1979, modified on 3 February 1984 and last modified on 3 October 2001; and

(b) the Protocol Relating to the Madrid Agreement concerning the International Registration of

Marks, adopted at Madrid on 27 June 1989, as amended on 3 October 2006 and on 12

November 2007.

4. Each Party reaffirms its commitment to other international agreements under the auspices of

the WIPO to which it is a party, including the Berne Convention.

& /en 334

SECTION B

STANDARDS CONCERNING INTELLECTUAL PROPERTY RIGHTS

SUB-SECTION 1

COPYRIGHT AND RELATED RIGHTS

ARTICLE 12.9

Authors

1. Each Party shall provide authors with the exclusive right to authorise or prohibit:

(a) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of their works;

(b) any form of distribution to the public, by sale or otherwise, of the original of their works or of

copies thereof;

& /en 335

(c) any communication to the public of their works, by wire or wireless means, including the

making available to the public of their works in such a way that members of the public may

access them from a place and at a time individually chosen by them; and

(d) the commercial rental to the public of originals or copies of their works.

2. This Article is without prejudice to Article 12.46 on persons entitled to apply for the

application of measures, procedures and remedies.

ARTICLE 12.10

Performers

1. Each Party shall provide performers with the exclusive right to authorise or prohibit:

(a) the fixation1 of their performances;

(b) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of fixations of their performances;

(c) the distribution to the public, by sale or otherwise, of the fixations of their performances;

1 The term "fixation" means the embodiment of sounds or images, or of the representations

thereof, from which they can be perceived, reproduced or communicated through a device.

& /en 336

(d) the making available to the public of fixations of their performances, by wire or wireless

means, in such a way that members of the public may access them from a place and at a time

individually chosen by them;

(e) the broadcasting by wireless means and the communication to the public of their

performances, except where the performance is itself already a broadcast performance or is

made from a fixation; and

(f) the commercial rental to the public of the fixation of their performances.

2. This Article is without prejudice to Article 12.46 on persons entitled to apply for the

application of measures, procedures and remedies.

ARTICLE 12.11

Producers of phonograms

1. Each Party shall provide producers of phonograms with the exclusive right to authorise or

prohibit:

(a) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of their phonograms;

& /en 337

(b) the distribution to the public, by sale or otherwise, of their phonograms, including copies

thereof;

(c) the making available to the public of their phonograms, by wire or wireless means, in such a

way that members of the public may access them from a place and at a time individually

chosen by them; and

(d) the commercial rental of their phonograms to the public.

2. This Article is without prejudice to Article 12.46 on persons entitled to apply for the

application of measures, procedures and remedies.

ARTICLE 12.12

Broadcasting organisations

1. Each Party shall provide broadcasting organisations with the exclusive right to authorise or

prohibit:

(a) the fixation of their broadcasts, whether those broadcasts are transmitted by wire or over the

air1;

1 Transmission "by wire or over the air" includes transmission by cable or satellite.

& /en 338

(b) the direct or indirect, temporary or permanent reproduction by any means and in any form, in

whole or in part, of fixations of their broadcasts, whether those broadcasts are transmitted by

wire or over the air;

(c) the making available to the public, by wire or wireless means, of fixations of their broadcasts,

whether those broadcasts are transmitted by wire or over the air, in such a way that members

of the public may access them from a place and at a time individually chosen by them;

(d) the distribution to the public, by sale or otherwise, of fixations, including copies thereof, of

their broadcasts, whether those broadcasts are transmitted by wire or over the air; and

(e) the rebroadcasting of their broadcasts by wireless means, as well as the communication to the

public of their broadcasts if such communication is made in places accessible to the public

against payment of an entrance fee.

2. This Article is without prejudice to Article 12.46 on persons entitled to apply for the

application of measures, procedures and remedies.

& /en 339

ARTICLE 12.13

Right to remuneration for broadcasting and communication to the public

1. Each Party shall provide that the performers and producers of phonograms enjoy the right to a

single equitable remuneration paid by the user to the performers and producers of phonograms if a

phonogram published for commercial purposes, or a reproduction of such phonogram, is used for

broadcasting or for any communication to the public.

2. Each Party shall provide that the single equitable remuneration referred to in paragraph 1 is

claimed from the user by the performer or by the producer of a phonogram or by both. Each Party

may enact laws and regulations that, in the absence of an agreement between performers and

producers of phonograms, set the terms according to which performers and producers of

phonograms shall share the single equitable remuneration.

& /en 340

ARTICLE 12.14

Term of protection

1. Each Party shall ensure that:

(a) the rights of an author of a literary or artistic work within the meaning of Article 2 of the

Berne Convention run for the life of the author and for 70 years after the author's death,

irrespective of the date when the work is lawfully made available to the public;

(b) the term of protection of a musical composition with words expires 70 years after the death of

the author of the lyrics or the composer of the musical composition, whoever lives longest,

provided that either contribution was specifically made for the relevant musical composition

with words;

(c) in the case of a work of joint authorship, the term of protection expires no less than 70 years

after the death of the last surviving author;

(d) in the case of anonymous or pseudonymous works1, the term of protection runs for at least 50

years after the work is lawfully made available to the public; however, if the pseudonym

adopted by the author leaves no doubt as to the author's identity, or if the author discloses the

author's identity during the period referred to in the first sentence, the term of protection set

out in point (a) shall apply;

1 The term "anonymous or pseudonymous works" shall be understood within the meaning of

the Berne Convention.

