WTO Panel Report on the Inadmissibility of Restrictions on Raw Materials Exports

Abstract

The WTO panel released its report on Indonesia (Raw Materials dispute) in December 2022. The dispute case was launched by the EU. This report is interesting in many respects, including such issues as production processes, the importance of nickel for the defendant’s economy, and interpretations of Articles XI:2(a) and XX(d) of the GATT 1994. Pursuant to the proceedings, Indonesia’s measures with respect to the exports of nickel ore were found as illegal and falling neither within the scope of exceptions to the quantitative restrictions, nor the exceptions to the processing obligations. The article analyzes the arguments of the parties, and the interpretations and conclusions made by the panel. The report of the panel raises many questions. For example, the conclusion that an industrial commodity can not be of essential importance for defendant’s economy if its use is only planned to create a new industry (in this case, batteries for electric vehicles). Consequently, de facto, the gap between the countries that are already engaged in successful production of electric cars and those who only plan to do this should increase. Indonesia has appealed this decision. It is hard to predict whether the Appellate Body will ever have the opportunity to give its assessment. In any case, it is quite clear that questionable interpretations of the WTO rules create additional systemic risks for the organization. As well as they make one ponder over the objectivity of trade dispute resolution.