Disabling Labeling: The WTO Consistency of the Indonesian Mandatory Halal Labeling Law

SECO Working Paper 8/2016:

The Halal Act is the first law in Indonesia, a Muslim majority nation, requiring Halal certification and labeling. Prior to the law, the Indonesian Council of Ulama (MUI) oversaw voluntary Halal certification. While Islamic organizations in Indonesia have praised the emergence of this law, local and foreign business entities have expressed their anxiety over whether such requirements would mean extra costs for them. The Halal Act involves several WTO issues, which could raise questions of Indonesia’s compliance with its WTO obligations. There have been a number of WTO cases where panel and the Appellate Body evaluated the concept of ‘public morals’. The question is how to balance this moral/religious objective and the means used to achieve such objective so that they are not more trade restrictive than necessary? It is also important to note that although Indonesia has the largest Muslim population in the world, the Indonesian constitution itself specifies that the country is not a Muslim nation and recognizes the existence of more than five religions in the country. This paper seeks to examine the WTO TBT consistency of the new Indonesian Halal Act and whether mandatory halal certification and labeling can be defended as an exception to WTO law.