DS: Indonesia Ś Importation of Horticultural Products, Animals and Animal Products
This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.
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(as cited in request for consultations)
|Request for Consultations received:|
|Panel Report circulated:||22 December 2016|
|Appellate Body Report circulated:||9 November 2017|
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Summary of the dispute to date
The summary below was up-to-date at
On 8 May 2014, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the importation of horticultural products, animals and animal products.
New Zealand claims that the measures are inconsistent with:
- Articles III:4, X:1 and XI:1 of the GATT 1994;
- Article 4.2 of the Agreement on Agriculture;
- Articles 1.2, 1.5, 1.6, 2.2, 3.2, 3.3, 5.1 and 5.2 of the Import Licensing Agreement; and
- Articles 2.1 and 2.15 of the Agreement on Preshipment Inspection.
On 20 May 2014, the United States requested to join the consultations. On 22 May 2014, Thailand requested to join the consultations. On 23 May 2014, Canada, the European Union and Chinese Taipei requested to join the consultations. On 26 May 2014, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union, Chinese Taipei and Thailand to join the consultations.
On 18 March 2015, New Zealand requested the establishment of a panel. At its meeting on 22 April 2015, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 20 May 2015, the DSB established a single panel pursuant to Article 9.1 of the DSU to examine this dispute and DS478. Australia, Brazil, Canada, China, the European Union, India, Japan, Norway, Paraguay, Singapore and Chinese Taipei reserved their third-party rights. Subsequently, Argentina, Korea and Thailand reserved their third-party rights.
On 28 September 2015, both New Zealand and the United States requested the Director-General to compose the panel. On 8 October 2015, the Director-General composed the panel.
These two disputes concerned 18 measures imposed by Indonesia on the importation of horticultural products, animals and animal products. Most of these measures (17) concerned Indonesia's import licensing regimes for horticultural products and animals and animal products. In addition, the co-complainants challenged Indonesia's conditioning of importation of these products on the sufficiency of domestic production to fulfil domestic demand.
The co-complainants (New Zealand and the United States) alleged that all 18 measures at issue were quantitative import restrictions prohibited by Articles XI:1 of the GATT 1994 (general elimination of quantitative restrictions) and 4.2 of the Agreement on Agriculture (elimination of measures that should have been converted into ordinary customs duties). They also alleged that the measures violated the national treatment obligation under Article III:4 of the GATT 1994 and the requirements for non-automatic import licensing under Article 3.2 of the Import Licensing Agreement.
Indonesia invoked defences under Article XX of the GATT 1994, alleging that the measures were necessary to protect Halal as a public moral (Article XX(a)), human life or health by ensuring food safety/food security (Article XX(b)), as well as necessary to secure compliance with customs legislation (Article XX(d)). Indonesia also sought to shield its measures under Article XI:2(c)(ii) of the GATT 1994, which exempts the introduction of import restrictions that are designed to remove temporary surpluses of like domestic products.
The Panel found that all 18 measures at issue were prohibitions on importation or restrictions having a limiting effect on importation and thus inconsistent with Article XI:1 of the GATT 1994. The Panel rejected Indonesia's defence under Article XX of the GATT 1994 because Indonesia had not demonstrated that its measures were justified under that provision. The Panel also rejected Indonesia's reliance on Article XI:2(c)(ii) of the GATT 1994 because this exemption was rendered inoperative by virtue of Article 4.2 of the Agreement on Agriculture.
On 17 February 2017, Indonesia notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.
On 13 April 2017, upon expiry of the 60‑day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the number and complexity of the issues raised in this and concurrent appellate proceedings, together with the demands that these concurrent appeals place on the WTO Secretariat's translation services, and the shortage of staff in the Appellate Body Secretariat. On 18 October 2017, the Chair of the Appellate Body informed the Chair of the DSB that the Appellate Body Report in these proceedings would be circulated no later than 9 November 2017.
Indonesia's first ground of appeal concerned the Panel's decision to start its analysis with the claims under Article XI:1 of the GATT 1994, rather than with the claims under Article 4.2 of the Agreement on Agriculture. According to Indonesia, Article 4.2 deals more specifically with quantitative import restrictions on agricultural products and should therefore have been applied to the exclusion of Article XI:1.