& /en 341

(e) where a work is published in volumes, parts, instalments, issues or episodes and the term of

protection runs from the time when the work was lawfully made available to the public, the

term of protection shall run for each of those items separately;

(f) the term of protection of cinematographic or audiovisual works expires either:

(i) 70 years after the death of the last of the following persons to survive, whether or not

those persons are designated as co-authors: the principal director, the author of the

screenplay, the author of the dialogue and the composer of music specifically created

for use in the cinematographic or audiovisual work; or

(ii) at least 50 years after the work has been made available to the public with the consent of

the author, or, failing that, at least 50 years after that work was made.

(g) the rights of broadcasting organisations expire at least 20 years after the first transmission of a

broadcast, whether that broadcast is transmitted by wire or over the air;

(h) the rights of performers expire 50 years after the date of the fixation of the performance;

however, if a fixation of the performance in a phonogram is lawfully published or, where

provided for by a Party, lawfully communicated to the public within that period, the term of

protection shall expire at least 50 years after the date of the first of such publication or, where

provided for by a Party, the first of such communication to the public where a Party provides

for both possibilities, the term of protection shall be calculated from whichever event occurs

earlier and;

& /en 342

(i) the rights of producers of phonograms expire 50 years after the fixation is made; however, if

the phonogram has been lawfully published within this period, the said rights shall expire at

least 50 years from the date of the first lawful publication; if no lawful publication has taken

place within 50 years after the first fixation is made and if the phonogram has been lawfully

communicated to the public within this period, the said rights shall expire at least 50 years

from the date of the first lawful communication to the public.

2. The terms of protection laid down in this Article are calculated from the first day of January

of the year following the event which gives rise to them.

3. Each Party may provide for longer terms of protection than those provided for in this Article.

ARTICLE 12.15

Resale right

1. Each Party shall make all reasonable efforts to provide, for the benefit of the author of an

original work of graphic or plastic art, a "resale right", to be defined as an inalienable right, which

cannot be waived, even in advance, to receive a royalty based on the sale price obtained for any

resale of that work, subsequent to the first transfer of that work by the author.

& /en 343

2. The resale right referred to in paragraph 1 shall apply to all acts of resale involving as sellers,

buyers or intermediaries art market professionals, such as salesrooms, art galleries and, in general,

any dealers in works of art.

3. Each Party may provide that the resale right referred to in paragraph 1 shall not apply to acts

of resale where the seller has acquired the work directly from the author less than three years before

that resale and when the resale price does not exceed a certain minimum amount.

4. Each Party shall provide that authors who are nationals of a third country and their successors

in title enjoy the resale right in accordance with this Agreement and the laws and regulations of

each Party concerned only if the laws and regulations of the relevant third country permit the

protection of resale rights in that third country for authors of the Party concerned and their

successors in title.

ARTICLE 12.16

Collective management of rights

1. The Parties shall promote cooperation between their respective collective management

organisations for the purposes of fostering the availability of works and other protected subject

matter in their respective territories and the transfer of rights revenue for the use of such works or

other protected subject matter.

& /en 344

2. The Parties shall promote the transparency of collective management organisations, in

particular as regards the rights revenue they collect, the deductions they apply to the rights revenue

they collect, the use of the rights revenue collected, the distribution policy and their repertoire.

3. Each Party shall encourage collective management organisations established in its territory

and that represent another collective management organisation established in the territory of the

other Party by way of a representation agreement, to accurately, regularly and diligently pay

amounts owed to the represented collective management organisations, as well as to provide the

represented collective management organisation with information on the amount of rights revenue

collected on its behalf and any deductions made to that rights revenue.

ARTICLE 12.17

Exceptions and limitations

1. Each Party shall provide for exceptions or limitations to the exclusive rights only in certain

special cases which do not conflict with a normal exploitation of the subject matter and do not

unreasonably prejudice the legitimate interests of the right holders.

& /en 345

2. Each Party shall provide that temporary acts of reproduction, which are transient or incidental,

and which are an integral and essential part of a technological process, the sole purpose of which is

to enable a transmission in a network between third parties by an intermediary, or a lawful use, of a

work or other subject matter to be made, and which have no independent economic significance, are

exempted from the reproduction right.

ARTICLE 12.18

Protection of technological measures

1. Each Party shall provide adequate legal protection against the circumvention of any effective

technological measures in accordance with its laws and regulations, which the person concerned

carries out in the knowledge, or with reasonable grounds to know, that they are pursuing that

objective.

2. Each Party shall provide adequate legal protection against the manufacture, import,

distribution, sale, rental, advertisement for sale or rental, or possession for commercial purposes of

devices, products or components or the provision of services which:

(a) are promoted, advertised or marketed for the purpose of circumvention of any effective

technological measures;

& /en 346

(b) have only a limited commercially significant purpose or use other than to circumvent any

effective technological measures; or

(c) are primarily designed, produced, adapted or performed for the purpose of enabling or

facilitating the circumvention of any effective technological measures.

