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Promoting an Open and Equitable Global Food System

IPCPress Release

FOR IMMEDIATE RELEASE 

Contact:

Katharine Shaw

+1 202-328-5117  

IPC Calls for Greater Transparency of Biofuels Support

September 1, 2010

(Washington, DC) – Transparency in subsidies is both a prerequisite for the wise expenditure of public funds and an aid to avoiding trade disputes. “Trade conflicts over biofuels have already erupted,” states IPC Chairperson Carlo Trojan, “and we are likely to see more. With this paper, IPC is calling for a clarification of how to notify support to the biofuels sector, and this clarification must include examining whether support of biofuels also serves as agricultural support.” IPC’s Position Paper “Biofuel and Biomass Subsidies in the US, EU and Brazil: Towards a Transparent System of Notification,” by Tim Josling, David Blandford and Jane Earley raises a number of issues, among them:

  • Both the U.S. and the EU have notified only a part of their biofuels support under the WTO’s Agreement on Subsidies and Countervailing Measures (ASCM) and Agreement on Agriculture (AoA), demonstrating that the absence of a subsidy in the notification is not an indication that such a subsidy does not exist.

  •  It is important to determine who gets the benefit of biofuels subsides by also considering “downstream” effects on biomass producers.

  •  Ethanol is classified as an agricultural product, whereas biodiesel is classified as an industrial product, indicating that ethanol support should be notified under the AoA. Moreover, agricultural feedstocks used to produce both ethanol and biodiesel, whose producers may also benefit from support to biofuels, are clearly agricultural products, subject to the AoA.

  •  In the U.S., some $3 billion of support may possibly be provided to corn producers from the ethanol by 2015, according to an estimate on the price-enhancing effect current U.S. policies. If this were included in the U.S. Total Aggregate Measure of Support, it could become limiting due to spending constraints imposed under the AoA, in particular if the Doha Round is concluded.

The paper also raises a more systemic issue, of particular relevance at a time of concern about high food prices. IPC member Stefan Tangermann points out that “whereas traditionally agricultural subsidies have been controversial because they put competitive producers at a disadvantage as a result of the price depressing effect of those subsidies, biofuels subsidies actually lead to price increases. Such increases are not to the detriment of producers but do negatively impact consumers, in particular the poor.”  IPC is organizing two events to present and discuss this paper and related issues:

Classifying Biofuels Subsidies: Farm Bill and WTO Considerations

September 14, 201012:00 – 1:30 pmRayburn House Office Building, Washington, DC

Clarifying WTO Rules for Biofuels

IPC Session at the WTO 2010 Public ForumSeptember 16, 20102:15 – 4:15 pmGeneva, Switzerland More information about the events can be found on IPC’s homepage, www.agritrade.org. The paper, "Biofuel and Biomass subsidies in the U.S., EU, and Brazil," along with the IPC Policy Focus, "Biofuel and Biomass Subsidies and WTO Rules," can be found athttp://www.agritrade.org/BiofuelSubsidiesUSEUBrazil.html About the International Food & Agricultural Trade Policy Council

The International Food & Agricultural Trade Policy Council (IPC) promotes a more open and equitable global food system by pursuing pragmatic trade and development policies in food and agriculture to meet the world’s growing needs. IPC convenes influential policymakers, agribusiness executives, farm leaders, and academics from developed and developing countries to clarify complex issues, build consensus, and advocate policies to decision-makers. More information on the organization and its membership can be found on our website:

www.agritrade.org.

 

For media inquiries, please contact Katharine Shaw at 202-328-5117 or shaw[at]agritrade[dot]org.


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