Juridical Analysis of ”Safeguards” on Protection of State Industrial Law

Rahayu Hartini

Universitas Muhammadiyah of Malang, Jl Raya Tlogomas No 246 ,Malang ,65144

Keywords:

Safeguard, Regulation, Legal Protection

Abstract:

Safeguard is one of the legal instruments to protect domestic industries from increasing imported goods that

occur in normal trade but harming domestic industries. To avoid this, the WTO and the Government of Indone-

sia issued a protection regulation. The purpose of the study is to ﬁnd out 1).Protection of domestic industrial

law against safeguards in WTO provisions and regulations in Indonesia. 2).Adjustment of a substance in In-

donesia to safeguard provisions. This legal research is normative juridical by using a statue approach, analyzed

in a continuous manner. The results of the study:1).There are still some weaknesses in the safeguard rules in

Indonesia because there are no speciﬁc rules regarding safeguards because they are still regulated in the Cus-

toms Law, while each WTO rule is regulated in each different Article, there is no explanation that absolute and

relative in terms of imposition of safeguards. 2).In implementing safeguards there are still differences found

in the form of safeguard provisions in WTO rules and regulations in Indonesia.

1 INTRODUCTION

International trade is one part of business activities

that have recently experienced very rapid progress.

This can be seen from the increasingly expanding cir-

culation of goods, services, capital and labour be-

tween countries. This activity can occur through ex-

port, import, investment, service trade, license and

franchise, intellectual property rights and technology

experts, which in turn have an inﬂuence on other eco-

nomic activities, such as banking, insurance, taxation

and so on (Indraswari and Sudiarta, a).

It is realized that it is not easy to implement the

WTO agreement in accordance with the stipulated

provisions so that there may be deviations in the pro-

cess of trade liberalization that urges the position of

the domestic industry, so it is necessary to take safe-

guards so that mutually beneﬁcial international trade

activities can be realized. Many cases of security

measures implemented by several countries such as

Argentina that implement security measures against

the footwear industry in their countries without har-

monizing the WTO provisions, resulting in losses suf-

fered by these countries.(Alfaqiih, 2012)

Trade relations between countries known as in-

ternational trade experience rapid development from

time to time. The dynamics of international trade are

followed by a variety of complex problems as a con-

sequence of a fair trade relationship occurring in the

business world. A distinctive feature of international

trade is the existence of trade relations carried out be-

tween cross-border countries carried out by business

actors by following a speciﬁc and speciﬁc system. In

international trade, the existence of a system is a pa-

tron that forms and directs trade activities into certain

desired goals (Barutu, 2007). Indonesia ofﬁcially be-

came a member of the WTO in 1995 by ratifying all

WTO agreements, through Law No. 7 of 1994 con-

cerning the Ratiﬁcation of the Agreement Establish-

ing the World Trade Organization.

Open international market conditions, for Indone-

sia, offers a great opportunity for domestic products

to be exported, however in accordance with the prin-

ciple of causality Indonesia is also required to open

a domestic market for imported products to enter and

circulate (Lestari, 2010). This certainly can bring in-

tense competition from imported products, especially

if the number of imported products ﬂoods the domes-

tic market. Thus, this can lead to the formation of an

unfair business competition in the domestic market. If

these conditions occur, then as a member of the WTO,

Indonesia can implement legal measures in the form

of safeguards. Safeguard is one of the legal instru-

ments to protect domestic industries from increasing

imported goods that occur in normal trade but harm-

ing domestic industries.

A safeguard mechanism for an international trade

agreement is the core element to secure market ac-

180

Hartini, R.

Juridical Analysis of ”Safeguards” on Protection of State Industrial Law.

