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) 342 final

2026/0184 (NLE)

Proposal for a

COUNCIL DECISION

on the signing of the Investment Protection 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 Association of Southeast Asian Nations (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. 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 (FDI) stock in Indonesia amounted to EUR 24.7 billion, while Indonesia’s FDI

stock in the EU was EUR 1.3 billion.

On 23 April 2007, the Council authorised the Commission to negotiate a free trade agreement

with Member States of ASEAN, of which Indonesia is a member. That authorisation provided

for the possibility of bilateral negotiations with members of ASEAN.

On 15 October 2013, based on a new EU competence under the Lisbon Treaty, the Council

authorised the Commission to extend the on-going bilateral negotiations with ASEAN

countries to cover also investment protection.

On 13 July 2016, the Council authorised the Commission to negotiate a Comprehensive

Economic Partnership Agreement with Indonesia (“CEPA”).

The CEPA negotiations were officially launched on 19 July 2016 by Indonesian Trade

Minister Thomas Lembong and EU ambassador to Indonesia Vincent Guérend. The

negotiations covered investment protection. However, following Opinion 2/15 of 16 May

2017 of the Court of Justice, it was decided that the investment protection part would form the

basis of a stand-alone agreement (the Investment Protection Agreement, hereinafter referred

to as the “IPA”). The Commission informed the Trade Policy Committee of its decision to

split the CEPA and the IPA in 2021 after the resumption of the negotiations following the

COVID-19 pandemic.

The negotiations for a CEPA and an IPA between the European Union and Indonesia were

successfully concluded on 23 September 2025, with a view to creating new opportunities and

legal certainty for trade and investment between both partners.

The legally reviewed texts of the IPA 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;

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– 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 authorising the

signing of the IPA between the European Union and Indonesia.

• Consistency with existing policy provisions in the policy area

Prior to concluding the negotiations for the IPA, the EU and Indonesia had negotiated a

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 IPA 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 IPA is fully consistent with Union policies and will not require the EU to amend its rules,

regulations or standards in any regulated area. Furthermore, the IPA fully safeguards the EU’s

and Indonesia’s right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public morals, social or consumer protection, privacy and

data protection, sustainable development or promotion and protection of cultural diversity.

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, which covers foreign direct investment.

Given that the main objective of the IPA is to create a better climate for the development of

foreign direct investments between the EU and Indonesia, and to lay down the necessary

arrangements for the protection of such investments, the substantive legal basis is Article 207

TFEU.

Given the subject matter of the envisaged agreement, it is appropriate for the Commission

to submit the proposal to the Council.

• Procedural legal basis

Article 218(5) TFEU provides that, where the agreement envisaged does not relate

exclusively or principally to the common foreign and security policy, the Commission

shall submit a proposal to the Council. The Council shall adopt a decision authorising the

signing of the agreement.

The Commission proposes to authorise the signing of the IPA between the European Union

and Indonesia, subject to its conclusion at a later date.

The procedural legal basis for the proposed decision to authorise the signing of the envisaged

agreement is Article 218(5) TFEU.

EN 3 EN

• 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 IPA would fall within the exclusive competence of the EU

and, more particularly, within the scope of Article 207 TFEU. The Court confirmed the EU’s

exclusive competence under the Common Commercial Policy pursuant to Article 207(1)

TFEU and Article 3(2) TFEU.

As a result, the IPA is to be signed by the Union pursuant to a decision of the Council based

on Article 218(5) TFEU and concluded by the Union pursuant to a decision of the Council

based on Article 218(6) TFEU, following the European Parliament’s consent.

• Subsidiarity (for non-exclusive competence)

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

exclusive competence.

• Proportionality

Investment protection agreements are the appropriate means to create a better climate for the

development of foreign direct investments and to lay down the necessary arrangements for the

protection of such investments between the EU and a third country. No alternative exists to

render such protection efforts legally binding.

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

political priority of the ‘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 is in accordance with Article 218(5) TFEU, which envisages the adoption by

the Council of decisions on the signature of international agreements. No other legal

instrument exists that could be used in order to achieve the objective expressed in 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, including in its subgroup on services and investment. 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 Sustainability Impact

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

The SIA, which was completed in September 2019 to support the negotiations for a free trade

and investment protection agreement, examined how the trade and investment provisions of

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

EN 4 EN

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

2009 in support of the region-to-region negotiations for an 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.

Overall, the SIA concluded that the agreement was expected to have positive impacts for both

Parties and their societies, across all the key economic indicators (GDP, welfare, global and

bilateral trade), with their comparative magnitude being larger in Indonesia than in the EU,

due to the differences in the relative sizes of the two economies.

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 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 IPA is not subject to REFIT procedures.

• Fundamental rights

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

4. BUDGETARY IMPLICATIONS

The IPA will not have a financial impact on the EU’s budget.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

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

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

The institutional chapter of the IPA establishes a Committee that has as its main task to

supervise and facilitate the implementation and application of the IPA.

EN 5 EN

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

with civil society representatives participating in a civil society dialogue.

The IPA also establishes domestic advisory groups comprising a balanced representation of

independent civil society organisations, based on a multi-stakeholder approach which includes

relevant interest groups in economic, social and environmental matters. The domestic

advisory groups may submit views and recommendations concerning the functioning and

implementation of the IPA and shall meet at least once a year.

• Explanatory documents (for directives)

Not applicable.

• Detailed explanation of the specific provisions of the proposal

The provisions of the IPA establish the legal framework for the protection of investors and

their investments within the respective territories of the EU and Indonesia. The IPA ensures

an appropriate balance between the protection of investors and their investments, on the one

hand, and governments’ right to regulate in the public interest, on the other.

The substantive obligations contained in the investment protection section closely reflect the

EU’s reformed approach, as incorporated in all EU agreements concluded to date. In

particular, the relevant provisions reaffirm the Parties’ right to regulate and confirm that the

regulatory framework applicable to investments may evolve, including in ways that may

adversely affect specific investments.

The investment protection provisions are based on clear and precise standards that provide

fundamental guarantees to foreign investors when deciding whether to invest in the EU or

Indonesia, respectively. In addition to non-discrimination obligations, these guarantees

include protection against expropriation without compensation, commitments relating to fair

and equitable treatment and physical security, compensation for losses owing to war or other

armed conflict, as well as the free transfer of funds. Importantly, the provisions define with

precision the circumstances under which a Party may be found to have breached the fair and

equitable treatment standard, thereby significantly limiting the scope for discretionary

interpretation in the event of disputes.

These protection standards are further subject to specific exceptions designed to preserve

additional policy space where necessary, including through prudential carve-outs, security

exceptions and general exceptions.

The IPA is further supported by a solid dispute settlement mechanism that consists of a)

investor-state mediation and b) state-state dispute settlement (SSDS). The SSDS mechanism

ensures that the rights and obligations provided for in the Agreement are enforceable. The EU

and Indonesia also undertake to restart negotiations on the settlement of investment disputes

between a Party and an investor of the other Party, as well as on an interpretative guidance on

taxation measures and expropriation, no later than the date of entry into force of the IPA. In

doing so, the two sides agree to take into account the progress on reform of investment

dispute settlement in relevant international fora.

• Signing and text of the Agreement 

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

In accordance with the Treaties, it is for the Commission to ensure the signing of the IPA,

subject to its conclusion at a later date.

EN 6 EN

2026/0184 (NLE)

Proposal for a

COUNCIL DECISION

on the signing of the Investment Protection 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 the

first subparagraph of Article 207(4), in conjunction with Article 218(5) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) On 23 April 2007, the Council authorised the Commission to negotiate a free trade

agreement with Member States of the Association of Southeast Asian Nations

(ASEAN), of which Indonesia is a member. That authorisation provided for the

possibility of bilateral negotiations.

(2) In October 2013, the Council extended the scope of its negotiating directives to

include provisions on investment protection.

(3) On 13 July 2016, the Council authorised the Commission to negotiate a

Comprehensive Economic Partnership Agreement with Indonesia, including

investment protection. In view of Opinion 2/15 of 16 May 2017 of the Court of Justice

of the European Union, it was decided to conclude a separate Investment Protection

Agreement.

(4) The negotiations for an Investment Protection Agreement (“the Agreement”) between

the European Union and Indonesia were successfully concluded on 23 September

2025, together with the negotiations for a Comprehensive Economic Partnership

Agreement.

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

policy by putting in place an investment protection agreement with Indonesia.

(6) Therefore, the Agreement should be signed,

HAS ADOPTED THIS DECISION:

Article 1

The signing of the Investment Protection Agreement between the European Union and

Indonesia is hereby authorised, subject to the conclusion of that Agreement.

EN 7 EN

Article 2

This Decision shall enter into force on the date of its adoption.

Done at Brussels,

For the Council

The President

EN EN

EUROPEAN COMMISSION

Brussels, 29.6.2026 COM(2026) 343 final

2026/0185 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion of the Investment Protection Agreement between the European Union

and Indonesia

EN 1 EN

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 Association of Southeast Asian Nations (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. Indonesian 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 (FDI) 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 from the GSP scheme 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 negotiate a free trade agreement

with Member States of ASEAN, of which Indonesia is a member. That authorisation provided

for the possibility of bilateral negotiations with members of ASEAN.

In October 2013, the Council extended the scope of its negotiating directives to include

provisions on investment protection.

On 13 July 2016, the Council authorised the Commission to negotiate a Comprehensive

Economic Partnership Agreement with Indonesia (“CEPA”).

The CEPA negotiations were officially launched on 19 July 2016 by Indonesian Trade

Minister Thomas Lembong and EU ambassador to Indonesia Vincent Guérend. The

negotiations covered investment protection. However, following Opinion 2/15 of 16 May

2017 of the Court of Justice, it was decided that the investment protection part would form the

basis of a stand-alone agreement. The Commission informed the Trade Policy Committee of

its decision to split the CEPA and the investment protection agreement (“IPA”) in 2021 after

the resumption of the negotiations following the COVID-19 pandemic.

The negotiations for an IPA between the European Union and Indonesia were successfully

concluded on 23 September 2025, together with the negotiations for the CEPA.

The legally revised texts of the IPA 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;

EN 2 EN

– 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 IPA between the European Union and Indonesia.

• Consistency with existing policy provisions in the policy area

Prior to concluding the negotiations for the IPA, the EU and Indonesia had negotiated a

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 IPA 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 IPA is fully consistent with Union policies and will not require the EU to amend its rules,

regulations or standards in any regulated area. Furthermore, the CEPA fully safeguards the

EU’s and Indonesia’s right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public morals, social or consumer protection, privacy and

data protection, sustainable development or promotion and protection of cultural diversity.

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, which covers foreign direct investments.

Given that the main objective of the IPA is to create a better climate for the development of

foreign direct investments between the EU and Indonesia, and to lay down the necessary

arrangements for the protection of such investments, the substantive legal basis is Article 207

TFEU.

Given the subject matter of the envisaged agreement, it is appropriate for the Commission to

submit the proposal to the Council.

• Procedural legal basis

Given that Article 207 TFEU is the substantive legal basis, the Council is to adopt the

decision concluding the agreement after obtaining the consent of the European Parliament, in

accordance with Article 218(6), 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.

EN 3 EN

• 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 IPA would fall within the exclusive competence of the EU

and, more particularly, within the scope of Article 207 TFEU. The Court confirmed the EU’s

exclusive competence under the Common Commercial Policy pursuant to Article 207(1)

TFEU and Article 3(2) TFEU.

As a result, the IPA is to be concluded by the Union pursuant to a decision of the Council

based on Article 218(6) TFEU, following the European Parliament’s consent.

• Subsidiarity (for non-exclusive competence)

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

exclusive competence.

• Proportionality

Investment protection agreements are the appropriate means to create a better climate for the

development of foreign direct investments and to lay down the necessary arrangements for the

protection of such investments between the EU and a third country. No alternative exists to

render such protection efforts legally binding.

