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The Evolution of the Dispute Settlement Mechanism in Preferential Trade Agreements [PTAs]: The Case of Indonesia

Published online by Cambridge University Press:  28 August 2020

I Gusti Ngurah Parikesit WIDIATEDJA
I Gusti Ngurah Parikesit WIDIATEDJA*
Affiliation:
Udayana University, Indonesia ngurahparikesit@gmail.com
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Abstract

The dispute settlement mechanism [DSM] under preferential trade agreements [PTAs] is crucial to ensure adequate implementation and enforcement of commitments among contracting parties. The DSM has evolved from political/diplomatic styles with a low level of legalism to judicial styles with a high level of legalism. Indonesia has also experienced this evolution process in its PTAs. This paper aims to show the evolution of the DSM in Indonesian PTAs, analyzing several related factors behind this trend. The paper argues that the evolution of the DSM from the GATT to WTO, Indonesia's participation in regional trade agreement, that is, ASEAN, the influence of trade partners, the existence of domestic factors, and the ongoing WTO dispute encourage the evolution of the DSM in Indonesian PTAs from political styles to more judicial styles with a high level of legalism.

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Articles
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Asian Journal of International Law , Volume 10 , Issue 2 , July 2020, pp. 346 - 374
Copyright
Copyright © Asian Journal of International Law, 2020

The existence of bilateral and regional trade agreements (hereinafter preferential trade agreements [PTAs]) is crucial for reducing or eliminating barriers to trade. Some PTAs have put this issue as a primary goal, which is reflected in their Preambles. For instance, the North American Free Trade Agreement [NAFTA] refers to the reduction of trade distortions to “create new employment opportunities and improve working conditions and living standards”.Footnote 1 A more recent example is in the Australia-China Free Trade Agreement [FTA], which refers to the removal of “barriers to the trade of goods and services and investment flows” to “create new opportunities for employment and to improve the living standards of their peoples”.Footnote 2

There has been an increase in the role of PTAs. They have been raised from a supporter of the World Trade Organization [WTO] to become the centre point in many countries’ trade policies.Footnote 3 The number of PTAs has significantly increased over the last two decades. By November 2018, 473 PTAs had been concluded, of which nearly 350 PTAs were from the 1990s.Footnote 4 The deadlock in the WTO negotiations has stimulated countries to seek alternative fora to proceed with their economic co-operation, particularly to increase trade and investment flows.Footnote 5 Equally, the Organization for Economic Co-operation and Development [OECD] negotiations on agreement in the realm of investment failed to establish a multilateral rule-based system.Footnote 6

The number of states entering PTAs has evolved in various regions in which these kinds of PTAs have several characteristics in common, as distinct from earlier ones. Approximately two-thirds of PTAs in force are among developing countries, compared with only twenty percent in the late 1970s,Footnote 7 such as the Malaysia-India FTA (2011).Footnote 8 Almost fifty percent of current PTAs involve countries from different regions (cross-regional).Footnote 9 Specifically, the Trans-Pacific Strategic Economic Partnership Agreement [Trans-Pacific SEP] was negotiated initially between three countries from three different regions—South America (Chile), Asia (Singapore), and Oceania (New Zealand).Footnote 10 Equally, approximately sixty-eight percent of PTAs in force focus on trade in goods, and thirty-one percent cover trade in both goods and services.Footnote 11 However, from 2000 to 2010, the percentage of PTAs encompassing both goods and services more than doubled.Footnote 12

Interestingly, over the last decade PTAs have covered not only trade in goods and services, but also more comprehensive agreements. Almost all areas of trade negotiated under the WTO now are negotiated under PTAs, for example investment, although this has traditionally been covered by Bilateral Investment Treaties [BITs].Footnote 13 More recent PTAs have also included intellectual property, traditional knowledge, energy and mineral rights, procurement, and the movement of labour.Footnote 14 Hence, PTAs now tend to adopt more features of the WTO Agreement. This is linked to the importance of incorporating not only Dispute Settlement Mechanism [DSM] procedures, but also substance in PTAs.

Indonesia has been a member of the General Agreement on Tariffs and Trade [GATT] since 24 February 1950 and the WTO since 1 January 1995.Footnote 15 Indonesia was actively involved in groups that promoted particular trade issues during the WTO negotiations, such as the Cairns Group,Footnote 16 the G-20,Footnote 17 and the G-33.Footnote 18 Indonesia has concluded PTAs with other WTO members, such as Bulgaria (2004)Footnote 19 and Australia (2019),Footnote 20 and with non-WTO members, such as Uzbekistan (2008).Footnote 21 As a member of ASEAN, Indonesia has concluded PTAs with China (2002),Footnote 22 India (2003),Footnote 23 Korea (2005),Footnote 24 Japan (2008),Footnote 25 and Australia and New Zealand (2009).Footnote 26

The DSM under PTAs is crucial in ensuring adequate implementation and enforcement of commitments among contracting parties.Footnote 27 The DSM has evolved from including only provisions for consultation to resolve disputes to adopting WTO-like dispute settlement systems, reflecting the important shift from political/diplomatic styles to judicial styles of the DSM.Footnote 28 Indonesia's PTAs have also experienced this evolution process.

The purpose of this paper is to show the evolutionary process of the DSM in Indonesia's PTAs, analyzing several related factors behind this trend. The paper argues that the evolution of the DSM from the GATT to WTO, Indonesia's participation in a regional trade agreement, that is, ASEAN, the influence of trade partners, the existence of domestic factors, and the ongoing WTO dispute encourage the evolution of the DSM in Indonesian PTAs from political styles to more judicial styles with a high level of legalism. Hence, it is important to investigate this political-legalistic shift to show how Indonesia has committed to improving the level of predictability and certainty of its PTAs that is necessary to support the recent development of international trade relations. Furthermore, given the fact that two authoritarian regimes followed by the overwhelming spirit of nationalism used to be dominant, the inclusion of the judicial styles of the DSM in Indonesia's PTAs is expected to build trust and confidence among Indonesia's trading partners, including their prospective investors and traders.

To begin, this paper explains the styles of the DSM, including political- or diplomatic-oriented styles with a low level of legalism, and judicial-oriented styles with a high level of legalism. Then, it discusses the evolution of the DSM under the WTO and PTAs, covering the relationship between the DSM under the WTO and PTAs, and the DSM under the GATT and the WTO, as well as PTAs. The next section covers the evolution of the DSM in Indonesia's PTAs, both as a member of ASEAN and as an individual country, showing the trend of the rise of judicial styles of the DSM in Indonesia's PTAs and several related factors causing this trend.

I. THE STYLE OF THE DSM IN TRADE AGREEMENTS

Some scholars have defined the styles of the DSM in international trade agreements. Munin classified the DSM into political or adjudicative procedures.Footnote 29 The political style will colour the DSM if the following features are met: the DSM has no final decision or merely political process, consensus determines the decision-making process, and it has no pre-established or barely comprehensive legal phases.Footnote 30 Meanwhile, if the decision of the dispute settlement authority is binding and a third authority is actively involved (subject to the parties’ consent) to resolve the dispute, the adjudicative styles have been employed.Footnote 31 Most trade agreements have adopted those two styles, with the domination of one style over another.Footnote 32 Hence, a power-oriented approach will follow if the political styles are dominant, while a procedure where the adjudicative styles are dominant will be shaped as rule-oriented.Footnote 33

A study by Chase et al. provided a more detailed classification. A political or diplomatic style of trade agreements is identified through the following features: (1) there are no provisions on the dispute settlement mechanism; (2) agreements that call for exclusively negotiated settlement among disputing parties and/or a dispute is referred to the political body for resolution; and (3) there is the existence of veto rights, enabling members to avoid the referral to a third-party adjudicator.Footnote 34 From the last type, although the provision has enabled third-party adjudication, it will still fall within the classification of the political style.

Under the quasi-judicial style, trade agreements set the “automatic” right to the involvement of third-party adjudication in the dispute settlement mechanism. The term “automatic” refers to the absence of an obvious right granted to parties to block the referral of a dispute to a third-party adjudicator.Footnote 35 The next classification is the existence of an ad hoc adjudicative body, meaning that this body is established for deciding a particular dispute and is dissolved after it has reached a decision.Footnote 36 This model also covers the existence of agreements that combine an ad hoc process at the first stage and a standing body at the appellate stage.Footnote 37 In judicial style, the adjudicative body has a greater level of independence and institutional permanence.Footnote 38 The members of this body are appointed for fixed periods, and have more administrative and functional autonomy (such as budget and legal personality).Footnote 39 In addition, there has been a requirement for appropriate legal training for those who intend to serve as members of an adjudicative body.Footnote 40 Trade agreements also fall within this style if they allow private parties to file a lawsuit directly before tribunals (standing) or indirectly through the media of national courts (preliminary reference procedures).Footnote 41

Smith introduced the notion of levels of legalism, from “none”, “low”, “medium”, “high”, to “very high”, to express the existence of the DSM in trade agreements.Footnote 42 The level of legalism is “none” if the agreement does not allow third-party adjudication.Footnote 43 A “low” level refers to the participation of third-party adjudication, but where the result provided by the adjudicative body is not binding.Footnote 44 Meanwhile, if the decision from the adjudicative body is binding on the parties to the dispute, the level of legalism is “medium”.Footnote 45 The level of legalism is “high” where the agreement administered third-party adjudication by standing tribunals.Footnote 46 Finally, the “very high” level refers to a situation in which agreements provided a standing tribunal for third-party adjudication.Footnote 47 Moreover, it enables private parties and treaty organs to initiate disputes and impose sanctions determined by the standing tribunal.Footnote 48 Allee and Elsig argued that the level of legalism has recently not always been applicable. Specifically, only a few PTAs allow private standing, and if they do, it is typically regulated under BITs as opposed to PTAs.Footnote 49

Jo and Namgung simplified Smith's work by classifying the level of legalism into “low”, “medium”, and “high”.Footnote 50 “Low” refers to a situation where agreements do not allow for third-party adjudication, or where the decision of the third-party adjudication is not binding.Footnote 51 “Medium” refers to the binding nature of the decision of a third-party review.Footnote 52 Finally, “high” legalism is identified by the existence of permanent standing tribunals in the DSM.Footnote 53

II. THE EVOLUTION OF THE DSM UNDER THE WTO AND PTAs

A. The Connection of the DSM Under the WTO and PTAs

There has been a contradictory connection between the WTO and PTAs. The Preamble of the WTO expressly states that the ultimate objective of multilateral trading systems is “the elimination of discriminatory treatment in international trade relations”Footnote 54 through, among other things, the application of “most-favoured-nation” [MFN] and “national treatment”. However, PTAs establish discriminatory treatment that WTO rules seek to eliminate.Footnote 55 Specifically, they conclude trade agreements to liberalize trade exclusively among them, making a network of differential treatments within the PTAs that are not available to other WTO members.Footnote 56 The WTO Agreements nevertheless recognize the existence of PTAs. For instance, Article XXIV:5 of GATT 1994 states that “the provisions of this Agreement shall not prevent, as between the territories of Members, the formation of a customs union or of a free-trade area”.Footnote 57

As regards the DSM, there is no formal connection between the WTO and PTAs. There are no provisions under the WTO Agreements that directly affect the function and the structure of the DSM in PTAs.Footnote 58 Moreover, the DSM of PTAs is not subject to the examination of the Committee on Regional Trade Agreements [CRTA] of the WTO.Footnote 59 Although the WTO and PTAs have no formal connection, there has been a dynamic development of the current PTAs that were inspired by the DSM under the WTO. PTAs have moved from a solely political process to a more rule-oriented style, adopting similar features of the WTO, such as the procedure stage and the language used.Footnote 60 This trend is indicated in the subsequent evolutionary examination of the DSM in Indonesia's PTAs, discussed in the next part.