3. Paragraph 2 does not limit the power of the judicial authorities of a Party to evaluate all the

circumstances of the case on a case-by-case basis according to the laws and regulations of that

Party.

4. For the purposes of this Article, the term "technological measures" means any technology,

device or component that, in the normal course of its operation, is designed to prevent or restrict

acts, in respect of works or other subject matter, which are not authorised by the right holder of any

copyright or related rights provided for in this Sub-Section. Technological measures are "effective"

where the use of a protected work or other subject matter is controlled by the right holder through

the application of an access control or protection process, such as encryption, scrambling or other

transformation of the work or other subject matter or a copy control mechanism, which achieves the

objective of protection.

& /en 347

ARTICLE 12.19

Obligations concerning rights-management information

1. Each Party shall provide adequate legal protection against any person knowingly performing,

without authority, any of the following acts, if that person knows, or has reasonable grounds to

know, that by so doing that person is inducing, enabling, facilitating or concealing an infringement

of any copyright or any related rights:

(a) the removal or alteration of any electronic rights-management information; or

(b) the distribution, importation for distribution, broadcasting, communication or making

available to the public of works or other subject matter protected under this Agreement from

which electronic rights-management information has been removed or altered without

authorisation.

2. For the purposes of this Article, "rights-management information" means any information

provided by right holders which identifies the work or other subject matter referred to in this

Chapter, the author or any other right holder, information about the terms and conditions of use of

the work or other subject matter, and any numbers or codes that represent such information. The

first sentence of this paragraph shall apply when any of those items of information is associated

with a copy of, or appears in connection with, the communication to the public of a work or other

subject matter referred to in this Chapter.

& /en 348

SUB-SECTION 2

TRADEMARKS

ARTICLE 12.20

Rights conferred by a trademark

1. A registered trademark shall confer on the proprietor exclusive rights therein. The proprietor

shall be entitled to prevent all third parties not having the proprietor's consent from using in the

course of trade:

(a) any sign which is identical with the trademark in relation to goods or services which are

identical with those for which the trademark is registered; and

(b) any sign where, because of its identity with, or similarity to, the trademark and the identity or

similarity of the goods or services covered by the trademark and the sign, there exists a

likelihood of confusion on the part of the public, which includes the likelihood of association

between the sign and the trademark.

2. The following, in particular, may be prohibited by the proprietor under paragraph 1:

(a) affixing the sign to the goods or to the packaging of those goods;

& /en 349

(b) offering the goods, placing them on the market, or stocking them for those purposes under the

sign, or offering or supplying services thereunder;

(c) importing or exporting the goods under the sign;

(d) using the sign as a trade or company name or part of a trade or company name; and

(e) using the sign on business papers and in advertising.

ARTICLE 12.21

Registration procedure

1. Each Party shall establish a system for the registration of trademarks in which each final

refusal decision1 to register a trademark, including a partial refusal of registration, issued by the

relevant trademark administration, shall be notified in writing, duly reasoned and subject to

challenge.

2. Each Party shall provide for the possibility to oppose applications to register a trademark or,

where appropriate, trademark registrations. Such opposition proceedings shall be adversarial.

1 Final negative decision.

& /en 350

3. Each Party shall provide a publicly available electronic database of applications and

registrations of trademarks.

ARTICLE 12.22

Well-known trademarks

For the purposes of giving effect to protection of well-known trademarks, as referred to in Article

6bis of the Paris Convention and paragraphs 2 and 3 of Article 16 of the TRIPS Agreement, each

Party shall apply the Joint Recommendation Concerning Provisions on the Protection of Well-

Known Marks, adopted by the Assembly of the Paris Union for the Protection of Industrial Property

and the General Assembly of the WIPO at the Thirty-Fourth Series of Meetings of the Assemblies

of the Member States of WIPO on 20 to 29 September 1999.

ARTICLE 12.23

Exceptions to the rights conferred by a trademark

1. Each Party shall provide for limited exceptions to the rights conferred by a trademark such as

the fair use of descriptive terms, including geographical indications, as appropriate and may provide

for other limited exceptions, provided that such exceptions take into account the legitimate interests

of the proprietor of the trademark and of third parties.

& /en 351

2. Each Party shall provide that the trademark shall not entitle the proprietor to prohibit a third

party from using, in the course of trade:

(a) the name or address of the third party, where the third party is a natural person;

(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical

origin, the time of production of goods or of rendering of services, or other characteristics of

goods or services; or

(c) the trademark where it is necessary to indicate the intended purpose of a goods or services, in

particular as accessories or spare parts.

3. Paragraph 2 shall only apply where the use made by the third party is in accordance with

honest practices in industrial or commercial matters. Each Party may provide that the use under

point (a) of paragraph 2 is only considered to be in accordance with honest practices in industrial or

commercial matters if it relates to goods or services which are dissimilar to those of an earlier

trademark.

