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The transition from the provisional General Agreement on Tariffs and Trade (GATT) of 1948 to the permanent institutional framework of the World Trade Organization (WTO) in 1995 marked a definitive shift in the governance of international commerce. Established via the Marrakesh Agreement, the WTO serves as the overarching legal and institutional structure for a “Single Undertaking,” where member nations agree to be bound by a comprehensive suite of multilateral trade agreements encompassing goods, services, and intellectual property. This report examines the intricacies of the WTO’s legal architecture, specifically the trade remedy mechanisms of Safeguards, Anti-Dumping, and Subsidies, alongside a granular analysis of the domestic procedural landscape in the Republic of Indonesia as administered by the Indonesian Anti-Dumping Committee (KADI) and the Indonesian Trade Safeguard Committee (KPPI).
The Institutional Framework of the Marrakesh Agreement
The Marrakesh Agreement Establishing the World Trade Organization is the foundational treaty that defines the scope, functions, and structure of the global trade body. Unlike its predecessor, the GATT 1947, which was a treaty without a permanent institutional base, the WTO is a full-fledged international organization with a permanent secretariat and a multi-tiered governance structure.
Governance and Decision-Making Organs
The highest decision-making authority of the WTO is the Ministerial Conference, which is composed of representatives from all member nations and must meet at least once every two years. The Ministerial Conference possesses the authority to take decisions on all matters under any of the multilateral trade agreements. In the intervals between these conferences, the General Council, also consisting of representatives from all members, carries out the day-to-day functions of the WTO, including supervising the operation of the agreements and ministerial decisions.
The General Council discharges its responsibilities through several specialized bodies and subsidiary councils. The Council for Trade in Goods oversees the multilateral trade agreements related to goods (Annex 1A), while the Council for Trade in Services (GATS) and the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) manage their respective domains. Additionally, the General Council convenes as the Dispute Settlement Body (DSB) to adjudicate trade conflicts and as the Trade Policy Review Body (TPRB) to conduct periodic assessments of members’ trade policies.
The Annex Structure and the Single Undertaking
The WTO legal regime is organized into several annexes, which are integral parts of the Marrakesh Agreement. The “Single Undertaking” principle ensures that all members are parties to all multilateral agreements, preventing the “à la carte” approach to international trade law.
| Annex | Subject Area | Core Legal Instruments |
| Annex 1A | Multilateral Agreements on Trade in Goods | GATT 1994, Agreements on Agriculture, SPS, TBT, TRIMs, AD, SCM, and Safeguards |
| Annex 1B | General Agreement on Trade in Services | GATS |
| Annex 1C | Intellectual Property Rights | TRIPS Agreement |
| Annex 2 | Dispute Settlement Mechanism | Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) |
| Annex 3 | Trade Policy Review | Trade Policy Review Mechanism (TPRM) |
| Annex 4 | Plurilateral Trade Agreements | Trade in Civil Aircraft, Government Procurement |
Foundational Principles of the WTO
The WTO operates on five central principles that aim to create a stable, predictable, and non-discriminatory environment for international trade.
Non-Discrimination: MFN and National Treatment
Non-discrimination is the bedrock of the multilateral trading system, manifested through Most-Favored-Nation (MFN) treatment and National Treatment. The MFN rule, embedded in GATT Article I, GATS Article II, and TRIPS Article IV, requires that a member must apply the same trade conditions to all other WTO members. Essentially, any favor granted to one trading partner must be extended to all others immediately and unconditionally.
National Treatment, codified in GATT Article III and GATS Article XVII, mandates that imported goods and services, once they have cleared customs, should be treated no less favorably than locally produced “like” products. This principle is designed to prevent non-tariff barriers, such as internal taxes or discriminatory technical standards, from undermining tariff concessions.
Reciprocity, Binding, and Transparency
Reciprocity reflects the desire to obtain better market access through mutual concessions, ensuring that the gains from liberalization are balanced across participants. Binding and Enforceable Commitments are managed through “schedules of concessions,” where members “bind” their maximum tariff rates. A country can only raise these bound rates after negotiating with affected trading partners and offering compensation.
Transparency is maintained through the TPRM and the requirement for members to publish trade regulations and notify the WTO of changes in policy. This ensures that the global trading environment remains stable and predictable, discouraging the use of quotas and other limit-setting measures.
The Legal Framework for Trade Remedies
While the WTO promotes liberalization, it recognizes that domestic industries may require protection from unfair trade practices or sudden, unforeseen surges in imports. These defensive actions are collectively known as trade remedies.