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

political priority of the ‘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 is in accordance with Article 218(6) TFEU, which envisages the adoption by

the Council of decisions on the conclusion of international agreements. No other legal

instrument exists that could be used in order to achieve the objective expressed in this

proposal. 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

expressed in 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, including in its subgroup for services and investments. 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 Sustainability Impact

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

EN 4 EN

The SIA, which was completed in September 2019 to support the negotiations for a free trade

and investment protection agreement, examined how the trade and investment 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

2009 in support of the region-to-region negotiations for an 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.

Overall, the SIA concluded that the agreement was expected to have positive impacts for both

Parties and their societies, across all the key economic indicators (GDP, welfare, global and

bilateral trade), with their comparative magnitude being larger in Indonesia than in the EU,

due to the differences in the relative sizes of the two economies.

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 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 IPA is not subject to REFIT procedures.

• Fundamental rights

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

4. BUDGETARY IMPLICATIONS

The IPA will not have a financial impact on the EU’s budget.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

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

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

EN 5 EN

The institutional chapter of the IPA establishes a Committee that has as its main task to

supervise and facilitate the implementation and application of the IPA.

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

with civil society representatives participating in a civil society dialogue.

The IPA also establishes domestic advisory groups comprising a balanced representation of

independent civil society organisations, based on a multi-stakeholder approach which includes

relevant interest groups in economic, social and environmental matters. The domestic

advisory groups may submit views and recommendations concerning the functioning and

implementation of the IPA and shall meet at least once a year.

• Explanatory documents (for directives)

Not applicable.

• Detailed explanation of the specific provisions of the proposal

The provisions of the IPA establish the legal framework for the protection of investors and

their investments within the respective territories of the EU and Indonesia. The IPA ensures

an appropriate balance between the protection of investors and their investments, on the one

hand, and governments’ right to regulate in the public interest, on the other.

The substantive obligations contained in the investment protection section closely reflect the

EU’s reformed approach, as incorporated in all EU agreements concluded to date. In

particular, the relevant provisions reaffirm the Parties’ right to regulate and confirm that the

regulatory framework applicable to investments may evolve, including in ways that may

adversely affect specific investments.

The investment protection provisions are based on clear and precise standards that provide

fundamental guarantees to foreign investors when deciding whether to invest in the EU or

Indonesia, respectively. In addition to non-discrimination obligations, these guarantees

include protection against expropriation without compensation, commitments relating to fair

and equitable treatment and physical security, compensation for losses owing to war or other

armed conflict, as well as the free transfer of funds. Importantly, the provisions define with

precision the circumstances under which a Party may be found to have breached the fair and

equitable treatment standard, thereby significantly limiting the scope for discretionary

interpretation in the event of disputes.

These protection standards are further subject to specific exceptions designed to preserve

additional policy space where necessary, including through prudential carve-outs, security

exceptions and general exceptions.

The IPA is further supported by a solid dispute settlement mechanism that consists of a)

investor-state mediation and b) state-state dispute settlement (SSDS). The SSDS mechanism

ensures that the rights and obligations provided for in the IPA are enforceable. The EU and

Indonesia also undertake to restart negotiations on the settlement of investment disputes

between a Party and an investor of the other Party as well as on an interpretative guidance on

taxation measures and expropriation no later than the date of entry into force of the IPA. In

doing so, the two sides agree to take into account the progress on reform of investment

dispute settlement in relevant international fora.

EN 6 EN

2026/0185 (NLE)

Proposal for a

COUNCIL DECISION

on the conclusion of the Investment Protection 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

Article 207, in conjunction with Article 218(6), second subparagraph, point (a) 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]2, the Investment Protection Agreement

between the European 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 an investment protection agreement with Indonesia.

(3) The Agreement should be approved.

(4) The Agreement, in accordance with Article 6.12 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 Investment Protection Agreement between the European Union and Indonesia (‘the

Agreement’) is hereby approved3.

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

3 The text of the Agreement is attached to this Decision.

EN 7 EN

Article 2

This Decision shall enter into force on the day of its adoption4.

Done at Brussels,

For the Council

The President

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

Union by the General Secretariat of the Council.

EN EN

EUROPEAN COMMISSION

Brussels, 29.6.2026 COM(2026) 341 final

2026/0183 (NLE)

Proposal for a

COUNCIL DECISION

on the signing of the Comprehensive Economic Partnership Agreement between the

European Union and Indonesia

EN 1 EN

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.

EN 2 EN

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 by Indonesian Trade Minister Thomas Lembong and the EU Ambassador to

Indonesia Vincent Guérend. 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 EU and Indonesia’s joint

commitment 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% 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 authorising the

signing 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 the CEPA, the EU and Indonesia had negotiated a

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 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.

Given the subject matter of the envisaged agreement, it is appropriate for the Commission to

submit the proposal to the Council.

• Procedural legal basis

Article 218(5) TFEU provides that, where the agreement envisaged does not relate

exclusively or principally to the common foreign and security policy, the Commission shall

submit a proposal to the Council. The Council shall adopt a decision authorising the signing

of the agreement.

The Commission proposes to authorise the signing of the Comprehensive Economic

Partnership Agreement between the European Union and Indonesia., subject to its conclusion

at a later date.

The procedural legal basis for the proposed decision to authorise the signing of the envisaged

agreement is Article 218(5) TFEU.

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• 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

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 (for non-exclusive competence)

The CEPA 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(5) TFEU,

which envisages the adoption by the Council of a decision authorising the signing of

international agreements. There exists no other legal instrument that could be used in order to

achieve the objective expressed in 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 Sustainability Impact

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

The SIA, which was completed in September 2019 to support the CEPA negotiations,

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

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of sectors of specific relevance for EU-Indonesia trade relations, including vegetable oils and

oilseeds, clothing and apparel, and financial services.

Overall, the SIA 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,

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 an 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 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 an 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

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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.

• 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 the 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 in

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

views and recommendations concerning the functioning and implementation of the CEPA 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.

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• 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

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

EN 8 EN

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.

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.

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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.

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.

• Signing and text of the Agreement

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 ensure the signing of the

Agreement, subject to its conclusion at a later date.

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2026/0183 (NLE)

Proposal for a

COUNCIL DECISION

on the signing 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(4), first subparagraph, in conjunction with Article 218(5)

thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) The Commission has negotiated a Comprehensive Economic Partnership Agreement

(the “Agreement”) with Indonesia.

(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) Therefore, the Agreement should be signed,

HAS ADOPTED THIS DECISION:

Article 1

The signing of the Comprehensive Economic Partnership Agreement between the European

Union and Indonesia (the “Agreement”) is hereby authorised, subject to the conclusion of that

Agreement.

Article 2

This Decision shall enter into force on the date of its adoption.

Done at Brussels,

For the Council

The President

EN 11 EN

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 signing 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 revenue12 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+11] [N+12] [N+13] [N+14] [N+15]

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):

1 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. 2 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)).

EN 12 EN

Expenditure line3 Year N Year N+1

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.

3 To be used only if necessary.

EN EN

EUROPEAN COMMISSION

Brussels, 29.6.2026 COM(2026) 343 final

ANNEX 1

ANNEX

to the

Proposal for a Council Decision

on the conclusion of the Investment Protection Agreement between the European Union

and Indonesia

& /en

INVESTMENT PROTECTION AGREEMENT

BETWEEN THE REPUBLIC OF INDONESIA

AND THE EUROPEAN UNION

& /en 1

PREAMBLE

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

and

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

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, and their important economic,

trade and investment relationship, including as reflected in the Comprehensive Economic

Partnership Agreement between the European Union and Indonesia, signed in XX on dd/mm/yyyy

(hereinafter referred to as the "Comprehensive Economic Partnership Agreement");

DESIRING to further strengthen their economic 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 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 investment under this Agreement;

& /en 2

CONVINCED that this Agreement will create 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 as reflected in their commitments in the

Comprehensive Economic Partnership Agreement;

SEEKING to establish clear and mutually advantageous rules governing investment between the

Parties;

REAFFIRMING their commitment to the Charter of the United Nations signed in 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 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, in particular, the Comprehensive Economic Partnership Agreement,

HAVE AGREED AS FOLLOWS:

& /en 3

CHAPTER 1

OBJECTIVES AND GENERAL DEFINITIONS

ARTICLE 1.1

Objectives

The Parties, reaffirming their commitment to creating a better climate for the development of

investment between them, hereby lay down the necessary arrangements for the effective protection

of investment.

ARTICLE 1.2

Definitions

For the purposes of this Agreement:

(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;

& /en 4

(b) "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;

(c) "covered investment" means an investment which is

(i) owned, directly or indirectly, or controlled, directly or indirectly1, by an investor of one

Party in the territory of the other Party,

(ii) established in accordance with the applicable laws2, and

(iii) in existence at the date of entry into force of this Agreement or established thereafter;

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

(e) "economic activities" means activities, including the supply of services, of an industrial,

commercial or professional character and activities of craftsmen, except for activities

performed or services supplied in the exercise of governmental authority;

1 A juridical person is:

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

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

(b) "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. 2 In the case of investments made in Indonesia, "in accordance with applicable laws" may

include specific approval in writing if applicable.

& /en 5

(f) "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 transactions1;

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

WTO Agreement;

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

Annex 1A to the WTO Agreement;

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

(j) "investment" means every kind of asset which has the characteristics of an investment, such

as the commitment of capital or other resources, the expectation of gain or profit, the

assumption of risk, and a certain duration. Forms that an investment may take include:

(i) an enterprise;

(ii) shares, stocks and other financial instruments, including rights derived therefrom;

(iii) turnkey, construction, management, production, concession, revenue-sharing, and other

similar contracts;

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

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

designated by the International Monetary Fund in accordance with the Articles of Agreement

of the International Monetary Fund.

& /en 6

(iv) claims to money, or to other assets or to any contractual performance having an

economic value;

(v) intellectual property licences and similar rights conferred pursuant to the law of a Party,

including any concessions to search for, cultivate, extract or exploit natural resources;

and

(vi) other tangible or intangible, movable or immovable property, including intellectual

property, as well as any other property rights, such as leases, mortgages, liens, and

pledges.

Investments that confer neither control nor a lasting interest ("portfolio investment") in a

juridical person of the other Party shall not constitute an investment for the purposes of this

Agreement. For greater certainty:

(A) "claims to money" does not include claims to money that arise solely from commercial

contracts for the sale of goods or services from the territory of a Party to the territory of

the other Party or the financing of such contracts through the extension of credits; and

(B) an order or judgment entered in a judicial or administrative action or an arbitral award

made in an arbitral proceeding shall not constitute in itself an investment.

(k) "investor of a Party" means:

(i) a natural person of a Party, or

& /en 7

(ii) a juridical person of a Party,

that has made a covered investment in the territory of the other Party;

(l) "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;

(m) "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 at least one 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;

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

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

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 of the Union enshrined in Article 54 of the TFEU is

equivalent to the concept of "substantive business operations".

& /en 8

(o) "measures of a Party" means any measures adopted or maintained by1:

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

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

local governments or authorities;

(p) "natural person of the Union" means a national of one of the Member States of the Union

according to its legislation2 and a "natural person of Indonesia" means a national of Indonesia

according to its legislation3;

(q) "operation" means the conduct, management, maintenance, use, enjoyment or sale or other

disposal of an investment by an investor of one Party in the territory of the other Party;

(r) "returns" means all amounts yielded by or derived from an investment or reinvestment,

including profits, dividends, capital gains, royalties, interest, payments in connection with

intellectual property rights, payments in kind and other lawful income;

1 For greater certainty, "measures of a Party" covers measures by entities listed under

points (o)(i) and (o)(ii), which are adopted or maintained by instructing, directing or

controlling, either directly or indirectly, the conduct of other entities with regard to those

measures. 2 In the case of the Union, the definition of natural person also includes natural persons

permanently residing in the Republic of Latvia who are not citizens of the Republic of Latvia

or any other state but who are entitled, under the laws and regulations of the Republic of

Latvia, to receive a non-citizen's passport. 3 For greater certainty, if a person possesses dual nationality of both Parties, that person shall be

deemed to be exclusively a national of the country of her or his dominant and effective

nationality.