B. The DSM Under the WTO

1. The DSM under the GATT

The origin of the DSM under the WTO can be traced through the existence of GATT 1947. contracting parties might commence the dispute settlement process through consultation.Footnote 61 A contracting party could request this procedure if it considered that other contracting parties had failed to carry out GATT obligations or if there was “non-violation nullification or impairment of the benefits of GATT”.Footnote 62 Contracting parties might conduct consultation with or without the support of a working party or mediator.Footnote 63 If the consultations failed to resolve differences, the working parties that included representatives from all interested contracting parties, particularly the parties to the dispute,Footnote 64 had to work collectively to “promptly investigate” and draw up a report, with recommendations or rulings, for adoption by the contracting parties.Footnote 65

The panel then replaced the role of working parties to resolve a dispute among GATT contracting parties. If a particular party was dissatisfied with the outcome of consultations, it could request the establishment of an ad hoc panel to issue a legal ruling on the specific matter. The panel comprised three or five independent experts (who were not necessarily jurists) who had no relation to the parties to the dispute.Footnote 66 A defendant party, however, could delay or block the formation of this panel.Footnote 67 Through an objective assessment, the panel then issued a report that became legally binding only after the approval of the GATT Council.Footnote 68 Once again, the defendant party had a veto right to block the adoption of the panel report.

Although it has not been invoked frequently,Footnote 69 the existence of a veto right that allows contracting parties to block the formation of the panel and the report of the panel reflects the political or diplomatic style of dispute settlement procedure in the GATT. There is no “automatic” right to prevent this blocking system from occurring. Hence, the level of legalism is considered “low”, as the nature of the panel report as third-party adjudication is not binding.Footnote 70 However, although the level of legalism is considered “low”, it does not mean that the level of compliance of the GATT is also low. Hudec provided an interesting analysis by emphasizing that the remarkable record of voluntary compliance originated mainly from a wide political consensus among GATT contracting parties.Footnote 71

2. The DSM under the WTO

The foremost objective of the WTO DSM is to immediately settle the WTO members’ disputes regarding the respective rights and obligations of the WTO members under WTO law.Footnote 72 Pursuant to Article 3.3 of the Dispute Settlement Understanding [DSU], the speedy settlement of such disputes is “essential to the effective functioning of the WTO and the maintenance of a proper balance between the rights and obligations of Members”.Footnote 73 The existing procedure of the dispute settlement process comprises four basic phases: consultations, panel report, Appellate Body report [AB report], and Dispute Settlement Body [DSB] adoption.

The dispute settlement phase under the WTO is started when a member requests consultations with the other members.Footnote 74 The responding member has to reply to this request within ten days, and then it has to enter into good faith consultations within thirty days after receiving the request.Footnote 75 If the consultation is unable to settle the dispute within sixty days, a panel is established.Footnote 76 Unless the members to a dispute approve otherwise, the panel comprises three or five panellists (who are not necessarily jurists) selected from the Secretariat's lists.Footnote 77 Despite the panellists acting in their individual capacities, the fact that the disputing members have to agree on the panellists may influence their independence.Footnote 78 Thereafter, the disputing members present their submission to the panel, and then the panel issues its recommendations and conclusion in a final report.Footnote 79 The DSB adopts this report within sixty days, except if there is a consensus against adoption.Footnote 80

When the disputing members are dissatisfied with the panel report, the Appellate Body takes over the dispute. Unlike the panel, the AB has a “fixed” composition, comprising seven independent legal expertsFootnote 81 who serve for a four-year term, renewable only once.Footnote 82 The DSB automatically adopts the recommendations and conclusions of the AB report, unless the DSB rules by consensus not to adopt the AB report.Footnote 83 The implementation of the recommendations (either the panel or the AB) has to be carried out for “a reasonable period of time”.Footnote 84 If the responding member does not obey the final decision, the complaining member can execute temporary trade retaliatory measures,Footnote 85 and the degree of these measures is the subject of arbitration.Footnote 86

Some experts have positively assessed the existence of the DSM under the WTO. Zimmermann explained that, unlike the GATT, the DSB has successfully introduced precise time limits throughout the dispute settlement process.Footnote 87 Lockhart and Voon presumed that appellate review in the WTO was working well, and experts remarked on the effectiveness and efficiency of appellate review that has contributed to the development of international trade law.Footnote 88 Similarly, Guzman and Pauwelyn stated that the dispute settlement process was one of the most remarkable and successful aspects of the WTO.Footnote 89 Bown praised how the WTO DSM effectively eliminated the blocking system that enabled members to prevent the initiation of a dispute, the formation of the panel, and the adoption of the panel report.Footnote 90

The WTO DSM also attracts the participation of developing countries. Brazil (thirty-four complaints), India (twenty-five complaints), Mexico (twenty-three complaints), Argentina (twenty-two complaints), and Indonesia (eleven complaints) are among the frequent users of the system.Footnote 91 China, which joined the WTO only in 2001, has filed several crucial cases against both the US and the EU.Footnote 92 Moreover, developing countries have successfully defeated economic superpower countries in some WTO cases: in particular, US-Underwear, a complaint by Costa Rica; US-Clove Cigarettes, a complaint by Indonesia; and especially US-Gambling, a complaint by Antigua, which has a population of only 67,000.

The WTO DSM falls within the category of judicial style, with the level of legalism being “high” due to various reasons. First, the AB is an independent and permanent body, comprising experts (who are necessarily legal experts and who serve with fixed terms). The AB also has more administrative and functional autonomy (such as a budget and legal personality). Islam explained how the WTO became a rule-oriented mechanism through the existence of the “covered agreements” as the source of law, reducing the disparities of power, guarding the members’ legitimate interests, and reducing the abusive exercise of rights.Footnote 93 Zangl then analyzed how the panel has been forced to meticulously base its report on legal reasoning, as otherwise its report would be annulled or modified by the AB.Footnote 94 Nevertheless, this is not to say that the WTO DSM is a perfect system. The legalization of this process entails rigorous financial and human resources that are often lacking in developing countries. Equally, due to the disparities of market power, the retaliatory remedy appears not to be an effective measure to any countries,Footnote 95 except the powerful members, such as the US and the EU.Footnote 96

C. The DSM in PTAs

Following the dynamic development of the DSM from the GATT and the WTO, PTAs have also moved from a political style of agreements to a judicial style of agreements with the higher level of legalism. Historically, some older agreements had no DSM. If they had such procedures, the political or diplomatic process pragmatically settled the dispute. Specifically, they provided consultations and possibly conciliation or mediation, implying a low level of legalism. The disputing parties retained the right to reject any legally proposed settlement.Footnote 97 These types of PTAs include the following: the 1969 Southern African Customs Union [SACU] and the US-Israel FTA (1985).Footnote 98

Some agreements then modified the DSM, moving to a higher level of legalism. For example, the 1973 Caribbean Community [CARICOM] established the Caribbean Court of Justice in 2001, which replaced the tribunal, and strengthened the procedure of dispute settlement.Footnote 99 Next, the 1969 SACU had no provisions on the DSM, but the provisions were added in 2002.Footnote 100 The 1996 ASEAN Protocol on dispute settlement stipulated only the diplomatic/political process as a means of resolving a dispute. The 2004 Protocol on Enhanced Dispute Settlement Mechanism provided ASEAN Members with a legalistic and rule-based dispute settlement process modelled on the WTO's DSU.Footnote 101

In general, modern PTAs have formal legal procedures to resolve disputes between the parties, resembling the WTO dispute settlement system.Footnote 102 Although the procedural details vary from agreement to agreement, they typically provide consultations as a means of resolving differences. If this stage fails to settle the dispute, the panel of experts will take over the dispute and then issue a report on the virtues of the dispute.Footnote 103 The success of the WTO DSM has inspired the growing spread of the WTO-like dispute settlement procedure.Footnote 104 Specifically, the WTO members that previously neglected or considered it unnecessary to employ an adjudicative style of dispute settlement in PTAs changed their methods.Footnote 105 The EU's PTAs with MexicoFootnote 106 and Chile,Footnote 107 as well as Australia's PTAs with Singapore and Thailand,Footnote 108 are examples of these movements.

Although having a similar DSM with the WTO, PTAs seem to be employed much less frequently. Moreover, a number of complex dispute settlement procedures have never been used, such as ASEAN.Footnote 109 There are various reasons for this. Perhaps the most plausible reason is that the successful WTO DSM has obviated the need for PTA members to activate regional DSMs. On a daily basis, the existence of the WTO panel and the AB is significantly supported by the WTO Secretariat, providing them with trained experts. However, dispute settlement under the PTAs relies much more heavily on the panellists themselves to manage all of the work.Footnote 110

The WTO DSM also has a more effective enforcement mechanism than PTAs. Although regulating the DSM, some countries prefer to settle disputes through diplomatic resolution, as it enables a negotiated outcome, one that can consider the domestic sensitivities both parties may have.Footnote 111 Equally, few PTAs include the existence of the appellate review, so their effectiveness and legitimacy are somewhat questioned.Footnote 112 WTO decisions are regarded as more legitimate because panel reports are subject to appellate review, which has a more adjudicative character than PTAs.Footnote 113

III. THE EVOLUTION OF THE DSM IN INDONESIA PTAs

A. The Evolution of Indonesia's PTAs

1. Indonesia's PTAs as an individual country

The first two of Indonesia's PTAs after its independence in 1945 were concluded with Japan in 1952Footnote 114 and India in 1953,Footnote 115 with the main objective being to promote trade between the two parties.Footnote 116 Specifically, both parties agreed to grant facilities and issue any licences necessary for the importation and exportation of goods and commodities.Footnote 117 Each party then established schedules on an annual basis, containing a list of goods and commodities that were available for such facilities and licences.Footnote 118 As a country that relied on primary commodities, Indonesia put goods and commodities such as tea, coffee, palm oil, rubber, peanuts, and rattan on its export schedule. Indonesia's country partner then put goods and commodities such as electric machinery, textiles, cotton, and metal on its export schedule. This pattern can be seen from Indonesia's subsequent PTAs with China (1953),Footnote 119 Pakistan (1953),Footnote 120 Iraq (1960),Footnote 121 Bulgaria (1961),Footnote 122 Romania (1962),Footnote 123 and Hungary (1965).Footnote 124

