Nickel Ban and Indonesia's Defense: A WTO Dispute with Implications for National Security

Abstract

The Indonesian government implemented an export ban on unprocessed nickel ore to promote the development of value-added nickel products and establish a strong presence in the global electric vehicle supply chain. This has led to modifications in the country's nickel supply chain and exports. However, the World Trade Organization (WTO) ruled in favor of the European Union's claim that the ban hindered EU manufacturers' access to nickel ore. Indonesia has appealed the verdict, contributing to trade disagreements between the two parties. This study examines the impact of global trade policies on national economic growth and security, focusing on Indonesia's nickel industry. It aims to provide insights into approaches that Indonesia can adopt to enhance its nickel industry and defense capabilities while complying with WTO regulations. The research conducted in Jakarta, Indonesia, in April 2023, employs a comprehensive review of existing literature and grey literature. The collected data underwent content analysis methodologies to present a comprehensive narrative, tables, and figures. Indonesia's nickel industry plays a critical role in the nation's development and national security due to its significant reserves and investments in battery supply chains. However, reconciling domestic interests with global trade commitments, particularly the ban on nickel ore exports, presents challenges. Indonesia can explore strategies such as incentivizing foreign investment and establishing a sustainable regulatory framework to foster the growth of its electric vehicle and steel industries. These measures can help position Indonesia as a key global hub for refined nickel and lithium-ion batteries while complying with WTO regulations.