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(GENEVA) – The EU on Friday requested the establishment of a WTO panel to seek the elimination of unlawful export restrictions imposed by Indonesia on raw materials necessary for the production of stainless steel.
The measures the EU is challenging concern an export ban on nickel ore and domestic processing requirements on nickel ore and iron ore. The EU executive says the measures “illegally restrict” access for EU steel producers to raw materials needed for stainless steel production. Trade Commissioner Valdis Dombrovskis said the EU was forced to take action and refer to the WTO following the failure of repeated attempts to resolve the issue directly with Indonesia.
“The fact is that no WTO member is permitted to restrict exports of raw materials in this way, imposing illegal restrictions to favour domestic producers,” he said, adding that the EU would continue to take “necessary measures to restore fair conditions for the EU steel industry, as is our right, and as we have undertaken to do as part of our implementation and enforcement agenda.”
These are difficult times for the EU steel sector, which is faced with global overcapacity, illegal subsidies and other trade-restrictive measures, as well as the COVID-19 economic crisis.
While the EU industry has reached its lowest level of stainless steel production in 10 years, Indonesia is set to become the second largest producer in the world after China, fuelled by unfair and illegal advantages like the ones challenged in this dispute.
In its panel request, the EU is challenging Indonesia’s long-standing and varying restrictions of nickel ore exports. Since January 2020, Indonesia has introduced a full ban on exports of nickel ore, reserving it for Indonesian stainless steel production.
Indonesia also applies domestic processing requirements on nickel ore and iron ore, which oblige businesses to subject their raw materials to certain processing or purification operations in Indonesia prior to exporting them. This further unduly restricts exports of unprocessed raw materials.
These measures, says the Commission, are inconsistent with the prohibition of export restrictions in Article XI:1 of the General Agreement on Tariffs and Trade (GATT) 1994.
The EU stainless steel industry turnover reaches around 20 billion and secures 420 million a year in investments. In total, 30,000 direct jobs and combined more than 200,000 direct, indirect and induced jobs depend on the stainless steel industry in Europe. The four major stainless steel flat producers in the EU recently announced plans for more than 1,000 permanent job cuts by the end of 2021.