The Appellate Body considered that, to the extent that Article 4.2 and Article XI:1 apply to the measures at issue, both provisions contain the same substantive obligations, and thus, apply cumulatively. It further found that there is no mandatory sequence of analysis between Article 4.2 and Article XI:1 in this dispute. On this basis, and having rejected Indonesia's related claim under Article 11 of the DSU, the Appellate Body upheld the Panel's decision to commence its examination with Article XI:1.
Indonesia's second ground of appeal concerned the second part of footnote 1 to Article 4.2 of the Agreement on Agriculture, which provides that agricultural measures (including quantitative import restrictions) maintained under “general, non-agriculture-specific provisions of GATT 1994”, among others, are not inconsistent with Article 4.2. In this context, Indonesia challenged the Panel's finding that Indonesia bears the burden of proof with respect to Article XX of the GATT 1994 when Article XX is applied as a “general, non-agriculture-specific provision of GATT 1994” under footnote 1 to Article 4.2.
The Appellate Body recalled that Article XX is an affirmative defence and that the respondent bears the burden of establishing a prima facie case under that provision. It observed that, while the second part of footnote 1 to Article 4.2 incorporates the Article XX exception by reference, nothing in Article 4.2 or footnote 1 thereto suggests that the allocation of the burden of proof under Article XX is modified by such incorporation. On this basis, and having rejected Indonesia's related claim under Article 11 of the DSU, the Appellate Body upheld the Panel's finding that Indonesia bears the burden of proof under Article XX referred to in the second part of footnote 1 to Article 4.2.
Third, in the alternative to its first claim of legal error, Indonesia alleged that the Panel erred in finding that Indonesia cannot invoke Article XI:2(c)(ii) of the GATT 1994 to exclude certain measures from the obligation under Article XI:1 because Article XI:2(c) has been rendered “inoperative” by Article 4.2 following the entry into force of the Agreement on Agriculture.
Article XI:2(c) exempts certain import restrictions on agricultural and fisheries products from the general prohibition of quantitative restrictions under Article XI:1 when particular conditions are met. The Appellate Body found that the prohibition of quantitative import restrictions under Article 4.2 extends to the kind of measures referred to in Article XI:2(c). The Appellate Body further found that, by virtue of Article 21.1 of the Agreement on Agriculture, which provides that provisions of the GATT 1994 “shall apply subject to” those of the Agreement on Agriculture, Article XI:2(c) cannot be relied upon to justify or exempt measures that fall within the prohibition of quantitative import restrictions under Article 4.2. The Appellate Body thus upheld the Panel's legal interpretation to that extent, stating that such finding would provide sufficient guidance for the purpose of resolving the particular dispute at hand.
Finally, Indonesia challenged the sequence of analysis applied by the Panel under Article XX of the GATT 1994 in respect of certain of its measures (Measures 9 through 17) and the Panel's finding that these measures are not justified under that provision. The Panel assessed these measures under the chapeau of Article XX, without first examining whether they were provisionally justified under the applicable paragraphs of Article XX.
The Appellate Body recalled that Article XX sets out a two-tier test involving, first, an assessment of whether the measure falls under one of the exceptions in the paragraphs of Article XX, and, second, an assessment of whether the measure satisfies the requirements of the chapeau. The Appellate Body noted that it had set out the sequence of analysis under Article XX in a number of previous reports. The Appellate Body accepted that, depending on the particular circumstances of the case, a panel that deviates from this sequence might not necessarily, for that reason alone, commit a reversible legal error provided the panel has made findings on those elements under the applicable paragraphs that are relevant for its analysis of the requirements of the chapeau. However, the Appellate Body observed that the task of assessing a particular measure under the chapeau so as to prevent the abuse of the exceptions provided for in Article XX is rendered difficult where the panel has not first identified and examined the specific exception at issue. The Appellate Body thus stressed the importance of following the normal sequence of analysis, in particular because assessing the measure under the applicable paragraphs provides panels with the necessary tools to assess the measure under the chapeau.
The Appellate Body noted that, even if it were to accede to Indonesia's request, namely, reverse the relevant finding under Article XX and not complete the legal analysis, the Panel's findings under Article XI:1 would remain undisturbed. The Appellate Body therefore declined to rule on Indonesia's claim and declared the Panel's finding that Indonesia had failed to demonstrate that Measures 9 through 17 are justified under Article XX moot and of no legal effect.
At its meeting on 22 November 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.
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