& /en 352

ARTICLE 12.24

Revocation and invalidation of a trademark

1. Each Party shall provide that a trademark shall be liable to revocation if, within a continuous

period of at least three years, the trademark has not been put to genuine use in the relevant territory

of a Party in connection with the goods or services in respect of which it is registered, and there are

no proper reasons for non-use. A Party may not claim that the proprietor's rights in a trademark

should be revoked where, during the interval between expiry of the period of at least three years and

filing of the application for revocation, genuine use of the trademark has been started or resumed.

The commencement or resumption of use within a period of three months preceding the filing of the

application for revocation, which began at the earliest on expiry of the continuous period of at least

three years of non-use, shall, however, be disregarded where preparations for the commencement or

resumption of use take place only after the holder has been informed that the application for

revocation may be filed.

2. Each Party shall provide that a trademark shall also be liable to revocation if, after the date on

which it was registered:

(a) as a consequence of acts or inactivity of the proprietor, the trademark has become the

common name in the trade for a goods or services in respect of which it is registered; or

& /en 353

(b) as a consequence of the use made of the trademark by the proprietor of the trademark or with

the proprietor's consent in respect of the goods or services for which it is registered, it is liable

to mislead the public, particularly as to the nature, quality or geographical origin of those

goods or services.

3. The grounds for invalidation of a trademark may be determined by the laws and regulations of

each Party.

ARTICLE 12.25

Bad faith applications

Each Party shall provide that a trademark shall be liable to be declared invalid where the application

for registration of the trademark was made in bad faith by the applicant. Each Party may also

provide that such a trademark shall not be registered.

& /en 354

SUB-SECTION 3

DESIGNS

ARTICLE 12.26

Protection of registered designs

1. Each Party shall provide for the protection of independently created designs that are new or

original.1 This protection shall be provided by registration and shall confer an exclusive right upon

their holders in accordance with this Sub-Section.

2. The holder of a registered design shall have the right at least to use it and to prevent third

parties not having the holder's consent at least from using, making, offering for sale, selling, placing

on the market, importing, exporting, stocking a product or using articles bearing or embodying the

protected design when such acts are undertaken for commercial purposes, unduly prejudice the

normal exploitation of the design, or are not compatible with fair trade practice.

3. A design applied to or incorporated in a product which constitutes a component part of a

complex product shall be granted design protection:

(a) if the component part, once it has been incorporated into the complex product, remains visible

during normal use of the latter; and

1 The Parties agree that if the law of the Union so provides, individual character of designs may

also be required.

& /en 355

(b) to the extent that those visible features of the component part fulfil in themselves the

requirements pursuant to paragraph 1.

4. The term "normal use" in point (a) of paragraph 3 shall mean use by the end user, excluding

maintenance, servicing or repair work.

ARTICLE 12.27

Term of protection

Each Party shall provide that the duration of the protection available for registered designs shall

amount to at least 10 years from the date of filing of the application. If a Party increases the

duration of protection beyond 10 years, before or after the entry into force of this Agreement, the

minimum duration of protection pursuant to the first sentence of this paragraph shall be set at that

increased level of duration, which shall amount to at least 15 years.

& /en 356

ARTICLE 12.28

Exceptions and exclusions

1. Each Party may establish limited exceptions to the protection of designs, provided that those

exceptions do not unreasonably conflict with the normal exploitation of protected designs and do

not unreasonably prejudice the legitimate interests of the holder of the protected design, taking into

account the legitimate interests of third parties.

2. The protection of designs shall not extend to designs dictated essentially by technical or

functional considerations. In particular, a design right shall not subsist in features of appearance of a

product which must necessarily be reproduced in their exact form and dimensions for the product in

which the design is incorporated or to which the design is applied to be mechanically connected to,

or placed in, or around or in contact with another product so that either product may perform its

function.

3. By way of derogation from paragraph 2, a design may subsist in a design, which has the

purpose of allowing the multiple assembly or connection of mutually interchangeable products

within a modular system.

& /en 357

ARTICLE 12.29

Relationship to copyright

Each Party shall ensure that a design is eligible for protection under its copyright law from the date

on which the design was created or fixed in any form. Each Party shall determine the extent to

which, and the conditions under which, that such a protection is conferred, including the level of

originality required.

SUB-SECTION 4

GEOGRAPHICAL INDICATIONS

ARTICLE 12.30

Scope

1. This Sub-Section applies to the protection of geographical indications originating in the

territories of the Parties.

& /en 358

2. Geographical indications of a Party, which are to be protected by the other Party, shall only be

subject to this Sub-Section if covered by the scope of the laws and regulations referred to in

Article 12.31.

ARTICLE 12.31

Procedures

1. Having examined the laws and regulations of Indonesia listed in Section A of Annex 12-A

(Requirements for Laws and Regulations on Geographical Indications), the Union concludes that

these laws and regulations meet the elements laid down in Section B of Annex 12-A (Requirements

for Laws and Regulations on Geographical Indications).

2. Having examined the laws and regulations of the Union listed in Section A of Annex 12-A

(Requirements for Laws and Regulations on Geographical Indications), Indonesia concludes that

these laws and regulations meet the elements laid down in Section B of Annex 12-A (Requirements

for Laws and Regulations on Geographical Indications).

