The primary focus of this criticism centers on the issue of critical minerals, specifically copper and nickel, and their potential influence on the direction of downstreaming policies and a just national energy transition.
The civil society organization Publish What You Pay (PWYP) Indonesia, along with the international research institute Transnational Institute (TNI), has sharply criticized the two recent trade deals signed by the Indonesian government with the United States (US) and the European Union (EU). The primary focus of this criticism centers on the issue of critical minerals, specifically copper and nickel, and their potential influence on the direction of downstreaming policies and a just national energy transition.
Since the implementation of the ban on raw mineral exports in 2020, Indonesia has recorded a 20-30 percent increase in domestic added value for commodities such as nickel. This success is often cited as a “main attraction” in trade negotiations with partner countries, including the US and EU.
However, they believe that the closed-door negotiation process, without public involvement, and the non-transparent nature of the agreement have the potential to lead to a “trade-off” of interests that could weaken Indonesia’s position, particularly in maintaining resource sovereignty and the sustainability of the green energy transition.
As of the last update on July 19, 2025, the Indonesian government had announced two important agreements. First, the reciprocal tariff agreement with the US, released on July 15, under which Indonesia received a 19 percent reduction in export tariffs, down from the threatened 32 percent, in exchange for the purchase of 50 Boeing aircraft and increased imports of agricultural and energy products from the US.
Second, the CEPA agreement with the EU, reached as a political agreement on July 13 and targeted for completion by September 2025, liberalizes approximately 80 percent of tariffs on goods and services.
However, despite these trade benefits, the PWYP and the TNI warned of strategic consequences that could undermine efforts to develop a domestic mineral processing industry. Securing critical mineral supply chains has become a geopolitical instrument used by developed countries like the US and EU to pressure resource-rich developing countries. This policy is considered contrary to Indonesia’s downstreaming spirit, which encourages added value through domestic processing.
In the view of Indonesian National Armed Forces (TNI) researcher Rachmi Hertanti, the US has a significant interest in securing supplies of strategic minerals like copper to support the defense and semiconductor industries. On the other hand, President Trump’s protectionist policies, such as the “Made in America” program, pose a challenge to Indonesia’s ability to maintain its value-added policy.
“The effectiveness of Indonesia’s mineral downstreaming negotiations is threatened by Trump’s policies. Including minerals in negotiations becomes irrelevant, and Indonesia ultimately compromises for tariff reductions, sacrificing copper downstreaming, locking Indonesia back into raw exports at the bottom of the global value chain,” she said in an official statement received by Hukumonline on Monday (July 21).
She also emphasized that the ban on raw mineral exports should be a primary and non-negotiable basis in the context of global geopolitics. This policy has previously drawn protests from the EU through a lawsuit against the nickel export ban at the WTO, supported by the US as a third party.
“The tug-of-war over US tariff reductions and EU market access only weakens Indonesia’s bargaining position. For example, the US currently wants to strengthen the capacity of its domestic processing industry, particularly for copper, to reduce dependence on China,” he continued.
On the other hand, the US National Trade Estimate (NTE) 2024 report also lists the ban on Indonesian copper exports as a trade barrier. In the Indonesia-EU CEPA, he said, provisions on energy and mineral raw materials are said to potentially violate the downstreaming principle, as they include clauses prohibiting export restrictions, eliminating export duties, and relaxing the Domestic Component Level (TKDN) requirements.
“So what will happen is that Indonesia will be pressured to remove the ban on concentrate exports, including TKDN, and its intention to strengthen the downstream industry, especially copper, could potentially be dashed,” he concluded.
Meliana Lumbantoruan, Deputy Director of PWYP Indonesia, echoed this sentiment. She believes that direct tariff negotiations with the US risk weakening the direction of the copper downstreaming policy, especially in the context of Indonesia’s complex relationship with Freeport McMoRan, a US mining company.
“Freeport continues to seek loopholes to maintain its copper concentrate export relaxation. If the government succumbs to US pressure and relaxes the export ban, the downstreaming policy, which began in December 2024, will be reinstated. We will lose consistency and direction. This will be very detrimental to Indonesia in the long term,” he said.
Furthermore, Meliana also highlighted the environmental sustainability dimension missing from the trade agreement. According to her, the sharp increase in global demand for critical minerals has fueled over-extraction practices that threaten ecosystems and exacerbate the climate crisis.
“The ban on raw mineral exports should be used to more wisely control permit issuance and production.” “This could be an important instrument in realizing responsible resource management in line with environmental sustainability commitments,” he explained.
He also doubted the serious commitment to environmental sustainability issues in the two trade agreements. For example, in the Indonesia-EU CEPA, there appears to be no legally binding environmental impact assessment mechanism. Meanwhile, with the US, the Trump administration’s history shows a highly skeptical attitude towards environmental issues.
“Trump even withdrew the US from the Paris Agreement and returned to prioritizing fossil fuels,” he added.
Therefore, PWYP Indonesia and the Transnational Institute urge the Indonesian government to be transparent and provide public access to the contents of Indonesia’s trade agreements with the US and EU so that they can assess the risks and potential negative impacts. According to these civil society organizations, the potential negative impacts must also be comprehensively reviewed by the Indonesian House of Representatives before giving approval for ratification.
Source: Hukum Online