Trading Biofuels - Will International Trade Law Be a Constraint?

Biofuels are increasingly being looked at to spur economic activity in the agricultural sector and to contribute to broader rural development goals while at the same time assisting in the reduction of harmful emissions created by burning petroleum-based fuels. Hence, biofuels appear to be a “win-win” technology that will contribute to achieving a number of important policy goals. As a result, governments around the world have become actively involved in the promotion of this new industry. The industry has expanded rapidly in the last few years but is still in a developmental stage. As the industry matures, biofuel producers will begin to see opportunities in international markets. Canada and the United States have considerable export potential due to their large supply of biomass and technological capacity to convert the biomass into biofuel. This article examines the potential trade issues that could arise when biofuels enter the international market. The issues examined include subsidization, the trade effects of using biotechnology in producing biofuels, market access and tariff classification, and potential technical barriers to trade related to product standards.