& /en 359

3. Following the completion of an opposition procedure in accordance with the criteria set out in

Annex 12-B (Criteria to be Included in the Opposition Procedure) and an examination of the

geographical indications of the Union listed in Annex 12-C (Geographical Indications for Products

as Referred to in Article 12.31(3) and (4)), which have been registered by the Union under the laws

and regulations referred to in paragraph 2 of this Article as geographical indications complying with

paragraph 1 of Article 22 of the TRIPS Agreement, Indonesia shall protect those geographical

indications according to the level of protection laid down in this Sub-Section.

4. Following the completion of an opposition procedure in accordance with the criteria set out in

Annex 12-B (Criteria to be Included in the Opposition Procedure) and an examination of the

geographical indications of Indonesia listed in Annex 12-C (Geographical Indications for Products

as Referred to in Article 12.31(3) and (4)), which have been registered by Indonesia under the laws

and regulations referred to in paragraph 1 of this Article as geographical indications complying with

paragraph 1 of Article 22 of the TRIPS Agreement, the Union shall protect those geographical

indications according to the level of protection laid down in this Sub-Section.

& /en 360

ARTICLE 12.32

Amendment of the list of geographical indications

The Parties may amend the list of geographical indications to be protected in Annex 12-C

(Geographical Indications for Products as Referred to in Article 12.31(3) and (4)), in accordance

with Articles 12.37 and 24.2. New geographical indications shall be added following the completion

of the opposition procedure and their examination as referred to in paragraphs 3 or 4, as the case

may be, of Article 12.31.

ARTICLE 12.33

Protection of geographical indications

1. Each Party shall provide for the protection of the geographical indications listed in Annex 12-

C (Geographical Indications for Products as Referred to in Article 12.31(3) and (4)) against:

(a) any direct or indirect commercial use of a protected name:

(i) for comparable products not compliant with the product specification of the protected

name; or

(ii) in so far as such use exploits the reputation of a geographical indication;

& /en 361

(b) any misuse, imitation or evocation, even if the true origin of the product is indicated or if the

protected name is translated, transcribed, transliterated or accompanied by an expression such

as "style", "type", "method", "as produced in", "imitation", "flavour", "like" or similar,

including when the product is used as an ingredient;

(c) any other false or misleading indication as to the origin, nature or essential qualities of the

product, on the inner or outer packaging, advertising material or documents relating to the

product concerned, and the packing of the product in a container liable to convey a false

impression as to its origin, including when the product is used as an ingredient; or

(d) any other practice liable to mislead the consumer as to the true origin of the product.

2. Geographical indications listed in Annex 12-C (Geographical Indications for Products as

Referred to in Article 12.31(3) and (4)) shall not become generic in the territories of the Parties.

3. Nothing in this Agreement shall oblige a Party to protect a geographical indication of the

other Party which is not, or ceases to be, protected in the territory of that other Party. Each Party

shall notify the other Party if a geographical indication ceases to be protected in the territory of the

notifying Party. That notification shall take place in accordance with the procedures laid down in

Article 12.37(5).

& /en 362

4. Nothing in this Agreement shall prejudice the right of any person to use, in the course of

trade, that person's name or the name of that person's predecessor in business, except where such

name is used in such a manner to mislead the public.

ARTICLE 12.34

Right of use of geographical indications

1. A geographical indication protected under this Agreement may be used by any operator

marketing a product which conforms to the corresponding specification.

2. Once a geographical indication is protected under this Agreement, the use of such protected

name shall not be subject to any registration of users or further charges.

& /en 363

ARTICLE 12.35

Relationship to trademarks

1. Each Party shall, where a geographical indication is protected under this Sub-Section, refuse

to register a trademark the use of which would contravene Article 12.33(1), provided that an

application to register the trademark is submitted after the applicable date of protection of the

geographical indication in the territory of the Party concerned. Trademarks registered in breach of

this paragraph shall be invalidated.

2. For geographical indications as referred to in Article 12.31, the applicable date of protection

referred to in paragraph 1 of this Article shall be the date of entry into force of this Agreement.

3. For geographical indications as referred to in Article 12.32, the applicable date of protection

referred to in paragraph 1 of this Article shall be the date of the transmission of a request to the

other Party to protect a geographical indication.

& /en 364

4. Each Party shall protect geographical indications where a prior trademark exists. A prior

trademark shall mean a trademark the use of which contravenes Article 12.33(1) which has been

applied for, registered or established by use, if that possibility is provided for by the laws and

regulations concerned, in good faith in the territory of one Party before the date on which the

application for protection of the geographical indication is submitted by the other Party under this

Agreement, which the proprietor of the prior trademark has the right to use the geographical

indications in accordance with the respective laws and regulations of a Party. That trademark may

continue to be used and renewed provided that no grounds for the trademark's invalidity or

revocation exist in the laws and regulations on trademarks of the relevant Party. In those cases, the

use of the protected geographical indication as well as the use of the relevant trademark shall be

permitted.

ARTICLE 12.36

Enforcement

Each Party shall provide for the enforcement of the protection laid down in Articles 12.31 to 12.35

by appropriate administrative and judicial means to prevent or stop the unlawful use of protected

designations of origin and protected geographical indications. Each Party shall also enforce this

protection on request of an interested party.

