Indonesia recorded export US$97.4 million worth of nickel mines and products in October - Photo: Special

JAKARTA (TheInsiderStories) – The European Union (EU) has brought a dispute in the World Trade Organization (WTO) against Indonesia’s curbs on exporting nickel and other raw materials. It said the restrictions unfairly limited EU producers’ access to nickel ore in particular, as well as to scraps, coal, and coke, iron ore and chromium.

The European Commission, which coordinates trade policy in the 28-member EU, also challenging subsidies that encourage the use of local content by Indonesian producers and give preference to domestic over imported goods, which goes against WTO rules.

“EU steel producers are under a lot of pressure and are suffering from the consequences of global overcapacity and unilateral trade restrictions. The export restrictions imposed by Indonesia put further jobs in the EU’s steel industry at risk,” EU Trade Commissioner Cecilia Malmstrom said last week.

She adds: “Despite our concerted efforts, Indonesia has maintained the measures in place and even announced a new export ban for January 2020. We must now act to ensure that international trade rules are respected. That’s why today we are taking legal action in the WTO to get these measures removed as soon as possible.”

Indonesia Must Answer Within 10 Days

Hasan Klein, Indonesia’s ambassador to Switzerland, said the disputed policy by the EU was essentially, first, export restrictions for mineral products (specifically nickel, iron ore, chromium) which were used as raw materials for the EU stainless steel industry.

“Second, fiscal incentives for some new companies or those that carry out factory reforms, third, tax-exempt schemes for companies that meet the Domestic Content Level,” Klein said in a written statement on Wednesday (11/27).

Klein explained that the EU claimed the policy violated: Article XI.1 of the GATT concerning the prohibition of export and import restrictions, Article 3.1 (b) Agreement on Subsidy and Countervailing Measures regarding prohibited subsidies, and Article X.1 of the GATT concerning violations of regulatory transparency obligations.

According to Klein, as the first stage, Indonesia must answer the EU letter within 10 days, the contents of which are willing or unwilling to conduct consultations. If willing, the consultation must take place within 30 days of receipt of the letter, or other times as agreed. If Indonesia is not willing to consult, the EU has the right to directly request the formation of a WTO dispute panel, he said.

“If it is agreed to hold consultations, Indonesia and the EU will need to agree on the place, time and format of the consultation,” he concluded.

Previously, the director-general of minerals and coal, Bambang Gatot Ariyono, assessed that the EU’s action was a natural thing in commodity trade in the world. Indonesia, he said, had tried to explain that they wanted to process their own nickel ore for downstream purposes. Because of that, the existing reserves need to be maintained.

“That was a long time ago right. Just ordinary. We explain that we want to manage ourselves. Soon the management plant will be big enough so we need to conserve,” said Ariyono.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com