& /en 9

(s) "service" includes any service in any sector but not services supplied in the exercise of

governmental authority;

(t) "territory" means the area to which this Agreement applies in accordance with Article 6.13;

(u) "TFEU" means the Treaty on the Functioning of the European Union;

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

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

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

& /en 10

CHAPTER 2

INVESTMENT PROTECTION

ARTICLE 2.1

Scope

1. This Agreement applies to:

(a) covered investments; and

(b) investors of a Party in respect of a covered investment,

as regards any measure adopted or maintained by a Party and affecting the operation of such

investment.

2. This Agreement applies to measures adopted or maintained by1:

(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.

1 For greater certainty, the entities listed under points (a) and (b) of paragraph 2 can adopt or

maintain a measure by instructing or directing other entities with regard to the measure.

& /en 11

3. Articles 2.3 and 2.4 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;

(ii) the selling and marketing of air transport services;

(iii) computer reservation system (CRS) services; and

(iv) groundhandling services.

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 of the Union 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 of the Union, including on its continental shelf, as provided for in the United

Convention on the Law of the Sea, done at Montego Bay on 10 December 1982, and traffic

originating and terminating in the same port or point located in Indonesia or in a Member

State of the Union.

& /en 12

4. For greater certainty and subject to paragraph 6, a Party's decision not to grant, renew or

maintain a subsidy

(a) in the absence of any specific commitment under law or contract to grant, renew, or maintain

that subsidy; or

(b) in accordance with any terms or conditions attached to the granting, renewal or maintenance

of the subsidy,

shall not constitute a breach of this Agreement.

5. Nothing in this Agreement shall be construed as preventing a Party from discontinuing the

granting of a subsidy or requesting its reimbursement, where such action has been ordered by one of

its competent authorities listed in Annex 2-B (Competent Authorities Mentioned in Article 2.1(5)),

or as requiring that Party to compensate the investor therefor.

6. Articles 2.3 and 2.4 do not apply to subsidies granted by the Parties1 and to government

procurement.

7. This Agreement shall not apply to any dispute between the contracting parties to a

government procurement contract arising from a breach of a provision thereto.

1 For the Union, "subsidy" includes "State aid" as defined in Union law. For Indonesia,

"subsidy" includes investment incentive as regulated by Indonesian law.

& /en 13

ARTICLE 2.2

Investment and regulatory measures

1. The Parties reaffirm their right to regulate within their territories to achieve legitimate policy

objectives, such as the protection of public health, safety, the environment including the tackling of

climate change, public morals, social and consumer protection, privacy and data protection,

sustainable development and the promotion and protection of cultural diversity.

2. The provisions of this Agreement shall not be interpreted as a commitment from a Party that it

will not change its legal and regulatory framework, including in a manner that may negatively affect

the operation of covered investments or an investor's expectations of profits.

ARTICLE 2.3

National treatment

1. Each Party shall accord to investors of the other Party and to covered investments, 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 investments.

2. The treatment to be accorded by a Party pursuant to paragraph 1 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

investments of investors, of that subnational region.

& /en 14

3. The treatment to be accorded by a Party pursuant to paragraph 1 means, with respect to a

government of or in a Member State of the Union, 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 investments in its territory.

ARTICLE 2.4

Most favoured nation treatment

1. Each Party shall accord to investors of the other Party and to covered investments, as regards

their operation in its territory, treatment no less favourable than the treatment it accords, in like

situations, to investors and investments of any third country.

2. Notwithstanding paragraph 1, a Party shall not be obliged to extend to investors of the other

Party or to their covered investments the benefits of any treatment accorded to investors and

investments 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.

3. Paragraph 1 shall not be construed to oblige a Party to extend to the investors of the other

Party the benefits 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

& /en 15

(b) measures providing for the recognition of qualifications, licences or prudential measures as

provided for in Article VII of the GATS or its Annex on Financial Services.

4. For greater certainty, the "treatment" referred to in paragraph 1 does not include dispute

settlement procedures provided for in other international investment treaties and other trade

agreements.

5. The substantive provisions in other international investment or trade agreements do not in

themselves constitute "treatment" as referred to in paragraph 1 and thus cannot give rise to a breach

of this Article. However, measures applied pursuant to such provisions can constitute "treatment" as

referred to in paragraph 1 and thus give rise to a breach of this Article.

ARTICLE 2.5

Treatment of investors and of covered investments

1. Each Party shall accord to covered investments and to investors of the other Party with respect

to their covered investments fair and equitable treatment and full protection and security in

accordance with paragraphs 2 to 5.

& /en 16

2. A Party breaches the obligation of fair and equitable treatment referred to in paragraph 1

through measures or series of measures that constitute:

(a) denial of justice in criminal, civil or administrative proceedings1;

(b) fundamental disregard of due process, including a fundamental breach of transparency, in

judicial and administrative proceedings;

(c) manifest arbitrariness2;

(d) targeted discrimination on manifestly wrongful grounds, such as gender, race or religious

belief; or

(e) harassment, coercion, abuse of power or corruptive practices.

3. When applying the above fair and equitable treatment obligations, a tribunal may take into

account whether a Party made a specific representation to an investor to induce a covered

investment, which created a legitimate expectation upon which that investor relied in deciding to

make or maintain a covered investment, and which that Party subsequently frustrated. The mere fact

that a Party takes or fails to take an action that may be inconsistent with an investor's expectations

does not constitute a breach of this Article, even if there is loss or damage to the covered investment

as a result.

1 For greater certainty, the mere fact that an investor's claim was rejected or unsuccessful in

domestic proceedings does not amount to a denial of justice. In determining whether a

measure amounts to a breach of point (a) of paragraph 2, a tribunal should take into account

other relevant facts such as whether the measure involves gross misconduct by that Party. 2 A measure is manifestly arbitrary if it is evident that the measure is not rationally connected

to a legitimate policy objective, or if a measure is based on prejudice or bias rather than on

reason or fact.

& /en 17

4. For greater certainty, the term "full protection and security" refers to the Party's obligations to

take such measures as may be reasonably necessary to ensure the physical protection and security of

covered investments and of investors with respect to their covered investments.

5. A determination that there has been a breach of another provision of this Agreement, or of any

other international agreement, does not in itself establish that there has been a breach of this Article.

ARTICLE 2.6

Compensation for losses

1. Investors of a Party whose covered investments suffer losses owing to war or other armed

conflict, revolution, a state of national emergency, revolt, insurrection or riot in the territory of the

other Party shall be accorded by that Party, with respect to restitution, indemnification,

compensation or other form of settlement, treatment no less favourable than that accorded by that

Party to its own investors or to the investors of any third country, whichever is more favourable to

the investors.

& /en 18

2. Without prejudice to paragraph 1, investors of a Party who, in any of the situations referred to

in that paragraph, suffer losses in the territory of the other Party shall be accorded adequate

restitution or compensation by the other Party1, if these losses result from:

(a) requisitioning of their covered investment or a part thereof by the latter's armed forces or

authorities; or

(b) destruction of their covered investment or a part thereof by the latter's armed forces or

authorities, which was not required by the necessity of the situation.

ARTICLE 2.7

Expropriation

1. A Party shall not nationalise or expropriate a covered investment either directly or indirectly

through measures having an effect equivalent to nationalisation or expropriation (hereinafter

referred to as "expropriation") except:

(a) for a public purpose2;

(b) under due process of law;

1 For greater certainty, when a Party provides restitution or compensation under this paragraph,

the value shall not exceed the loss suffered by the investor as a result of the intervention by

the armed forces or authorities of that Party. 2 The Parties acknowledge that the public purpose concept may be referred to in their law

through terms such as "public necessity", "public interest" or "public use".

& /en 19

(c) in a non-discriminatory manner; and

(d) against payment of prompt, adequate and effective compensation1.

This paragraph shall be interpreted in accordance with Annex 2-A (Expropriation).

2. The compensation referred to in paragraph 1 shall amount to the fair market value of the

investment at the time immediately before the expropriation or the impending expropriation became

known, whichever is earlier.

The determination of the fair market value of an investment shall be based on the principles and

criteria recognised in international financial standards, as appropriate.

3. The compensation referred to in paragraph 1 shall also include interest at a normal

commercial rate from the date of expropriation until the date of payment and shall, in order to be

effective for the investor, be paid and made transferable, without delay in a freely convertible

currency in accordance with Article 2.8.

4. Notwithstanding paragraphs 1, 2, and 3, if Indonesia is the expropriating Party, any measure

of direct expropriation relating to land shall be:

(a) for a public purpose in accordance with the applicable Indonesian laws and regulations2; and

1 The Parties understand that there may be legal and administrative processes that need to be

observed before payment can be made. 2 The applicable laws and regulations are, among others, Indonesia's Law No. 2 of 2012 on

Land Acquisition for Development for the Public Interest and Government Regulation No. 19

of 2021 Regulating Implementation of Land Acquisition for Development for the Public

Interest, as at the date of entry into force of this Agreement.

& /en 20

(b) upon payment of compensation equivalent to the market value in accordance with the

applicable Indonesian laws and regulations.

5. The investor affected shall have a right, under the law of the expropriating Party, to prompt

review of its claim and of the valuation of its investment, by a judicial or other independent

authority of that Party, in accordance with the principles set out in this Article.

6. This Article does not apply to the issuance of compulsory licenses granted in relation to

intellectual property rights in accordance with the TRIPS Agreement, or to the revocation1,

limitation or creation of intellectual property rights to the extent that such revocation, limitation or

creation is consistent with Chapter 12 (Intellectual Property) of the Comprehensive Economic

Partnership Agreement and the TRIPS Agreement.

ARTICLE 2.8

Transfers

1. Each Party shall permit all transfers relating to a covered investment to be made in a freely

convertible currency, without restriction or delay and at the market rate of exchange prevailing on

the date of transfer with regard to the currency to be transferred. Such transfers include:

(a) contributions to capital, such as principal and additional funds to maintain, develop or

increase the investment;

1 For greater certainty, the term "revocation" of intellectual property rights includes the

cancellation or nullification of those rights, and the term "limitation" of intellectual property

rights includes exceptions to those rights.

& /en 21

(b) profits, dividends, capital gains and other returns, proceeds from the sale of all or any part of

the investment or from the partial or complete liquidation of the investment;

(c) interest, royalty payments, management fees, and technical assistance and other fees;

(d) payments made under a contract entered into by the investor, or its investment, including

payments made pursuant to a loan agreement;

(e) earnings and other remuneration of personnel engaged from abroad and working in

connection with an investment;

(f) payments made pursuant to Articles 2.6 and 2.7; and

(g) payments of damages pursuant to an award issued by a tribunal.

2. Neither Party may require its investors to transfer, or penalise its investors for failing to

transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments

in the territory of the other Party.

3. This Article shall not be construed as preventing a Party from making returns in kind relating

to a covered investment, which are subject to a written agreement between that Party and a covered

investment or an investor of the other Party, as authorised or specified in that agreement, or from

restricting transfers of returns in kind in circumstances where it could otherwise restrict such

transfers under this Agreement.

& /en 22

ARTICLE 2.9

Subrogation

1. If a Party, or an agency of a Party, makes a payment to an investor of that Party under a

guarantee or contract of insurance or other form of indemnity it has granted on non-commercial risk

in respect of a covered investment, the other Party shall recognise the subrogation or transfer of any

rights or assignment of any claim of the investor under this Agreement in respect of the covered

investment. The investor shall not, unless authorised by the Party or the agency making the

payment, pursue those rights against the other Party.

