Jakarta, CNBC Indonesia – The World Trade Organization (WTO) has declared Indonesia lost to a lawsuit by the European Union in October 2022. The European Union’s lawsuit is related to the Government of Indonesia’s policy of banning the export of nickel ore abroad which officially took effect on January 1, 2020.
What is the chronology of RI’s defeat in the WTO?
Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif explained, in final panel report The WTO Dispute Settlement Body (DSB), which was released on October 17 2022, stated that the export policy and obligations for processing and refining minerals in Indonesia were proven to violate WTO provisions.
Report final panel report this is contained in the dispute DS 592.
“Decided that the export policy and the obligation to process and refine nickel minerals in Indonesia are proven to have violated WTO provisions Article XI.1 GATT 1994 and cannot be justified by Articles XI.2 (a) and XX (d) GATT 1994,” said Arifin in a working meeting with Commission VII DPR RI, Monday (21/11/2022).
In final panel report it also contains a panel rejecting the defense submitted by the Government of Indonesia in relation to the limited number of National Nickel Reserves and to implement Good Mining Practice (Environmental Aspects) as the basis for the defense.
At least, there are several laws and regulations that are considered to violate WTO provisions. First, Law Number 4 of 2009 concerning Mineral and Coal Mining (Minerba Law).
Second, Regulation of the Minister of Energy and Mineral Resources Number 11 of 2019 concerning the Second Amendment to the Regulation of the Minister of Energy and Mineral Resources Number 25 of 2018 concerning Mineral and Coal Mining Business.
Third, Regulation of the Minister of Trade Number 96 of 2019 concerning Provisions for the Export of Processed and Refined Mining Products. Fourth, Regulation of the Minister of Energy and Mineral Resources Number 7 of 2020: Procedures for Granting Areas, Permits, and Reporting on Mineral and Coal Mining Business Activities.
Why Indonesia Can Lose?
After investigating, in the records of the Indonesian Ministry of Trade (Kemendag), it turns out that Indonesia was declared defeated because the downstream industry in Indonesia was considered immature.
The WTO assesses that a country that prohibits the total export of a commodity, the industry in the country supported by the commodity must really develop first. Meanwhile, the downstream nickel industry, namely iron, in Indonesia is considered to be still underdeveloped.
“So for example there is a crisis of a commodity then the country’s domestic industry is mature, if for example an export ban is carried out it is declared valid by the WTO. This was said by the WTO that our iron industry, our iron by product from nickel is iron, iron is in Indonesia has not yet developed, so it is not yet mature,” said the Special Staff of the Minister of Trade for International Trade Agreements, Bara Krishna Hasibuan in the CNBC Indonesia Mining Zone, quoted on Thursday (16/2/2023).
RI Filed an Appeal
The Indonesian government also did not take for granted its first defeat at the WTO. The government submitted an appeal in December 2022 and prepared its own argument, namely that currently Indonesia is in the stage of boosting the domestic downstream industry, especially downstreaming raw minerals such as nickel.
“Nickel is already growing, we already have dozens of smelters that process nickel. That is our argument, so we will be there and later, in 2024 or 2025, when the appeal trial begins, we will have many smelters and our industry will be more mature,” he said.
Bara said that RI’s appeal regarding nickel is likely to start in 2024. This happened because of the blockade of the election of the Appellate Body by one of the WTO Members, namely the United States (US).
The US assesses the need for major reforms to be carried out at the WTO. Thus, as long as reforms at the WTO have not been carried out, America will not give its approval to the establishment of an appeals panel.
“We have consulted with our Geneva-based lawyers and it is estimated that it is realistically possible that the panel will not form until 2024,” he said.
The lawsuit appeal still has to wait for the queue to be processed at the WTO Appellate Body, so the appeal process does take quite a long time.
“So once the panel is formed there is also a queue of cases that must be tried at the panel. So we are still number 23-24. So as long as there is no decision from the panel we can continue our policy regarding the development of this downstream industry. ,” he said.
Minister of Investment/Head of BKPM Bahlil Lahadalia revealed the reaction of Indonesian President Joko Widodo (Jokowi) when he learned that Indonesia had lost the European Union’s lawsuit at the WTO.
“What did Mr. President say? Be careful if a villager becomes president leadershipits strong. What did the President say? Mas Bahlil, this country is already independent, this country has a government and its people are protected by law. You can’t give in to any country that wants to put pressure on us, we are fighting the European Union at the WTO,” Minister Bahlil explained in a Public Lecture by the Minister of Investment/Head of BKPM at Sebelas Maret University (UNS), quoted on Thursday (24/8/2023).
Bahlil said that the reason the European Union sued Indonesia at the WTO was because the world was currently moving towards green energy and environmentally friendly industries. Where, materials to support these things require nickel.
Nickel as it is known for the raw material needs for electric vehicle batteries. “There are four raw materials for this battery; nickel, cobalt, manganese and lithium,” said Bahlil.
Indonesia has three of the four raw materials for electric batteries, namely nickel, cobalt and manganese. Bahlil said that only lithium is not owned by Indonesia.
Therefore, he said that other countries, including the European Union, are not willing to develop the country’s industry. This is what led to the tackle on the WTO.
“This is world foreign policy to force us not to develop our industry in Indonesia,” he said.
Oh Mr. Jokowi, RI’s appeal at the WTO was hampered by the US!