Joint statement on raw materials in EU-Indonesia

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Joint Statement on raw materials in EU-Indonesia CEPA

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Civil society organizations from Europe and Indonesia ask:

  • The EU and the Indonesian government should stop the Indonesia-EU CEPA negotiations, because the agreement poses a threat to the environment and climate, and to the rights of women, Indigenous Peoples, workers, small farmers and fisherfolk.
  • Indonesia should retain the policy space to develop its own energy and raw materials value chain, including processing and refining capabilities. The Energy and Raw Materials Chapters in the CEPA would limit Indonesia’s ability to protect its internal market through (temporary) tariffs and quotas and to build up its own manufacturing capacities.
  • A just energy transition cannot be achieved by privatizing public goods, in this case energy. Public control through the state should be strengthened and not weakened by the liberalization agenda in the renewable energy sector.
  • The EU and Indonesia should not agree to any Investor-State Dispute Settlement (ISDS) mechanism, such as in the EU agreements with Mexico and Chile. Investment protection, including the Investment Court System (ICS), potentially undermines the state’s capacity to respond to public demands to implement a socially just climate policy.
  • The Indonesia-EU CEPA should not integrate elements from the Indonesian “Omnibus Law on Job Creation” as this makes human rights and labor protection in Indonesia worse. Both the EU and Indonesia must adhere to internationally agreed ILO-standards and conventions.
  • Trade cooperation must ensure that the traded raw materials have been produced under the highest environmental and due diligence standards. Social and environmental impact assessments need to be mandatory for every mining or energy generation project. The rights of communities affected by mining for critical raw materials must be strengthened and those rights must be taken into account from the outset in the planning and implementation of any projects. Indigenous communities’ free, prior and informed consent (FPIC) must be ensured and their decisions respected.
  • The EU should reduce its own materials footprint to stay within planetary boundaries and to reduce dependence on resources from other countries such as Indonesia. The EU should commit to reducing critical raw materials consumption by setting targets to reduce consumption through sufficiency measures, material efficiency, responsible design, and substitution technologies​.

EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA)

Indonesia and the European Union have been negotiating the EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA) trade agreement since 2016. There are still contentious issues remaining in the negotiations and one of the key issues is on raw materials, under the Energy and Raw Materials Chapter. This chapter specifically regulates the opening of market access and investment in the energy and raw materials sectors to ensure that there are no barriers to EU trade and investment.

However, the liberalization of investment and trade in energy and raw materials in the Indonesia-EU CEPA would have a negative impact on the national interests of Indonesia, the environment, and the Indonesian people at large. For this reason, while we acknowledge the importance of a deepened relationship between the EU and Indonesia based on solidarity and trade cooperation, European and Indonesian civil society groups want to express their concerns regarding CEPA’s implications, in particular on human rights and the environment as well as Indonesia’s capacity to add value to its raw materials.

Irresponsible mining practices and its social and ecological consequences

Increasing demand for critical mineral raw materials for the green energy transition has triggered over-exploitation and extraction of natural resources, as is the case in Indonesia.

Some estimates indicate Indonesia supplies over one-fourth of the world’s mineral supply. Indonesia is the world’s biggest nickel producer. It also produces significant quantities of coal, copper, cobalt, tin, gold and bauxite. In the so-called ‘nickel provinces’ of Sulawesi and North Maluku, mining’s damage manifests itself in different forms. Civil society organisations have been tracking sea and river pollution contaminating once pristine waters, reducing fish stocks, causing skin infections in children, and threatening the livelihoods of local people and indigenous communities. Nickel mining in Raja Ampat threatens the most biodiverse coral reef system on the planet, and could further exacerbate the armed conflict in West Papua which is currently displacing almost 80,000 civilians. Mining is also driving deforestation and forcibly displacing local peoples. Women are forced to “adapt” to the situation by taking roles as mining laborers with poor working conditions, taking up informal works such as food vendors, or sex workers. The extraction of critical raw materials also happens at the costs of workers and unions.