DOI: 10.5220/0009880401800185

In Proceedings of the 2nd International Conference on Applied Science, Engineering and Social Sciences (ICASESS 2019), pages 180-185

ISBN: 978-989-758-452-7

cess commitments in trade negotiations and effec-

tively sustain trade liberalization despite domestic re-

sistance from comparatively disadvantaged economic

sectors. A safeguard system is not only essential to

provide safety nets for overly excessive importation

within such a short period of time, but also critical

to facilitate structural adjustment induced by import

competition. (Ahn, 2006)

WTO data show that Indonesia is the second

largest country that actively applies safeguard mea-

sures. This can be proven since Indonesia joined the

WTO from 01/01/1995 until 31/12/2015.

In Indonesia, the institution authorized to con-

duct the investigation is the Indonesian Trade Safe-

guard Committee (KPPI) which was established in

2003 through the Decree of the Minister of Indus-

try and Trade No.84/MPP/Kep/2/2003 dated Febru-

ary 17, 2003. This decree is a follow-up to Presiden-

tial Decree No. 84 of 2002 dated December 16, 2002

concerning Measures for Safeguarding Domestic In-

dustries from the Effects of a surge in Imports. This

KPPI has the task of handling problems related to ef-

forts to recover serious losses or prevent the threat of

serious losses suffered by domestic industries as a re-

sult of a surge in the number of imported goods (In-

donesia, a).

Safeguard is regulated in the WTO, GATT (Gen-

eral Agreement on Tariff and Trade) Article XIX and

in several national regulations, namely Law No. 7 of

1994 concerning Ratiﬁcation of the Agreement Estab-

lishing The World Trade Organization; UU no. 17 of

2006 concerning Amendments to Law No. 10 of 1995

concerning Customs; Government Regulation No. 34

of 2011 concerning Antidumping Measures, Reward

Measures and Trade Safeguard Measures and Decree

of the Minister of Industry and Trade of the Repub-

lic of Indonesia No. 85/MPP/Kep/2003 concerning

Procedures and Requirements for Requests for Inves-

tigation of Safeguarding Domestic Industries from the

Effects of a Surge in Imports.

Some previous study research on safeguards, for

example:

1. Protection of Domestic Industry through Safe-

guard Actions of the World Trade Organization.

That safeguard regulation refers to Article XIX

GAAT (Emergency Action on Imports of Partic-

ular Product) as perfected by the 1994 agreement

on safeguard. Safeguard measures are also reg-

ulated in the Indonesian legal system with Pres-

idential Decree Number 84 of 2002 concerning

measures to safeguard domestic industries from

the consequences import policy (Indraswari and

Sudiarta, b).

2. Harmonization of Regulations and Effectiveness

of Safeguard Institutions in Indonesia , Analy-

sis of the Interest of Indonesia’s Special Safe-

guard Mechanism in Agricultural Negotiations in

the World Trade Organization (WTO), which ad-

dresses the issue of protecting domestic producers

from import surges through the Special Protection

Mechanism (SSM) scheme (Lubis et al., 2010).

3. Likewise for the nuclear ﬁeld, as the study con-

ducted by Ign. Djoko Irianto in the Title: The

Role of Safeguards Technology and Physical Pro-

tection for the Protection of Nuclear Materials.

4. Safeguard Mechanism and ATIGA (ASEAN

Trade in Goods Agreement): Case Study of Sugar

Trade in Indonesia and Fruit Trade in Vietnam,

which explains among others the emergence of

new problems in trade that exist between ASEAN

member countries, is due to non-cultural negoti-

ations their confrontation and informal coopera-

tion adopted by member countries in solving trade

problems.

5. Anita Kamilah’s research entitled: Law Protec-

tion for Domestic Industries Due To Dumping

Practice. Basically, this research focuses on:

(1) What factors cause a corporation to practice

dumping, and (2) How is the legal protection of a

country due to dumping practices. Factors caus-

ing dumping, to gain proﬁt by setting lower prices

on the import market and monopoly on the mar-

ket of the importing country. The form of pro-

tection for countries suffering from losses due to

dumping practices is to be able to impose ”Anti-

dumping Import Duty”, as a sanction for export-

ing countries(Kamilah, 2015).

