The EU is planning to request the establishment of a panel to rule on the legality of Indonesia’s export restrictions at the next meeting of the World Trade Organization’s (WTO) Dispute Settlement Body (DBS) on Jan. 25.

Indonesian Trade Minister Muhammad Lutfi said on Jan. 15 that the country would participate in the dispute settlement process while the EU sought to prove its allegations.

“At the same time, we will explain and defend everything we have worked on, especially on the nickel export front, in line with the prevailing laws and regulations, to maintain the sustainability of our natural resources. I believe we are on the right track,” Lutfi told reporters during a virtual briefing.

The country’s nickel reserves are thought to be sufficient for another 26 years, given 2020 production rates, according to the United States Geological Survey.

Indonesia, the world’s largest nickel ore producer, has banned the export of the ore since January 2020 through an Energy and Mineral Resources Ministerial regulation issued in November 2019. The regulation aims to push the country’s miners to develop smelters and refine the metal domestically so that a higher-value product can be exported.

The EU’s dispute escalation follows a consultation with the Indonesian government that has been stalled since Jan. 30 of last year. It took place after the EU registered its initial complaint in November 2019.

Read also: Indonesia, EU embroiled in fresh trade spat over nickel export ban, subsidies

The EU believes the export restriction has contributed to Indonesia’s rise as the world’s second-largest producer of stainless steel, of which raw nickel is a key ingredient, “fueled by unfair and illegal advantages”, according to a Jan. 14 European Commission press release.

The EU’s stainless steel production has reached its lowest level in a decade, the statement also reads. Four stainless steel flat manufacturers are planning to cut more than 1,000 jobs permanently by the end of the year.

The 20 billion-euro industry employs an estimated 30,000 workers directly and 200,000 workers indirectly across the continent.

“We will always act to protect the rights of our economic operators and safeguard the level playing field for EU producers,” said Valdis Dombrovskis, the bloc’s executive vice president and commissioner for trade. 

“The fact is that no WTO member is permitted to restrict exports of raw materials in this way, imposing illegal restrictions to favor domestic producers.”

Read also: Govt maintains export ban on nickel, relaxes rules for other metals until 2023

Jakarta has noted that the EU’s main sources of nickel ore are Canada, South Africa, Guatemala, the United States and Malaysia, not Indonesia. However, any restriction of the world’s nickel ore supply could cause world prices to rise.

The EU got about 0.14 percent of its nickel ore from Indonesia in 2019, or about $339,207 worth of the commodity, according to data from the United Nations International Trade Statistics Database (UN Comtrade).

“After we studied it, [we found that] the nickel commodities that the EU imports from Indonesia are only a fraction [of its total nickel imports],” Minister Lutfi told the press.

The minister said the Indonesian government would be open to further negotiation and would be willing to send a team of experts to help EU manufacturers boost productivity.

Lutfi added that the dispute would not have an immediate impact on nickel exports and would likely not affect the ongoing comprehensive economic partnership (CEPA) negotiation with the EU, which is set to enter its tenth round.

“In the short run, we can guarantee that there will be no immediate impact, and we will keep competing, creating added value,” said Lutfi.

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