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Info Service on WTO and Trade Issues (Feb21/18) Geneva, 23 Feb (Kanaga Raja) – The WTO Dispute Settlement Body (DSB) on Monday agreed to establish a dispute panel, at the request of the European Union, to examine Indonesia’s export prohibition on nickel ore, as well as the domestic processing requirements on minerals, in particular nickel ore and iron ore. This was a second-time request and panel establishment was automatic. Canada, China, the Russian Federation, India, Ukraine, Japan, the United States, Turkey, Chinese Taipei, the United Kingdom, Singapore, Brazil, and the United Arab Emirates reserved their third party rights to the dispute. In other actions, the DSB also agreed to establish a dispute panel, at the request of Hong Kong, China to examine new origin marking requirements imposed by the United States on goods imported from Hong Kong, China. (For details of the dispute, see SUNS #9272 dated 27 January 2021). This was also a second-time request and panel establishment was automatic. Canada, Brazil, China, Ukraine, Norway, Korea, India, Singapore, Turkey, Russia, Japan, Switzerland, and the European Union reserved their third party rights to the dispute. Meanwhile, Pakistan appealed the panel report in the dispute over anti-dumping measures imposed by Pakistan on biaxially oriented polypropylene film from the United Arab Emirates. With regards to the panel report in United States – Anti-Dumping and Countervailing Duties on Certain Products and Use of Facts Available (DS539), the DSB chair said Korea had informed the DSB on 19 February that it has decided to withdraw this item from the DSB meeting’s agenda. EU-INDONESIA DISPUTE OVER RAW MATERIALS In its communication to the DSB (WT/DS592/3) concerning its dispute with Indonesia, the EU said that the dispute is with regards to various measures concerning certain raw materials necessary for the production of stainless steel, as well as a cross-sectoral import duty exemption scheme conditional upon the use of domestic over imported goods. According to the EU, the measures at issue are the export prohibition of nickel ore and the domestic processing requirements on minerals, in particular nickel ore and iron ore. According to the EU communication, Indonesia has restricted exports of nickel ore to different extent and under different rules since at least 2014. In January 2014, nickel was excluded from the regime on the necessary processing and purification of mining commodities for export, which effectively outlawed exports of nickel ore. From January 2017 to December 2019, exports of nickel ore with a concentration below 1.7% were permitted subject to certain conditions, while those of nickel ore with a higher concentration remained prohibited. Since January 2020, all exports of nickel ore, regardless of its concentration, are banned, said the EU. According to the EU, the legal instruments through which this measure is implemented include: * Law Number 4/2009 on Coal and Mining. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 7/2012 concerning increasing added value of minerals through processing and refining of minerals activities of 6 February 2012. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 11/2012 amending Regulation of the Minister of Energy and Mineral Resources Number 7/2012 of 16 May 2012. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 20/2013 amending Regulation of the Minister of Energy and Mineral Resources Number 7/2012 of 1 August 2013. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 1/2014 concerning increasing added value of minerals through domestic processing and refining of minerals activities of 11 January 2014. * Regulation of the Minister of Trade of the Republic of Indonesia Number 1/2017 concerning export provisions for processed and purified mining products of 9 January 2017. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 25/2018 concerning mineral and coal mining business of 3 May 2018. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 11/2019 amending Regulation of the Minister of Energy and Mineral Resources Number 25/2018 of 28 August 2019. * Regulation of the Minister of Trade of the Republic of Indonesia Number 96/2019 on export provisions for processed and purified mining products of 30 December 2019. The export prohibition of nickel ore bans all exports of nickel ore from Indonesia, said the EU. The EU said it is therefore inconsistent with Article XI:1 of the GATT 1994 which provides that no prohibitions or restrictions shall be instituted or maintained on the exportation or sale for export of any product destined for the territory of any other contracting party. According to the EU communication, Indonesia applies domestic processing requirements with regard to certain raw materials, notably nickel ore and iron ore, prior to them being exported. Domestic processing requirements oblige mining companies to enhance the value of the relevant raw materials through the conduct of certain processing and/or purification operations in Indonesia before exporting them, it said. According to the EU, the legal instruments through which this measure is implemented include: * Law Number 4/2009 on Coal and Mining. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 25/2018 concerning mineral and coal mining commercialisation of 3 May 2018. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 50/2018 amending Regulation of the Minister of Energy and Mineral Resources Number 25/2018 of 5 December 2018. * Regulation of the Minister of Energy and Mineral Resources of the Republic of Indonesia Number 11/2019 amending Regulation of the Minister of Energy and Mineral Resources Number 25/2018 of 28 August 2019. The EU said that the domestic processing requirements have the consequence of preventing exports of the raw materials concerned unless they have been duly processed and/or purified. For that reason, it is inconsistent with Article XI:1 of the GATT 1994 which provides that no prohibitions or restrictions shall be instituted or maintained on the exportation or sale for export of any product destined for the territory of any other contracting party, it added. As a result of the inconsistencies described above, Indonesia’s measures nullify or impair the benefits accruing to the European Union, directly or indirectly, under the covered agreements, said the EU. According to a Geneva trade official, Indonesia was of the view that its measures are fully consistent with as well as justified under the WTO rules. US AGAIN BLOCKS APPELLATE BODY APPOINTMENTS Under a separate agenda item, the United States blocked a joint proposal by 121 WTO members calling for the start of the selection process to fill seven vacancies on the Appellate Body (AB). The US again said that it was not in a position to agree to the joint proposal, introduced by Mexico on behalf of 121 WTO Members, that called for the simultaneous launch of the selection process to fill the vacancies as soon as possible. According to a communication (WT/DSB/W/609/Rev.19) to the DSB, the proponents proposed that given the urgency and importance of filling the vacancies in the Appellate Body, in compliance with the DSU and so that it can carry on its functions properly, that, at its meeting, the DSB takes a decision with regard to the following: (1) to launch: (i) one selection process to replace Mr Ricardo Ramirez Hernandez, whose second four-year term of office expired on 30 June 2017, (ii) a second selection process to replace Mr. Hyun Chong Kim, who resigned from the Appellate Body as of 1 August 2017, (iii) a third selection process to replace Mr. Peter Van den Bossche, whose second four-year term of office expired on 11 December 2017, (iv) a fourth selection process to replace Mr. Shree Baboo Chekitan Servansing, whose four-year term of office expired on 30 September 2018, (v) a fifth selection process to replace Mr. Ujal Singh Bhatia, whose second four-year term of office expired on 10 December 2019, (vi) a sixth selection process to replace Mr. Thomas R. Graham, whose second four-year term of office expired on 10 December 2019, and (vii) a seventh selection process to replace Ms. Hong Zhao, whose first four-year term of office expired on 30 November 2020. (2) to establish a Selection Committee, consistent with the procedures set out in document WT/DSB/1 and with previous selection processes, composed of the Director-General and the Chairpersons of the General Council, the Goods Council, the Services Council, the TRIPS Council and the DSB, to be Chaired by the DSB Chair; (3) to set a deadline of a 30-day period after the date of its decision, for Members to submit nominations of candidates; and (4) to request the Selection Committee to carry out its work in order to make recommendations to the DSB within 60 days after the deadline for submitting nominations of candidates, so that the DSB can take a decision to appoint seven new Appellate Body members as soon as possible. In its statement at the DSB meeting, the United States said it is not in a position to support the proposed decision. The United States said that it continues to have systemic concerns with the Appellate Body, adding that it looked forward to further discussions with Members on those concerns.
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