The social and environmental impacts of mineral extraction for the green energy transition are not effectively addressed in the Energy and Raw Materials Chapter of the Indonesia-EU CEPA, as there are no legal implications for parties that fail to mitigate these impacts. The provisions under the trade and sustainable development chapter are still questionable in their effectiveness, given that there is no binding enforcement mechanism for related parties, especially corporations. This risks eroding Indonesia’s sovereignty in governing its natural resources and domestic value addition and supports a new period of extractivism.

Lack of value addition and undermining of Indonesia’s industrial development

The Energy and Raw Materials Chapter specifically regulates for the opening of market access and investment in the energy and raw materials sectors, and serves to ensure that there are no barriers to EU trade and investment in these sectors. This chapter seeks to ensure that Indonesia opens market access and eliminates ‘discriminatory’ treatment in the energy and raw materials sectors. This includes provisions prohibiting export restrictions, including the elimination in principle of all export duties or any measure having equivalent effect. However, this provision conflicts with Indonesia’s policy of limiting raw mineral exports to fulfill domestic processing.

The EU’s pressure on Indonesia to remove restrictions on raw mineral exports calls into question the EU’s commitment to support domestic value-added production in its partner countries. To make matters worse, the provision on performance requirements also prohibits the application of local content and much-needed technology transfer requirements. This prohibition will make it even more difficult for Indonesia to strengthen its downstream economic agenda around domestic value-added production. In fact, the prioritization of industrial policy within the EU, if conducted in a “business as usual” manner, will only deepen development inequality in developing countries like Indonesia. In this case, the EU’s desire to guarantee the supply of essential minerals for its industrial development will only perpetuate extractive business practices as usual.

The Energy and Raw Materials Chapter also encourages privatization, by prohibiting government intervention in the pricing of energy goods.  These  provisions will only benefit foreign private actors acting in Indonesia as independent power producers and will lead to the Indonesian government having no option but to purchase electricity at the company’s asking price. In the end, this mechanism will increase the burden on state finances and undermine people’s access to affordable electricity, as well as hindering the realization of an equitable energy transition.

Corporate protections for critical minerals supply in Indonesia

The EU expansion of resource extraction and the privatization of the public energy sector in Indonesia will only strengthen the protection of multinational corporations. This is evidenced by the Investment Chapter of the Indonesia-EU CEPA, which contains the Investment Court System (ICS). The EU proposal for ICS is simply a rebranding of the pre-existing ISDS mechanism that gives special rights to multinational corporations to sue the state. Given the global trend of competition to secure critical mineral supplies and the nationalization agenda of resources under Indonesia’s mining law, this will open up more potential lawsuits for Indonesia given Indonesia’s past experience in dealing with ISDS claims. The mining sector is one of the most litigious industries when it comes to ISDS. Therefore, we see that incorporating such elements into the Indonesia-EU CEPA will have an impact on the protection of the rights of the Indonesian people over corporations. The EU has recently decided to exit the Energy Charter Treaty after several ISDS cases, yet is still promoting provisions on ICS in its trade negotiations. This contradiction shows the EU’s hypocritical approach when it comes to the ISDS system.

Consequences for the EU

Along with the potential negative consequences for Indonesia, the EU’s policy of pushing for market liberalization has in fact harmed the EU’s own access to critical materials. While the EU has been fighting Indonesia over trade rules, China has invested tens of billions in nickel mining and refining in Indonesia. As a result, Chinese producers have secured a huge supply of nickel for its energy transition. As it stands, 80-82 percent of Indonesian battery-grade nickel output is expected to be produced by majority Chinese producers this year.

What the EU should therefore do is move towards a truly equal partnership with Indonesia, that does not force Indonesia to liberalize its raw materials export or give up its sovereignty to set prices, but instead shows the EU’s willingness to support Indonesian value addition and sustainable economic development. The EU can form an alternative to Chinese-owned environmentally destructive and dangerous nickel processing in Indonesia by investing in and supporting cleaner and more responsible processing capabilities and by paying a fair price for the resources. This would set the standard for fair, equal and sustainable trading practices.