The existence of the GATT 1947 significantly influenced Indonesia's PTAs. For example, the trade agreement between Indonesia and Australia in 1972 stated that “the exchange of goods between the two countries shall be conducted in accordance with the rights and obligations arising from their participation as Contracting Parties to the [GATT]”.Footnote 125 Both parties agreed to the MFN obligation in relation to import and export charges, policies concerning the importation and exportation of goods and commodities, customs duties, customs rules, and procedures applying to export and import licences.Footnote 126 Similar provisions can be found in the trade agreements of Indonesia with the following countries: Malaysia (1973),Footnote 127 the Philippines (1974),Footnote 128 Romania (1975),Footnote 129 and Czechoslovakia (1994).Footnote 130

After the WTO was established in 1994, Indonesia continued to conclude PTAs with other WTO members, including Papua New Guinea (2000),Footnote 131 Slovakia (2002),Footnote 132 Bulgaria (2004),Footnote 133 Thailand, (2011),Footnote 134 and Australia (2019).Footnote 135 Relating to the MFN principle, all agreements mainly referred to the WTO establishing agreement and covered the following measures: customs duties and charges; jaw regulations in relation to customs procedures, transit, storage, and reloading; and domestic taxes and other charges, regulations, and requirements connected to the imported goods.Footnote 136 Indonesia also concluded trade agreements with non-WTO members, such as Uzbekistan (2008).Footnote 137 Nevertheless, the influences of the WTO agreement are still dominant. For example, in the trade agreement with Uzbekistan, both parties agreed to grant MFN treatment in all matters related to trade and economic co-operation.Footnote 138

2. Indonesia's PTAs as a Member of ASEAN

In 1977, as a Member of ASEAN, Indonesia along with other Members, started establishing PTAs that later became a stepping stone to the establishment of the ASEAN Free Trade Area [AFTA].Footnote 139 In 1992, ASEAN Members then established the ASEAN Common Effective Preferential Tariff [CEPT] for the AFTA.Footnote 140 They defined CEPT as “an agreed effective tariff, preferential to ASEAN, to be applied to goods originating from the ASEAN Member States, and which have been identified for inclusion in the CEPT Scheme”.Footnote 141 Further, “a product shall be deemed to be originating from ASEAN Members if at least 40 per cent of its content originates from any Member State”.Footnote 142

In 2003, ASEAN Members started initiating the establishment of the ASEAN Economic Community [AEC] in 2020. In 2007, ASEAN Member States then committed themselves to accelerate the establishment of the AEC by 2015.Footnote 143 In 2009, the ASEAN Trade in Goods Agreement [ATIGA] was established.Footnote 144 The objective of this agreement was “to achieve the free flow of goods in ASEAN as one of the principal means to establish a single market and production base for the deeper economic integration of the region towards the realization of the AEC by 2015”.Footnote 145

ASEAN Members concluded PTAs with China (2002),Footnote 146 India (2003),Footnote 147 South Korea (2005),Footnote 148 Japan (2008),Footnote 149 and Australia and New Zealand [AANZFTA] (2009).Footnote 150 In the FTAs’ objectives, most of the PTAs have the goals of progressively liberalizing and facilitating trade in goods by eliminating tariff and non-tariff barriers; of gradually liberalizing trade in services with substantial sectoral coverage; and of promoting and protecting investment and intellectual property rights.Footnote 151 Nonetheless, the ASEAN-Japan FTA mentioned a more specific objective by stating that the agreement also intended to support “ASEAN economic integration, bridging the development gap among ASEAN Member States, and enhancing trade and investment among the Parties”.Footnote 152

B. The Domination of Political/Diplomatic Styles of the DSM in Indonesia's PTAs (1947–94)

1. Indonesia's PTAs with no DSM

During this period, Indonesia's PTAs mostly had no provisions on the DSM, reflecting the domination of political styles and low level of legalism. Anticipating any potential differences in the implementation of PTAs, Indonesia's PTAs arranged the existence of a joint committee. For example, the Indonesia-United Arab (1965) PTA stated that a Joint Committee, comprising representatives of both parties, would meet to facilitate the implementation of this agreement.Footnote 153 The meeting of this committee should be held not later than two months after the request of either Party.Footnote 154 This provision was also similar to Indonesia's PTAs with Japan (1952),Footnote 155 Romania (1956),Footnote 156Australia (1959),Footnote 157 Turkey (1959),Footnote 158 Bulgaria (1961),Footnote 159 the US (1961),Footnote 160 and North Korea (1963).Footnote 161

Some of Indonesia's PTAs adopted consultations as a means of solving problems in relation to the implementation of the agreement, for instance, the PTAs with Australia (1972),Footnote 162 the Philippines (1974),Footnote 163 and Romania (1975).Footnote 164 The PTA with Jordan (1986) regulated the existence of a joint commission with more detailed tasks, including “supervising the practical implementation of the agreement and removing all difficulties that may arise in this respect, and assisting the development of trade, and economic and technical cooperation”.Footnote 165

In the 1990s, Indonesia's PTAs were dominant in employing diplomatic channels to resolve the dispute. Specifically, the Indonesia-Czech (1994) PTA stated that any dispute on the interpretation or implementation of this agreement “shall be settled amicably by both contracting parties or through diplomatic channels”.Footnote 166 This type of provision was also found in Indonesia PTAs with Chile (1992),Footnote 167 Suriname (1994),Footnote 168 Vietnam (1995),Footnote 169 Ukraine (1996),Footnote 170 Cambodia (1997),Footnote 171 and Yemen (1998).Footnote 172

The 1992 ASEAN CEPT provided several stages of dispute resolution. First, a Member may request a consultation regarding any matter affecting the implementation of the agreement.Footnote 173 This process was organized by the ministerial-level council, comprising one nominee from each Member State and the Secretary-General of the ASEAN Secretariat. If the consultation failed to settle the dispute, the council might seek guidance from the ASEAN Economic Ministers [AEM].Footnote 174

There were both internal factors and external factors that caused Indonesia's PTAs in this period to be somewhat political/diplomatic with a low level of legalism. As to internal factors, two authoritarian regimes under Soekarno (1945–66) and Soeharto (1966–98) had controlled Indonesia. Jo and Namgung have postulated a “democracy effect” to explain how the domestic politics of PTA members influence the way in which countries incorporated their dispute settlement provisions.Footnote 175 In Indonesia, both authoritarian administrations tended to prioritize local elites by protecting import-competing industries, demanding a low level of legalism to promote diplomatic measures instead of third-party adjudication.Footnote 176 Equally, the spirit of nationalism that promoted domestic industries also coloured this period so that the presence of the DSM was considered a threat to domestic sovereignty.

The considerations of the statement of offer of Indonesia under GATT 1947 follows the analysis mentioned above. The government of Indonesia stated that any trade commitments would be carried out according to the economic and social development in Indonesia.Footnote 177 The government indicated that the predominant factor restricting the importation of foreign goods was the limited availability of foreign exchange.Footnote 178 Furthermore, the government had undertaken tariff reform to encourage and protect domestic industries.Footnote 179 In addition, Indonesia agreed only to the elimination or reduction of tariff and non-tariff barriers imposed upon export products of interest of Indonesia.Footnote 180

The next internal factor that influenced Indonesia's PTAs was the lack of experience in negotiating PTAs. This analysis may link to the status of Indonesia as a member of GATT 1947. Historically, three ways were available for a government to become a contracting party of the GATT: (1) original membership; (2) accession under Article XXXIII; and (3) sponsorship after obtaining independence from a government that was already a contracting party.Footnote 181 Unlike accession, becoming a GATT contracting party through sponsorship did not require tariff negotiations, and a newly independent country was able to join the GATT without making any tariff concessions.Footnote 182 The Article also did not specify what the obligations of this country were, as it might be hard to impose stringent tariff obligations when it was in the process of development and demanded special dispensations on GATT obligations.Footnote 183 Indonesia was the first country to become a contracting party of the GATT through sponsorship on 24 February 1950.Footnote 184 This fact might contribute to the lack of experience in negotiating tariff concessions, both in the GATT and PTA, because Indonesia had had no previous experience in negotiating this issue.

From external factors, Jo and Namgung stated that the development of a multilateral trade regime had a substantial impact on how the DSM was established in PTAs, reflecting what has been called the “emulation effect”. Specifically, the mechanism of dispute settlement was more likely to have low-level legalism after the establishment of the Uruguay Round. However, the mechanism of dispute settlement was more likely to have a high level of legalism before the Uruguay Round.Footnote 185 In Indonesia's PTAs, however, this pattern is somewhat different because the low level of legalism was dominant before the Uruguay Round. Indonesia seemed to follow the political styles of GATT 1947 with a low level of legalism in its dispute settlement mechanism. After the Uruguay Round, Indonesia's PTAs, primarily through its status as a member of ASEAN, adopted more judicial styles with a high level of legalism. Also, the influence of trade partners contributed to the style of the dispute settlement provisions in Indonesia's PTAs. Specifically, when Indonesia (as an autocratic country) signed PTAs with other autocratic countries, the result of those PTAs was more likely to have a low level of legalism.Footnote 186

2. Indonesia's PTAs with DSM

Even though Indonesia's PTAs were mostly of a political style, the Indonesia-Netherlands PTA (1968) regulated the DSM. Specifically, if consultations or negotiations fail to settle disputes, either party could submit the dispute to an arbitral tribunal that comprised three members.Footnote 187 Each party appoints one arbitrator, and the two arbitrators then appoint a third arbitrator who is not a national of either party.Footnote 188 If the arbitrator fails to be appointed within two months, both parties could request the appointment of an arbitrator by the President of the International Court of Justice.Footnote 189 The principles of law will be the basis for the tribunal's decision.Footnote 190 The dispute could be settled amicably, at any stage, before the tribunal's decision.Footnote 191 Thereafter, the foregoing provisions will not prejudice the power of the tribunal to rule the dispute ex aequo et bono if the parties so agree.Footnote 192 Finally, the tribunal's decision is reached through a majority of votes and that decision is final and binding on the parties to the dispute.Footnote 193

The existence of the DSM under this PTA provided an interesting analysis. From the independence of Indonesia in 1945 to the establishment of the Uruguay Round in 1994, this PTA was the only PTA that covered the dispute settlement mechanism. It did not follow the pattern that if an agreement adopted a low level of legalism in its dispute settlement provisions, then subsequent agreements that shared memberships were likely to exhibit a low level of legalism.Footnote 194

The status of the Netherlands as the former colonial power that ruled over Indonesia may have influenced the negotiation of this PTA. It seems that the trail of the superiority of the Netherlands still remains in negotiations, enabling the Netherlands to put dispute settlement provisions (that refer to the International Court of Justice) in the PTA with Indonesia. Nevertheless, the more sensible explanation is the need for both parties to establish mutual trust. Before this PTA was signed in 1968, Indonesia was an inhospitable country for foreign investors through its nationalization policy. Almost all foreign enterprises (which were mostly Dutch-owned enterprises) were nationalized.Footnote 195 The inclusion of the dispute settlement provisions was crucial for protecting the interest of the Netherlands, particularly to anticipate unilaterally adverse policies from Indonesia. In contrast, the government of Indonesia wanted to show its willingness and seriousness in concluding the PTA with the Netherlands by incorporating the dispute settlement provisions. Equally, the government intended to show how the transfer of power from Soekarno to Soeharto had resulted in a more trustworthy government that differed from the previous one.