2. The subrogated or transferred right or assigned claim shall not be greater than the original

right or claim of the investor. The recognition of the subrogation referred to in paragraph 1 shall not

be construed as implying recognition of the merits of any claim or the amount of damages arising

therefrom.

& /en 23

CHAPTER 3

MEDIATION MECHANISM FOR INVESTOR-TO-STATE DISPUTES

ARTICLE 3.1

Objective and scope

1. The objective of the mediation mechanism provided for in this Chapter is to facilitate the

finding of mutually agreed solutions through a comprehensive and expeditious procedure with the

assistance of a mediator.

2. The mediation mechanism referred to in paragraph 1 applies to disputes between an investor

of a Party and the other Party concerning the application of this Agreement (hereinafter referred to

as "disputing parties").

3. Recourse to mediation is voluntary and without prejudice to the legal position of either

disputing party.

& /en 24

ARTICLE 3.2

Initiation of the procedure

1. Either disputing party may, at any time, request the commencement of a mediation procedure.

Such request shall be addressed to the other disputing party in writing, with a copy to the home

State of the investor, for information. Where the request is addressed to the Union, the Union may

involve one or several Member States in the mediation, as appropriate.

2. The party to which such request is addressed shall give sympathetic consideration to the

request and accept or reject it in writing within 30 days after the date of its receipt.

ARTICLE 3.3

Selection of the mediator

1. If both disputing parties agree to a mediation procedure, a mediator shall be selected in

accordance with the procedure set out in paragraphs 2 and 3. The disputing parties shall endeavour

to agree on a mediator within 15 days from the date of receipt of the reply to the request.

2. The Committee shall, upon the entry into force of this Agreement, establish a list of

six individuals, of high moral character and recognised competence in the fields of law, commerce,

industry or finance, who may be relied upon to exercise independent judgment and who are willing

and able to serve as mediators.

& /en 25

3. The mediator shall be appointed by agreement of the disputing parties from the list

established pursuant to paragraph 2, unless otherwise agreed. In the absence of an agreement on the

choice of the mediator, the disputing parties may jointly request the Secretary General of the

Permanent Court of Arbitration to appoint a mediator from that list or, in the absence of a list, from

individuals proposed by either Party.

4. A mediator shall not be a national of either Party, unless the disputing parties agree otherwise.

5. The mediator shall assist, in an impartial and transparent manner, the disputing parties in

reaching a mutually agreed solution.

ARTICLE 3.4

Rules of the mediation procedure

1. Within 10 days after the appointment of the mediator, the disputing party having invoked the

mediation procedure shall present, in writing, a detailed description of the problem to the mediator

and to the other disputing party. Within 20 days after the date of delivery of this submission, the

other disputing party may provide, in writing, its comments to the description of the problem. Either

disputing party may include in its description or comments any information that it deems relevant.

& /en 26

2. The mediator may decide on the most appropriate way of bringing clarity to the measure

concerned. In particular, the mediator may organise meetings between the disputing parties, consult

the disputing parties jointly or individually, seek the assistance of or consult with relevant experts

and stakeholders and provide any additional support requested by the disputing parties. However,

before seeking the assistance of or consulting with relevant experts and stakeholders, the mediator

shall consult with the disputing parties.

3. The mediator may offer advice and propose a solution for the consideration of the disputing

parties which may accept or reject the proposed solution or may agree on a different solution.

However, the mediator shall not advise or give comments on the consistency of the measure at issue

with this Agreement.

4. The procedure shall take place in the territory of the Party concerned, or by mutual agreement

in any other location or by any other means.

5. The disputing parties shall endeavour to reach a mutually agreed solution within 60 days after

the date of the appointment of the mediator. Pending a final agreement, the disputing parties may

consider possible interim solutions.

6. Mutually agreed solutions shall be made publicly available. However, the version disclosed to

the public may not contain any information that a disputing party has designated as confidential.

7. The procedure shall be terminated:

(a) by the adoption of a mutually agreed solution by the disputing parties, on the date of adoption;

& /en 27

(b) by a written declaration of the mediator, after consultation with the disputing parties, that

further efforts at mediation would be to no avail; or

(c) by written notice of a disputing party.

ARTICLE 3.5

Implementation of a mutually agreed solution

1. Where a solution has been agreed, each disputing party shall take the measures necessary to

implement the mutually agreed solution within the agreed timeframe.

2. The implementing disputing party shall inform the other disputing party in writing of any

steps or measures taken to implement the mutually agreed solution.

3. On request of the disputing parties, the mediator shall issue to the disputing parties, in writing,

a draft factual report, providing a brief summary of:

(a) the measure at issue in these procedures;

(b) the procedures followed; and

(c) any mutually agreed solution reached as the final outcome of these procedures, including

possible interim solutions.

& /en 28

4. The mediator shall provide the disputing parties 15 days to comment on the draft report. After

considering the comments of the disputing parties submitted within the period, the mediator shall

submit, in writing, a final factual report to the disputing parties within 15 days. The factual report

shall not include any interpretation of this Agreement.

ARTICLE 3.6

Relationship to dispute settlement

1. The procedure under this mediation mechanism is not intended to serve as a basis for dispute

settlement procedures under this Agreement or another agreement. A disputing party shall not rely

on or introduce as evidence in such dispute settlement procedures, nor shall any adjudicative body

take into consideration:

(a) positions taken by a disputing party in the course of the mediation procedure;

(b) the fact that a disputing party has indicated its willingness to accept a solution to the measure

subject to mediation; or

(c) advice given or proposals made by the mediator.

2. The mediation mechanism is without prejudice to the rights and obligations of the Parties

under Chapter 4 (Dispute Settlement between the Parties).

& /en 29

3. Unless the disputing parties agree otherwise, all steps of the procedure, including any advice

or proposed solution, shall be confidential. However, any disputing party may disclose to the public

that mediation is taking place.

ARTICLE 3.7

Time limits

Any time limit referred to in this Chapter may be modified by mutual agreement between the

disputing parties.

ARTICLE 3.8

Costs

1. Each disputing party shall bear its own expenses deriving from its participation in the

mediation procedure.

2. The disputing parties shall share jointly and equally the expenses deriving from organisational

matters, including the remuneration and expenses of the mediator.

& /en 30

CHAPTER 4

DISPUTE SETTLEMENT BETWEEN THE PARTIES

SECTION A

OBJECTIVE AND SCOPE

ARTICLE 4.1

Objective

The objective of this Chapter is to establish an effective and efficient mechanism for avoiding and

settling any dispute between the Parties concerning the interpretation and application of this

Agreement with a view to reaching, where possible, a mutually agreed solution.

& /en 31

ARTICLE 4.2

Scope

This Chapter shall apply with respect to any dispute between the Parties concerning the

interpretation and application of this Agreement (hereinafter referred to as "covered provisions").1

ARTICLE 4.3

Definitions

1. For the purposes of this Chapter and Annexes 4-A (Rules of Procedure) and 4-B (Code of

Conduct for Panellists and Mediators):

(a) "administrative staff" means individuals, other than assistants, under the direction and control

of a panellist;

(b) "adviser" means an individual retained by a Party to advise or assist that Party in connection

with the panel proceedings;

(c) "assistant" means an individual who, under the terms of appointment and under the direction

and control of a panellist, conducts research or provides assistance to that panellist;

1 For greater certainty, non-violation complaints shall not be permitted under this Agreement.

& /en 32

(d) "candidate" means an individual whose name is on the list of panellists referred to in

Article 4.7 and who is under consideration for selection as a panellist in accordance with

Article 4.6;

(e) "complaining Party" means any Party that requests the establishment of a panel under

Article 4.5;

(f) "mediator" means an individual who has been selected as mediator in accordance with

Article 4.29;

(g) "panel" means a panel established pursuant to Article 4.6;

(h) "panellist" means a member of a panel;

(i) "Party complained against" means the Party that is alleged to be in violation of a covered

provision; and

(j) "representative of a Party" means an employee or any individual appointed by a government

department, agency, or any other public entity of a Party who represents the Party for the

purposes of a dispute under this Agreement.

& /en 33

SECTION B

CONSULTATIONS

ARTICLE 4.4

Consultations

1. The Parties shall endeavour to resolve any dispute referred to in Article 4.2 by entering into

consultations in good faith with the aim of reaching a mutually agreed solution.

2. A Party shall seek consultations by means of a written request, including electronically,

delivered to the other Party identifying the measure at issue and the covered provisions that it

considers applicable.

3. The Party to which the request for consultations is made shall reply to that request promptly,

but no later than 10 days after the date of its receipt. Unless the Parties agree otherwise,

consultations shall be held within 30 days after the date of receipt of the request and take place in

the territory of the Party to which the request is made. The consultations shall be deemed concluded

within 60 days after the date of receipt of the request, unless the Parties agree to continue

consultations.

& /en 34

4. Consultations on matters which the Party seeking consultations considers to be of urgency,

including those regarding perishable goods or seasonal goods or services, shall be held

within 20 days after the date of receipt of the request. The consultations shall be deemed concluded

within those 20 days, unless the Parties agree to continue consultations.

5. During consultations each Party shall provide sufficient factual information so as to allow a

complete examination of the manner in which the measure at issue could affect the application of

this Agreement. Each Party shall endeavour to ensure the participation of personnel of its competent

governmental authorities who have expertise in the matter subject to the consultations.

6. Consultations, including all information disclosed and positions taken by the Parties during

consultations, shall be confidential, and without prejudice to the rights of either Party in any further

proceedings.

& /en 35

SECTION C

PANEL PROCEDURES

ARTICLE 4.5

Initiation of panel procedures

1. The Party that sought consultations pursuant to Article 4.4 may request the establishment of a

panel if:

(a) the Party to which the request is made pursuant to Article 4.4(3) does not respond to the

request for consultations within 10 days after the date of its receipt;

(b) the consultations are not held within the time periods set out Article 4.4(3) or 4.4(4)

respectively;

(c) the Parties agree not to have consultations; or

(d) the consultations have been concluded and no mutually agreed solution has been reached.

2. The request for the establishment of a panel shall be made by means of a written request,

including electronically, delivered to the other Party. The complaining Party shall identify the

measure at issue in its request and explain how that measure constitutes a breach of the covered

provisions in a manner sufficient to present the legal basis for the complaint clearly.

& /en 36

3. If a request is made pursuant to paragraph 1, a panel shall be established in accordance with

Article 4.6.

4. The Committee may decide, if it deems necessary and appropriate, to entrust an external body

with assisting panels under this Chapter, including providing administrative and legal support1.

ARTICLE 4.6

Establishment of a panel

1. A panel shall consist of three panellists.

2. Within 10 days after the date of receipt by the Party complained against of the written request,

including electronically, for the establishment of a panel, the Parties shall consult with a view to

agreeing on the composition of the panel.

3. If the Parties do not agree on the composition of the panel within the time period set out in

paragraph 2, each Party shall, within five days from the expiry of the time period set out in

paragraph 2, appoint a panellist from the sub-list of that Party established pursuant to Article 4.7.

1 This shall cover the provision of research assistance and expertise for panellists on legal

questions throughout the dispute settlement process.

& /en 37

4. If a Party does not appoint a panellist from its sub-list within the time period provided for in

paragraph 3, the co-chair of the Committee from the complaining Party shall, within five days after

the expiry of that time period, select by lot the panellist from the sub-list of that Party. The co-chair

of the Committee from the complaining Party may delegate such selection by lot of the panellist.

5. If the Parties do not agree on the chairperson of the panel within the time period established in

paragraph 2, the co-chair of the Committee from the complaining Party shall, within five days after

the expiry of that time period, select by lot the chairperson of the panel from the sub-list of

chairpersons established pursuant to Article 4.7. The co-chair of the Committee from the

complaining Party may delegate such selection by lot of the chairperson of the panel.

6. The panel shall be deemed to be established 15 days after the three selected panellists have

accepted their appointment in accordance with Rule 6 of Annex 4-A (Rules of Procedure), unless

the Parties agree otherwise.

