Abstract
Under the WTO laws, countries are allowed to protect their national industry by imposing tariffs as well as non-tariff measures (NTM). While the WTO is committed to reduce tariff, it does not have uniform treatment towards NTMs. One type of NTM that becomes the disputed subject of several WTO cases is Local Content Requirement (LCR) because while it can help national industry, it is seen as discriminatory towards imported products. This work discusses whether the application of the Tingkat Komponen Dalam Negeri (TKDN) or LCR provisions for 4G LTE communication devices in Indonesia is in conformity with WTO laws. By analyzing relevant WTO agreements and rulings, this work will demonstrate that Indonesia’s LCR provisions in 4G LTE sector may not be in conformity with the GATT and TRIMS but at the same time it does not violate the GATS, ASCM, and GPA because such LCR provisions do not fall under those three agreements. In light of those, this writing suggests that the government of Indonesia bring the LCR provisions in 4G LTE sector into conformity with WTO laws by revoking the provisions mandating the need to use local over imported products to avoid potential claims from other WTO members.
Highlights
The industry of electronics in Indonesia is among the prioritized due to its high growth, especially the mobile phone industry as one of its strategic subsectors.1 According to Indonesia Cell Phone Association (APSI), this 30-50% annual growth rate of smartphone users places Indonesia as the third largest market in the region.2 It is not surprising that there is a high amount of mobile phone import inYetty Komalasari Dewi, Talissa KoentjoroIndonesia
This work discusses whether the application of the Tingkat Komponen Dalam Negeri (TKDN) or Local Content Requirement (LCR) provisions for 4G LTE communication devices in Indonesia is in conformity with WTO laws
The WTO does not have a specific agreement governing the use of LCR, but there are several provisions concerning the legality of LCR embedded in various WTO agreements
Summary
The industry of electronics in Indonesia is among the prioritized due to its high growth, especially the mobile phone industry as one of its strategic subsectors. According to Indonesia Cell Phone Association (APSI), this 30-50% annual growth rate of smartphone users places Indonesia as the third largest market in the region. It is not surprising that there is a high amount of mobile phone import in. In relation to this measure the United States, Japan, and other countries questioned the conformity of the LCR provisions in 4G LTE sector with Indonesia’s commitment under the WTO.1111 They recognized Indonesia’s intentions to integrate itself into global value chains, but claimed that such efforts had to be done in line with WTO regulations.. The International Classification of Non-Tariff Measures is a document that was developed by a team of international organizations consisting of Food and Agriculture Organization of the United Nations, International Monetary Fund, International Trade Centre, Organization for Economic Cooperation and Development, United Nations Conference on Trade and Development, United Nations Industrial Development Organization, World Bank, and World Trade Organization (WTO) It was composed from 2007 until 2012 and the document referred in this writing is the latest version finished in 2012. This article aims to understand the regulation of LCR under WTO agreements and to evaluate whether the LCR provisions for 4G LTE communication devices in Indonesia in conformity with WTO agreements
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