The European Union (EU) is currently taking measures to develop a new approach in response to Indonesia’s appeals within the framework of the World Trade Organization (WTO). The context of these appeals stems from Indonesia’s previous defeat in the WTO during a legal dispute initiated by the EU concerning the prohibition of nickel ore exports in 2020. Following this initial setback, Indonesia filed an appeal in December 2022 to challenge the ruling.
Recently, the EU has introduced the “Enforcement Regulation” in its pursuit of a response to the situation. Should this regulation gain the approval of EU member countries, it could potentially lead to the implementation of new policies that may complicate Indonesia’s exports, including the imposition of import tariffs.
Bara Krishna Hasibuan, the Special Staff to the Minister of Trade, explained that the Enforcement Regulation is an internal mechanism employed by the EU to assess the impact of policies adopted by non-EU countries, which may have implications on EU member states.
Through this Enforcement Regulation, the EU aims to evaluate the consequences of Indonesia’s decision to prohibit the export of raw minerals, particularly nickel ore, which may have repercussions for EU member nations.
As part of the consultation process, the EU is actively engaging with various stakeholders, including the private sector, to comprehensively evaluate the consequences of Indonesia’s ban on nickel ore exports.
“For instance, they are assessing whether specific policies have resulted in any detrimental effects on EU member states, and thus, they are consulting stakeholders, including private enterprises,” Bara elaborated.
The Enforcement Regulation empowers the EU to potentially take retaliatory measures in response to Indonesia’s policy on nickel exports.
“Hence, the EU perceives this as an opportunity to respond to our export policies. While the initial WTO decision did not favor Indonesia, as we were found to be in violation of certain provisions, Indonesia has decided to pursue an appeal,” Bara emphasized.
Furthermore, the EU could explore the possibility of imposing import duties on Indonesian goods as part of its response strategy.
“By virtue of the Enforcement Regulation, the EU seeks to engage in consultations initially. Subsequently, if they ascertain that there is a valid case substantiating damages, they could then proceed with measures of retaliation, such as the imposition of import duties on Indonesian goods entering the EU,” Bara disclosed.
The stakeholders from the EU have been given until August 11, 2023, to present their perspectives on the implementation of the Enforcement Regulation in this particular case.
Potential actions that may ensue include the imposition of duties or quantitative restrictions on both imports and exports.
“The EU’s Enforcement Regulation is designed to enforce international obligations that have been mutually agreed upon by WTO member countries. It comes into effect when trade disputes remain unresolved despite the EU’s efforts to engage in dispute settlement procedures in good faith,” the EU highlighted on its official website, as quoted on Friday, July 14, 2023.
Concurrently, the EU remains committed to pursuing amicable solutions to the nickel ore dispute, including extending an invitation to Indonesia to participate in the Multi-Party Interim Appeal Arrangement (MPIA), as further elucidated on the aforementioned website.