7. If an individual selected to serve as a panellist is not available or does not accept their

appointment within the time period set out in Rule 6 of Annex 4-A (Rules of Procedure), a new

individual shall be selected in accordance with the same selection method used for the selection of

the individual who was not available or did not accept the appointment.

8. If the list provided for in Article 4.7 has not been established or if a sub-list does not contain

any available individual, at the time a selection by lot is to be made pursuant to paragraphs 4 or 5,

the panellists shall be drawn by lot from the individuals who have been formally proposed by one

Party or both Parties in accordance with Annex 4-A (Rules of Procedure) within five days after the

expiry of the time period set out in paragraph 2 or after the confirmation that no individual is

available, as the case may be.

& /en 38

ARTICLE 4.7

List of panellists

1. The Committee shall, no later than six months after the date of entry into force of this

Agreement, adopt a decision to establish a list of at least 15 individuals who are willing and able to

serve as panellists. The list shall be composed of three sub-lists:

(a) one sub-list of individuals established on the basis of proposals by the Union;

(b) one sub-list of individuals established on the basis of proposals by Indonesia; and

(c) one sub-list of individuals that are not nationals of either Party and who shall serve as

chairperson to the panel.

2. Each sub-list shall include at least five individuals. The Committee shall ensure that each sub-

list is always maintained at this minimum number of individuals.

3. The Committee may establish additional lists of individuals with expertise in specific sectors

covered by this Agreement. Subject to the agreement of the Parties, such additional lists shall be

used to compose the panel in accordance with the procedure set out in Article 4.6.

& /en 39

ARTICLE 4.8

Requirements for panellists

1. Each panellist shall:

(a) have demonstrated expertise in law, international trade or investment, and other matters

covered by this Agreement;

(b) be independent of, and not be affiliated with1, or take instructions from, either Party;

(c) serve in their individual capacities and not take instructions from any organisation or

government with regard to matters related to the dispute; and

(d) comply with Annex 4-B (Code of Conduct for Panellists and Mediators).

2. The chairperson shall also have experience in dispute settlement procedures.

3. In view of the subject-matter of a particular dispute, the Parties may agree to derogate from

the requirements listed in point (a) of paragraph 1.

1 For greater certainty, the fact that a person receives an income from the government of a

Party, was formerly employed by the government of a Party or has a family relationship with

a government official of a Party is not in itself a reason to be considered as being affiliated

with that Party.

& /en 40

ARTICLE 4.9

Functions of the panel

The panel:

(a) shall make an objective assessment of the matter before it, including an objective assessment

of the facts of the case and the applicability of and conformity with the covered provisions;

(b) shall set out, in its decisions and reports, the findings of facts, the applicability of the covered

provisions and the basic rationale behind any findings and conclusions that it makes; and

(c) should consult regularly with the Parties and provide adequate opportunities for the

development of a mutually agreed solution.

& /en 41

ARTICLE 4.10

Terms of reference

1. Unless the Parties agree otherwise within five days after the date of establishment of the

panel, the terms of reference of the panel shall be:

"to examine, in the light of the relevant provisions of the Investment Protection Agreement between

the Republic of Indonesia and the European Union (hereinafter "the Agreement"), cited by the

Parties, the matter referred to in the request for the establishment of the panel and to make findings

on the conformity of the measure at issue with the provisions of the Agreement referred to in

Article 4.2 of the Agreement and to deliver a report in accordance with Articles 4.12 and 4.13 of the

Agreement.".

2. If the Parties agree on other terms of reference, they shall notify the agreed terms of reference

to the panel within the time period set out in paragraph 1.

ARTICLE 4.11

Decision on urgency

1. If a Party so requests, the panel shall decide, within 10 days after its establishment, whether

the dispute concerns matters of urgency.

& /en 42

2. If the Panel decides that the dispute concerns matters of urgency, it shall, after consulting the

Parties, shorten the applicable time periods set out in Section C of this Chapter, except for the time

periods set out in Articles 4.6 and 4.10.

ARTICLE 4.12

Interim report

1. The panel shall deliver an interim report to the Parties, to the extent practicable within 90 days

after the date of establishment of the panel. If the panel considers that this deadline cannot be met,

the chairperson of the panel shall notify the Parties in writing, including electronically, stating the

reasons for the delay and the date on which the panel plans to deliver its interim report. The panel

should, under no circumstances, deliver its interim report later than 120 days after the date of

establishment of the panel. If the complaining Party chooses to deliver a second written submission

pursuant to Rule 11 of Annex 4-A (Rules of Procedure), the time periods set out in this paragraph

shall be extended by 30 days.

2. Each Party may deliver to the panel a written request, including electronically, to review

precise aspects of the interim report within 10 days after its receipt. A Party may comment on the

other Party's request within six days after the delivery of that request.

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ARTICLE 4.13

Final report

1. The panel shall deliver its final report to the Parties, to the extent practicable within 120 days

after the date of establishment of the panel. If the panel considers that this deadline cannot be met,

the chairperson of the panel shall notify the Parties in writing, including electronically, stating the

reasons for the delay and the date on which the panel plans to deliver its final report. The panel

should, under no circumstances, deliver its final report later than 150 days after the date of

establishment of the panel. If the complaining Party chooses to deliver a second written submission

pursuant to Rule 11 of Annex 4-A (Rules of Procedure), the time periods set out in this paragraph

shall be extended by 30 days.

2. The final report shall include a discussion of any written request, including electronically,

made by a Party on the interim report, and clearly address the comments of the Parties.

ARTICLE 4.14

Compliance measures

1. The Party complained against shall take any measure necessary to comply promptly with the

findings and conclusions in the final report in order to bring itself in compliance with the covered

provisions.

& /en 44

2. The Party complained against shall, no later than 30 days after the receipt of the final report,

deliver a notification to the complaining Party of the measures which it has taken or which it

envisages to take to comply.

ARTICLE 4.15

Reasonable period of time

1. If immediate compliance is not possible, the Party complained against shall, no later than 30

days after the receipt of the final report, deliver a notification to the complaining Party of the length

of the reasonable period of time it will require for compliance. The Parties shall endeavour to agree

on the length of the reasonable period of time to comply with the final report.

2. If the Parties have not agreed on the length of the reasonable period of time, the complaining

Party may, at the earliest 20 days after the receipt of the notification referred to in paragraph 1,

request in writing, including electronically, the original panel to determine the length of the

reasonable period of time. The panel shall deliver its decision to the Parties within 30 days after the

date of receipt of the request.

3. The Party complained against shall deliver a written notification, including electronically, of

its progress in complying with the final report to the complaining Party at least 30 days before the

expiry of the reasonable period of time.

4. The Parties may agree to extend the reasonable period of time.

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ARTICLE 4.16

Compliance review

1. The Party complained against shall, no later than at the date of expiry of the reasonable period

of time, deliver a notification to the complaining Party of any measure that it has taken to comply

with the final report.

2. If the Parties disagree on the existence or the consistency with the covered provisions of any

measure taken to comply, the complaining Party may deliver a written request, including

electronically, to the original panel to decide on the matter. The request shall identify any measure

at issue and explain how that measure constitutes a breach of the covered provisions in a manner

sufficient to present the legal basis for the complaint clearly. The panel shall deliver its decision to

the Parties within 46 days after the date of receipt of the request.

ARTICLE 4.17

Temporary remedies

1. The Party complained against shall, upon request of, and after consultations with, the

complaining Party, present an offer for temporary compensation if:

(a) the Party complained against delivers a notification to the complaining Party that it is not

possible to comply with the final report;

& /en 46

(b) the Party complained against fails to deliver a notification of any measure taken to comply

within the deadline referred to in Article 4.14 or before the date of expiry of the reasonable

period of time; or

(c) the panel finds that no measure taken to comply exists or that the measure taken to comply is

inconsistent with the covered provisions.

2. In any of the situations referred to in points (a) to (c) of paragraph 1, the complaining Party

may deliver a written notification, including electronically, to the Party complained against that it

intends to take appropriate measures if:

(a) the complaining Party decides not to make a request pursuant to paragraph 1; or

(b) the Parties do not agree on the temporary compensation within 30 days after the expiry of the

reasonable period of time or the delivery of the panel decision pursuant to Article 4.16 when a

request pursuant to paragraph 1 is made.

The notification shall specify such measures.

3. The complaining Party may take such measures at the earliest 20 days after the date of

delivery of the notification referred to in paragraph 2, unless the Party complained against made a

request pursuant to paragraph 5.

4. The appropriate measures shall not exceed the level equivalent to the nullification or

impairment caused by the violation.

& /en 47

5. If the Party complained against considers that the notified measures exceed the level

equivalent to the nullification or impairment caused by the violation, it may deliver a written

request, including electronically, to the original panel before the expiry of the 20-day period set out

in paragraph 3 to decide on the matter. The panel shall deliver its decision on the level of the

measures to the Parties within 30 days after the date of the request. The measures shall not be taken

until the panel has delivered its decision. The measures shall be consistent with that decision.

6. The appropriate measures or the compensation referred to in this Article shall be temporary

and shall not be applied after:

(a) the Parties have reached a mutually agreed solution pursuant to Article 4.33;

(b) the Parties have agreed that the measure taken to comply brings the Party complained against

into conformity with the covered provisions; or

(c) any measure taken to comply which the panel has found to be inconsistent with the covered

provisions has been withdrawn or amended so as to bring the Party complained against into

conformity with those provisions.

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ARTICLE 4.18

Review of any measure taken to comply after the adoption of temporary remedies

1. The Party complained against shall deliver a notification to the complaining Party of any

measure it has taken to comply following the appropriate measures or following the application of

temporary compensation, as the case may be. With the exception of cases pursuant to paragraph 2,

the complaining Party shall terminate the appropriate measures within 30 days after the date of

receipt of the notification. In cases where compensation has been applied, and with the exception of

cases pursuant to paragraph 2, the Party complained against may terminate the application of such

compensation within 30 days after the date of receipt of its notification that it has complied.

2. If the Parties do not reach an agreement on whether the notified measure brings the Party

complained against into conformity with the covered provisions within 30 days after the date of

receipt of the notification referred to in paragraph 1 the complaining Party shall deliver a written

request, including electronically, to the original panel to decide on the matter. The panel shall

deliver its decision to the Parties within 46 days after the date of receipt of the request. If the panel

finds that the measure taken to comply is in conformity with the covered provisions, the appropriate

measures or compensation, as the case may be, shall be terminated. When relevant, the complaining

Party shall adjust the level of the appropriate measures or of compensation in light of the panel

decision.

& /en 49

3. If the Party complained against considers that the level of the appropriate measures

implemented by the complaining Party exceeds the level equivalent to the nullification or

impairment caused by the violation, it may deliver a written request, including electronically, to the

original panel to decide on the matter.

ARTICLE 4.19

Replacement of panellists

If during a dispute settlement procedure, a panellist is unable to participate, withdraws or needs to

be replaced because he or she does not comply with the requirements of Annex 4-B (Code of

Conduct for Panellists and Mediators), the procedure provided for in Article 4.6 applies. The time

period for the delivery of the report or decision of the panel shall be extended for the time necessary

for the appointment of the new panellist.

ARTICLE 4.20

Rules of procedure

Panel procedures shall be governed by this Chapter and Annex 4-A (Rules of Procedure). The

hearings of the panel shall be closed for any discussion of confidential information. Otherwise, the

hearings shall be open to the public, unless the Parties to the dispute agree otherwise.

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ARTICLE 4.21

Suspension and termination

1. On request of both Parties or the complaining Party, the panel shall suspend its work at any

time for a period agreed by the Parties and not exceeding 12 consecutive months.

2. The panel shall resume its work before the expiry of the suspension period at the written

request, including electronically, of both Parties or the complaining Party, or at the expiry of the

suspension period at the written request, including electronically, of either Party. The requesting

Party shall deliver a notification to the other Party accordingly. If a Party does not request the

resumption of the panel's work at the expiry of the suspension period, the authority of the panel

shall lapse and the dispute settlement procedure shall be terminated.