6. Subsequent research on safeguards by Dukgeun

Ahr, a Professor from Korea (Professor of Interna-

tional Trade Law and Policy, Graduate School of

International Studies, Seoul National University,

Korea). With the title of his research ”Restruc-

turing the WTO Safeguard System” in his journal

entitled ”The WTO Trade Remedy System: East

Asian Perspectives”. In this study discussed some

of the problems that are more basic, procedural

and substantive. Also explained a little about the

establishment of better protection mechanisms in

the future(Ahn, 2006)

Meanwhile, in my research entitled Juridical

Analysis of ”Safeguards” On Protection of State In-

dustrial Law, by raising the issue as set out in the legal

issue below.

Based on the description above, several problems

arise. The objectivities of the study in this study are:

1. How about safeguards against the protection of-

Juridical Analysis of ”Safeguards” on Protection of State Industrial Law

181

domestic industrial law according to WTO Provi-

sions and Regulations in Indonesia?

2. is safeguards in Indonesia in accordance with the

safeguard provisions stipulated by the WTO?

2 METHOD

This research is juridical normative by using a statue

approach, and a conceptual approach. This research

is normative juridical with a literature approach that

is by studying journals, books, legislation and other

documents related to this research.

This approach views the law as identical with

written norms created and promulgated by authorized

institutions or ofﬁcials.

In this study there are 3 legal materials: pri-

mary, secondary and tertiary. Primary legal materi-

als which are provisions relating to Safeguards based

on WTO regulations and national regulations consist-

ing of: a. General Agreement on Tariffs and Trade

(GATT) 1947; agreement on Safeguard: c. Law No. 7

of 1994 concerning Ratiﬁcation of the Agreement Es-

tablishing The World Trade Organization d. UU no.

17 of 2006 concerning Amendments to Law No. 10 of

1995 concerning Customs; Government Regulation

No. 34 of 2011 concerning Antidumping Actions,

Reward Actions, and Trade Safeguard Measures; Sec-

ondary legal material that is all publications about law

that are not ofﬁcial documents (books, dictionaries,

journals, comments on court decisions).Tertiary legal

materials namely: a large Indonesian dictionary, Law

dictionary, encyclopaedia, and others.

Legal Material Collection Techniques with the

model of library research (Ibrahim, 2006).

The technique of analysing legal material is car-

ried out in a descriptive qualitative manner, namely

the selection of theories, principles, norms, doctrines

and articles in the law. Legal materials obtained are

then subjected to discussion, examination and group-

ing into certain parts to be processed into information

data (Asshiddiqie, 1997).

3 SAFEGUARDS (TRADE

SECURITY MEASURES)

AGAINST THE PROTECTION

OF DOMESTIC INDUSTRIAL

LAW ACCORDING TO WTO

PROVISIONS AND

REGULATIONS IN INDONESIA

It is not easy to establish a WTO agreement in ac-

cordance with the provisions applied so that a safety

valve may be needed so that mutually beneﬁcial in-

ternational trade activities can be realised. This has

been done since the entry into force of the 1947 GATT

agreement, one of which is safeguard action (Barutu,

2007). Safeguard actions are intended to avoid situ-

ations in which WTO members face a dilemma be-

tween allowing domestic markets that are severely

disturbed by imported goods and withdrawing them-

selves from the agreement. If the second one is cho-

sen by many countries, it means that the agreement is

ineffective.

GATT 1947 has special conditions in emergency

actions stipulated in Article XIX regarding this Emer-

gency Action on Imports of Particular Products, and

the provisions in the condition of how safeguard ac-

tions can be implemented, speciﬁcally Article 1 (a)

concerning unforeseen developments are stipulated

(Indonesia, b). Safeguard actions can be carried out

if there are elements of unexpected developments, the

obligations of the parties to the agreement include:

concessions on tariffs which consequently increase

the number of imported goods into the area, causing

a serious threat to similar products so that the coun-

tries that make the agreement are given the author-

ity to take preventative action against the more severe

losses that will be experienced by the domestic indus-

try. Preventive and corrective actions can be in the

form of delaying concessions, withdrawing or chang-

ing concessions.

