Indonesia will Fight the EU Nickel Export Ban

WTO Says “No”

The World Trade Organization (WTO) ruled in favor of the European Union (EU) in a dispute over an Indonesian ban on nickel ore exports.  The Indonesia president claims his country will appeal. At an investment event, President Joko Widodo (aka “Jokowi”) said the ruling would not deter their drive to process more of their own domestic raw materials:

“Even though we lost at the WTO on this nickel issue…it’s okay. I have told the minister to appeal.”

– Jokowi

The EU started challenging Indonesia at the WTO in November 2019, claiming that the Asian nation’s export restrictions on raw materials was unfairly harming its stainless steel industry. Indonesia banned nickel ore exports at the start of 2020.

So What?

The WTO ruled that the Indonesian ban on nickel exports and their requirement that all nickel ore is to be refined in the country, were not in line with global trade regulations. The WTO would only allow for a temporary ban on exports of this nature if the country in question faces a critical shortage.

President Widodo, called on his nation to stop exporting their raw materials – the export of other unprocessed minerals like bauxite will also be prohibited.

As we’ve covered in previous articles, Indonesia is the Nickel King – they were the world’s biggest exporters of nickel before the ban. Their goal is to attract investment to develop their processing infrastructure and a critical supply chain in Indonesia – with China as a major source of investment.

The Difference (Cha-Ching):

Jokowi noticed that Indonesia enjoyed revenues of about US$1.2 billion before implementing the ban on exports. After the ban took effect, he can now try to capitalize from exports valued at approximately US$19.4 billion. Over the last two years, Indonesia’s trade balance has been in surplus with nickel making the major contribution.

The Indonesian government is wising up to international game of raw exports vs. domestic production and the localized downstream industries that spring up as a result.  This will in turn create jobs and a pathway to economic prosperity. Domestic industrialization of its resources will (in time), increase the productivity and per capita income of its citizens – raising Indonesia’s GDP and develop the country.

“I checked why the European Union sued (Indonesia over the export ban)? Right, because there are lots of industries there. If it is done here, then there will be a lot of unemployment. There are factories that will be closed. There will be industries that will be closed. We also want to develop; our country wants to be a developed country. We want to create jobs. If we are afraid of being sued and prefer to retreat, well, we will not become a developed country.”

– Jokowi