C. The Rise of the Judicial Styles of the DSM in Indonesia's PTAs (1994–2019)

1. Indonesia's PTAs with no DSM

Some of Indonesia's PTAs still have no provisions on the DSM, reflecting a low level of legalism. Interestingly, all Indonesia's PTAs that have no provisions on the DSM were concluded with other developing countries. The following reasons explain why DSM provisions are absent. First, the role of a joint committee to settle a dispute between the parties has been strengthened in this period, so the DSM may not be necessary. For example, the Indonesia-Kuwait PTA (2007) stated that any dispute should be resolved through consultations within the Joint Committee.Footnote 196 It did not mean that the dispute settlement process solely relied on the Joint Committee because the parties must “supply the Joint Committee with the information required for a thorough examination of the dispute with the view to seeking an amicable settlement acceptable to the Parties”.Footnote 197 These types of provisions are also found in Indonesia's PTAs with Slovakia (2006),Footnote 198 the Czech Republic (2007),Footnote 199 Uzbekistan (2008),Footnote 200 China (2011),Footnote 201 Thailand (2011),Footnote 202 and Pakistan (2012).Footnote 203

The influence of trade partners is also significant in shaping Indonesia's PTAs. In this period, the rise of judicial styles of the DSM in PTAs has occurred, but Indonesia did not follow this trend. Indonesia, along with its partner developing countries, seemed to be reluctant to put the DSM in its PTAs. The maxim the “ASEAN Way” has influenced this trend. While the Western concept has promoted “rule-based” regionalism, ASEAN states still emphasize consultation, informality, and consensus in collective decision-making.Footnote 204 Traditionally, they are reluctant to rely on the existence of third-party adjudication, Footnote 205 or they do not want to establish supranational bodies for implementing and enforcing community rules.Footnote 206

Finally, the fact that Indonesia and its partner developing countries have joined the WTO and the Regional Trade Agreements [RTA] that have incorporated comprehensive provisions with a better enforcement mechanism on the DSM has led to them concluding more flexible and political styles of the DSM in their bilateral PTAs. For example, Article 13 Indonesia-Thailand FTA states that “any differences between the Parties on the interpretation or implementation of this Agreement shall be settled amicably, through consultation or negotiation between the Parties”.Footnote 207

This FTA shows that, although ASEAN has established the judicial styles of the DSM through the establishment of the ASEAN DSM and ASEAN PTAs, it does not mean that Indonesia and Thailand will always follow the judicial styles of the DSM in ASEAN's scope while they conclude PTAs as an individual country. They seem to have non-exclusive jurisdiction, meaning that, although both countries are ASEAN Member States, the countries have retained their flexibility to decide the DSM under different agreements.

2. Indonesia's PTAs with DSM

(a) Indonesia's PTAs with ASEAN Member States

In this period, Indonesia's PTAs with ASEAN Member States regarding the DSM have been significantly strengthened through the 2004 Protocol on Enhanced Dispute Settlement Mechanism [the Protocol].Footnote 208 All ASEAN economic agreements (the covered agreements) from the 1977 ASEAN Preferential Trading Arrangements and future ASEAN economic agreements must follow the DSM under this protocol. The existence of the DSU WTO has inspired almost all provisions in this protocol, particularly the combination of an ad hoc panel system and a permanent Appellate Body, as well as the existence of the Senior Economic Officials Meeting [SEOM] to act as the equivalent of the DSB in the WTO DSM.Footnote 209 This process showed the willingness of ASEAN to move from political/diplomatic styles to the judicial styles of the DSM with a high level of legalism.

Similar to the DSU WTO, the complaining party may request consultations if there is any dispute under the covered agreement.Footnote 210 The responding party must reply within ten days and enter into consultations within thirty days.Footnote 211 If consultations fail to settle the dispute within sixty days, the complaining party may raise this issue to the SEOM to request the establishment of a panel.Footnote 212 The panel established by the SEOM has its own working processes, as regulated by Annex II of the Protocol. The panel has to submit its findings and recommendations to the SEOM within sixty days, with an additional ten days for an exceptional case.Footnote 213 This timetable shows how the ASEAN panel is under even harder time pressure compared to the WTO panel.Footnote 214 The SEOM must adopt the report within thirty days, unless there is a consensus not to do so or a competing party states its decision to appeal.Footnote 215

If the panel report is appealed, the AEM establishes the AB.Footnote 216 The AB comprises seven persons who are unaffiliated with any government and has the authority to uphold, modify, or reverse the panel report.Footnote 217 The members of the AB serve for a four-year term, and each member may be reappointed once.Footnote 218 There is a requirement that the members of the AB must demonstrate expertise in law and international trade.Footnote 219 The SEOM must adopt the AB report, and the parties must unconditionally accept this report unless there is a consensus not to adopt the report within thirty days.Footnote 220 Unlike the WTO panels and the WTO AB that only recommend to the member concerned to bring the measure into conformity,Footnote 221 the panel or the AB under ASEAN DSM may “suggest ways in which the Member State concerned could implement the recommendations”.Footnote 222

Concerning implementation, the parties to the dispute must comply with the report either from the panel or from the AB within sixty days after the adoption of the report.Footnote 223 Supervising the progress of the implementation of the findings and recommendations of the panel and the AB reports, a party must provide a written report to the SEOM.Footnote 224 The issue of this implementation may be raised at the SEOM by any Member State at any time following their adoption.Footnote 225 Equally, it must be placed on the agenda of the SEOM meeting and must remain on the SEOM's agenda until the issue is resolved.Footnote 226

The existence of the protocol has significantly changed the DSM among ASEAN Members from political/diplomatic styles to judicial styles with a high level of legalism. Under the protocol, the Members agree to apply an “automatic” right, preventing the parties from blocking the referral of a dispute to a third-party adjudicator. Furthermore, the AB has a greater level of independence and institutional permanence. Specifically, the members of the AB are appointed for fixed terms, having expertise in law and international trade. While serving on the AB, they have to be available at all times and on short notice.Footnote 227 Regarding the fund, the Members agree to establish a revolving fund, separate from the ASEAN Secretariat's regular budget for administering the DSM.Footnote 228 Finally, in the enforcement mechanism, in addition to providing similar mechanisms to the DSU WTO, the Members will put the enforcement issue on the agenda of every SEOM conference until it has been resolved. This mechanism could give an influential sentence, as there will be a public shame for non-compliance, given the cultural tradition of the ASEAN Members.Footnote 229

Although the ASEAN DSM seems ideal, there have been some concerns on this DSM. The protocol does not regulate public participation and how the report from the panel or the AB will be enforced in a national court. As regards transparency, only limited information regarding the DSM is publicly available. In addition, there is no provision on the choice of forum. Finally, scholars have not been able to analyze the effectiveness of the ASEAN DSM because it has never been invoked.Footnote 230 Nevertheless, the existence of the ASEAN DSM that is comparable to the DSU WTO has been an important bridge for ASEAN Members to participate in the WTO, particularly while having a dispute with other WTO Members. Equally, the presence of the ASEAN DSM will increase Members’ knowledge and experience while formulating the DSM in PTAs with other countries, both as an individual country and a Member of ASEAN.

(b) Indonesia PTAs as a Member of ASEAN

As a Member of ASEAN, Indonesia concluded PTAs with China (2002),Footnote 231 India (2003),Footnote 232 Korea (2005),Footnote 233 Japan (2008),Footnote 234 and Australia and New Zealand (2009).Footnote 235 All these PTAs contained the DSM, reflecting the judicial styles, with a high level of legalism. Some provisions are comparable with the ASEAN DSM, although these PTAs have no appellate review mechanism.

The DSM is started when any party requests consultations with any other party in relation to any dispute arising under the agreement.Footnote 236 The parties may also request good offices, conciliation, and mediation that are applied voluntarily.Footnote 237 If the consultations fail to resolve a dispute within sixty days, the complaining party may submit a written request to the responding party for establishing an arbitral panel.Footnote 238 In addition, those PTAs have allowed the participation of third parties that have a substantial interest in a dispute as long as the responding party agrees.Footnote 239

Regarding the composition of arbitral panels, an arbitral panel comprises three arbitrators wherein each party to the dispute appoints one arbitrator. Both parties should endeavour to agree on the third arbitrator. There is a requirement with respect to the appropriate level of expertise or experience in law and international trade.Footnote 240 If the parties fail to appoint the third arbitrator who will serve as the chair, the members of the arbitral panel will request the Director-General of the WTO to appoint the chair.Footnote 241 In the ASEAN-China FTA, there is an additional explanation wherein if one of the parties is a non-WTO Member, the parties will request the President of the International Court of Justice to appoint the chair.Footnote 242 Unlike other PTAs, the ASEAN-India FTA does not involve the WTO for appointing the third arbitrator. Hence, the parties should consult each other for jointly appointing the chair within a further period of thirty days.Footnote 243

There are some basic principles in the proceedings of arbitral panels. These include the following: (1) the right to a minimum of one hearing before the arbitral panel; (2) an equal opportunity for both parties to the dispute to deliver initial and rebuttal submissions; (3) a judicious opportunity for both parties to submit comments on the interim report; and (4) the shielding of confidential information.Footnote 244 Within ninety days from the date of its establishment, the arbitral panel provides an interim report / draft award / draft report that contains, among other things (1) a descriptive part summarizing the opinions of the parties; and (2) the panel's findings on the facts of the dispute and on the applicability of the provisions of the agreements.Footnote 245

The arbitral panel should provide a final report within 120 days from the date of its establishment and within thirty days from the presentation of an interim report. For transparency, this final report will be publicly available within ten days after both parties receive the report.Footnote 246 The ASEAN-ANZ FTA provides different timetables wherein the arbitral process must not exceed nine months from the date of establishment until the date of the final report.Footnote 247 Next, the final report is final and binding on the parties to the dispute and is not subject to appeal.