Anti-Dumping Measures (ADA)
Anti-dumping (AD) duties are targeted measures applied to products exported at less than their “normal value”—a practice known as dumping. The Agreement on Implementation of Article VI of GATT 1994 (the ADA) provides the legal requirements for a member to impose these duties. Dumping is legally condemned only if it causes or threatens to cause “material injury” to a domestic industry producing the “like product”.
The calculation of dumping involves comparing the export price with the normal value in the exporter’s domestic market. The dumping margin is defined as:
Where DM is the dumping margin, NV is the normal value (the price paid for same-kind goods in general trade in the domestic market of the exporting country), and EP is the export price (the price actually paid for goods exported to the customs area of the importing country).
The ADA mandates a transparent investigation process where authorities must establish three factors: the existence of dumping, the existence of material injury, and a causal link between the two. Provisional measures can be applied for six months while the investigation proceeds, and definitive duties are applied if the final findings are affirmative. Members are encouraged to apply the “Lesser Duty Rule,” where the duty is less than the dumping margin if it is sufficient to remove the injury.
Subsidies and Countervailing Measures (SCM)
The Agreement on Subsidies and Countervailing Measures (SCM Agreement) regulates the use of government subsidies and the measures members can take to offset their trade-distorting effects. A subsidy is defined as a financial contribution by a government or any public body that confers a “benefit” to the recipient.
Subsidies are categorized into two types:
- Prohibited Subsidies: These are deemed to be so trade-distorting that they are banned outright. They include export subsidies (contingent upon export performance) and local content subsidies (contingent upon the use of domestic over imported goods).
- Actionable Subsidies: These are not prohibited but can be challenged if they cause “adverse effects” to the interests of another member, such as material injury to a domestic industry, serious prejudice, or the nullification/impairment of benefits.
To impose Countervailing Duties (CVD), an importing member must conduct an investigation proving the existence of a specific subsidy (one limited to a specific industry or enterprise), injury, and a causal link. Specificity ensures that general infrastructure projects or public education funding are not subject to CVD actions.
Safeguard Measures
Safeguard actions are “emergency” measures taken against a surge in imports of a product that, although “fairly traded,” causes or threatens “serious injury” to a domestic industry. The Agreement on Safeguards clarifies the requirements of GATT Article XIX. Because safeguards affect fair trade, the injury standard (“serious injury”) is significantly higher than for AD or SCM (“material injury”).
| Feature | Anti-Dumping / SCM | Safeguards |
| Trade Practice | Unfair (dumping or subsidization) | Fair (sudden import surge) |
| Injury Standard | Material Injury | Serious Injury (significant overall impairment) |
| Application | Country/Company specific | MFN (applied to all origins) |
| Primary Goal | Level the playing field | Facilitate industry adjustment |
| Duration | Typically 5 years (renewable) | Initial max 4 years (total max 8-10 years) |
Safeguard measures can take the form of tariff increases or quantitative restrictions (quotas). Unlike AD or SCM, the importing country must generally offer compensation to affected trading partners if the measure lasts longer than three years.
Annex 1A: Specific Agreements on Trade in Goods
Beyond trade remedies, Annex 1A contains several agreements that govern various aspects of commodity trade to prevent non-tariff barriers from obstructing market access.
The Agreement on Agriculture (AoA)
The AoA was a landmark outcome of the Uruguay Round, bringing agricultural trade under much stronger multilateral disciplines. It is built upon three “pillars” of reform.
- Market Access: Members must convert non-tariff barriers into “ordinary customs duties” (tariffication) and commit to reducing these duties over time. Minimum access commitments were also established to ensure at least some level of imports (e.g., 5% of domestic consumption).
- Domestic Support: Subsidies provided to domestic producers are categorized into “boxes” based on their trade-distorting potential.
- Green Box: Subsidies that are minimally or non-trade distorting (e.g., R&D, disaster relief, decoupled income support). They are not capped.
- Amber Box: Trade-distorting measures (e.g., price supports, input subsidies tied to production). These are subject to “de minimis” thresholds and reduction commitments quantified as an Aggregate Measure of Support (AMS).
- Blue Box: “Amber box with conditions,” specifically payments linked to production-limiting programs. These currently have no reduction limits.
- Export Subsidies: Members agreed to specific caps and reduction targets for both the volume and expenditure of agricultural export subsidies.
Special and Differential Treatment (SDT) allows developing countries and Least Developed Countries (LDCs) longer implementation periods and lower reduction commitments, with LDCs often being exempt from reduction obligations entirely.
SPS, TBT, and TRIMs Agreements
The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) and the Agreement on Technical Barriers to Trade (TBT) address potential non-tariff barriers arising from health and safety regulations.
