Bridges Weekly Trade News Digest • Volume 10 • Number 31 • 27th September 2006
Ted Turner Promotes Biofuels At WTO Forum; Urges Govts To ‘Fight One More Round’ For Doha
Ted Turner, the US media mogul turned philanthropist, delivered a ringing call for the resurrection of the frozen Doha Round trade talks at the WTO’s public forum in Geneva on 25 September. He told an audience of trade officials, civil society organisation representatives, academics, and members of the private sector that boosting support to biofuels offered a way out of the deadlock over farm subsidies — and would also reduce poverty and environmental degradation.
The WTO’s annual public forum plays host to a series of discussions and seminars on a wide range of issues related to the multilateral trading system, organised primarily by non-governmental organisations (NGOs), private sector groups, intergovernmental institutions, and the WTO itself. The 1000-odd participants at this year’s two-day conference focused on the theme "What WTO for the 21st century?"
Turner, who founded the international television network CNN, addressed the opening session in his capacity as chair of the UN Foundation, which he founded in 1998 and endowed with USD 1 billion to support the UN and its causes. Saying that it would be a "disaster" if governments gave up on multilateral trade talks, he called on countries to think about long-term gains for the global economy, rather than short-term pain, in order to muster up the will to revive the Doha Round talks and bring them to a successful conclusion.
"If we give up on Doha, we’re giving up on fighting poverty," Turner said. He asked governments not to give up on the negotiations, and, using a boxing metaphor, to "fight one more round — this Doha Round."
Turner moots biofuels as way out of subsidy conundrum
Blaming rich countries’ need for farm subsidies on excess production, Turner said that biofuels — fuels made from agricultural products — offered the promise of vastly increased worldwide demand for agricultural products. This, in turn, he argued, would give "developed countries a chance to end the stalemate over agriculture subsidies by giving farmers incentives to grow biofuels."
Instead of having to commit electoral suicide by cutting subsidies to farmers, rich country politicians could simply pay them to grow crops that could be converted into fuels. If WTO governments adopt policies to encourage the production and use of biofuels, Turner added, the demand for biofuel crops would rise so high that subsidies to support them "will not displace foreign competitors or prices paid abroad."
Turner pointed to Brazil, which has saved USD 50 billion in oil imports by using ethanol made from sugar, as well as other examples of crops such as palm, soy, rapeseed, and jatropha which have been used to make biofuels. "Forty percent of the energy for the Bolivian town of Riberalta comes from a plant powered by Brazil nut shells," he said.
He emphasised that biofuels were renewable, could "dramatically cut greenhouse gas emissions," and could help poor countries generate jobs, reduce poverty, and diminish their reliance on expensive imported oil.
Turner proposed that "developed countries should agree to phase out tariffs and reduce their subsidies for food and fibre crops and replace them with support for biofuels" over a 5-10 year transition period.
Others sound note of caution
Others, however, cautioned that even though biofuels have great potential, expectations for them should be kept realistic.
Unilever Chair Antony Burgmans, who addressed the session following Turner’s speech, warned that a growing world population’s demand for both biofuels and food would put extraordinary pressure on land and biodiversity, raising the spectre of deforestation in rainforests in Brazil and Borneo. He urged the audience to be wary of ‘low-intensity’ biofuels such as rapeseed oil that require several chemical inputs and have relatively low energy yields, although newer biofuels offered far greater possibilities. Burgmans added that wider use of existing technology for conventional fuel efficiency could yield vast savings in greenhouse gases.
Ronald Steenblik, director of research for the Geneva-based Global Subsidies Initiative, also cautioned against viewing biofuels as a "magic bullet," for the trade talks as well as for poverty and the environment. In an interview, he noted that the deadlocked agriculture negotiations dealt with much more than biofuel crops, and that some of the most politically contentious subsidies — to rice, cotton, and dairy — went to crops that were not even used to produce biofuels. He also questioned Turner’s apparent assumption that biofuel crops would be produced (often with the help of subsidies) and consumed domestically, rather than freely produced and traded. "Orienting subsidies towards biofuels ignores that biofuels themselves can be traded," he said, adding that there was little evidence that higher prices would obviate demands for subsidies.
Furthermore, Steenblik said, increased global demand for crops would inevitably affect land and water use. Enormous price increases for agricultural products would likely have a negative impact on net food-importing developing countries. Policymakers should keep specific local conditions in mind when discussing cost-effective ways of replacing greenhouse gas emissions, he emphasised. "There seems to be a political correctness about biofuels, so that they can’t be questioned."
Certain opportunities did exist for addressing biofuels within the current framework of the Doha Round talks, Steenblik said. For instance, biodiesel had been proposed for expedited tariff cuts as an ‘environmental good.’ However, he observed, tariffs on biodiesel were already quite low. Ethanol, on the other hand, is still subject to high tariffs in many countries, including a 54 cent per gallon tariff in the US — but is currently covered by the WTO Agreement on Agriculture and thus not eligible for the environmental goods negotiations. He noted that countries could nevertheless decide to create a new exception for ethanol, or simply decide to unilaterally liberalise trade in it.
Some trade experts proposed making subsidies to biofuel crops eligible for the ‘green box’ in the agriculture negotiations, which would make them exempt from cuts to payments that clearly distort production and trade. At a UN Foundation-sponsored event on energy at last year’s WTO public forum, Ira Shapiro, a former legal counsel to the Office of the US Trade Representative, also suggested reforming multilateral subsidy disciplines to explicitly protect governments’ ability to encourage the development of alternative energy sources.
ICTSD reporting.