European Union to Refused Palm Oil Persistently, While Still Asking Indonesia to Exporting Nickel
Indonesia will face a European Union’s lawsuit regarding Indonesia’s policy of ban nickel ore export. Previously, these two countries had held consultations since 2020, but the EU gave a notification that it would continue the dispute process through a panel trial at the World Trade Organization (WTO), because they considered Indonesia’s policy makes their steel (stainless steel) industry not compete with global steel industry.
The Indonesian government to ban on nickel ore exports from January 1, 2020, as stipulated in the Regulation of the Minister of Energy and Mineral Resource No. 11/2019. The purpose of implementing this policy is to maintain resource availability and encourage downstream mining such as the domestic refinery and smelter industry. This policy also aims to realize Indonesia’s ambition in developing factory of batteries for electric vehicles as mandated by Presidential Decree No. 55/2019.
For yout information, Indonesia is the largest nickel ore exporter in the world with a share of 28 percent in 2019. Indonesia also the second-largest exporter of the EU’s steel industries. This data shows that EU has a high dependence on Indonesia’s nickel exports. With the Indonesia’s policy of export ban on nickel ore has the potential to threaten the steel and metal industry to the electric car industry in European Union.
Seems like de javu, what the EU is currently doing has also been done by Indonesia, which submitted a lawsuit against EU’s to WTO regarding three EU commission policies, namely RED II ILUC, Delegated Regulation (DR), and French Fuel Tax. RED II ILUC and DR classifies palm oil as a high-risk Indirect Land Use Change (ILUC) so that the use of palm oil as a biodiesel feedstock for them will be reduced and phase-out in 2030. Meanwhile, the French Fuel Tax policy implemented by the French Government provides an exception to palm oil biodiesel from the scheme of reducing tax rates on the production of renewable and sustainable biofuels, even though it’s feedstock comes from sustainable palm oil.
Based on the description above, the action taken by EU is very contradictory. EU wants Indonesia to continue exporting nickel ore. Even though these products are non-renewable mining products and their extraction has a negative impact on environmental sustainability, such as land conversion that causes deforestation, eliminating its function as a carbon sink and preventing soil erosion and also biodiversity loss. Nickel mining activities also damage water resources that are consumed by the surrounding community. A lot of nickel mining waste is also dumped directly into the sea, causing damage to coral reef ecosystems.
In contrast, EU commissions prohibits palm oil or it’s derivative products (such as biodiesel) because they considered it as the main commodity that triggers GHG emissions, deforestation, and other environmental damage. In fact, when compared to nickel as a mining product, palm oil is a renewable plant that has the role and ability to conserve land (nutrients) and hydrological functions, saving water and not threaten water resources, absorb carbon, and produce oxygen, and can reduce emissions through palm oil biofuel development and development of sustainable oil palm plantation on peatlands.
If the aim of EU policies are to maintain global sustainability and minimize the impact of climate change and global warming, the EU government should support the Indonesian government’s policy regarding the export ban on nickel ore, not the other way around to suing and asking Indonesia to continue exporting it to that country.
Or if wants to create fair trade, EU should not implement policies that discriminate against palm oil behind their arguments to protect the environmental, even though the real motive is to protect their domestic vegetable oils. The palm oil that is considered “dirty” is still better than the environmental damaging impacts are generated by nickel mining activities.
The European Union also asked Indonesia to continue exporting nickel ore because the steel industry is a source of income for 30 thousand direct workers and 200 thousand indirect workers. However, they also forgot that the palm oil discrimination in EU’s policies will have an impact on the sustainability of the palm oil industry in Indonesia, which is one of the main sectors of the national economy and society. EU’s policies will reduce the welfare of 3 million farmers and 17 million indirect workers in palm oil industry in Indonesia.
This shows that what Indonesia or EU doing is a reasonable action in order to defend their domestic interests. All countries that carry out international trade should be work together to improving their governance to fulfill market preferences (such as sustainability aspect), so that fair trade can be achieved and creating gain of trade which can also be evenly distributed. On the other hand, a lot of government policies or actions in global market actually inhibits trade by using other issues.
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