Like the ASEAN DSM, those PTAs have no regulation on public participation. Furthermore, there is no provision on how the report from the arbitral panels will be executed in a national court. In addition, only limited information with respect to the proceedings of the DSM is publicly available. Only the ASEAN-ANZ FTA includes the provision of choice of forum.Footnote 248 Finally, the effectiveness of the ASEAN DSM has not been able to be analyzed as it has never been invoked.

(c) Indonesia-Japan EPA

The Indonesia-Japan Economic Partnership Agreement [EPA] 2007 is the first Indonesian PTA in which it, as an individual country, adopts a rules-oriented approach, with a high level of legalism. Almost all provisions are comparable with the ASEAN PTAs described above. Nevertheless, the difference of this PTA is the mechanism by which the third arbitrator is decided upon. Specifically, this PTA does not involve the Director-General of the WTO in appointing the third arbitrator if the parties in the dispute fail to do so. They have another fifteen days to choose the third arbitrator from the list of candidates available.Footnote 249

This agreement has been under ongoing revision and negotiation and was formally signed on 4 March 2019.Footnote 250 As there is no significant discussion on the DSM, this revision does not affect the method of resolving disputes. The main issue of this process is the mutual commitment to open more access for trade in goods and services.Footnote 251 Furthermore, both countries agree to co-operate in the manufacturing industry sector through the establishment of a new manufacturing industry development centre, covering the automotive, electronics, and textile sectors.Footnote 252 It seems that Indonesia applies double tracts because it already has the Indonesia-Japan EPA, but Indonesia with other ASEAN countries also has the ASEAN-Japan FTA. However, some issues have not been covered yet under the ASEAN-Japan FTA so that they have been negotiated intensively under the Indonesia-Japan EPA, for example co-operation in employment sectors where Indonesia seeks more access to labour in Japan's tourism sector.Footnote 253

The establishment of the ASEAN DSM, along with the conclusion of ASEAN PTAs with other countries, have encouraged the rise of judicial styles of the DSM in Indonesia's PTAs. As an ASEAN Member, Indonesia has PTAs which have adopted similar DSM provisions. Moreover, there has been an emulation effect,Footnote 254 wherein the previous judicial PTAs of ASEAN PTAs considerably influenced the subsequent ASEAN PTAs. The fact that the Indonesia-Japan EPA adopts a similar DSM provision with the ASEAN PTAs reflects how the “emulation effect” also inspires Indonesia when concluding bilateral PTAs as an individual country.

(d) Indonesia–Australia CEPA

A very new agreement signed by Indonesia was with its neighbouring country, Australia. This agreement, which was known as the Indonesia-Australia Comprehensive Economic Partnership [IA-CEPA], was finally signed on 4 March 2019 amid tumultuous diplomatic relations and mutual suspicion between the two countries.Footnote 255 Australia was disappointed with the imposition of the death penalty on two of its citizens who had been convicted of drug offences.Footnote 256 Meanwhile, Indonesia was frustrated by the fact that Australia had spied on the Indonesian cabinet.Footnote 257 In November 2018, Indonesia postponed the signatory process of this agreement, complaining about Australia's measure that supported the relocation of Israel's capital from Tel Aviv to Jerusalem.Footnote 258

Concerning international trade, historically both countries hardly traded with each other as their commodities were not strongly complementary.Footnote 259 This condition continued in the 1970s and 1980s. Although trade in real terms had grown, aggregate Australia-Indonesia trade remained insignificant, growing from US$73m in 1970 to US$642m in 1987.Footnote 260 In 2018, according to the Department of Foreign Affairs and Trade of Australia, Australia's trade with Indonesia was worth US$16.8bn, making Indonesia its thirteenth largest two-way trading partner.Footnote 261 Nevertheless, Australia recognized Indonesia's position as the largest economy in Southeast Asia and the sixteenth largest economy in the world in 2017,Footnote 262 making it worthwhile to conclude a PTA with Indonesia. Furthermore, Indonesia had a population of 262 million people, with 52 million people in the growing middle class.Footnote 263

With Australia, Indonesia seems to apply double tracks, through ASEAN in the ASEAN-ANZ FTA 2009 and as an individual country in 2019. However, it is not completely true as the following issues are only covered under the Indonesia-Australia EPA. In vocational education, Indonesia has allowed the presence of Australian suppliers up to sixty-seven percent ownership to open technical and vocational education in Indonesia.Footnote 264 Next is the work and holiday arrangement, where both parties agree to allow Australian and Indonesian travellers to work and holiday in the other country for up to twelve months.Footnote 265 Australia will grant work and holiday visas for Indonesians, expanding the current 1,000 places to 5,000 by the sixth year after the entry into force of the Indonesia-Australia CEPA.Footnote 266

The Indonesia-Australia CEPA is the second Indonesia PTA in which it, as an individual country, adopts a rules-oriented approach, with a high level of legalism. Almost all provisions are comparable with the ASEAN's PTAs described above. Some specific reasons explain why Indonesia has adopted this approach.

Historically, as two neighbouring countries, Indonesia and Australia have been involved in a “love-hate relationship”. Since the independence of Indonesia in 1945, at least, the two biggest cases that reflected this kind of relationship were over Papua and East Timor, in which Indonesia accused Australia of intervention over its territory and sovereignty. In the dispute between Indonesia and the Netherlands over Papua,Footnote 267 Australia strongly opposed the inclusion of Papua within Indonesia's territory.Footnote 268 Australia had a vital interest in the economic and political stability of Indonesia, and felt that this inclusion would endanger Indonesia's stability and adversely affect Australia. In 2003, when Australian Prime Minister John Howard visited Jakarta, President Megawati and her ministers questioned the support of some groups in Australia for the independence of Papua, and whether the Australian government was also involved in funding these groups.Footnote 269

In the case of East Timor in late 1999, Australia's intervention led to the worst relationship between the two countries in three decades.Footnote 270 Australia played the role of “regional policeman”,Footnote 271 claiming that Indonesia had brutally occupied East Timor since 1975, and then initiating a movement to support the independence of East Timor.Footnote 272 Opposing Australia's intervention, the Prime Minister of Malaysia, Mahathir Mohamad, reasoned that Australia was not “Asian” in any sense and therefore “its attempts to become more involved in Asian affairs should be resisted by Asian countries”.Footnote 273

The history of this “love-hate relationship” may influence the negotiation of this PTA, making the presence of the DSM crucial in establishing mutual trust between two countries. From the perspective of Indonesia, some experts analyze how the spirit of protectionism has increased in the era of Joko Widodo's administration.Footnote 274 Hence, the inclusion of the DSM will also protect the interest of Australia in preventing unilaterally adverse policies from Indonesia as a reflection of the spirit of that protectionism.

The second reason why the Indonesia-Australia CEPA has adopted a rules-oriented approach, with a high level of legalism, is the successful implementation of the ASEAN-Australia-New Zealand FTA. This FTA has inspired the negotiation process of the Indonesia-Australia CEPA. The Preamble of this agreement expressly states that the agreement recalls “the positive contribution made to the trade and investment relationship between the Parties by the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area”.Footnote 275

In the Indonesia-Australia CEPA, almost all DSM provisions are the same as the DSM provisions under the ASEAN-ANZ FTA. For example, provisions on the choice of forum;Footnote 276 the establishment and reconvening of panels;Footnote 277 the functions of panels;Footnote 278 panel procedures;Footnote 279 the interim and final reports;Footnote 280 the suspension and termination of proceedings;Footnote 281 compliance review;Footnote 282 and the compensation and suspension of concessions.Footnote 283 The fact that the Indonesia-Australia CEPA adopts a similar DSM provision to the ASEAN PTAs, that is the ASEAN-Australia-New Zealand FTA, reflects how the “emulation effect”Footnote 284 has inspired Indonesia and Australia when concluding a bilateral PTA as individual countries.

Lastly, what is totally different from the Indonesia-Australia CEPA compared to previous ASEAN PTAs is the provision to require the panels when they interpret this agreement to “consider relevant interpretations in reports of WTO panels and the Appellate Body adopted by the WTO Dispute Settlement Body”.Footnote 285 The inclusion of this provision seems to take into account two ongoing disputes that involve Indonesia and Australia in the WTO. Coincidentally, these disputes occurred when this agreement was being negotiated. Specifically, in Australia-Tobacco Plain Packaging, Indonesia protested against Australian laws and regulations that imposed restrictions on geographical indications, trademarks, and other plain packaging stipulations on tobacco products and packaging.Footnote 286 Indonesia claimed that this measure conflicted with Australia's obligations under the Trade-Related Aspects of Intellectual Property Rights [TRIPS] and Technical Barriers to Trade [TBT] Agreements.Footnote 287 In Australia-Anti-Dumping Measures on A4 Copy Paper, Indonesia accused Australia of violating the Anti-Dumping Agreement, as it had imposed an anti-dumping order on A4 copy paper from Indonesia.Footnote 288 This case is still waiting for the final report from the panel that is expected to be issued in the end of 2019.Footnote 289

From Indonesia's perspective, in the Indonesia-Australia CEPA, the application of the rules-oriented approach, with a high level of legalism, is not only because of the influence of its trade partner, that is Australia, and its participation in ASEAN PTAs, which is the ASEAN-Australia-New Zealand FTA, but also the influence of the ongoing WTO dispute between Indonesia and Australia.

IV. CONCLUSION

The DSM in Indonesia's PTAs has shifted from the political/diplomatic styles to a more judicial style, driven by the transformation of the DSM from the GATT to the WTO; Indonesia's involvement in ASEAN; trade partners’ influence; the presence of domestic factors; and the ongoing WTO dispute.

First, how Indonesia's PTAs incorporate the DSM is significantly influenced by the dynamic development of the DSM under the GATT and the WTO. Following the style and character of the DSM under the GATT, most of Indonesia's PTAs in this era adopted political/diplomatic styles. After the WTO was formed in 1994, the rise of the judicial styles of the DSM with a high level of legalism had occurred in Indonesia's PTAs, not only when Indonesia concluded PTAs as an individual country, but also as a member of ASEAN. Thereafter, Indonesia's involvement in ASEAN has considerably shaped the styles of the DSM of its PTAs. While concluding PTAs as a Member of ASEAN, all of Indonesia's PTAs have adopted judicial styles of the DSM with a high level of legalism. Furthermore, reflecting the “emulation effect”, the high level of legalism of the DSM in previous Indonesia PTAs has had a beneficial effect on the subsequent PTAs.

