UN Development Program calls on US, Europe to drop barriers to Brazilian ethanol

The United Nations Development Program called today for the elimination of the Brazilian ethanol tariff imposed by the US and Europe. The UNDP report said that Brazilian ethanol reduces greenhouse gas emissions by up to 70 percent, compared to 13 percent for corn ethanol, and that trade barriers are preventing the reduction of worldwide dependence on oil.

The United States and European Union have blocked a Brazilian proposal to include biofuels among “environmental goods” scheduled for tariff reduction or elimination in the next world trade treaty. The US and European position is that the environmental designation rules are for industrial products, not agriculture.

Brazil is expected to ask the World Trade Organization to investigate U.S. ethanol subsidies. If the WTO takes on the case, it will be the first time the organization has ruled on energy subsidies.

The convergence of energy and agriculture in the biofuels industry is expected to pose thorny questions for the WTO if it takes on the case. While neither sector has enjoyed free trade conditions, the subsidy mechanism which has supported national agriculture interests has attracted negative attention far more than the cartel approach employed in the oil industry.

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