& /en 365

ARTICLE 12.37

Other provisions and specific functions of the Committee

1. A Party shall not be required to protect a name as a geographical indication under this Sub-

Section if that name conflicts with the name of a plant variety or an animal breed and as a result is

likely to mislead the consumer as to the true origin of the product.

2. A homonymous name which misleads consumers into believing that a product comes from

another territory shall not be protected even if the name is accurate as far as the actual territory,

region or place of origin of the product in question is concerned. Without prejudice to Article 23 of

the TRIPS Agreement, the Parties shall mutually determine the practical conditions of use under

which wholly or partially homonymous geographical indications will be differentiated from each

other, taking into account the need to ensure equitable treatment of the producers concerned and

that consumers are not misled.

3. If a Party, in the context of bilateral negotiations with a third country, proposes to protect a

geographical indication of that third country which is wholly or partially homonymous with a

geographical indication of the other Party that is protected under this Sub-Section, it shall inform

the other Party thereof and give that Party an opportunity to comment before the third country's

geographical indication becomes protected.

& /en 366

4. Any matter arising from product specifications of protected geographical indications shall be

dealt with in the Committee on Services, Investment, Digital Trade, Government Procurement, and

Intellectual Property in its specific configuration with regard to Chapter 12 (Intellectual Property)

(hereinafter referred to as the "Committee" for the purposes of this Chapter) referred to in

Article 12.61.

5. The protection of geographical indications protected under this Agreement may only be

cancelled by the Party in which the product originates. A Party shall notify the other Party if a

geographical indication listed in Annex 12-C (Geographical Indications for Products as Referred to

in Article 12.31(3) and (4)) ceases to be protected in its territory. Following such notification,

Annex 12-C (Geographical Indications for Products as Referred to in Article 12.31(3) and (4)) shall

be amended pursuant to paragraph 8 of this Article.

6. A product specification referred to in this Sub-Section shall be approved, including any

amendments also approved, by the authorities of the Party from which the product originates.

7. For the purposes of this Sub-Section, the Committee referred to in Article 12.61 shall also see

to the proper functioning of this Sub-Section and may consider any matter related to its

implementation and operation.

& /en 367

8. For the purposes of this Sub-Section, the Committee referred to in Article 12.61 may

recommend to the Trade Committee to amend, pursuant to Article 24.2:

(a) Annex 12-A (Requirements for Laws and Regulations on Geographical Indications) as

regards the references to the laws and regulations applicable in the Parties and the elements

for registration and control of geographical indications;

(b) Annex 12-B (Criteria to be Included in the Opposition Procedure) as regards the criteria to be

included in the opposition procedure; and

(c) Annex 12-C (Geographical Indications for Products as Referred to in Article 12.31(3) and (4))

as regards geographical indications.

9. The Committee shall be responsible for exchanging and notifying information on

geographical indications for the purpose of considering their protection in accordance with

Article 12.33.

& /en 368

SUB-SECTION 5

PATENTS

ARTICLE 12.38

Patents

1. Subject to the provisions of paragraphs 2 and 3 of Article 27 of the TRIPS Agreement, each

Party shall ensure at least adequate and effective patent protection for inventions in all fields of

technology, provided that they are new, involve an inventive step and are capable of industrial

application.

2. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of Article 27

of the TRIPS Agreement, patents shall be available and patent rights enjoyable without

discrimination as to the place of invention, the field of technology and whether products are

imported or locally produced.

& /en 369

ARTICLE 12.39

Period of effective protection under a patent on medicinal products

or on plant protection products

The Parties recognise that medicinal products or plant protection products protected by a patent in

their respective territory may be subject to an administrative authorisation1 procedure before being

place on their market. The Parties acknowledge that the period that elapses between the filing of the

application for a patent and the first authorisation to place the product on their respective markets,

as defined for that purpose by the relevant laws and regulations, may shorten the period of effective

protection under the patent.

1 The term "administrative authorisation" refers to the formal approval granted by regulatory

authorities to allow the marketing of medicinal and plant protection products. This

authorisation ensures that the product meets all necessary regulatory requirements, including

safety and efficacy.

& /en 370

SUB-SECTION 6

PROTECTION OF TRADE SECRETS1

ARTICLE 12.40

Scope of protection of trade secrets

1. In fulfilling its obligation under paragraph 1 of Article 2 of the TRIPS Agreement and in

particular paragraphs 1 and 2 of Article 39 of the TRIPS Agreement, each Party shall provide for

appropriate civil judicial procedures and remedies for any trade secret holder to prevent, and obtain

redress for, the acquisition, use or disclosure of a trade secret without the consent of the holder,

whenever carried out in a manner contrary to honest commercial practices.

2. For the purposes of this Sub-Section, the following definitions apply:

(a) "trade secret" means information that:

(i) is secret in the sense that it is not, as a body or in the precise configuration and assembly

of its components, generally known among or readily accessible to persons within the

circles that normally deal with the kind of information in question;

1 The terms "trade secret" and "undisclosed information" are interchangeable for the purposes

of Articles 12.40 and 12.41.