In Article XIX GATT, a country is allowed to:

modify agreed concessions, impose import restric-

tions for a temporary time if it can be proven that

an increase in certain imported products results in

considerable losses for domestic producers, and con-

tinues to impose import restrictions during the time

needed to overcome corrected losses. In its develop-

ment, the provisions on safeguards were rewritten in

a formulation that was somewhat different from what

was stated in the Agreement on Safeguard Agreement

which was one part of the WTO agreement.

There is a difference regarding the identiﬁcation

of the increase in imports between Article XIX GATT

1994 and Article 2.1 Agreement on Safeguard where

ICASESS 2019 - International Conference on Applied Science, Engineering and Social Science

182

Article 2.1 Agreement on Safeguard identiﬁcation of

imports is further clariﬁed by the inclusion of ele-

ments of difference between absolute and relative in-

creases, where this is not mentioned in Article XIX

GATT 1994.

Law Number 10 of 1995 concerning Customs

which originally only regulates the issue of An-

tiDumping Import Duty and Subsidized Import Duty,

then Law Number 17 of 2006 concerningamendments

to Law number 10 of 1995 concerning customs, ex-

tends actions trade safeguards by including two new

provisions, namely Safeguard Measures Import Duty

and Revitalization Import Duty in addition to Anti-

Dumping Import Duty and Rewards Import Duty

(Barutu, 2007).

In the opinion of the author, Indonesia, which has

ratiﬁed Law Number 7 of 1994 in protecting domestic

industries for safeguards, has not been able to provide

preventive safeguards optimally. This can be proven

by the absence of regulations regarding safeguards

stipulated in more speciﬁc laws. Safeguard in Law

Number 17 of 2006 concerning changes to Law num-

ber 10 of 1995 concerning customs is only inserted.

Whereas in the WTO regulations both are regulated

in different Articles, safeguards are regulated in Arti-

cle XIX GATT while Customs is regulated in Article

VII GATT.

In Government Regulation No. 34 of 2011 con-

cerning Antidumping Measures, Reward Measures,

and Trade Safeguard Measures more speciﬁcally reg-

ulates the safeguard actions themselves both in terms

of their understanding and procedures. The shortcom-

ings do not explain who the parties are interested in.

3.1 Safeguards Provisions in Indonesia

Viewed from WTO Safeguard

Provisions

In principle, open international trade demands unifor-

mity of rules that apply at the international level with

rules made at the national level. This uniformity of

rules is commonly referred to as a harmony between

international rules and national rules. In harmonizing

this law, the most important thing is the existence of a

meeting point on fundamental principles between the

two, so that the conﬂict of law is avoided (Alfaqiih,

2012).

The inconsistency in the substance of the arrange-

ment and its application will have an impact on the

demands through the WTO Dispute Settlement Body.

A question is whether the safeguard provisions

made by the Indonesian government are in accor-

dance with the provisions that apply internationally,

the fundamental principles of the GATT and national

legislation need to be compared. These fundamental

principles are examined through 2 categories, namely

the safeguard imposition requirements and the safe-

guard forms that can be imposed.

Rules regarding safeguards in Indonesia are reg-

ulated more fully in Government Regulation No. 34

of 2011 concerning Antidumping Measures, Reward

Measures and Trade Safeguard Measures, while at the

international level, the safeguard provisions contained

in the GATT are further elaborated in the Agreement

on Safeguard.

First, the conditions for imposing safeguards. In

this government regulation, safeguard requirements

can be found in the deﬁnition of safeguards, namely

actions taken by the government to restore Serious

Loss or prevent the Threat of Serious Loss suffered

by the Domestic Industry as a result of a surge in

the number of imported goods in absolute or relative

to the Similar Goods or Directly Competing Goods.

