The EU has made a request for the establishment of a panel at the World Trade Organisation (WTO) to investigate the elimination of unlawful export restrictions that have been imposed by Indonesia. These restrictions have been placed on raw materials required for the production of stainless steel including nickel ore and iron ore.
It is stated that these imposed measures illegally restrict access for European Union steel producers to raw materials required for stainless steel production. The European Union in its panel request is challenging Indonesia’s long-established and varying nickel ore export restrictions. Indonesia introduced a full ban on exports of nickel ore in January 2020, reserving it for Indonesian stainless-steel production.
Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade was quoted as saying: “Following repeated attempts to resolve this issue directly with Indonesia, the EU is now forced to take action and refer this issue to the WTO. We will always act to protect the rights of our economic operators and safeguard the level playing field for EU producers. The fact is that no WTO member is permitted to restrict exports of raw materials in this way, imposing illegal restrictions to favour domestic producers. We will take the necessary measures to restore fair conditions for the EU steel industry, as is our right, and as we have undertaken to do as part of our implementation and enforcement agenda. These are very challenging times for the EU steel sector, which is faced with global overcapacity, illegal subsidisation, and other trade-restrictive measures, as well as the COVID-19 economic crisis. We will take every possible action to support our steel operators in this difficult environment.”
Indonesia is projected to become the second biggest producer of stainless steel in the world after China. Some in the industry say this growth is being fuelled by unfair and illegal practices and advantages such as the ones challenged in this dispute by the EU.
Indonesia also enforces domestic processing requirements on nickel ore and iron ore, which forces Indonesian businesses to carry out additional processing or purification operations on their raw materials in Indonesia before exporting them around the world. This further restricts exports of unprocessed raw materials. According to the EU, these measures are inconsistent with the prohibition of export restrictions in Article XI:1 of the General Agreement on Tariffs and Trade (GATT) 1994 which is the reasoning behind the EU’s actions.
