ILUC proposal vulnerable to WTO rules

Speaking at a conference in Brussels, Jung-ui Sul of global law firm Sidley Austin said that there were similarities between the European Commission proposal and several WTO cases that the US has lost. 

One US law banning clove cigarettes, mostly imported from Indonesia, did not extend to other flavoured products such as menthol cigarettes manufactured in the US. On those grounds, the WTO found the US law to be discriminatory.

Through a variety of measures, such as a cap on food-based biofuels, the EU proposal attempts to stimulate the production of non-food biofuels, which have lower ILUC-related CO2 emission values.

The EU would have to prove that no “reasonable alternative” is available that would be less restrictive to trade. Incentivising low-ILUC biofuels rather than capping their use could be such a WTO-friendly alternative, she suggested.

Several non-food biofuels, including cereal straw, cause ILUC emissions but the proposal identifies them as biofuels with zero emissions. The WTO could decide that the distinction made between food- and non-food biofuels is arbitrary and thus illegitimate, the lawyer added.

A representative of the Brazilian Institute for International Trade Negotiations said the proposal overestimated the ILUC emissions for sugar cane bioethanol. The estimate did not take account of recent progress made by the industry to increase crop and energy yields which reduces land needs, he said.

“Some nuance is needed. The proposal makes a 'black and white' kind of distinction between ‘good’ non-food biofuels and ‘bad’ food biofuels, but, in fact, the distinction may not be so clear cut,” said the Green group shadow rapporteur for the proposal on the parliament’s environment committee, Bas Eickhout.