& /en 371

(ii) has commercial value because it is secret; and

(iii) has been subject to reasonable steps under the circumstances, by the person lawfully in

control of the information, to keep it secret; and

(b) "trade secret holder" means any natural or legal person lawfully controlling a trade secret.

3. For the purposes of this Sub-Section, at least the following conducts shall be considered

contrary to honest commercial practices:

(a) the acquisition of a trade secret without the consent of the trade secret holder, whenever

carried out by unauthorised access to, appropriation of, or copying of any documents, objects,

materials, substances or electronic files that are lawfully under the control of the trade secret

holder, and that contain the trade secret or from which the trade secret can be deduced;

(b) the use or disclosure of a trade secret whenever carried out without the consent of the trade

secret holder, by a person who is found to meet any of the following conditions:

(i) having acquired the trade secret in a manner referred to in point (a);

(ii) being in breach of a confidentiality agreement or any other duty not to disclose the trade

secret; or

(iii) being in breach of a contractual or any other duty to limit the use of the trade secret; and

& /en 372

(c) the acquisition, use or disclosure of a trade secret whenever carried out by a person who, at

the time of the acquisition, use or disclosure, knew or ought to have known, under the

circumstances, that the trade secret had been obtained directly or indirectly from another

person who was using or disclosing the trade secret unlawfully within the meaning of point

(b), including when a person induced another person to carry out the actions referred to in

point (b).

4. Nothing in this Sub-Section shall be understood as requiring a Party to consider any of the

following conducts as contrary to honest commercial practices:

(a) independent discovery or creation by a person of the relevant information;

(b) reverse engineering of a product by a person who is lawfully in possession of it and who is

free from any legally valid duty to limit the acquisition of the relevant information;

(c) acquisition, use or disclosure of information required or allowed by the relevant law of each

Party; or

(d) use by employees of their experience and skills honestly acquired in the normal course of

their employment.

& /en 373

ARTICLE 12.41

Civil judicial procedures and remedies concerning trade secrets

1. Each Party shall ensure that any person participating in the civil judicial proceedings referred

to in Article 12.40(1) or who has access to documents which form part of those legal proceedings, is

not permitted to use or disclose any trade secret or alleged trade secret which the competent judicial

authorities have, in response to a duly reasoned application by an interested party, identified as

confidential and of which they have become aware as a result of that participation or access.

2. In the civil judicial proceedings referred to in Article 12.40(1), each Party shall provide that

its judicial authorities have the authority at least to:

(a) order provisional measures, as set out in the laws and regulations of the Party, to prevent the

acquisition, use or disclosure of the trade secret in a manner contrary to honest commercial

practices;

(b) order injunctive relief to prevent the acquisition, use or disclosure of the trade secret in a

manner contrary to honest commercial practices;

(c) order the person that knew or ought to have known that the person was acquiring, using or

disclosing a trade secret in a manner contrary to honest commercial practices to pay the trade

secret holder damages appropriate to the actual prejudice suffered as a result of that

acquisition, use or disclosure of the trade secret;

& /en 374

(d) take specific measures to preserve the confidentiality of any trade secret or alleged trade

secret used or referred to in civil proceedings relating to the alleged acquisition, use and

disclosure of a trade secret in a manner contrary to honest commercial practices; and

(e) impose sanctions on parties to the proceedings, or other persons subject to the court's

jurisdiction for violation of judicial orders concerning the protection of a trade secret or

alleged trade secret used or referred to in those proceedings.

3. A Party shall not be required to provide for the judicial procedures and remedies referred to in

Article 12.40(1) if the conduct contrary to honest commercial practices is carried out, in accordance

with the law of that Party, to reveal misconduct, wrongdoing or illegal activity or for the purpose of

protecting a legitimate interest recognised by the law of that Party.

ARTICLE 12.42

Protection of data submitted to obtain an authorisation to put a medicinal product on the market

1. Each Party shall protect commercially confidential information submitted to obtain an

authorisation to place medicinal products on the market (hereinafter referred to as "marketing

authorisation") against disclosure to third parties, except where it is necessary to protect the public,

or unless steps are taken to ensure that the information is protected against unfair commercial use.

& /en 375

2. Each Party shall provide that, for a limited period of time to be determined by its law, the

authority responsible for the granting of a marketing authorisation does not accept any subsequent

application for a marketing authorisation that relies on the results of pre-clinical tests or clinical

trials submitted in the application to that authority for the first marketing authorisation without the

explicit consent of the holder of the first marketing authorisation, unless international agreements

applied by both Parties provide otherwise.

ARTICLE 12.43

Protection of data submitted to obtain a marketing authorisation

for a plant protection product

1. Each Party shall provide that for at least 10 years from the date of the first marketing

authorisation to place a plant protection product on the market, the test or study reports submitted to

obtain that first marketing authorisation are not used for the benefit of any other person who seeks

to obtain a marketing authorisation for a plant protection product, without the explicit consent of the

owner of the test or study reports, regardless of whether or not the test or study report has been

made available to the public.

2. The test or study report protected under paragraph 1 should fulfil the following conditions:

(a) be necessary for the marketing authorisation or for an amendment of a marketing

authorisation in order to allow the use of the plant protection product on other crops; and

& /en 376

(b) be certified as compliant with the principles of good laboratory practice or of good

experimental practice.