The SPS Agreement focuses on food safety and animal/plant health. Measures must be based on scientific principles and risk assessments, and members are encouraged to harmonize their rules with the “Three Sisters” of international standards: the Codex Alimentarius (food), the OIE (animal health), and the IPPC (plant health).
The TBT Agreement covers technical regulations, standards, and conformity assessment procedures. While members have the right to implement measures for legitimate policy objectives (e.g., environmental protection or consumer information), such measures must be non-discriminatory and not create “unnecessary obstacles” to trade.
The Agreement on Trade-Related Investment Measures (TRIMs) prohibits investment-related policies that violate the GATT principles of National Treatment or the general elimination of quantitative restrictions.
| Prohibited TRIMs Measure | GATT Article Violated |
| Local Content Requirements: Requiring the purchase or use of domestic products. | Article III:4 (National Treatment) |
| Trade Balancing Requirements: Limiting imports based on the volume of exports. | Article III:4 and XI:1 |
| Foreign Exchange Restrictions: Limiting imports to the amount of foreign exchange generated by the enterprise. | Article XI:1 (Quantitative Restrictions) |
| Domestic Sales Requirements: Restricting export volumes to a proportion of domestic production. | Article XI:1 |
Annex 1B and 1C: Services and Intellectual Property
The General Agreement on Trade in Services (GATS) and the TRIPS Agreement expanded the WTO’s mandate into modern economic sectors.
GATS: The Four Modes of Supply
GATS defines trade in services through four distinct modes of supply :
- Mode 1: Cross-border supply (e.g., online banking or architectural services sent via email).
- Mode 2: Consumption abroad (e.g., tourism or a patient traveling for medical treatment).
- Mode 3: Commercial presence (e.g., a foreign bank establishing a local branch).
- Mode 4: Presence of natural persons (e.g., an individual consultant traveling to another country to provide a service).
While MFN treatment and Transparency are general obligations, market access and national treatment under GATS are “specific commitments” negotiated and listed in each member’s schedule.
TRIPS: Standardization of IP Protection
The TRIPS Agreement sets minimum standards of protection for various forms of intellectual property, including patents, copyrights, trademarks, and industrial designs. It addresses the trade in counterfeit goods and includes enforcement mechanisms to ensure that IP rights can be effectively defended in domestic courts. A notable development is the 2022 TRIPS waiver, which allows developing countries to override patents for COVID-19 vaccines for five years to expand global production.
The Dispute Settlement Mechanism
The WTO’s Dispute Settlement Body (DSB) is often described as the “crown jewel” of the system, providing a structured and mandatory process for resolving conflicts. The goal is not to punish but to ensure the withdrawal of measures that are inconsistent with WTO obligations.
The DSU Process and the Appellate Body Crisis
The process begins with mandatory consultations between the parties. If these fail, a panel of three independent experts is established to review the case. The panel report, once adopted, is binding unless a party appeals it to the standing Appellate Body (AB).
Since December 11, 2019, the Appellate Body has been unable to hear new cases because the United States has blocked the appointment of new members, citing concerns over “judicial overreach”. This has led to “appeals into the void,” where a party appeals a panel report knowing it cannot be reviewed, effectively preventing the ruling from becoming enforceable. In response, several members, including the EU, China, and Australia, established the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a voluntary alternative for resolving appeals.
Domestic Industry Petitions in Indonesia: KADI and KPPI
Indonesia ratified the Marrakesh Agreement through Law Number 7 of 1994, making WTO obligations part of its national legal fabric. The primary implementation regulation for trade remedies is Government Regulation (PP) No. 34 of 2011.
The Indonesian Anti-Dumping Committee (KADI)
KADI, established in 1996, is an agency under the Ministry of Trade responsible for anti-dumping and countervailing duty investigations. It consists of a Secretariat and an Investigation Sub-Committee of professionals specializing in either proving dumping/subsidies or proving domestic industrial losses.
Filing an Anti-Dumping or CVD Petition
The process for a domestic industry to seek protection through KADI involves rigorous evidence-gathering and standing requirements.
| Step | Requirement/Timeline | Procedural Detail |
| Standing | 50% / 25% Rule | Applicants must produce >50% of the total production of those expressing an opinion on the case; and those supporting must represent at least 25% of the total domestic production of the “Like Product”. |
| Evidence | Preliminary Evidence | Petitioners must provide documented evidence of the Dumping Margin (Normal Value vs Export Price), Material Loss, and the Causal Link. |
| Notification | Pre-Initiation | KADI must notify the government of the exporting country before officially starting an investigation. |
| Initiation | 30 Working Days | KADI has 30 days to review a complete application and issue a decree to start the investigation. |
| Investigation | 12 – 18 Months | The standard duration is 12 months, extendable to 18 months in complex cases. |
| De Minimis | Termination Rule | Investigations stop if the dumping margin is <2% or if import volume from a country is <3% of total imports. |
When filling out the investigation questionnaire, the domestic industry must provide specific data indicators, including sales, production, profit/loss, market share, capacity utilization, productivity, workforce, wages, inventory levels, and cash flow impacts. KADI often conducts on-site verification in both the domestic market and the exporting country to cross-check this data.
