ANALYSIS OF DISCRIMINATORY MEASURES FROM EUROPEAN UNION RENEWABLE ENERGY DIRECTIVE II TO INDONESIA AS A PALM OIL PRODUCER COUNTRY

On 21 December 2018, the European Union (EU) issued a regulation titled Renewable Energy Directive II (RED II), where the RED II policy introduced the indirect land use change (ILUC) criteria for palm oil. RED II states that palm oil is classified as a commodity with a " high ILUC risk" type, and as such, the EU will gradually reduce palm oil consumption and no longer use palm oil by 2030. Indonesia brought this issue to WTO in 2020. Indonesia, through its consultation, argued that the RED II is inconsistent with the few provisions of the General Agreement on Tariffs and Trade (GATT) 1994, particularly under the National Treatment obligation. Indonesia argued that the measures derived from the RED II policy might cause discrimination against palm oil-based biofuel, considering RED II classifies palm oil as a high ILUC-risk commodity. Such discrimination occurs by gradually reducing the use of palm oil as a material for biofuels until it reaches zero percent by 2030. Further, Indonesia assumed that the RED II policy prioritizes other vegetarian oil produced in the EU countries, such as sunflower and rapeseed. This paper will analyze whether the RED II policy may be considered discriminative measures by the EU to palm oil producer countries under WTO regulations. Hence, such RED II policy is likely inconsistent with Article III:4 of the GATT 1994 regarding National Treatment.