3. Each Party shall establish rules to avoid duplicative testing on vertebrate animals.

SUB-SECTION 7

PLANT VARIETIES

ARTICLE 12.44

Protection of plant variety rights

Each Party shall protect plant variety rights consistent with the International Convention for the

Protection of New Varieties of Plants, adopted at Paris on 2 December 1961, as revised in Geneva

on 19 March 1991 (hereinafter referred to as the "1991 UPOV Act"), including the exceptions to the

breeder's right as referred to in Article 15(2) of that Convention.1

1 For greater certainty, this provision shall not affect the registration of local plant varieties

under the laws and regulations of Indonesia outside the scope of the 1991 UPOV Act.

& /en 377

SECTION C

ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

ARTICLE 12.45

General provisions

1. The Parties affirm their commitments under the TRIPS Agreement and in particular of Part III

thereof. The complementary measures, procedures and remedies under this Section are necessary to

ensure the enforcement of intellectual property rights1. Those measures, procedures and remedies

shall be fair and equitable, and shall not be unnecessarily complicated or costly, or entail

unreasonable time limits or unwarranted delays.

2. The measures, procedures and remedies referred to in paragraph 1 shall also be effective,

proportionate and dissuasive, and shall be applied in such a manner as to avoid the creation of

barriers to legitimate trade and to provide for safeguards against their abuse.

3. This Section is without prejudice to the enforcement mechanisms, if any, for genetic

resources, traditional knowledge and traditional cultural expression provided by the respective laws

of the Parties.

1 For the purposes of this Section the notion of "intellectual property rights" should include at

least the following rights: copyright, rights related to copyright, rights of the creator of the

topographies of a semiconductor product, trademark rights, design rights, patent rights,

geographical indications; utility model rights, plant variety rights and trade names in so far as

they are protected by each Party.

& /en 378

4. Each Party shall endeavour to enhance the fight against counterfeiting and piracy.

ARTICLE 12.46

Persons entitled to apply for the application

of the measures, procedures and remedies

Each Party shall recognise as persons entitled to seek application of the measures, procedures and

remedies referred to in this Section C of this Chapter and in Part III of the TRIPS Agreement:

(a) the holders of intellectual property rights in accordance with the law of the Party;

(b) all other persons authorised to use those intellectual property rights, in particular licenses, in

so far as permitted by, and in accordance with, the law of the Party;

(c) intellectual property collective rights management bodies which are regularly recognised as

having a right to represent holders of intellectual property rights, in so far as permitted by, and

in accordance with, the law of the Party; and

(d) professional defence bodies which are regularly recognised as having a right to represent

holders of intellectual property rights, in so far as permitted by, and in accordance with, the

law of the Party.

& /en 379

SUB-SECTION 1

CIVIL AND ADMINISTRATIVE ENFORCEMENT

ARTICLE 12.47

Evidence

1. Each Party shall ensure that, even before the commencement of proceedings on the merits of

the case, the competent judicial authorities may, on application by a party which has presented

reasonably available evidence to support their claims that their intellectual property right has been

infringed or is about to be infringed, order prompt and effective provisional measures to preserve

relevant evidence in respect of the alleged infringement, subject to the protection of confidential

information.

2. Such measures may include the detailed description, with or without the taking of samples, or

the physical seizure of the alleged infringing goods, and, in appropriate cases, the materials and

implements used in the production or distribution of those goods and the documents relating

thereto.

& /en 380

3. Each Party shall take the measures necessary, in cases of infringement of an intellectual

property right committed on a commercial scale, to enable the competent judicial authorities to

order, where appropriate, on application by a party, the communication of banking, financial or

commercial documents under the control of the opposing party, subject to the protection of

confidential information.

ARTICLE 12.48

Right of information

1. Each Party shall ensure that, in the context of proceedings concerning an infringement of an

intellectual property right and in response to a justified and proportionate request of the claimant,

the competent judicial authorities may order the infringer or any other person which is party to the

proceedings or a witness therein to provide information on the origin and distribution networks of

the goods or services which infringe an intellectual property right.

2. For the purposes of paragraph 1, "any other person" means a person who was:

(a) found in possession of the infringing goods on a commercial scale;

(b) found to be using the infringing services on a commercial scale;

& /en 381

(c) found to be providing on a commercial scale services used in infringing activities; or

(d) indicated by the person referred to in points (a) to (c) as being involved in the production,

manufacture or distribution of the infringing goods or the provision of the infringing services.

3. The information referred to in paragraph 1 shall, as appropriate, comprise:

(a) the names and addresses of the producers, manufacturers, distributors, suppliers and other

previous holders of the goods or services, as well as the intended wholesalers and retailers; or

(b) information on the quantities produced, manufactured, delivered, received or ordered, as well

as the price obtained for the goods or services in question.

4. This Article is without prejudice to the law of a Party which:

(a) grants the right holder rights to receive fuller information;

(b) governs the use in civil or criminal proceedings of the information communicated pursuant to

this Article;

(c) governs responsibility for misuse of the right of information;