From SSRN, this is the abstract of "EU Biofuels Policy – Raising the Question of WTO Compatibility," by Stephanie Switzer and Joe McMahon:
This article examines the question of the compatibility of the new EU Biofuels regime with the disciplines established by the WTO. After an explanation of the evolution of the Biofuels regime, the authors consider whether that regime is compatible with the rules on subsidies established by the WTO Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures. Thereafter the authors assess the compatibility of the regime with the national treatment provision of the GATT, Article III. Concluding that there may be an incompatibility with the latter, the authors conclude by suggesting the need for international negotiations on the liberalization of trade in Biofuels and more especially on the issue of the sustainability of Biofuel production, an issue that lies at the heart of the changes made recently to the EU Biofuels regime.
From the paper:
Biofuels20 and bioliquids21 used to meet targets set out in Directive are required to adhere to certain sustainability standards.22 The core sustainability criterion established under the Directive requires biofuels to achieve a minimum level of 35% greenhouse gas savings.23
...
It is argued that while the existence of sustainability criteria does not in itself subject imported products to treatment which is ‘less favourable’ within the meaning of Article III:4, the 35% greenhouse gas savings criterion may be problematic. It is possible that this figure could favour biofuel production from domestically produced rapeseed oil over imported products such as biodiesel derived from palm oil.84 Indeed, the ‘default’ greenhouse gas savings for biodiesel produced from rapeseed set out in the Directive is listed as 38 %. This compares rather unfavourably with the default for biodiesel produced from palm oil which is listed as achieving greenhouse gas savings of only 19%.85 While a more detailed examination is required of both the impact of these default values and reasons behind the introduction of the value of 35% greenhouse gas savings, it is possible that their combined effect could result in less favourable treatment of imported biofuels as well as the raw materials used in their production. ...
They also talk about subsidies rules, GATT Article III:2 and GATT Article XX.
