Investor Daily, Jakarta – The government is preparing itself to face a possible lawsuit by China in the World Trade Organization regarding the ban on the export of unprocessed bauxite ores that will take place in June 2023, a Trade Ministry official has said.
China is very likely to file the lawsuit as 90 percent of Indonesian bauxite ore export went to the country.
"We are ready with the consequences from the policy decided by the president and the government to ban bauxite export to strengthen the industrialization process in Indonesia," Bara Hasibuan, a special advisor on international trade agreement for the trade minister, said on Thursday.
President Joko "Jokowi" Widodo has decided to ban the export of bauxite ores to support the domestic processing industry and multiply the export value by 30 times.
China depends on bauxite ore supplies from Indonesia mainly for its glass industry.
In the last five years, the value of Indonesian bauxite ore export has increased by nearly tenfold to reflect the rapidly growing global demand for the commodity. The Indonesian government, on the other hand, sees it as an opportunity to earn more by giving added value to bauxite rather than selling unprocessed ores.
Based on Bank Indonesia data, bauxite export value jumped from $66.43 million in 2017 to $628.17 million in 2021.
A lawsuit by China will further add to Indonesia's legal battle at the WTO after the country was sued by other countries regarding the export of nickel ores and crude palm oil.
"If the bauxite issue also brings about a lawsuit by China, surely the Trade Ministry is ready to help the government to deal with it," Bara said.
He underlined that the government is committed to developing the downstream industry for certain commodities. After nickel and bauxite, domestic processing will be required for copper, tin, and gold before they go to the export markets, Bara added.
Indonesia banned the export of nickel ores in January 2020 and has since enjoyed a much greater value of processed nickel export that prompted the government to expand the policy to other mining commodities.
Bauxite is the main material to produce aluminum, whose export value is 30 times higher than the value of unprocessed bauxite ores.
Trade Minister Zulkifli Hasan said every country has the right to defend its national interests and protect domestic industries in global trade with any means necessary.
"Not only safeguard and anti-dumping policies, but we must continue to make efforts to strengthen the domestic industry. There is plenty to take care of and an ecosystem must be built because Indonesia has great potential. The key is to collaborate – we need to support and ease businesses. The state is here for all of our sake," Zulkifli said.
According to him, the WTO has given authority to its member states to use trade remedies instruments, such as anti-dumping, reciprocal acts, and safeguard policies. The goal is to protect domestic industry, be it from fair trade practices or unfair ones.
Throughout 2022, the Trade Ministry has handled 59 accusations of dumping, subsidies, safeguard policies and technical trade barriers in the export markets. Of those cases, 12 were eventually dropped.
According to the ministry, the successful defense in trade disputes saved the country $718.7 million in potential losses in export values.