The influence of trade partners is the next factor in determining the style of the DSM. After the GATT, Indonesia had two types of PTAs. The case of the Indonesia-Netherland PTA (1968) revealed an anti-mainstream trend because it was the only PTA that included the DSM in its provision. Interestingly, although the existence of the WTO has led to the rise of judicial styles of the DSM in almost all PTAs across the globe, not all Indonesian PTAs have adopted the DSM in their provisions, particularly if they involved trade partners from developing countries. The presence of domestic factors is also essential. Following the “democracy effect”, when the authoritarian regime with its overwhelming spirit of nationalism was dominant in Indonesia, the aftermath of its PTAs was mostly a political style, with a low level of legalism. After Indonesia became a more democratic country through the reformation process,Footnote 290 the rise of judicial styles of the DSM in its PTAs has occurred. Finally, as shown by the Indonesia-Australia CEPA (2019), the ongoing WTO dispute between Indonesia and Australia has led to the application of the rules-oriented approach, with a high level of legalism in Indonesia's PTAs.

Footnotes

*

Lecturer of Faculty of Law Udayana University, Indonesia; PhD Candidate Melbourne Law School, Australia. The author is grateful to the anonymous reviewers of the Journal.

1. North American Free Trade Agreement, 17 December 1992, 1994 C.T.S. 2 (entered into force 1 January 1994), preamble [NAFTA].

2. Free Trade Agreement Between the Government of Australia and the Government of the People's Republic of China, 17 June 2015, 2015 A.T.S. 15 (entered into force 20 December 2015), preamble [Australia-China FTA]. See also the preamble of Agreement on Comprehensive Economic Partnership Between the Republic of Indonesia and Australia, signed 4 March 2019 (not yet in force) [IA-CEPA], which states: “Resolving to create clear and mutually advantageous rules governing their trade and investment to promote a predictable, transparent and consistent commercial framework for business operations, minimise barriers, enhance economic efficiency and create a larger market with more opportunities for business.”

3. EVANS, David, “Bilateral and Plurilateral PTAs” in LESTER, Simon, MERCURIO, Bryan, and BARTELS, Lorand, eds., Bilateral and Regional Trade Agreements: Commentary and Analysis (Cambridge: Cambridge University Press, 2015), at 53.

4. The total number of the existing PTAs is available online at <http://rtais.wto.org/UI/publicsummarytable.aspx>.

5. Evans, supra note 3 at 56.

6. DÜR, Andreas and ELSIG, Manfred, eds., Trade Cooperation: The Purpose, Design and Effects of Preferential Trade Agreements (Cambridge: Cambridge University Press, 2015) at 2.

7. World Trade Organization, World Trade Report 2011: The WTO and Preferential Trade Agreements: From Co-existence to Coherence (Geneva: WTO, 2011) at 57 [WTO 1].

8. The Comprehensive Economic Cooperation Agreement Between Malaysia and India, 18 February 2011 (entered into force 1 July 2011) [Malaysia-India CECA].

9. WTO 1, supra note 7 at 56.

10. Trans-Pacific Strategic Economic Partnership, Brunei Darussalam-Chile-New Zealand-Singapore, 18 July 2005 (Brunei Darussalam, signed 2 August 2005) (entered into force 28 May 2006) (New Zealand and Singapore), 12 July 2006 (Brunei Darussalam), 8 November 2006 (Chile) [TPP].

11. WTO 1, supra note 7 at 62.

12. Footnote Ibid., at 63.

13. Molly LESHER and Sébastien MIROUDOT, “Analysis of the Economic Impact of Investment Provisions in Regional Trade Agreements”, OECD Trade Policy Working Paper No. 36, 11 July 2006.

14. See e.g. IA-CEPA, supra note 2, and TPP, supra note 10.

15. World Trade Organization, “Indonesia and the WTO”, online: WTO <https://www.wto.org/english/thewto_e/countries_e/indonesia_e.htm>.

16. The Cairns Group, “Background on the Cairns Group and the WTO Doha Round”, online: The Cairns Group <http://cairnsgroup.org/pages/wto_negotiations.aspx>.

17. World Trade Organization, “Groups in the Negotiations”, online: WTO <https://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm#grp025>.

18. Organization for Economic Co-operation and Development, “Globalization and Emerging Economies: Brazil, Russia, India, Indonesia, China and South Africa” (Paris: OECD, 2008) at 151.

19. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Bulgaria, 29 January 2004 (entered into force 3 April 2006).

20. IA-CEPA, supra note 2.

21. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Uzbekistan, 13 May 2008 (entered into force 30 September 2009).

22. Framework Agreement on Comprehensive Economic Co-operation Between the Association of South East Asian Nations and the People's Republic of China, 4 November 2002 (entered into force 1 July 2003) [ASEAN-China FTA].

23. Framework Agreement on Comprehensive Economic Cooperation Between the Republic of India and the Association of Southeast Asian Nations, 8 October 2003 (entered into force 1 July 2004) [ASEAN-India FTA].

24. Framework Agreement on Comprehensive Economic Cooperation Among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea, 13 December 2005 (entered into force 1 July 2006) [ASEAN-Korea FTA].

25. Agreement on Comprehensive Economic Partnership among Member States of the Association of Southeast Asia Nations and Japan, 31 March 2008 [ASEAN-Japan FTA].

26. Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, 27 February 2009 (entered into force 1 July 2009) [ASEAN-ANZ FTA].

27. Luo, YAN, “Dispute Settlement in the Proposed East Asia Free Trade Agreement: Lessons Learned from the ASEAN, the NAFTA, and the EU” in BARTELS, Lorand and ORTINO, Federico, eds., Regional Trade Agreements and the WTO Legal System (Oxford: Oxford University Press, 2006), at 420.

28. DAVEY, William J., “Dispute Settlement in the WTO and RTAs: A Comment” in BARTELS, Lorand and ORTINO, Federico, eds., Regional Trade Agreements and the WTO Legal System (Oxford: Oxford University Press, 2006), at 349.

29. MUNIN, Nellie, “The Evolution of Dispute Settlement Provisions in Israel's PTAs: Is There a Global Lesson?” (2010) 44 Journal of World Trade 385 at 393.

30. Footnote Ibid.

31. Footnote Ibid.

32. Footnote Ibid.

33. Footnote Ibid.

34. Claude CHASE, Alan YANOVICH, Jo-Ann CRAWFORD, and Pamela UGAZ, “Mapping of Dispute Settlement Mechanisms in Regional Trade Agreements—Innovative or Variations on a Theme”, World Trade Organization: Economic Research and Statistics Division, Staff Working Paper, 10 June 2013.

35. Footnote Ibid.

36. Footnote Ibid.

37. Footnote Ibid.

38. Footnote Ibid.

39. Footnote Ibid.

40. Footnote Ibid.

41. Footnote Ibid.

42. SMITH, James M., “The Politics of Dispute Settlement Design: Explaining Legalism in Regional Trade Pacts” (2000) 54 International Organization 137 at 155–9.

43. Footnote Ibid.

44. Footnote Ibid.

45. Footnote Ibid.

46. Footnote Ibid.

47. Footnote Ibid.

48. Footnote Ibid.

49. ALLEE, Todd and ELSIG, Manfred, “Dispute Settlement Provisions in PTAs: New Data and New Concepts” in DÜR, Andreas and ELSIG, Manfred, eds., Trade Cooperation: The Purpose, Design and Effects of Preferential Trade Agreements (Cambridge: Cambridge University Press, 2015), at 320.

50. JO, Hyeran and NAMGUNG, Hyun, “Dispute Settlement Mechanisms in Preferential Trade Agreements: Democracy, Boilerplates, and the Multilateral Trade Regime” (2012) 56 Journal of Conflict Resolution 1041 at 1041.

51. Footnote Ibid.

52. Footnote Ibid.

53. Footnote Ibid., at 1044.

54. Marrakesh Agreement Establishing the World Trade Organization, 15 April 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994), preamble [WTO Agreement].

55. MITCHELL, Andrew D. and LOCKHART, Nicolas J.S., “Legal requirements for PTAs under the WTO” in LESTER, Simon and MERCURIO, Bryan, Bilateral and Regional Trade Agreements Commentary and Analysis (Cambridge: Cambridge University Press, 2009), at 81.

56. Footnote Ibid.

57. General Agreement on Tariffs and Trade 1994, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994), art. XXIV:5 [GATT 1994].

58. Munin, supra note 29 at 389.

59. Footnote Ibid.

60. Footnote Ibid.

61. Footnote Ibid., art. XXII.

62. Footnote Ibid., art. XXIII.

63. JOHNS, Leslie, Strengthening International Courts: The Hidden Costs of Legalization (Ann Arbor, MI: University of Michigan Press, 2015) at 135.

64. The World Trade Organization, “Historic Development of the WTO Dispute Settlement System”, online: WTO <https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c2s1p1_e.htm> [WTO 2].

65. PORGES, Amelia and JACKSON, John H., “The WTO and the New Dispute Settlement” (1994) 88 American Society of International Law Proceedings 131 at 131–9.

66. Munin, supra note 29 at 388.

67. BUSCH, Marc L., “Democracy, Consultation, and the Paneling of Disputes under GATT” (2000) 44 Journal of Conflict Resolution 425 at 428.

68. WTO 2, supra note 64.

69. HOEKMAN, Bernard and KOSTECKI, Michel, The Political Economy of the World Trading System: WTO and Beyond (Oxford: Oxford University Press, 2001) at 75.

70. Johns, supra note 63 at 137.

71. HUDEC, Robert E., The GATT Legal System and World Trade Diplomacy (New York: Praeger, 1975) at 219.

72. BOSSCHE, Peter Van den, The Law and Policy of the World Trade Organization (Cambridge: Cambridge University Press, 2010) at 169.

73. Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes, Marrakesh Agreement Establishing the World Trade Organization, annex 2, 1869 U.N.T.S. 401, 33 I.L.M. 1226 (1994), art. 3.3 [DSU].

74. Son, NGUYEN Tan, “Towards a Compatible Interaction Between Dispute Settlement Under the WTO and Regional Trade Agreements” (2008) 5 Macquarie Journal of Business Law 113

75. DSU, supra note 73, art. 4.3.

76. Footnote Ibid., arts. 4.7, 4.8.

77. Footnote Ibid., arts. 8.4, 8.5.

78. ZANGL, Bernhard, “Judicialization Matters! A Comparison of Dispute Settlement Under GATT and the WTO” (2008) 52 International Studies Quarterly 825.

79. DSU, supra note 73, art. 16.4.

80. Footnote Ibid.

81. Footnote Ibid., art. 17.1.

82. JOHANNESSON, Louise and MAVROIDIS, Petros C., “The WTO Dispute Settlement System 1995–2016: A Data Set and Its Descriptive Statistics” (2017) 51 Journal of World Trade 357.

83. DSU, supra note 73, art. 17.4.

84. Footnote Ibid., art. 21.3.

85. Footnote Ibid., art. 22.

86. Footnote Ibid., art. 22.7.

87. ZIMMERMANN, Thomas A., “WTO Dispute Settlement at Ten: Evolution, Experiences & Evaluation” (2005) 60 Swiss Review of International Economic Relations 27 at 53.

