A booming world trade in biofuels may be around the corner, a new report said today, so the World Trade Organization and others must act now to regulate rules and standards that are "all over the map."
"Everybody's wildly producing biofuels, especially in developed countries," said Charlotte Hebebrand, president of the International Food and Agricultural Trade Policy Council, which released the report on WTO rules and fuels like ethanol.
But with rules for things such as import standards varying from country to country, Hebebrand said the WTO, the World Customs Organization and national governments must work together to make sure that future biofuel trade runs smoothly.
"Uncertainty over biofuels classification, and the range of government measures to protect domestic biofuel production - from tax incentives, high tariffs and subsidies - risk stunting growth in trade," the report said.
One big question is whether the WTO will consider biofuels, made by processing crops including corn and sugar cane, as agricultural, industrial or even environmental goods, noted the group, whose members represent current and former government officials and agricultural industry executives.
Classification could affect, for example, how the fuels are treated in trade talks and whether governments would be permitted to pay export subsidies to biofuel producers. The council suggested one idea for solving the problem would be introduce a new biofuel classification.
Also needed, the report said, are world standards on biofuel content and rules on subsidies for biofuel crops. If no decisive action is taken, Hebebrand said governments could end up "cross-subsidizing" biofuel by-products like glycerol.