Our demands

Civil society organizations from Europe and Indonesia ask:

  • The EU and the Indonesian government should stop the Indonesia-EU CEPA negotiations, because the agreement poses a threat to the environment and climate, and to the rights of women, Indigenous Peoples, workers, small farmers and fisherfolk.
  • Indonesia should retain the policy space to develop its own energy and raw materials value chain, including processing and refining capabilities. The Energy and Raw Materials Chapters in the CEPA would limit Indonesia’s ability to protect its internal market through (temporary) tariffs and quotas and to build up its own manufacturing capacities.
  • A just energy transition cannot be achieved by privatizing public goods, in this case energy. Public control through the state should be strengthened and not weakened by the liberalization agenda in the renewable energy sector.
  • The EU and Indonesia should not agree to any Investor-State Dispute Settlement (ISDS) mechanism, such as in the EU agreements with Mexico and Chile. Investment protection, including the Investment Court System (ICS), potentially undermines the state’s capacity to respond to public demands to implement a socially just climate policy.
  • The Indonesia-EU CEPA should not integrate elements from the Indonesian “Omnibus Law on Job Creation” as this makes human rights and labor protection in Indonesia worse. Both the EU and Indonesia must adhere to internationally agreed ILO-standards and conventions.
  • Trade cooperation must ensure that the traded raw materials have been produced under the highest environmental and due diligence standards. Social and environmental impact assessments need to be mandatory for every mining or energy generation project. The rights of communities affected by mining for critical raw materials must be strengthened and those rights must be taken into account from the outset in the planning and implementation of any projects. Indigenous communities’ free, prior and informed consent (FPIC) must be ensured and their decisions respected.
  • The EU should reduce its own materials footprint to stay within planetary boundaries and to reduce dependence on resources from other countries such as Indonesia. The EU should commit to reducing critical raw materials consumption by setting targets to reduce consumption through sufficiency measures, material efficiency, responsible design, and substitution technologies​.

Signatories

Global and regional organisations

  1. Climate Action Network Europe (CAN Europe)
  2. Climate Action Network Southeast Asia (CANSEA)
  3. EU Raw Materials Coalition
  4. European Coordination Via Campesina
  5. European Trade Justice Coalition
  6. Fern
  7. Friends of the Earth Europe
  8. GRAIN
  9. Plataforma América Latina y el Caribe mejor sin TLC
  10. Publish What You Pay
  11. Regions Refocus
  12. SIRGE Coalition
  13. Transnational Institute

