Jakarta. An analyst said Monday that President Prabowo Subianto should try to convince US President-Elect Donald Trump to get the supreme court for global trade back in business if Indonesia really wants to pursue a fair international trade.

The first Trump administration broke the World Trade Organization or WTO’s dispute settlement system. Trump had blocked the appointment of new judges to the seven-member appellate body, which is in charge of hearing appeals brought to the WTO court. The US at the time had accused the body of engaging in judicial overreach in their disputes. With only a few days remaining at the White House, US President Joe Biden has yet shown interest in unfreezing the appellate body that had been dysfunctional since late 2019. And its fate will soon rest on Trump’s hands once again. 

In his recent first-ever annual press statement, Foreign Minister Sugiono said that Indonesia would seek a fairer global trade as one of the highlights of its economic diplomacy.

Muhammad Habib, a researcher at the think-tank CSIS, shared his thoughts on what sort of concrete actions for Indonesia’s fair trade dream.

“I believe that we can achieve fair global trade by reforming [the WTO]. This includes urging the US to immediately appoint the [appellate body] panel members,” Habib said in a media gathering in Jakarta.

Shortly after the presser, Habib told The Jakarta Globe that Prabowo needs to maintain “open communication” with Trump to nudge the latter into reviving WTO’s appellate body. Prabowo’s phone call congratulating Trump when he won the election back in November was an “excellent start”.

“Indonesia needs to come up with an idea to make sure that the [appeal mechanism] is truly fair for all, not just for Indonesia, but also the US. … Since Trump was worried that the appellate body doesn’t quite benefit Washington. So Jakarta needs to prepare a study that shows they can bring a mutually beneficial solution,” Habib said.

The frozen appellate body has left many cases in queue, including the European Union or EU’s lawsuit against Indonesia's nickel export ban. 

The Southeast Asian nation has stopped exporting unprocessed nickel ores to encourage foreign importers to refine nickel in the country. This way, Indonesia can bring back the added value from the nickel supply chain to its economy. The EU feared that such a decision could deal a fatal blow on European stainless steel production, thus accusing Jakarta of violating international trade rules at the WTO. In late 2022, the WTO ruled in favor of the EU, thus prompting Jakarta to swiftly file an appeal.

According to Habib, a well-functioning dispute settlement system can help Indonesia properly defend its decision to ban mineral ore exports to move its commodities up the value chain amid international backlash. 

 “[Indonesia’s appeal on the nickel lawsuit is now stuck. … If we can get this mechanism moving again, Indonesia might be able to get that validation that what it is doing [the export ban] aligns with international law,” Habib said.

He added: “I don’t think they have really given Indonesia a chance to show why it is important for the country to develop its downstream industries.”

Should Indonesia Join MPIA?

Not long ago, Deputy Trade Minister Dyah Roro Esti Widya Putri revealed that Indonesia was weighing the pros and cons of joining the so-called MPIA as a temporary fix to the appellate body crisis. In 2020, the European Union and Canada, among others, established the Multi-Party Interim Arbitration Arrangement (MPIA) that could let countries lodge an appeal amid the WTO crisis.  

According to Habib, the Trade Ministry needs to communicate with the Foreign Affairs Ministry should they wish to explore the possibility of being part of the MPIA.

“We need to have a cross-ministerial review [before applying to the MPIA] because the world is currently filled with geopolitical and geoeconomic uncertainties.It is true that the MPIA can be an alternative, but the question is: how effective is the MPIA in resolving past cases?" Habib told the Globe.

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