88. LOCKHART, John and VOON, Tania, “Review of the Appellate Review in the WTO Dispute Settlement System” (2005) 6 Melbourne Journal of International Law 474 at 476.

89. GUZMAN, Andrew T. and PAUWELYN, Joost H.B., International Trade Law, 2nd ed. (South Holland: Wolters Kluwer, 2012) at 127. See also BUTLER, Nicolette, “In Search of a Model for the Reform of International Investment Dispute Resolution: An Analysis of Existing International and Regional Dispute Settlement Mechanisms” in KALICKI, Jean E. and JOUBIN-BRET, Anna, eds., Reshaping the Investor-State Dispute Settlement System: Journeys for the 21st Century (Leiden: Nijhoff, 2015), at 355.

90. Chad P. BOWN, “Participation in WTO Dispute Settlement: Complainants, Interested Parties and Free Riders” (2005) 19 World Bank Economic Review 287 at 293.

91. World Trade Organization, “Map of Disputes Between WTO Members”, online: WTO <https://www.wto.org/english/tratop_e/dispu_e/dispu_maps_e.htm>.

92. HORLICK, Gary N. and FENNELL, Katherine, “WTO Dispute Settlement from the Perspective of Developing Countries” in LEE, Yong-Shik, HORLICK, Gary N., CHOI, Won-Mog, and BROUDE, Tomer, eds., Law and Development Perspective on International Trade Law: The Law and Development Institute (Cambridge: Cambridge University Press 2011), at 164.

93. ISLAM, Rafiqul M., International Trade Law of the WTO (Oxford: Oxford University Press, 2006) at 428.

94. Zangl, supra note 78 at 825–54.

95. See, for example, BOWN, Chad P., “On the Economic Success of GATT/WTO Dispute Settlement” (2004) 86 Review of Economics and Statistics 811 at 811.

96. Davey, supra note 28 at 355.

97. Smith, supra note 42.

98. Agreement on the Establishment of a Free Trade Area Between the Government of Israel and the Government of the United States of America, 22 April 1985 (entered into force 19 August 1985), art. 19.

99. Revised Treaty of Chaguaramas Establishing the Caribbean Community Including the Caricom Single Market and Economy, 5 July 2001 (entered into force 4 February 2002), art. 188-224 [CARICOM].

100. Martina METZGER, “Regional Cooperation and Integration in Sub-Saharan African”, UNCTAD, Discussion Papers No. 189, September 2008, at 26.

101. Yan, supra note 27 at 431.

102. Nguyen, supra note 74.

103. Davey, supra note 28 at 349.

104. David MORGAN, “Dispute Settlement under PTAs: Political or Legal?”, Legal Studies Research Paper No. 341, Melbourne Law School, 2007, at 252.

105. Footnote Ibid.

106. Economic Partnership, Political Coordination and Cooperation Agreement Between the European Community and its Member States, of the one Part, and the United Mexican States, of the other Part, 27 February 2001(entered into force 1 March 2001), art. 50.

107. Agreement Establishing an Association Between the European Community and the Republic of Chile, 18 November 2002 (entered into force 1 February 2003), art. 184.

108. Morgan, supra note 104 at 259.

109. Davey, supra note 28 at 354.

110. Footnote Ibid., at 355.

111. Morgan, supra note 104 at 13.

112. Footnote Ibid., at 15.

113. Davey, supra note 28 at 355.

114. Trade Agreement Between the Republic of Indonesia and Japan, 7 August 1952 (entered into force 7 August 1952) [Indonesia-Japan PTA 1].

115. Trade Agreement Between the Republic of Indonesia and the Republic of India, 30 January 1953 (entered into force 30 January 1953) [Indonesia-India PTA 1].

116. Indonesia-Japan PTA 1, supra note 114, art. I.

117. Indonesia-India PTA 1, supra note 115, art. III.

118. Indonesia-Japan PTA 1, supra note 114, art. II.

119. Trade Agreement Between the Republic of Indonesia and the People's Republic of China, 30 November 1953.

120. Trade Agreement Between the Republic of Indonesia and the Islamic Republic of Pakistan, 7 February 1953 (entered into force 1 January 1953).

121. Trade Agreement Between the Republic of Indonesia and the Republic of Iraq, 4 April 1960 (entered into force 14 December 1961).

122. Long-term Trade Agreement Between the Republic of Indonesia and the People's Republic of Bulgaria, 5 May 1961.

123. Long Term Trade Agreement Between the Republic of Indonesia and the Rumanian People's Republic for the period 1963–1965, 11 October 1962 (entered into force 1 January 1963).

124. The Long Term Trade Agreement Between the Government of the Republic of Indonesia and Hungarian People's Republic, 15 April 1965 (entered into force 15 April 1965).

125. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Commonwealth of Australia, 14 November 1972 (entered into force 14 November 1972), art. 2.

126. Footnote Ibid.

127. Trade Agreement Between the Government of the Republic of Indonesia and the Government of Malaysia, 16 October 1973 (entered into force 16 October 1973).

128. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of the Philippines, 8 August 1974 (entered into force 8 August 1974).

129. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Socialist Republic of Romania, 8 March 1975 (entered into force 8 March 1975).

130. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Czech Republic, 23 May 1994 (entered into force 14 June 2000).

131. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Independent State of Papua New Guinea, 15 September 2000.

132. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Slovak Republic, 19 June 2002.

133. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Bulgaria, 29 January 2004 (entered into force 3 April 2006).

134. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Kingdom of Thailand, 16 November 2011 (entered into force 3 August 2012).

135. IA-CEPA, supra note 2.

136. Indonesia-Bulgaria PTA, supra note 133, art. 2.

137. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Uzbekistan, 13 May 2008 (entered into force 30 September 2009).

138. Footnote Ibid., art. 2.

139. Agreement on ASEAN Preferential Trading Arrangements, 24 February 1977 (entered into force 25 August 1977).

140. Agreement on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA), 28 January 1992 (entered into force 28 January 1992).

141. Footnote Ibid., art. 1.

142. Footnote Ibid., art. 2.

143. Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015, 13 January 2007 (entered into force 13 January 2007).

144. ASEAN Trade in Goods Agreement, 26 February 2009 (entered into force 30 April 2010).

145. Footnote Ibid.

146. ASEAN-China FTA, supra note 22.

147. ASEAN-India FTA, supra note 23.

148. ASEAN-Korea FTA, supra note 24.

149. ASEAN-Japan FTA, supra note 25.

150. ASEAN-ANZ FTA, supra note 26.

151. Footnote Ibid., art. 1.

152. ASEAN-Japan FTA, supra note 25, art. 3.

153. Long Term Trade Agreement Between the Republic of Indonesia and the Government of the United Arab Republic, 30 September 1965, art. 13.

154. Footnote Ibid.

155. Indonesia-Japan PTA, supra note 114, art. 6.

156. Indonesia-Romania PTA, supra note 129, art. 5.

157. Trade Agreement Between the Republic of Indonesia and the Commonwealth of Australia, 17 December 1959 (entered into force 1 July 1959), art. 7.

158. Trade Agreement Between the Republic of Indonesia and the Republic of Turkey, 14 September 1959 (entered into force 14 September 1959), art. 5.

159. Indonesia-Bulgaria PTA, supra note 133, art. 9.

160. Agricultural Commodities Agreement Between the Republic of Indonesia and the Government of the United States of America, 26 October 1961 (entered into force 26 October 1961), art. 5.

161. Trade Agreement Between the Republic of Indonesia and the Democratic People's Republic of Korea, 15 November 1963, art. 12.

162. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Commonwealth of Australia, 14 November 1972 (entered into force 14 November 1972), art. 10.

163. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of the Philippines, 8 August 1974 (entered into force 8 August 1974), art. 9.

164. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Socialist Republic of Romania, 8 March 1975 (entered into force 8 March 1975), art. 10.

165. Agreement on Trade and Economic Cooperation Between the Government of the Republic of Indonesia and the Government of the Hashemite Kingdom of Jordan, 3 April 1986, art. 8.

166. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Czech Republic, 23 May 1994, art. 11.

167. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Chile, 2 September 1992, art. 9.

168. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Suriname, 13 May 1994, art. 9.

169. Trade Agreement Between the Government of the Republic of Indonesia and the Socialist Republic of Vietnam, 23 March 1995, art. 7.

170. Trade Agreement Between the Government of the Republic of Indonesia and the Government of Ukraine, 11 April 1996, art. 9.

171. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Kingdom of Cambodia, 18 February 1997 (entered into force 18 February 1997), art. 9.

172. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Yemen, 20 February 1998, art. 12.

173. Agreement on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA), 28 January 1992 (entered into force 28 January 1992), art. 8.

174. Footnote Ibid.

175. Jo and Namgung, supra note 50 at 1046.

176. Footnote Ibid., at 1047.

177. World Trade Organization, “Republic of Indonesia Permanent Mission to GATT, ‘Statement of Offers as a Contribution to the Objective of the Trade Negotiation by the Government of Indonesia: Additional Paragraph’” (21 December 1965), online: WTO <https://www.wto.org/english/docs_e/gattbilaterals_e/Kennedy_1964_1967/500147-0006/500147-0006.pdf>.

178. Footnote Ibid.

179. Footnote Ibid.

180. Footnote Ibid.

181. John H JACKSON, World Trade and The Law of GATT (Indianapolis, IN: Bobbs-Merrill Company, 1969) at 89.

182. Footnote Ibid., at 98.

183. Footnote Ibid.

184. World Trade Organization, “Indonesia and the WTO”, online: WTO <https://www.wto.org/english/thewto_e/countries_e/indonesia_e.htm>.

185. Jo and Namgung, supra note 50 at 1051.

186. Footnote Ibid., at 1053.

187. Agreement on Economic Cooperation Between the Government of the Republic of Indonesia and the Government of the Kingdom of the Netherlands, 7 July 1968, art. 22.

188. Footnote Ibid.

189. Footnote Ibid.

190. Footnote Ibid.

191. Footnote Ibid.

192. Footnote Ibid.

193. Footnote Ibid.

194. Jo and Namgung, supra note 50 at 1049.

195. Organization for Economic Co-operation and Development, OECD Investment Policy Reviews Indonesia 2010 (Paris: OECD, 2010) at 40–1.

196. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the State of Kuwait, 30 May 2007, art. 9.

197. Footnote Ibid.

198. Agreement on Economic Cooperation Between the Government of the Republic of Indonesia and the Government of the Slovak Republic, 2 May 2006, art. 6.

199. Agreement Between the Government of the Republic of Indonesia and the Government of the Czech Republic on Economic Cooperation, 12 November 2007, art. 8.

200. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Republic of Uzbekistan, 13 May 2008 (entered into force 30 September 2009), art. 13.

201. Agreement Between the Government of the Republic of Indonesia and the Government of the People's Republic of China on Expanding and Deepening Bilateral Economic and Trade Cooperation, 29 April 2011 (entered into force 29 April 2011), art. 10.

202. Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Kingdom of Thailand, 16 November 2011 (entered into force 3 August 2012), art. 13.

203. Preferential Trade Agreement Between the Government of the Republic of Indonesia and the Government of the Islamic Republic of Pakistan, 3 February 2012, art. VI.

204. CHO, Sungjoon and KURTZ, Jürgen, “Legalizing the ASEAN Way: Adapting and Reimagining the ASEAN Investment Regime” (2018) 66 American Journal of Comparative Law 233 at 252. See also BAGULAYA, Jose Duke, “ASEAN as Wayang Kulit: A Critique of the Constitutional, Extra-constitutional, and Practical Fetters of ASEAN” (2019) 9 Asian Journal of International Law 275 at 297.

205. MERRILLS, John, “The Means of Dispute Settlement” in EVANS, Malcolm, ed., International Law (Oxford: Oxford University Press, 2006), at 547–8.

206. TAN, Lay Hong, “Will ASEAN Economic Integration Progress Beyond a Free Trade Area?” (2004) 53 International and Comparative Law Quarterly 935 at 949.

207. Indonesia-Thailand FTA, supra note 202, art. 13.

208. ASEAN Protocol on Enhanced Dispute Settlement Mechanism, 29 November 2004 (entered into force 29 November 2004), online: ASEAN <http://asean.org/?static_post=asean-protocol-on-enhanced-dispute-settlement-mechanism>.

209. Yan, supra note 27 at 431.

210. ASEAN DSM, supra note 208, art. 3.

211. Footnote Ibid., art. 5.

212. Footnote Ibid.

213. Footnote Ibid., art. 8.

214. Yan, supra note 27.

215. ASEAN DSM, supra note 208, art. 9.

216. Footnote Ibid., art. 12(1).

217. Footnote Ibid., art. 12(12).

218. Footnote Ibid., art. 12(2).

219. Footnote Ibid., art. 12(3).

220. Footnote Ibid., art. 12(13).

221. Yan, supra note 27.

222. ASEAN DSM, supra note 208, art. 14.

223. Footnote Ibid., art. 15(1).

224. Footnote Ibid., art. 15(4).

225. Footnote Ibid., art. 15(6).

226. Footnote Ibid.

227. Footnote Ibid., art. 12(3).

228. Footnote Ibid., art. 17.

229. Yan, supra note 27.

230. Walter WOON, “Dispute Settlement in ASEAN” Centre for International Law (17 October 2011), online: NUS <https://cil.nus.edu.sg/wp-content/uploads/2010/08/DISPUTE-SETTLEMENT-IN-ASEAN-KSIL-ProfWalterWoon.pdf>.

231. ASEAN-China FTA, supra note 22.

232. ASEAN-India FTA, supra note 23.

233. ASEAN-Korea FTA, supra note 24.

234. ASEAN-Japan FTA, supra note 25.

235. ASEAN-ANZ FTA, supra note 26.

236. ASEAN-India FTA, art. 4; ASEAN-China FTA, art. 4; ASEAN-Korea FTA, art. 3; ASEAN-Japan FTA, art. 62; ASEAN-ANZ FTA, ch. 17, art. 6.

237. ASEAN-India FTA, art. 5; ASEAN-China FTA, art. 5; ASEAN-Korea FTA, art. 4; ASEAN-Japan FTA, art. 63; ASEAN-ANZ FTA, ch. 17, art. 7.

238. ASEAN-India FTA, art. 6; ASEAN-China FTA, art. 6; ASEAN-Korea FTA, art. 5; ASEAN-Japan FTA, art. 64; ASEAN-ANZ FTA, ch. 17, art. 8.

239. ASEAN-India FTA, art. 8; ASEAN-China FTA, art. 8; ASEAN-Korea FTA, art. 7; ASEAN-Japan FTA, art. 66; ASEAN-ANZ FTA, ch. 17, art. 10.

240. ASEAN-India FTA, art. 7; ASEAN-China FTA, art. 7; ASEAN-Korea FTA, art. 6; ASEAN-Japan FTA, art. 65; ASEAN-ANZ FTA, ch. 17, art. 11

241. ASEAN-China FTA, art. 7; ASEAN-Korea FTA, art. 6(3); ASEAN-Japan FTA, art. 65(3); ASEAN-ANZ FTA, ch. 17, art. 11(7).

242. ASEAN-China FTA, supra note 22, art. 7(3)

243. ASEAN-India FTA, supra note 23, art. 7(3).

244. ASEAN-India FTA, art. 11; ASEAN-China FTA, art. 9; ASEAN-Korea FTA, art. 10; ASEAN-Japan FTA, art. 68; ASEAN-ANZ FTA, ch. 17, art. 13.

245. ASEAN-India FTA, art. 12; ASEAN-China FTA, art. 9(7); ASEAN-Korea FTA, art. 11(2); ASEAN-Japan FTA, art. 69; ASEAN-ANZ FTA, ch. 17, art. 13(13).

246. ASEAN-India FTA, art. 13; ASEAN-China FTA, art. 9(8); ASEAN-Korea FTA, art. 12; ASEAN-Japan FTA, art. 69(6).

247. ASEAN-ANZ FTA, supra note 26, ch. 17, art. 13(3).

248. Footnote Ibid., ch. 17, art. 5.

249. Agreement Between the Republic of Indonesia and Japan for an Economic Partnership Agreement, 20 August 2007 (entered into force 1 July 2008), art. 142(6) [Indonesia-Japan EPA].

250. “New Indonesian-Japanese deal to be signed in late 2019” The Jakarta Post (3 July 2019), online: The Jakarta Post <https://www.thejakartapost.com/news/2019/07/03/new-indonesian-japanese-deal-to-be-signed-in-late-2019.html>.

251. Footnote Ibid.

252. “Amendment of General Review of IJEPA Targeted Completion in 2019 End” Antaranews (2 July 2019), online: Antaranews <https://en.antaranews.com/news/128199/amendment-of-general-review-of-ijepa-targeted-completion-in-2019-end>.

253. “Indonesia Postpones IJEPA’ Completion to the end of 2019” The Insider Stories (2 July 2019), online: The Insider Stories <https://theinsiderstories.com/indonesia-postpones-ijepa-completion-to-the-end-of-2019/>.

254. Jo and Namgung, supra note 50 at 1048.

255. “Indonesia-Australia Finally Sign Free Trade Agreement” The Australian (4 March 2019), online: The Australian <https://www.theaustralian.com.au/national-affairs/foreign-affairs/indonesia-australia-finally-sign-freetrade-agreement/news-story/f93dcc1f01ceb196f99fae84a1e806be>.

256. Amy MAGUIRE and Shelby HOUGHTON, “The Bali Nine, Capital Punishment and Australia's Obligation to Seek Abolition” (2016) 28 Current Issues Criminal Justice 67 at 67.

257. The Australian, supra note 255.

258. Footnote Ibid.

259. ARNDT, H.W., “Trade Relations between Australia and Indonesia” (1968) 44 Economic Record 168 at 168.

260. HILL, Hal, “Australia and Indonesia: Challenges and Opportunities in a ‘Small’ Economic Relationship” (1990) 6 ASEAN Economic Bulletin 283 at 284.

261. Department of Foreign Affairs and Trade of Australia, Why has the Australian Government Negotiated a Comprehensive Economic Partnership Agreement with Indonesia?, online: DFAT <https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/Pages/why-has-the-australian-government-negotiated-a-comprehensive-economic-partnership-agreement-with-indonesia.aspx>.

262. Footnote Ibid.

263. Footnote Ibid.

264. Department of Foreign Affairs and Trade Australia, “Indonesia-Australia Comprehensive Partnership Agreement, Outcome: Skills Development” (last updated 27 June 2019), online: DFAT <https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/outcomes-documents/Pages/outcomes-skills-development.aspx>.

265. Footnote Ibid.

266. Footnote Ibid.

267. VANDENBOSCH, Amry and VANDENBOSCH, Mary Belle, Australia Faces Southeast Asia: The Emergence of a Foreign Policy (Kentucky, KY: University Press of Kentucky, 1967) at 41.

268. CHAUVEL, Richard, “Australia's Strategic Environment: The Problem of Papua” (2004) 11 Journal of Policy Analysis and Reform at 40–1. See also UMETSU, Hiroyuki, “Australia's Response to the West New Guinea Dispute, 1952–53” (2004) 39 Journal of Pacific History at 59.

269. Chauvel, ibid., at 48.

270. CHALK, Peter, “Australia and Indonesia: Rebuilding Relations After East Timor” (2001) 23 Contemporary Southeast Asia at 234.

271. MCDOUGALL, Derek, “Intervening in the Neighbourhood: Comparing Australia's Role in East Timor and the Southwest Pacific” (2007) 62 International Journal at 868.

272. HOOD, Alisa Newman, “Australia Adrift: The Timor Sea Oil & Gas Dispute” (2005) 12 Brown Journal of World Affairs 239 at 243.

273. MCDOUGALL, Derek, “Australia and Asia-Pacific Security Regionalism: From Hawke and Keating to Howard” (2001) 23 Contemporary Southeast Asia 81 at 81.

274. PATUNRU, Arianto A., “Rising Economic Nationalism in Indonesia” (2018) 35 Journal of Southeast Asian Economies, Special Issue: The Indonesian Economy in Transition: Policy Challenges in the Jokowi Era and Beyond, 335 at 345.

275. IA-CEPA, supra note 2, preamble.

276. Footnote Ibid., art. 20.4.

277. Footnote Ibid., art. 20.8.

278. Footnote Ibid., art. 20.9.

279. Footnote Ibid., art. 20.10.

280. Footnote Ibid., art. 20.15.

281. Footnote Ibid., art. 20.11.

282. Footnote Ibid., art. 20.13.

283. Footnote Ibid., art. 20.14.

284. Jo and Namgung, supra note 50 at 1048.

285. IA-CEPA, supra note 2, art. 20.3.

286. World Trade Organization, “Australia—Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging” (28 August 2018), online: WTO <https://www.wto.org/english/tratop_e/dispu_e/cases_e/DS467_e.htm>.

287. Footnote Ibid.

288. World Trade Organization, “Australia—Anti-Dumping Measures on A4 Copy Paper”, online: WTO <https://www.wto.org/english/tratop_e/dispu_e/cases_e/DS529_e.htm>.

289. Footnote Ibid.

290. The reformation process reflects the transitional process of Indonesia's governmental systems from authoritarian rule to democracy by amending Indonesia's constitution. Some basic reforms are the restriction of presidential powers, the adoption of decentralization, people's sovereignty, direct presidential election, and legislative and judicial reform. See e.g. INDRAYANA, Denny, Indonesian Constitutional Reform 1999–2002: An Evaluation of Constitution-Making in Transition (Jakarta: Kompas, 2008) at 148–53.

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