3. If the work of the panel is suspended, the relevant time periods set out in Section C of this

Chapter shall be extended by the same period of time for which the work of the panel was

suspended.

ARTICLE 4.22

Receipt of information

1. On request of a Party, or on its own initiative, the panel may seek from the Parties relevant

information it considers necessary and appropriate. The Parties shall respond promptly and fully to

any request by the panel for such information.

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2. On request of a Party or on its own initiative, the panel may seek any information it deems

appropriate from any source. The panel also has the right to seek the opinion of experts, as it deems

appropriate, and subject to any terms and conditions agreed by the Parties, where applicable.

3. The panel shall consider amicus curiae submissions from natural persons of a Party or

juridical persons established in a Party in accordance with Annex 4-A (Rules of Procedure).

4. Any information or expert opinion obtained by the panel pursuant to this Article shall be

disclosed to the Parties and the Parties may provide comments thereon.

ARTICLE 4.23

Rules of interpretation

1. The panel shall interpret the covered provisions in accordance with customary rules of

interpretation of public international law, including those codified in the Vienna Convention on the

Law of Treaties.

2. The panel shall also take into account relevant interpretations in reports of WTO panels and

the Appellate Body adopted by the Dispute Settlement Body of the WTO.

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ARTICLE 4.24

Reports and decisions of the panel

1. The deliberations of the panel shall be kept confidential. The panel shall make every effort to

draft reports and take decisions by consensus. If this is not possible, the panel shall decide the

matter by majority vote. In no case shall separate opinions of panellists be disclosed.

2. The decisions and reports of the panel shall be accepted unconditionally by the Parties.

3. Reports and decisions of the panel cannot add to or diminish the rights and obligations of the

Parties under this Agreement. They shall not create any rights or obligations with respect to natural

or juridical persons.

4. The panel and the Parties shall treat as confidential any information submitted by a Party to

the panel in accordance with Annex 4-A (Rules of Procedure).

ARTICLE 4.25

Choice of forum

1. If a dispute arises regarding a particular measure alleged to breach a covered provision and a

substantially equivalent obligation under another international agreement to which both Parties are

party, including the WTO Agreement, the Party seeking redress shall select the forum in which to

settle the dispute.

& /en 53

2. Once a Party has selected the forum and initiated dispute settlement procedures under Section

C of this Chapter or under another international agreement, the Party shall not initiate dispute

settlement procedures under any other agreement with respect to the particular measure referred to

in paragraph 1, unless the forum selected first fails to make findings for procedural or jurisdictional

reasons.

3. For the purposes of this Article:

(a) dispute settlement procedures under Section C of this Chapter are deemed to be initiated by a

Party's request for the establishment of a panel pursuant to Article 4.5;

(b) dispute settlement procedures under the WTO Agreement are deemed to be initiated by a

Party's request for the establishment of a panel under Article 6 of the Understanding on Rules

and Procedures Governing the Settlement of Disputes, contained in Annex 2 to the WTO

Agreement; and

(c) dispute settlement procedures under any other international agreement are deemed to be

initiated in accordance with the relevant provisions of that agreement.

4. Without prejudice to paragraph 2, nothing in this Agreement shall preclude a Party from

suspending obligations authorised by the Dispute Settlement Body of the WTO or authorised under

the dispute settlement procedures of another international agreement to which the disputing Parties

are party. The WTO Agreement or any other international agreement between the Parties shall not

be invoked to preclude a Party from suspending obligations under Section C of this Chapter.

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SECTION D

MEDIATION MECHANISM

ARTICLE 4.26

Objective

The objective of the mediation mechanism is to facilitate the finding of a mutually agreed solution

to a dispute through a comprehensive and expeditious procedure with the assistance of a mediator.

ARTICLE 4.27

Request for information

1. At any time before the initiation of the mediation procedure, a Party may deliver a written

request, including electronically, for information regarding a measure adversely affecting

investment between the Parties. The Party to which such a request is made shall, within 21 days

after the date of receipt of the request, deliver a written response, including electronically,

containing its comments on the requested information.

& /en 55

2. If the responding Party considers that it will not be able to deliver a response within 21 days

after the date of receipt of the request, it shall promptly notify the requesting Party, stating the

reasons for the delay and providing an estimate of the shortest period within which it will be able to

deliver its response.

3. A Party is normally expected to avail itself of this provision before the initiation of the

mediation procedure.

ARTICLE 4.28

Initiation of the mediation procedure

1. A Party may at any time request to enter into a mediation procedure with respect to any

measure by a Party adversely affecting investment between the Parties.

2. The request shall be made by means of a written request, including electronically, delivered to

the other Party. The request shall be sufficiently detailed to present the concerns of the requesting

Party clearly and shall:

(a) identify the specific measure at issue;

(b) provide a statement of the adverse effects that the requesting Party considers the measure has,

or will have, on investment between the Parties; and

(c) explain how the requesting Party considers that those effects are linked to the measure.

& /en 56

3. The mediation procedure may only be initiated by mutual agreement of the Parties in order to

explore mutually agreed solutions and consider any advice and proposed solutions by the mediator.

4. The Party to which the request is made shall give sympathetic consideration to the request and

deliver its written acceptance or rejection, including electronically, to the requesting Party

within 10 days after its receipt. Otherwise, the request shall be regarded as rejected.

ARTICLE 4.29

Selection of the mediator

1. The Parties shall endeavour to agree on a mediator within 10 days after the initiation of the

mediation procedure.

2. If the Parties are unable to agree on the mediator within the time period laid down in

paragraph 1, either Party may request the co-chair of the Committee from the complaining Party to

select the mediator by lot, within five days after the date of the request, from the sub-list of

chairpersons established pursuant to Article 4.7. The co-chair of the Committee from the

complaining Party may delegate such selection by lot of the mediator.

3. Should the sub-list of chairpersons referred to in Article 4.7 not be established at the time a

request is made pursuant to Article 4.28, the mediator shall be drawn by lot from the individuals

formally proposed by one or both Parties for that sub-list.

& /en 57

4. A mediator shall not be a national of either Party or employed by either Party, unless the

Parties agree otherwise.

5. A mediators shall comply with Annex 4-B (Code of Conduct for Panellists and Mediators).

ARTICLE 4.30

Rules of the mediation procedure

1. Within 10 days after the appointment of the mediator, the Party which invoked the mediation

procedure shall deliver to the mediator and to the other Party a detailed written description of its

concerns, in particular of the operation of the measure at issue and its possible adverse effects on

investment. Within 20 days after the receipt of this description, the other Party may deliver written

comments on this description. Either Party may include any information that it deems relevant in its

description or comments.

2. The mediator shall assist the Parties in a transparent manner in bringing clarity to the measure

concerned and its possible adverse effects on investment. In particular, the mediator may organise

meetings between the Parties, consult the Parties jointly or individually, seek the assistance of, or

consult with, relevant experts and stakeholders and provide any additional support requested by the

Parties. The mediator shall consult with the Parties before seeking the assistance of, or consulting

with, relevant experts and stakeholders.

& /en 58

3. The mediator may offer advice and propose a solution for the consideration of the Parties. The

Parties may accept or reject the proposed solution, or agree on a different solution. The mediator

shall not advise or comment on the consistency of the measure at issue with this Agreement.

4. The mediation procedure shall take place in the territory of the Party to which the request was

addressed, or by mutual agreement in any other location or by any other means.

5. The Parties shall endeavour to reach a mutually agreed solution within 60 days after the

appointment of the mediator. Pending a final agreement, the Parties may consider possible interim

solutions, particularly if the measure relates to perishable goods or seasonal goods or services.

6. The mutually agreed solution may be adopted by means of a decision of the Committee.

Either Party may make the solution subject to the completion of any necessary internal procedures.

7. Upon request of either Party, the mediator shall deliver a draft factual report to the Parties,

providing:

(a) a brief summary of the measure at issue;

(b) the procedures followed; and

(c) if applicable, any mutually agreed solution reached, including possible interim solutions.

8. The mediator shall allow the Parties 15 days to comment on the draft report. After considering

the comments of the Parties received, the mediator shall, within 15 days, deliver a final factual

report to the Parties. The factual report shall not include any interpretation of this Agreement.

& /en 59

9. The mediation procedure shall be terminated:

(a) by the adoption of a mutually agreed solution by the Parties, on the date of the adoption

thereof;

(b) by mutual agreement of the Parties at any stage of the procedure, on the date of that

agreement;

(c) by a written declaration of the mediator, after consultation with the Parties, that further efforts

to mediate would be to no avail, on the date of that declaration; or

(d) by a written declaration of a Party after exploring mutually agreed solutions under the

mediation procedure and after having considered any advice and proposed solutions by the

mediator, on the date of that declaration.

ARTICLE 4.31

Confidentiality

Unless the Parties agree otherwise, all steps of the mediation procedure, including any advice or

proposed solution, are confidential. Any Party may disclose to the public the fact that mediation is

taking place.

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ARTICLE 4.32

Relationship to dispute settlement procedures

1. The mediation procedure is without prejudice to the Parties' rights and obligations under

Sections B and C or under dispute settlement procedures under any other agreement.

2. A Party shall not rely on, or introduce as evidence, in other dispute settlement procedures

under this Agreement or under any other agreement, nor shall a panel take into consideration:

(a) positions taken by the other Party in the course of the mediation procedure or information

exclusively gathered pursuant to Article 4.30(2);

(b) the fact that the other Party has indicated its willingness to accept a solution to the measure

subject to mediation; or

(c) advice given or proposals made by the mediator.

3. Unless the Parties agree otherwise, a mediator shall not serve as a panellist in dispute

settlement procedures under this Agreement or under any other agreement involving the same

matter for which he or she has been a mediator.

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SECTION E

COMMON PROVISIONS

ARTICLE 4.33

Mutually agreed solution

1. The Parties may reach a mutually agreed solution at any time with respect to any dispute

referred to in Article 4.2.

2. If a mutually agreed solution is reached during the panel or mediation procedure, the Parties

shall jointly notify that solution to the chairperson of the panel or the mediator, respectively. Upon

such notification, the panel or the mediation procedure shall be terminated.

3. Each Party shall take any measure necessary to implement the mutually agreed solution

within the agreed time period.

4. No later than at the expiry of the agreed time period, the implementing Party shall inform the

other Party in writing, including electronically, of any measure that it has taken to implement the

mutually agreed solution.

& /en 62

ARTICLE 4.34

Transparency

1. Each Party shall promptly make public:

(a) a request for consultations pursuant to Article 4.4(2);

(b) a request for the establishment of a panel pursuant to Article 4.5(2);

(c) the date of establishment of a panel in accordance with Article 4.6(6), the time-limit for

amicus curiae submissions determined by the panel pursuant to Rule 42 of Annex 4-A (Rules

of Procedure) and the working language for the panel procedure determined in accordance

with Rule 46 of Annex 4-A (Rules of Procedure);

(d) its submissions in the panel procedure or, if a Party decides otherwise, a summary of its

submissions within a short period of time after the issuance of the panel report;

(e) a mutually agreed solution reached pursuant to Article 4.30(6) or Article 4.33 unless the

Parties agree otherwise and subject to the protection of confidential information; and

(f) the final reports and decisions of the panel.

2. Any hearing of the panel shall be closed to the public for the duration of any discussion of

confidential information. Otherwise, the hearing shall be open to the public, unless the Parties to the

dispute agree otherwise.

& /en 63

3. Natural persons of a Party or juridical persons established in a Party may make amicus curiae

submissions to the panel in accordance with Rule 42 of Annex 4-A (Rules of Procedure).

4. Paragraphs 1 and 2 shall be subject to the protection of confidential information as set out in

Rules 35-38 of Annex 4-A (Rules of Procedure).