Provisions regarding safeguard requirements are in

line with the provisions contained in the Agreement

on Safeguard. It can be said that Indonesia has ad-

justed the substance to the WTO safeguard regard-

ing the requirements for imposing safeguards because

there is no difference between the safeguard imposi-

tion requirements. There should be a harmony be-

tween international rules and national rules so that

there is no conﬂict of law.(ULFA, 2017)

Second, the form of safeguards in regulations in

Indonesia can be found in article 70 paragraph 2 of

Government Regulation Number 34 of 2011 in which

safeguards can be imposed in the form of import du-

ties or quotas. If the form of safeguard chosen is im-

port duty, then the one who determines it is the Min-

ister of Finance, while the safeguard in the form of a

quota is determined by the Minister of Industry and

Trade (Indonesia, a).

PP No. 34 of 2011 divides safeguards into tem-

porary safeguards and permanent safeguards. Tempo-

rary safeguards stipulated in article 80, article 81, ar-

ticle 82, where temporary safeguards can be applied

in the event of recovery of domestic industry losses

are difﬁcult due to delay in imposing security mea-

sures, during the investigation period KPPI can rec-

ommend to the Minister to impose temporary security

measures.

Safeguard on Agreement has temporary safe-

guards and permanent safeguards. Temporary safe-

guards are carried out if there is initial evidence of

an increase in imports that results in serious losses or

the threat of serious concern for domestic industries,

temporary safeguard measures (Article 6 Agreement

on Safeguard), are needed if domestic industry condi-

tions are in ”critical condition”. That is, if no imme-

Juridical Analysis of ”Safeguards” on Protection of State Industrial Law

183

diate action is taken, an increasingly difﬁcult situation

will be created to make repairs and recovery (Indone-

sia and Indonesia, ).

For safeguards, it can still be determined in 3

forms, namely an increase in import duties, a stipu-

lated import quota, and a combination of both forms.

If safeguard measures are set in the form of quotas,

the number of quota may not be smaller than the aver-

age import data in the last three years. In otherwords,

for the case of imposing a number of quotas that are

different from the import average in the last 3 years,

there is a need for evidence/justiﬁcation speciﬁcally

(Barutu, 2007). As stated in Article 5.1 Agreement

on Safeguard.

The arrangement of safeguard forms in this Gov-

ernment Regulation is the same as the arrangement in

the Agreement on Safeguard. Even if there is a differ-

ence, it is only in the form of temporary safeguards, in

the Agreement on Safeguard Article 6 it is mentioned

that it should be imposed in the form of import duty

and not quota, while in PP Number 34 of 2011 arti-

cle 80 paragraph 1 is mentioned only in the form of

import duty temporary security measures and not as a

choice.

4 CONCLUSIONS

4.1 Conclusion

4.1 Safeguards (trade security measures) against the

protection of domestic industrial law according to

WTO Provisions and Regulations in Indonesia, it

turns out there are still some disadvantages, namely:

a). Safeguard arrangements in Indonesia have not

been maximized in providing legal protection to do-

mestic industries’). Protection of domestic industrial

law regarding safeguards in Indonesia can be real-

ized through preventive legal protection provided by

the Government, namely by making more appropriate

regulations regarding safeguards, providing socializa-

tion for business actors, and conducting an assess-

ment of the import mechanism. While repressive legal

protection is carried out by the government by giving

import duties and quotas or both so that the domes-

tic industry does not suffer losses due to a surge in

imports.

4.2 In the safeguard provisions in Indonesia, judg-

ing from the WTO safeguard provisions both from

the safeguard imposition requirements and viewed

from the form of safeguards in Indonesia, they are

quite consistent in their provisions. However, there

are still differences found in the form of temporary

safeguards, in the Agreement on Safeguard Article 6

Agreement of Safeguard: it should be imposed in the

form of an import duty tariff (and not a quota), while

PP No. 34 of 2011 article 80 paragraph 1 is men-

tioned only imposed in the form of import duty for

temporary security measures and not as an option. In

implementing a rule, there should be uniformity of

rules that apply at the international level with rules

made at the national level so that later it can avoid the

occurrence of a conﬂict of law.

