WTO disciplines and biofuels: opportunities and constraints in the creation of a global marketplace

Oct 2006

This paper examines how the rules of the World Trade Organization (WTO) might apply to the biofuels sector. We emphasize “might” because this is a topic that has not yet been addressed in great detail and our examination should therefore be viewed as an exploratory one.
The fact that biofuels are not classified in a uniform fashion and their unusual make-up –a fuel produced through the transformation of agricultural feedstocks – makes examining biofuels and trade regulations a rather complex undertaking. As often happens when existing rules have to be applied to technologies that did not figure prominently when the rules were written, a debate needs to occur on how the rules apply to this technology and how or whether the rules need to be clarified or even changed.
As a general matter, energy trade has not been a focus of WTO law and policy, in part because until recently a number of key players in energy markets, particularly petroleum, such as Saudi Arabia, have not been WTO members. Moreover, due to certain exceptions in the GATT, the core agreement in the WTO on trade in goods, such as the national security exception and an exception that deals with scarce or potentially scarce commodities, it has sometimes been thought that energy policies are largely exempt from discipline, although this assumption, as the paper shows, does not bear close scrutiny.

By: International Food & Agricultural Trade Policy Council

 
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