Brazilian sugarcane head said EU, US, Argentine biofuel trade policies about economic benefit, not global emission reductions

In Brazil, the head of the Brazilian Sugar Cane Industry Union said that national and regional trade barriers and tax policies are interfering with the drive to provide eco-friendly fuels to consumers and industry. Marcos Jank said, at the Reuters Global Agriculture and Biofuel Summit, that he expects the EU to impose trade barriers to Argentine and US biodiesel in retaliation for subsidies and tax preferences in the Americas that have led to dumping practices in Europe. Jank said that countries are seeking national economic benefit, rather than approaching climate change as a global problem.

The United Nations Development Program called last month 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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