Does the negotiation process on nickel export between Indonesia and the European Union provide benefits?

¹ Department of Agribusiness, Faculty of Agriculture, Universitas Trunojoyo Madura, Bangkalan, Indonesia
² Program study of Business Analytic Centre, Master of Science in Business Analytics, National University of Singapore, Singapore

^* Corresponding author: ifan.kurniyanto@trunojoyo.ac.id

Abstract

Nickel is one of the Indonesia’s potential raw materials which export to the European Union (EU). Indonesia stopped exporting raw material of nickel to the EU on the grounds that Indonesia wanted to be linked downstream to provide value added from exported goods and create new jobs. Nickel which has many benefits makes the European Union act to make a lawsuit against Indonesia regarding the termination of raw nickel exports through the World Trade Organization (WTO). The purpose of this research was finding out the reasons for Indonesia to stop exporting raw nickel to the EU and finding out the reasons for the EU to sue Indonesia, finding out the negotiation process and the causes of Indonesia's defeat of the EU lawsuit at the WTO. This research was conducted in period March - May 2024 by using the literature review approach method through the study of information from secondary data to answer the purpose of research. The results showed that there was a split in the relationship that developed because of the European Union's decision to ban palm oil exports. Indonesia felt aggrieved by this, so it took the policy to ban nickel exports as a “retaliation”. Negotiations said that the value of exports was increased by the requirement that nickel imports from Indonesia must be processed through smelters into semi-finished goods before being exported to the EU. The EU disagreed because such a regulation could impair the ability of existing industries to compete, as the supply of raw materials for nickel products would be reduced. The WTO granted the EU's lawsuit because Indonesia is still unable to implement nickel to be linked downstream, supported by the existence of Indonesian government regulations that contradict WTO regulations related to trade. The temporary result of the EU lawsuit trial against Indonesia is (win-lose). It is expected that the Indonesian government can strengthen smelters for sustainable development and can support nickel be linked downstream in the future. Indonesia must also strengthen negotiations in the form of cooperation to support the nickel export program in the form of semi-finished and finished goods.