The Indonesian Trade Safeguard Committee (KPPI)
KPPI handles investigations related to safeguard measures, focusing on “serious injury” caused by unforeseen import surges. KPPI procedures follow a distinct track under PP 34/2011.
Safeguard Petition Procedures
- Application Submission: Domestic producers of “like” or “directly competing” products submit a written request to KPPI.
- Standing Review: Similar to KADI, the supporting industry must represent at least 25% of total production.
- Provisional Measures: In “critical circumstances” where delay would cause irreparable damage, KPPI may recommend a provisional safeguard duty for up to 180 days based on a preliminary determination of injury.
- Public Hearings: KPPI is mandated to hold public hearings to allow interested parties, including foreign exporters and importers, to present their views and evidence.
- Final Recommendation: Based on the investigation and public hearings, KPPI recommends the rate and duration of a safeguard import duty to the Minister of Trade.
Recent KPPI cases have addressed products such as Linear Low-Density Polyethylene (LLDPE), where the scope of the investigation was expanded to cover additional HS codes (e.g., 3901.40.00) following data showing a sharp rise in imports from 112,286 tons to 192,873 tons annually.
Indonesia’s Involvement in WTO Disputes: Key Case Studies
Indonesia has been both a significant complainant and a frequent respondent in the WTO dispute settlement system, reflecting its active participation in the global rules-based order.
Significant Complainant Victories
Indonesia has successfully challenged trade barriers affecting its key exports, such as steel and paper.
- DS616: EU – Countervailing and Anti-Dumping Duties on Stainless Steel (2025): Indonesia secured a major win when a WTO Panel found that the EU’s duties on Indonesian stainless steel were inconsistent with the SCM Agreement. The panel ruled that Indonesia’s nickel export policy did not result in raw material prices being below fair market value and that import duty exemptions in bonded zones were not illegal subsidies.
- DS312: South Korea – Anti-Dumping Duties on Paper: Indonesia successfully challenged duties imposed on its paper products, reinforcing the requirement for objective investigations.
- DS480 & DS618: EU – Anti-Dumping on Biodiesel: Indonesia has repeatedly challenged the EU’s “cost adjustment” methodology used to calculate dumping margins for biofuels, often prevailing at the panel stage.
Challenges as a Respondent
Indonesia has also faced challenges, particularly regarding its industrial “downstreaming” policies.
- DS592: Indonesia – Nickel Export Ban: The EU challenged Indonesia’s ban on the export of raw nickel ore. While a panel reportedly ruled against Indonesia, the case has been “appealed into the void” by Indonesia, preventing the enforcement of the ruling while the AB remains paralyzed.
- DS490 & DS496: Indonesia – Safeguards on Iron/Steel: Taiwan and Vietnam successfully challenged Indonesia’s safeguard measures on steel products, arguing that the measures failed to meet the WTO’s rigorous MFN and injury standards.
Future Outlook: MC13 and Beyond
The outcomes of recent Ministerial Conferences (MC12 and MC13) highlight the ongoing challenges and successes of the WTO in a divided geopolitical landscape.
The Fisheries Subsidies Agreement
The 2022 Agreement on Fisheries Subsidies (Fish 1) is a historic milestone for ocean sustainability. It prohibits subsidies for IUU fishing and for fishing in overfished stocks, marking the first time the WTO has incorporated environmental sustainability into its binding rules. However, members at MC13 failed to reach a consensus on the “second wave” of negotiations (Fish 2) aimed at curbing subsidies that contribute to broader overcapacity and overfishing.
Digital Trade and WTO Reform
The moratorium on customs duties on electronic transmissions was extended until MC14 or March 2026, providing a critical win for the digital economy. For Indonesia, which is currently in the process of acceding to the OECD, the focus remains on inclusive WTO reform to restore the dispute settlement system and ensure that the rules-based order remains resilient against global economic uncertainty.
As Indonesia continues to elevate its economic standing through infrastructure development and human capital investment, its mastery of both international trade law and domestic trade remedy procedures will remain a cornerstone of its national trade strategy. The interplay between global rules and domestic implementation ensures that while the country opens its sectors to foreign investment, it retains the necessary “safety valves” to protect its domestic industrial base from legitimate market injuries.
Karya yang dikutip
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