ASEAN Pace | Economy | Southeast Asia
“If we are afraid of being sued and step back, we will not be a developed country,” Indonesian President Joko Widodo said.
Indonesian President Joko Widodo addresses the Bank Indonesia annual meeting in Jakarta, Indonesia on November 30, 2022.
Credit: Facebook/President Joko Widodo
Indonesian President Joko “Jokowi” Widodo says his nation will appeal a recent World Trade Organization (WTO) ruling that favored the European Union in a dispute over Indonesia’s ban on nickel ore exports.
Speaking at an investment event in Jakarta on Wednesday, Jokowi promised that the ruling of the WTO it would not impede his government’s determination to process more raw materials at home and that he had directed his government to appeal.
“Even though we lost at the WTO on this nickel thing… that’s okay. I have told the minister to appeal,” Jokowi said, according to a report. Reuters report.
Indonesia, formerly the world’s largest exporter of nickel ore, announced a ban on the export of the raw ore in August 2019, and introduced domestic processing requirements that have required companies to process or purify raw materials in Indonesia prior to export. These measures entered into force at the beginning of 2020.
This led the European Union to launch a WTO challenge in November 2019, arguing that Indonesia’s export restrictions on raw materials were unfairly hurting its stainless steel industry.
the WTO panel ruling agreed with the European claim, stating that neither the nickel export ban nor the in-house processing requirement (DPR) were in line with global trade rules. He “He found that the export ban is the most trade restrictive measure that could be applied and that the DPR is highly trade restrictive.” While an exception could have been made if the restrictions were applied temporarily to alleviate “a critical shortage of an essential product”, Indonesia’s export ban did not meet this criterion.
in a statement wednesdayThe European Commission said it welcomed the WTO’s decision that Indonesia’s export restrictions were not consistent with international trade rules. “I hope that Indonesia will fulfill its obligations under the WTO and remove these measures immediately,” Valdis Dombrovskis, the EU’s executive vice-president and trade commissioner, was quoted as saying in the statement. “The EU supports the rights of all countries to economic development, but this does not give license to set aside the rules of the WTO.”
The WTO ruling poses a direct challenge to the Jokowi administration’s policy of economic nationalism: that is, its desire to ensure that the country’s raw materials are developed domestically rather than exported for the benefit of foreign industry. This, in turn, flows from the country’s anti-colonial tradition, which draws a direct line from the exploitations of the colonial government to the contemporary power of international capital.
The purpose of the export bans is to encourage foreign companies to invest in nickel smelters and other processing facilities in Indonesia, to create jobs and increase the country’s revenue from the export of vital raw minerals. Jokowi has also announced possible bans on the export of raw bauxite, tin and copper. “We really want to stop exporting raw materials because there is no added value and there will be no job creation,” he said. said in October last year.
Whether the loot from these resources will be distributed equitably within Indonesia is an open question, of course, but it is clear that Jakarta sees the development of its natural resources as a matter of equity between the Global North and South. “We want to be a developed country, we want to create jobs,” Jokowi said, according to Reuters. “If we are afraid of being sued and we step back, we will not be a developed country.”
Even if its appeal fails, it is unclear whether Indonesia would comply with the WTO ruling. After all, powerful countries often ignore the agency’s decisions when it is convenient to do so, and it is exactly the desire to level the international economic playing field that has motivated export bans in the first place.
The fact that Indonesia enjoys increasing international economic influence due to its possession of valuable resources such as nickel will make this topic worth pursuing in the months and years to come.