The International Food and Agricultural Trade Policy Council (IPC) has recently called on the WTO to clarify its rules on biofuels. It called for a resolution of the customs classifications problems surrounding these fuels so that trade could flourish in an organized manner. More specifically it argued that uncertainty over the biofuels customs classification, and the range of governmental measures to protect domestic biofuel production, including tariffs and subsidies, risked stunting growth in trade even as the global demand for biofuels was rising. For the IPC–as well as for numerous actors on the biofuels landscape–an examination of how WTO rules apply to these fuels has clearly become timely.
This article seeks to draw attention to the multiple policy objectives that are driving governments to promote biofuels, and to how “trade policy” is largely being put to the service of the specific goals to which governments are attaching priority. It argues that a coherent vision at the international level of the role that biofuels should play in energy, economic and environmental policy has yet to emerge, but that despite this situation it is key that this sector develops on a “level trade policy playing field” for its long-term efficiency. Such a levelling would, in particular, unleash the full comparative advantage of tropical developing country producers of ethanol. The article highlights that–even in the absence of a concerted decision by governments on how to handle these fuels at the WTO–certain restrictions to biofuels trade would in any event be reduced through the current Doha Round of trade negotiations. But for the Doha Round to bear full fruit, it would be important for governments not to fully shelter either biofuels, or their production feedstock, through existing “flexibilities” in the negotiations.Journal of World Trade