The Problem of Access to Government Procurement Markets in the Indonesia-European Union CEPA Regarding the Obligation to Use Domestic Products in Indonesia

Abstract

Indonesia and the European Union are currently negotiating the Indonesia-European Union Comprehensive Economic Partnership Agreement (I-EU CEPA) on Government Procurement Chapter which aims to open market access based on the principle of non-discrimination. However, the principle of non-discrimination proposed by the European Union has different provisions from the regulation on the use of domestic products in Indonesia because the use of domestic products is required in the government procurement and is discriminatory against foreign products and suppliers. This study aims to explain whether these different arrangements will eliminate the obligation to use domestic products in Indonesia if the I-EU CEPA is agreed. The results of this study indicate that if the principle of non-discrimination of the I-EU CEPA on Government Procurement Chapter is agreed, it will not immediately eliminate the obligation to use domestic products in Indonesia because the principle of non-discrimination only applies to covered procurement. Indonesia can implement transitional measures while still enforcing regulations on the use of domestic products in the government procurement by giving time after entry into force as an adjustment effort in order to increase the competitiveness of domestic products against foreign products and the threshold permitted for foreign suppliers.

Keywords: Market Access, Non-discrimination Principle, I-EU CEPA, Domestic Products, Government Procurement

DOI: 10.7176/JLPG/118-11

Publication date: February 28^th 2022