4.2 Suggestion

B.1. For the government, especially the Indonesian

Trade Security Committee (KPPI), to be more mas-

sive in providing services and outreach to the pub-

lic, especially the domestic industrial parties, so that

the economy and trade ﬂows run in accordance with

what is stated. Seeing the increasingly dynamic de-

velopment of the trading business world, it can be

made a concern for the government in the future so

that the domestic industry does not suffer losses for

the welfare of the country’s economy. In protecting

the domestic industry against a surge in imports, it is

necessary to have legal protection through the estab-

lishment of regulations speciﬁcally discussing safe-

guards. Because until now there is no speciﬁc regu-

lation governing safeguards. Safeguard regulation is

still an insert in the Customs Law and there needs to

be an additional in substance regulating in more de-

tail who are the parties interested in this government

regulation and the intent of absolute or relative.

B.2. For the domestic industry parties to take an

active role in providing reports to the KPPI so that

the KPPI can directly follow up with the imposition

of import duties on temporary safeguards decided by

the ﬁnance minister in order to prevent greater losses.

Because KPPI is not the only one that has an impor-

tant role in protecting its domestic industry, the pub-

lic, especially domestic industries, also has an impor-

tant role in achieving economic welfare goals in In-

donesia.

ICASESS 2019 - International Conference on Applied Science, Engineering and Social Science

184

REFERENCES

Ahn, D. (2006). Restructuring the wto safeguard system.

The WTO Trade Remedy System: East Asian Perspec-

tive, pages 11–31.

Alfaqiih, A. (2012). Harmonisasi regulasi dan efektivitas

kelembagaan safeguard di indonesia. Media Hukum,

19(1).

Asshiddiqie, J. (1997). Teori dan aliran penafsiran hukum

tata negara. Ind Hill-Company.

Barutu, C. (2007). Sejarah sistem perdagangan interna-

sional (dari upaya pembentukan internasional trade

organization, eksistensi general agreement on tariffs

and trade sampai berdirinya world trade organization).

Jurnal Hukum Gloris Juris, 7(1).

Ibrahim, J. (2006). Teori dan metodologi penelitian hukum

normatif. Malang: Bayumedia Publishing, 57.

Indonesia, K. A. and Indonesia, K. P. P. Pengenaan tindakan

safeguard (bagian pertama). Fair Trade, (3).

Indonesia, K. P. Komite pengamanan perdagangan indone-

sia.

Indonesia, K. P. Perlindungan industri dalam negeri melalui

kesepakatan safeguard world trade organization.

Indraswari, A. I. and Sudiarta, I. K. Perlindungan industri

dalam negeri melalui tindakan safeguard world trade

organization. Kertha Semaya: Journal Ilmu Hukum.

Indraswari, A. I. and Sudiarta, I. K. Perlindungan industri

dalam negeri melalui tindakan safeguard world trade

organization. Kertha Semaya: Journal Ilmu Hukum.

Kamilah, A. (2015). Law protection for domestic industries

due to dumping practice. Jurnal Dinamika Hukum ,

15(3):304–310.

Lestari, S. K. (2010). Tinjauan yuridis tas perlindungan

hukum terhadap industri dalam negeri melalui per-

aturan nasional dikaitkan dengan upaya sefeguards

dalam world trade organization (WTO). PhD thesis,

Universitas Indonesia. Fakultas Hukum.

Lubis, A. D., Mutakin, F., and Arianti, R. K. (2010). analisis

kepentingan special safeguard mechanism indonesia

dalam negosiasi pertanian di world trade organization

(wto). Buletin Ilmiah Litbang Perdagangan, 4(1):63–

74.

ULFA, M. (2017). TINJAUAN YURIDIS TENTANG TIN-

DAKAN PENGAMANAN PERDAGANGAN (SAFE-

GUARD) DALAM KAITANNYA DENGAN PERLIN-

DUNGAN HUKUM TERHADAP INDUSTRI DALAM

NEGERI BERDASARKAN KETENTUAN WTO DAN

PERATURAN DI INDONESIA. PhD thesis, Univer-

sity of Muhammadiyah Malang.

Juridical Analysis of ”Safeguards” on Protection of State Industrial Law

185