By requesting consultations on Friday 22 November against Indonesian export restrictions on raw materials used in stainless steel production, the European Union is demonstrating its support for a suffering steel sector. These consultations mark the first step in a new dispute within the World Trade Organisation (WTO)
According to the EU, Indonesian restrictions disrupt the supply of these raw materials to European industry. These include restrictions and prohibitions on the export of raw materials such as nickel, various requirements on access to nickel, iron, chromium, waste and scrap metal, coal and coke. These requirements take the form of pre-export processing requirements, national marketing obligations and complex and unclear export licencing procedures.
The EU also challenges subsidies paid by Jakarta to stimulate the use of local content and products, such as an import duty exemption regime if at least 30% of domestic equipment and machinery is used in domestic production, which is discrimination contrary to WTO rules.
For the Commission, it is also a way of supporting an asphyxiated steel sector, particularly due to Washington sanctions. “EU steel producers are under a lot of pressure and are suffering from the consequences of global overcapacity and unilateral trade restriction”, said Cecilia Malmström, European Commissioner for Trade.
The EU’s diplomatic efforts have not borne fruit, on the other hand. “Despite our concerted efforts, Indonesia has maintained the measures in place and even announced a new export ban for January 2020”, Malmström said. “We must now act to ensure that international trade rules are respected.”
This request for consultations marks the first step in the WTO dispute settlement procedure. If this fails, the EU may request that the organisation set up a panel to rule on the matter. (Original version in French by Hermine Donceel)