ARTICLE 4.35

Time Periods

1. All time periods laid down in this Chapter shall be counted in calendar days from the day

following the act to which they refer.

2. Any time period referred to in this Chapter may be modified by mutual agreement of

the Parties.

3. A panel established under Section C of this Chapter may at any time propose to the Parties to

modify any time period referred to in this Chapter, stating the reasons for the proposal.

& /en 64

ARTICLE 4.36

Costs

1. Each Party shall bear its own expenses and legal costs derived from the participation in the

panel or mediation procedure.

2. Unless the Parties agree otherwise, the Parties shall be jointly liable for the remuneration and

expenses of panellists and mediators. The Parties shall share such remuneration and expenses

equally. Unless the Parties agree otherwise, the remuneration and expenses of panellists and

mediators shall be determined in accordance with Rule 8 of Annex 4-A (Rules of Procedure).

3. Unless the Parties agree otherwise, other expenses associated with the conduct of the

proceedings shall be borne in equal parts by the Parties to the dispute.

ARTICLE 4.37

Annexes

The Committee may amend the Annexes 4-A (Rules of Procedure) and 4-B (Code of Conduct for

Panellists and Mediators), pursuant to Article 6.2.

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CHAPTER 5

EXCEPTIONS

ARTICLE 5.1

Denial of benefits

1. A Party may deny the benefits of this Agreement to an investor of the other Party or to a

covered investment 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 or covered investment; or

(b) would be violated or circumvented if the benefits of this Agreement were accorded to that

investor or covered investment, including where the measures prohibit transactions with a

natural or juridical person who owns or controls either of them.

2. Notwithstanding paragraph 1, Indonesia may under its applicable laws and regulations deny

the benefits of this Agreement to an investor of the Union if a person of a third country owns or

controls the covered investment and Indonesia does not maintain diplomatic relations with that third

country.

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ARTICLE 5.2

General exceptions

1. Subject to the requirement that such measures are not applied in a manner which would

constitute a means of arbitrary or unjustifiable discrimination between countries where like

conditions prevail, or a disguised restriction on covered investment, nothing in Articles 2.3, 2.4

and 2.8 shall be construed to prevent the adoption or enforcement by either Party of measures:

(a) necessary to protect public security1 or public morals or to maintain public order2;

(b) necessary to protect human, animal or plant life or health;

(c) necessary to secure compliance with laws or regulations which are not inconsistent with the

provisions of this Agreement including those relating to:

(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a

default on contracts;

(ii) the protection of the privacy of individuals in relation to the processing and

dissemination of personal data and the protection of confidentiality of individual records

and accounts; or

1 For greater certainty, public security may cover measures taken to protect critical public

infrastructure (whether publicly or privately owned), including communications, power and

water infrastructure, from deliberate attempts intended to disable or degrade such

infrastructure. 2 The public security and public order exceptions may be invoked only where a genuine and

sufficiently serious threat is posed to one of the fundamental interests of society.

& /en 67

(iii) safety.

2. For greater certainty, the Parties understand that:

(a) the measures referred to in point (b) of Article XX of GATT 1994 and in point (b) of

paragraph 1 of this Article include environmental measures, which are necessary to protect

human, animal or plant life or health; and

(b) point (g) of Article XX of GATT 1994 applies to measures relating to the conservation of

living and non-living exhaustible natural resources.

3. For greater certainty, the Parties understand that this Article can only be invoked with respect

to measures that are otherwise inconsistent with the provisions of the Articles referred to in

paragraph 1.

ARTICLE 5.3

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

& /en 68

(b) ensuring the integrity and stability of a Party's financial system.

2. Where 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 to require 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 5.4

Security exceptions

Nothing in this Agreement shall be construed:

(a) to require a Party to furnish or allow access to any information the disclosure of which it

considers contrary to its essential security interests;

& /en 69

(b) to prevent a Party from taking any action which it considers necessary for the protection of its

essential security interests:

(i) connected to the production of or traffic in arms, ammunition and implements of war

and to such traffic and transactions in other goods and materials, services and

technology, and to economic activities, carried out directly or indirectly for the purpose

of supplying a military establishment;

(ii) relating to fissionable and fusionable materials or the materials from which they are

derived; or

(iii) taken in time of war or other emergency in international relations; or

(c) to prevent a Party from taking any action in pursuance of its obligations under the Charter of

the United Nations signed in San Francisco on 26 June 1945 for the purpose of maintaining

international peace and security.

ARTICLE 5.5

Taxation

1. For the purposes of this Article, the following definitions apply:

(a) "residence" means residence for tax purposes; and

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(b) "tax convention" means a convention for the avoidance of double taxation or any other

international agreement or arrangement relating wholly or mainly to taxation to which the

Union or any of its Member States or Indonesia is party.

A "tax" and a "taxation measure" do not include a customs duty.

2. Each Party retains its right to regulate taxation measures, without prejudice to its rights and

obligations under this Agreement.

3. Nothing in this Agreement shall affect the rights and obligations of either Indonesia or the

Union or any of its Member States, under any tax convention. In the event of any inconsistency

between this Agreement and any such tax convention, that tax convention shall prevail to the extent

of the inconsistency.

4. Article 2.4 shall not apply to an advantage accorded by a Party pursuant to a tax convention.

For the avoidance of doubt, nothing in this Agreement shall oblige a Party to extend to the other

Party the benefit of any treatment, preference or privilege arising from any existing or future tax

convention by which the Party is bound.

& /en 71

5. Subject to the requirement that taxation measures are not applied in a manner which would

constitute a means of arbitrary or unjustifiable discrimination between countries where like

conditions prevail, or a disguised restriction on trade and investment, nothing in this Agreement

shall be construed to prevent a Party from adopting, maintaining or enforcing any measure which:

(a) aims at ensuring the equitable or effective1 imposition or collection of direct taxes;

1 Measures that are aimed at ensuring the equitable or effective imposition or collection of

direct taxes include measures taken by a Party under its taxation system which:

(i) apply to non-resident investors and service suppliers in recognition of the fact that the

tax obligation of non-residents is determined with respect to taxable items sourced or

located in the Party's territory;

(ii) apply to non-residents in order to ensure the imposition or collection of taxes in the

Party's territory;

(iii) apply to non-residents or residents in order to prevent the avoidance or evasion of taxes,

including compliance measures;

(iv) apply to consumers of services supplied in or from the territory of the other Party in

order to ensure the imposition or collection of taxes on such consumers derived from

sources in the Party's territory;

(v) distinguish investors and service suppliers subject to tax on worldwide taxable items

from other investors and service suppliers, in recognition of the difference in the nature

of the tax base between them; or

(vi) determine, allocate or apportion income, profit, gain, loss, deduction or credit of

resident persons or branches, or between related persons or branches of the same

person, in order to safeguard the Party's tax base.

Tax terms or concepts in this paragraph and this footnote are determined according to tax

definitions and concepts, or equivalent or similar definitions and concepts, under the law of

the Party taking the measure.

& /en 72

(b) aims at preventing the avoidance or evasion of taxes pursuant to the provisions of any tax

convention or its fiscal legislation; or

(c) distinguishes between taxpayers, who are not in the same situation, in particular with regard

to their place of residence or with regard to the place where their capital is invested.

ARTICLE 5.6

Temporary safeguard measures

In exceptional circumstances of serious difficulties for the operation of 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, the Party concerned may adopt or maintain safeguard measures with regard to

capital movements, payments or transfers for a period not exceeding six months1. Such measures

must be strictly necessary to address such difficulties.

1 For greater certainty, such measures can be renewed for additional periods of six months,

provided that it remains strictly necessary under the current circumstances.

& /en 73

ARTICLE 5.7

Restrictions in case of balance-of-payments or external financial difficulties

1. Where a Party experiences serious balance-of-payments or external financial difficulties, or a

threat thereof, it may adopt or maintain restrictive measures with regard to capital movements,

payments or transfers1.

2. The measures referred to in paragraph 1:

(a) shall be consistent with the Articles of Agreement of the International Monetary Fund, as

applicable;

(b) shall not exceed what is necessary to deal with the circumstances described in paragraph 1;

(c) shall be temporary and shall be phased out progressively as the situation specified in

paragraph 1 improves;

(d) shall avoid unnecessary damage to the commercial, economic and financial interests of the

other Party; and

(e) shall not treat the other Party less favourably than a third country in like situations.

1 In the case of the Union, such measures may be taken by a Member State of the Union in

situations other than those referred to in Article 5.6, which affect the economy of that Member

State. For greater certainty, serious balance-of-payments or external financial difficulties, or a

threat thereof, may be caused, among other factors, by serious difficulties related to monetary

or exchange rate policies, or threats thereof.

& /en 74

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. These measures shall be in accordance 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. These measures shall be in

accordance with Article XII of the GATS.

5. A Party maintaining or having adopted measures referred to in paragraphs 1 and 2 shall

promptly notify them to the other Party.

6. Where restrictions are adopted or maintained pursuant to this Article, consultations shall be

held promptly 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, inter alia, 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.

The consultations shall address the compliance of any restrictive measures with paragraphs 1 and 2.

All relevant findings of a 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 situation of the Party concerned.

& /en 75

ARTICLE 5.8

Application of laws and regulations relating to capital movements, payments or transfers

The provisions of Article 2.8 shall not preclude a Party from applying its laws and regulations

relating to:

(a) bankruptcy, insolvency, the protection of the rights of creditors, bank recovery and resolution,

or the prudential supervision of financial institutions;

(b) issuing of, trading or dealing in financial instruments;

(c) financial reporting or record keeping of capital movements, payments or transfers where

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 or administrative proceedings; or

(f) social security, public retirement or compulsory savings schemes.

Such laws and regulations 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.

& /en 76

ARTICLE 5.9

Disclosure of information

1. Nothing in this Agreement shall be construed to require a Party to make available confidential

information, the disclosure of which would impede law enforcement, or otherwise be contrary to the

public interest, or which would prejudice the legitimate commercial interests of particular

enterprises, public or private, except where a panel requires such confidential information in dispute

settlement proceedings under Chapter 4 (Dispute Settlement between the Parties). In such cases, the

panel shall ensure that confidentiality is fully protected.

2. When a Party submits information to the Committee which is considered as confidential under

its laws and regulations, the other Party shall treat that information as confidential, unless the

submitting Party agrees otherwise.

& /en 77

CHAPTER 6

INSTITUTIONAL AND FINAL PROVISIONS

SECTION A

INSTITUTIONAL PROVISIONS

ARTICLE 6.1

Committee

1. The Parties hereby establish a Committee comprising representatives of the Parties.

2. The Committee shall meet no later than one year after the entry into force of this Agreement.

Thereafter, the Committee shall meet on an annual basis, unless otherwise agreed by the co-chairs

of the Committee.

3. The meetings of the Committee shall take place in the Union or Indonesia alternately, unless

otherwise agreed by the representatives of the Parties. The Committee may meet in person or by

other appropriate means of communication, as agreed by the co-chairs of the Committee.

4. The Committee shall be co-chaired by a representative of Indonesia at ministerial level and

the Member of the European Commission responsible for trade, or their respective designees.

& /en 78

ARTICLE 6.2

Functions of the Committee

1. In order to ensure that this Agreement operates properly and effectively, the Committee shall:

(a) consider ways to further enhance investment relations between the Parties;

(b) supervise and facilitate the implementation and application of this Agreement, and promote its

general aims;

(c) without prejudice to Chapter 4 (Dispute Settlement between the Parties) seek appropriate

ways and methods of preventing problems that may arise in areas covered by this Agreement,

or of resolving disputes that may arise regarding the interpretation or application of

this Agreement;

(d) consider any other matter of interest relating to an area covered by this Agreement; and

(e) adopt at its first meeting its own rules of procedure.

