WTO blocks biofuel export subsidies

Export subsidies for bioethanol and biofuel feedstocks in general are to be scrapped after a World Trade Organization ministerial meeting in Nairobi agreed in mid-December to phase out the trade sweeteners, reports Keith Nuthall. The deal covers exports of soy, sugar, corn oil, palm oil, cotton oil and other feedstocks, including animal and vegetable wastes, that can be used in the development of second generation biofuels. Biodiesel falls outside the scope of the tariff lines covered by this agreement, however, as do fossil fuels, although bioethanol (HS code 2207) is covered.

Developed country members have committed to remove export subsidies immediately for basic agricultural commodities and products, with a slower phase-out schedule for all processed foods, pig-meat and dairy products, which is not likely to cover bioethanol. Standard developing countries, such as India, will phase out their agricultural export subsidies by 2018, although they will retain the right to pay export subsidies to cover marketing and transport costs for agricultural exports until the end of 2023. Under the deal, least developed countries such as Bangladesh, and net food-importing developing countries, including many sub-Saharan African countries, can continue to finance export subsidies on agricultural products until the end of 2030.

For any remaining subsidies covered by the deal but left in place during the phase-out period, the agreement binds WTO members − which currently numbers 162 countries − to make sure such subsidies do not damage a significant industry in another member state. The agreement says they must ensure ‘any export subsidies have at most minimal trade distorting effects and do not displace or impede the exports of another member’. WTO Director General Roberto Azevêdo hailed the deal as the ‘most significant outcome on agriculture’ in the organisation’s 20-year history. ‘WTO members − especially developing countries − have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade,’ he declared.