National organisations

  1. Asamblea Argentina mejor sin TLC, Argentina
  2. ATTAC Argentina, Argentina
  3. Anders Handeln, Austria
  4. Attac Austria, Austria
  5. National Garment Workers Federation, Bangladesh
  6. 11.11.11, Belgium
  7. CNCD 11.11.11, Belgium
  8. Global Aktion, Denmark
  9. Miljøbevægelsen NOAH- Friends of the Earth Denmark, Denmark
  10. ActionAid France, France
  11. Aitec, France
  12. Alofa Tuvalu, France
  13. Alternatiba, France
  14. Amis de la Terre / Friends of the Earth, France
  15. ANV-COP21, France
  16. Attac France, France
  17. CADTM France, France
  18. Canopée, France
  19. CCFD-Terre Solidaire, France
  20. CGT (Confédération Générale du Travail), France
  21. Collectif national Stop CETA/Mercosur, France
  22. Confédération paysanne, France
  23. CRID, France
  24. Extinction Rebellion France, France
  25. Fédération Artisans du Monde, France
  26. Fondation Copernic, France
  27. France Nature Environnement, France
  28. FSU (Fédération Syndicale Unitaire), France
  29. Générations Futures, France
  30. Notre Affaire à Tous, France
  31. Reclaim Finance, France
  32. Union Syndicale Solidaires, France
  33. Veblen Institute for Economic Reforms, France
  34. Nature & Progrès Fédération, France & Belgium
  35. Attac Germany, Germany
  36. Berliner Wassertisch, Germany
  37. Brot für die Welt, Germany
  38. FIAN Deutschland, Germany
  39. German NGO Forum on Environment & Development, Germany
  40. Human Rights Monitor, Germany
  41. Misereor, Germany
  42. NaturFreunde Deutschlands, Germany
  43. Netzwerk gerechter Welthandel, Germany
  44. PowerShift e.V., Germany
  45. Rettet den Regenwald, Germany
  46. Slow Food Deutschland, Germany
  47. Stiftung Asienhaus, Germany
  48. Umweltinstitut München e.V., Germany
  49. Urgewald, Germany
  50. Watch Indonesia! Für Menschenrechte, Demokratie und Umwelt in Indonesien und Osttimor e.V., Germany
  51. WEED – World Economy, Ecology, & Development, Germany
  52. Aceh Wetland Foundation, Indonesia
  53. AEER (Aksi Ekologi & Emansipasi Rakyat), Indonesia
  54. BAKUMSU, Indonesia
  55. Bina Desa, Indonesia
  56. Borneo Institute, Indonesia
  57. CEMWU KSPSI, Indonesia
  58. Farkes Reformaasi, Indonesia
  59. FIAN Indonesia, Indonesia
  60. Forum penjaga hutan dan sungai harimau pining, Indonesia
  61. FSPI (Federasi Serikat Pekerja Indonesia), Indonesia
  62. Indonesia AIDS Coalition, Indonesia
  63. Indonesia for Global Justice (IGJ), Indonesia
  64. Indonesia Green Party (Partai Hijau Indonesia), Indonesia
  65. JAMTANI (Indonesian Peasant Community Organization), Indonesia
  66. Jaringan Advokasi Tambang Sulawesi Tengah ( JATAM SULTENG, Indonesia
  67. Jaringan Kerja Lembaga Pelayanan Kristen di Indonesia (JKLPK), Indonesia
  68. Koalisi perempuan jaga lingkungan, Indonesia
  69. Kolektif Semai, Indonesia
  70. Lembaga Pengkajian Hukum Internasional, Indonesia
  71. MATEPE Foundation, Indonesia
  72. Pemerhati Lingkungan hidup Urai Uni, Indonesia
  73. Pengurus Wilayah Aliansi Masyarakat Adat Nusantara (AMAN) Tano Batak, Indonesia
  74. Persatuan Pegawai PT PLN Indonesia Power, Indonesia
  75. Persaudaraan Pekerja Muslim Indonesia ’98, Indonesia
  76. Petrasa Foundation, Indonesia
  77. Puanifesto, Indonesia
  78. Publish What You Pay (PWYP) Indonesia, Indonesia
  79. Sahita Institute, Indonesia
  80. Satya Bumi, Indonesia
  81. Save Our Borneo, Indonesia
  82. SERBUK Indonesia, Indonesia
  83. Serikat Petani Indonesia, Indonesia
  84. Solidaritas Perempuan, Indonesia
  85. Wahana Lingkungan Hidup Indonesia (WALHI), Indonesia
  86. WALHI Bengkulu, Indonesia
  87. WALHI NTT, Indonesia
  88. WALHI Papua, Indonesia
  89. WALHI Sumatera Utara, Indonesia
  90. Yayasan Ambeua Helewo Ruru, Indonesia
  91. Yayasan Apel Green Aceh, Indonesia
  92. Yayasan Bina Insani Indonesia Kendari / Foundation For Human Development, Indonesia
  93. Yayasan Motivator Pembangunan Masyarakat (MPM), Indonesia
  94. Yayasan Pusaka Bentala Rakyat, Indonesia
  95. YIHUI (Yayasan Insan Hutan Indonesia), Indonesia
  96. Observatorio Fairwatch, Italy
  97. Mouvement Ecologique asbl / FoE Luxembourg, Luxembourg
  98. Both ENDS, Netherlands
  99. FNV, Netherlands
  100. Handel Anders! coalitie, Netherlands
  101. Platform Aarde Boer Consument, Netherlands
  102. SOMO, Netherlands
  103. Working group Food Justice, Netherlands
  104. Trade Justice Pilipinas, Philippines
  105. TROCA – Plataforma por um Comércio Internacional Justo, Portugal
  106. Earth Thrive, Serbia
  107. Observatori del Deute en la Globalització, Spain
  108. Ongd AFRICANDO, Spain
  109. SETEM Catalunya, Spain
  110. Southern and Eastern Africa Trade Information and Negotiation Institute (SEATINI), Uganda

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