2. In order to ensure that this Agreement operates properly and effectively, the Committee may:

(a) recommend to the Parties any amendments to this Agreement;

& /en 79

(b) adopt decisions to amend this Agreement in accordance with Article 6.3, in the following

cases:

(i) Annex 4-A (Rules of Procedure);

(ii) Annex 4-B (Code of Conduct for Panellists and Mediators);

(c) adopt, through decisions, binding interpretations of the provisions of this Agreement, in

accordance with Article 6.3; such decisions on binding interpretations shall enter into force on

the date on which the Parties have exchanged written notifications confirming that they have

completed their respective procedures, and they shall be binding on the Parties and all bodies

established under this Agreement, including any panel referred to under Chapter 4 (Dispute

Settlement between the Parties);

(d) adopt any decisions as envisaged in this Agreement, or make recommendations as provided

for in Article 6.3; and

(e) communicate on matters related to this Agreement with all interested parties including

business, trade unions and civil society organisations.

& /en 80

3. The Committee shall exchange views on topics concerning the implementation of this

Agreement with civil society representatives participating in a Civil Society Forum. The Committee

shall agree at its first meeting on the operational guidelines for the conduct of the Civil Society

Forum. The Civil Society Forum shall meet in conjunction with the meeting of the Committee,

unless otherwise agreed by the representatives of the Parties. Representatives of the Parties shall

facilitate the organisation of the Civil Society Forum including participation by virtual means. The

Civil Society Forum includes members of the domestic advisory groups referred to in Article 6.5

and is open to other relevant independent civil society organisations established in the territories of

the Parties. Each Party shall promote a balanced representation of interest groups in economics,

social and environmental matters with fields of activity and expertise directly relating to the scope

of this Agreement, as appropriate. The Parties may, jointly or individually, publish any formal

statements made at the Civil Society Forum.

4. The Committee shall regularly report to the Trade Committee established under the

Comprehensive Economic Partnership Agreement on its activities, at the regular meetings of the

Trade Committee. The information to be reported may also be provided to the Trade Committee by

representatives designated by the Committee or in writing.

& /en 81

ARTICLE 6.3

Decisions and recommendations of the Committee

1. The Committee shall, for the purpose of attaining the objectives of this Agreement, have the

power to adopt decisions as provided for in this Agreement. The decisions adopted by the

Committee shall be binding upon the Parties and enter into force after the notification in writing of

the completion of their respective applicable legal requirements and procedures. Each Party shall

take all measures necessary to implement the decisions adopted by the Committee.

2. For the purposes of attaining the objectives of this Agreement, the Committee may make

appropriate recommendations in respect of all matters covered by this Agreement.

3. The Committee shall adopt its decisions and make its recommendations by consensus.

ARTICLE 6.4

Contact points

1. Each Party shall designate an "IPA contact point" to facilitate communications between the

Parties on matters pertaining to this Agreement, and shall notify the details of its IPA contact point

to the other Party within 30 days following the entry into force of this Agreement.

& /en 82

2. The designated IPA contact points shall:

(a) unless otherwise provided for in this Agreement, or otherwise agreed by the co-chairs of the

Committee, deliver and receive all notifications and information to be provided between the

Parties pursuant to this Agreement;

(b) facilitate communications between the Parties on any matter covered by this Agreement, as

well as on its implementation; and

(c) coordinate preparations for the meetings of the Committee.

ARTICLE 6.5

Domestic advisory groups

1. Each Party shall create a new or designate an existing domestic advisory group within a year

of the date of entry into force of this Agreement, with the task of providing advice, including on its

own initiative, on matters concerning the implementation of this Agreement. The composition of

each domestic advisory group shall ensure a balanced representation of independent civil society

organisations1, based on a multi-stakeholder approach which includes relevant interest groups in

economic, social and environmental matters.

1 Civil society includes non-governmental organisations, business and employers' organisations

as well as trade unions.

& /en 83

2. Each Party shall convene a meeting with its domestic advisory group at least once a year and

consider the advice or recommendations that the group may provide. Each Party may decide on the

follow-up to the advice or recommendations by its domestic advisory group. Domestic advisory

groups may be convened in different configurations to discuss the implementation of different

Chapters or provisions of this Agreement.

3. The Parties shall promote public awareness of their respective domestic advisory groups and

encourage interaction between them. To this end, each Party shall make publicly available relevant

information on the composition of its domestic advisory group and shall exchange information with

the other Party on the contact point of its own domestic advisory group.

SECTION B

FINAL PROVISIONS

ARTICLE 6.6

Amendments

1. The Parties may agree, in writing, to amend this Agreement. Amendments to this Agreement

constitute integral parts thereof.

& /en 84

2. Amendments shall enter into force on the first day of the second month, or on such later date

as may be agreed by the Parties, following the date on which the Parties exchange written

notifications confirming that they have completed their respective applicable legal requirements for

the entry into force of such amendments.

3. Notwithstanding paragraph 1, the Committee may, in accordance with the respective

applicable legal requirements of the Parties, amend this Agreement, where provided for in point (b)

of Article 6.2(2).

ARTICLE 6.7

Entry into force

1. The Parties shall approve this Agreement in accordance with their respective applicable legal

requirements and procedures.

2. This Agreement shall enter into force on the first day of the second month following the date

on which the Parties exchange written notifications confirming that they have completed their

respective applicable legal requirements for the entry into force of this Agreement. The Parties may

agree on another date of entry into force of this Agreement.

3. Notifications referred to in paragraph 2 shall be sent to the Secretary General of the Council

of the European Union and to the Ministry of Foreign Affairs of Indonesia, or their respective

successors.

& /en 85

ARTICLE 6.8

Relation with other agreements

1. Unless otherwise provided for in this Agreement, the existing agreements between the

Member States of the Union or the European Community or the Union and Indonesia are not

superseded or terminated by this Agreement.

2. This Agreement shall be an integral part of the overall bilateral relations as governed by the

Comprehensive Economic Partnership Agreement and shall form part of the common institutional

framework.

3. The Parties affirm their rights and obligations with respect to each other under the WTO

Agreement. For greater certainty, nothing in this Agreement requires a Party to act in a manner

inconsistent with its obligations under the WTO Agreement.

4. In the event of any inconsistency between this Agreement and any agreement other than the

WTO Agreement to which both Parties are a party, the Parties shall immediately consult with each

other with a view to finding a mutually satisfactory solution.

5. If any of the provisions of the WTO Agreement incorporated into this Agreement is amended,

the Parties shall consult with a view to finding a mutually satisfactory solution, where necessary.

& /en 86

ARTICLE 6.9

Work programme

1. The Parties shall, on the basis of the progress already made, and without prejudice to their

respective positions, restart negotiations on the settlement of investment disputes between a Party

and an investor of the other Party concerning breaches of Chapter 2 (Investment Protection) of this

Agreement, and on an interpretative guidance on taxation measures and expropriation, no later than

on the date of entry into force of this Agreement.

2. In such negotiations, the Parties shall work towards a state-of-the-art dispute settlement

mechanism, considering, inter alia, progress on reforms of investment dispute settlement in relevant

international fora. The Parties share the understanding that any parts of the dispute settlement

mechanism, on which they already reached an agreement in the negotiations towards this

Agreement, will be part of such work.

3. The Parties shall conclude the negotiations within three years after the date of the entry into

force of this Agreement.

ARTICLE 6.10

Duration and termination

1. This Agreement shall remain in force unless terminated pursuant to paragraph 2.

& /en 87

2. A Party may terminate this Agreement by written notification to the other Party. This

notification shall be sent to the Secretary General of the Council of the European Union and to the

Ministry of Foreign Affairs of Indonesia, or their respective successors. This termination shall take

effect six months after the date of receipt of that notification, unless the Parties agree otherwise.

3. In the event that this Agreement is terminated pursuant to paragraph 2, this Agreement shall

continue to be effective for a further period of 10 years from the date of termination, with respect to

investments made before the date of termination of the present Agreement.

ARTICLE 6.11

Fulfilment of obligations

1. Each Party is fully responsible for the observance of all provisions of this Agreement.

2. Each Party shall take all general or specific measures required to fulfil its obligations under

this Agreement. Each Party shall ensure within its territory the observance of all obligations and

commitments under this Agreement by its respective central, regional and local governments and

authorities, and by non-governmental bodies in the exercise of governmental powers delegated

to them.

& /en 88

ARTICLE 6.12

No direct effect

1. Nothing in this Agreement shall be construed as conferring rights or imposing obligations on

persons, other than those created between the Parties under public international law, nor as

permitting this Agreement to be directly invoked in the legal systems of the Parties.

2. A Party shall not expressly provide for a right of action under its law against the other Party

on the ground that a measure of the other Party is inconsistent with this Agreement.

ARTICLE 6.13

Territorial application

1. This Agreement shall apply:

(a) with respect to the Union, to the territories in which the Treaty on European Union and the

TFEU are applied and under the conditions laid down in those Treaties; and

& /en 89

(b) with respect to Indonesia, to its territory, which is defined as the land territories, internal

waters, archipelagic waters, territorial sea, including seabed and subsoil thereof, and airspace

over such territories and waters, as well as continental shelf and exclusive economic zone,

over which Indonesia has sovereignty, sovereign rights or jurisdiction as defined in its laws

and in accordance with international law, including the United Nations Convention on the

Law of the Sea, done at Montego Bay on 10 December 1982.

2. References to "territory" in this Agreement shall be understood in accordance with

paragraph 1, except as otherwise expressly provided.

ARTICLE 6.14

Annexes

1. The Annexes to this Agreement constitute integral parts thereof.

2. Each of the Annexes to this Agreement shall form an integral part of the Chapter that refers to

that Annex or to which reference is made in that Annex.

ARTICLE 6.15

Future accessions to the Union

1. The Union shall notify Indonesia of any request made by a country to accede to the Union.

& /en 90

2. During the negotiations between the Union and the country seeking accession, the Union

should provide, upon request of Indonesia, and to the extent possible, any relevant information

regarding any matter covered by this Agreement.

3. For greater certainty, this Agreement shall apply to trade and investment between the new

Member State of the Union and Indonesia from the date of accession of that new Member State to

the Union.

4. In order to facilitate the implementation of paragraph 3, the Committee shall examine any

effect of the accession to the Union on this Agreement and decide on the necessary amendments to

this Agreement, and on any necessary adjustment or transition measures, sufficiently in advance of

the date of accession of the new Member State to the Union. Such decision shall take effect on the

date of accession of the new Member State to the Union.

5. The Union shall notify Indonesia of the entry into force of any accession to the Union.

& /en 91

ARTICLE 6.16

Authentic texts

This Agreement is drawn up in duplicate and is authentic in the language in which it was

negotiated.

EN EN

EUROPEAN COMMISSION

Brussels, 29.6.2026 COM(2026) 341 final

ANNEX 1

ANNEX

to the

Proposal for a Council Decision

on the signing of the Comprehensive Economic Partnership Agreement between the

European Union and Indonesia

& /en

COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

BETWEEN THE EUROPEAN UNION

AND THE REPUBLIC OF INDONESIA

& /en 1

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;

& /en 2

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:

& /en 4

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.

& /en 13

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.

& /en 26

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.

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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;

& /en 132

(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.

& /en 133

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.

& /en 134

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

& /en 135

(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.

& /en 136

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.

& /en 137

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.

& /en 138

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.

& /en 139

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.

& /en 140

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.

& /en 142

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.

& /en 145

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.

& /en 146

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).

& /en 147

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.

& /en 148

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.

& /en 149

(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.

& /en 150

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.

& /en 151

(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;

& /en 152

(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.

& /en 153

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.

& /en 154

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.

& /en 155

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.

& /en 156

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

& /en 157

(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.

& /en 158

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

& /en 159

(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.

& /en 160

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.

& /en 161

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;

& /en 162

(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.

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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.

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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.

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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;

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(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.

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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).

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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;

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(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

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(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.

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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.

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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.

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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.

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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.

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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.

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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);

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(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.

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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.

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(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.

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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.

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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.

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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;

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(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