Evaluation of the Indonesian Log Timber Export Prohibition Policy and Proposed Potential Alternative Policies to Minimize Subsidy Allegations

— Wood and paper industry sector become one of the heavily sector which has been charged with trade remedy in Indonesia mostly due to the implementation of log timber export prohibition policy. The implementation of this policy since 2012 has received many trade remedy allegations, particularly subsidy allegations by trading partner countries. This study aims to evaluate the log timber export prohibition policy and propose alternative policies that could minimize the potential for alleged subsidies. The study used some different methodology included normative juridical legal analysis based on the DS491 case study: US Coated Paper, Regulatory Impact Analysis (RIA), and Computable General Equilibrium (CGE) Model to simulate the impact of trade remedy on export prohibition policy, export quota policy, and export duty policy. The results show that the log timber export prohibition policy concluded as a subsidy. While the impact of log timber prohibition export on financial contribution is still debatable. This study recommends better alternative policy option that provide benefits in supporting forest sustainability and the continuity of downstream industries made from wood. That would be done by continuing the log timber export prohibition by adjusting the legal text with World Trade Organization (WTO) principle, namely conservation of natural resources in Article XX GATT 1944 (general exceptions) and clarifying that the control of forests by the government is not dominantly supporting the formation of domestic market prices.