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Danger of Trade Barriers for Renewable Fuels Highlighted During WTO Director-General's Visit to Ethanol Mill in Brazil

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PRADOPOLIS, BRAZIL (April 18, 2010) -- It makes no sense for countries to adopt ambitious policies to reduce greenhouse gas (GHG) emissions, while continuing to apply high tariffs on clean technologies that can be instrumental to achieve reduction goals and allowing fossil fuels to be traded freely. That was a key message delivered this morning by the President and CEO of the Brazilian Sugarcane Industry Association (UNICA), Marcos Jank, in a presentation to the World Trade Organization's Director-General, Pascal Lamy.

Jank's presentation opened a visit by Lamy to the Sao Martinho sugar, ethanol and bioelectricity plant in the town of Pradopolis, in the heart of the world's largest sugarcane growing region in the Brazilian State of Sao Paulo. The Sao Martinho plant processed 8.1 million tons of sugarcane in the 2009/2010 harvest season, making it the largest among Brazil's 430 cane processing mills and largest in the world.

"It is essential that WTO member countries reconcile their trade and climate change policies, and that we progress toward the inclusion of ethanol in the list of environmental goods for which import tariffs must be abolished," said Jank, as he argued that ethanol must be recognized as a global energy commodity. To achieve that, UNICA defends that the customs classification for ethanol should be changed, in order to reflect its growing importance as a low-carbon energy solution.

The proliferation of proposals for legally binding criteria, developed by institutions and individual countries to ensure that goods are sustainably produced and don't add to climate change, was also raised during Jank's presentation. "This might well become a challenge for WTO rules.

Sustainability must be a given and we all want to ensure that it is always a vital consideration, but any binding criteria must be science based and measurable in practice. Otherwise, we will be opening doors to a serious risk of creating new trade barriers," he explained.

The greatest risk of new non-tariff barriers, according to Jank, lies in the development of implementation mechanisms to prove compliance with sustainability criteria. He added that compatibility with WTO rules of recent initiatives, like the European Union's Directive on Renewable Energy Sources, must also be assessed carefully as they also could lead to new barriers to trade disguised as sustainability concerns.

Pascal Lamy visited the Sao Martinho mill as a guest of UNICA, following a meeting with Brazil's External Relations Minister Celso Amorim in Brasília on Saturday, April 17. Later today he flies to Montevideo, Uruguay, and then on to Buenos Aires, Argentina, to wrap up his South American trip.

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Ana Carolina Lessa
Public Affairs, North America
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