The Indonesian Trade Law of 2014: The Provision on the Annulment of International Trade Agreement

Author:Huala Adolf
Journal of International Commercial Law and Technology
Vol. 10, No.1 (2015)
The Indonesian Trade Law of 2014:
The Provision on the Annulment of International Trade
Huala Adolf
Abstract: On March 2014, the Government of th e Republic Indonesia promulgated
the Law No. 7 of 2014 on Trade. No law on trade has ever been promulgated before. One of
the controversial provisions embodied in the Law is the provision on the status of
international trade agreement in Indonesia. The Law, a s embodied in Article 85, states that
the government, with the approval of the parliament, may review and annul the
international trade agreements which have been signed by Indonesia.
This provision is controversial because, the international agreement, including the
international trade agreement, is the product of th e consensus of the states participating in
it. With the promulgation of the Law and especially the provision of article 85, can the Law
be effectively implemented in the future?
1. Introduction
On March 2014, the Government of the Republic of Indonesia promulgated the Law No. 7 on Trade (The
Law)1. The Law is significant because th e Law, for the first time since Indonesia’s independence, has
eventually had a clear legal policy relating to its trade.
The Law consists of 29 Chapters and 122 Articles. The Law contains legal provisions concerning
trade-related issues, including among others, the domestic trade, th e foreign trade, the trade in the border
areas, standardization, trade through electronic systems, the safeguard measures, the small and middle
business, etc.
One provision of the Law, however, that is worth commenting on is Article 85. This article
empowers the government to cancel an international agreement that it has signed2. This article provides
as follows:
(1) The Government with the approval of the Parliament may, when the national interest is
at stake, review and cancel the international trade agreements.
(2) The Government may, when the national interest is at stake, review an d cancel
international trade agreements promulgated by Presidential Decree.
(3) Further provisions concerning the procedures for the review and cancellation of
international trade agreements as referred to in paragraph (1) and paragraph (2) will be stipulated
in Government Regulation.
The Law h owever does not state clearly what the word cancellation under article 85 means. The
elucidation of the article 85 embodied in the appendix of the Law is silent on this issue. It only stat es that
the provision (under article 85) is sufficiently clear. Article 85, including its elucidation, is also silent on
the issue regarding its meaning of ‘national interests’ according to Indonesian law.
In order to reach an answer, it is necessary t o take a short look at the principles regulating the
international agreement, a s enshrined in the Vienna Convention on the Law of Treaties of 1969, as the
1 State Gazette No 45 of 2014
2 The term ‘cancel’ is the translation of the original text in Indonesian language for ‘membatalkan.’ The Original text
of Article 85 para. (1) reads as follows:
“(1) Pemerintah dengan persetujuan Dewan Perwakilan Rakyat dapat meninjau kembali dan membatalkan perjanjian
Perdagangan internasional yang persetujuannya dilakukan dengan undang-undang berdasarkan pertimbangan
kepentingan nasional.” (Emphasis added)

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