The Prisoner’s Dilemma: Indonesia and the European Union in Export Commodity Disputes

Abstract

Nickel ore export ban has been imposed by Indonesia as the leading actor on the global nickel supply chain which created a disruption and has not been perceived well by other countries, especially the European Union (EU) countries. This paper will analyze the implications caused by the export ban to EU countries and the actions following it, including the enactment of the palm oil ban. Starting with the World Trade Organization (WTO) panel, the EU’s strategy of forcing Indonesia to lift the export ban has not yet succeeded. With the tit-for-tat strategy, this paper identifies the EU’s palm oil ban as a form of retaliation for the Indonesian nickel ore export ban. Although the tit-for-tat strategy often is used in a positive-sum game, the conflict between Indonesia and the EU is a negative-sum game with both parties putting their economies at risk.

Keywords: nickel ore export ban, palm oil ban, tit-for-tat strategy, Indonesia, European Union

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