Green  Protectionism  in  the  European  Union  by  Frederik  Erixon  from  the  European  Center  for  International 

Political  Economy  examines  Europe’s  trade  policy  on  biofuels  in  the  dynamics  of  protectionism and environmentalism and later concludes that its  Renewable Energy Directive (RED) is a  good example of “green protectionism”.  Renewable Energy Directive  Europe has been a leading proponent of international environment action. Recently, EU countries signed  up to a binding target to direct 20% of their energy needs from fossil fuels to renewable energy sources  by  2020.  To  meet  this  objective,  they  agreed  on  a far‐reaching  RED  in  December  2008,  which  set  individual targets for each member state. Under the new Directive, the member states were requested  to  submit  a  document  to  specify  what  polices  they  plan  to  enforce  on  biomass  resources  by  June  30  2010. Since the implementation of the Directives is scheduled in the next year, it carries significance that  we  review  its  implication  on  non‐EU  countries.  In  this  regard,  the  paper  sets  out  solid  guidance.  His  article also introduces green protectionism which is a relatively new concept, but since it induces a lot of  contention, it is worthwhile to examine.     Key Argument   The  author  advances  his  argument  on  the  RED  to  analyze  the  EU’s  approach  towards  biofuels.  The  statistics state that Europe is in overcapacity of biodiesel, especially rapeseed crops, which has been less  protected by tariffs and subsidies compared to other biofuels. According to him, the RED will effectively  protect  the  industry  through  setting  up  technical  regulation,  and  since  it  is  adding  non‐environmental  objectives that are discriminatory, it is a manifestation of green protectionism.   To  support  his  assertion  that  the  RED  should  be  modified,  he  also  argues  that  the  Directive  violates  various  GATT rules and further do not meet any of the exception criteria  under the GATT regime either.   The first alleged GATT violation is that the RED violates GATT Article I1, rules on ‘like products’  which  states  that  any  advantage  given  to  one  product  must  also  be  given  to  like  products.  According  to  the  RED, biofuels which don’t result in at least 35% of greenhouse gas saving are not eligible for excise‐tax  exemption. Since physical difference between products that either meet or do not meet the target of 35%  cannot show that products are not ‘alike’, the author contends they should be treated as ”like products”,  and,  therefore, giving economic advantage only to one group of products is discrimination. 

                                                            
1

Article I: General Most-Favoured-Nation Treatment

1.         With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the  international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect  to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of  Article III,* any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other  country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other  contracting parties [emphasis added]. 

 

  they  will  not  be  eligible  to  receive  the  tax  exemption. is not considered consistent with the  Article  XI3 which  sets  out  clear  limits  on  the  use  of  trade‐restrictive  measures  to  no  prohibition  and  restrictions  other  than  duties.  He argues that  the  RED  will  clearly  affect  sales  of  foreign  producers  discriminated  by  the  Directive  and  the  discriminatory aspect of likeness discussed under Article I applies equally to the Article III. shall be instituted or maintained by any contracting party on the importation of any product of the territory of any  other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.  Finally. offering for sale.  The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment  no less favourable than that accorded to like products of national origin in respect of all laws. For the  above  reasons  the  author  believes  the  RED  is  clear  violation  of  the  GATT  and  has  to  be  changed  accordingly. The Appellate Body of the WTO has shown this to be the case through its rulings. purchase. distribution or use. the RED’s adoption will protect its biodiesel industry.  Article  XX4.  3 Article XI: General Elimination of Quantitative Restrictions 1. mainly  articulated  in  the  Article  175 of  it. nothing in this  Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: [continues]    5  Please see AnnexI  .  which  deals  with  the  GATT  Exception. transportation.   Green Protectionism  World  Wildlife  Fund  (WWF)  defines  Green  Protectionism  as  action  that  provides  economic  and/or  political protection for domestic industry ostensibly on environmental grounds.  If  a  foreign  exporter  cannot  document  all  necessary  information  to  prove  compliance.  Further. 4 Article XX: General Exceptions             Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable  discrimination between countries where the same conditions prevail. or a disguised restriction on international trade. The provisions of this paragraph shall not prevent the application of  differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the  nationality of the product. the author argues that the Directive. whether made effective through quotas. taxes or other charges. especially rapeseed oil market which has  faced tougher competition with cheaper foreign products such as palm oil.  Further. does not apply as the EU will clearly have difficulty proving a rational connection between the  measure  and  the  environmental  goal  to  avoid  it  being  seen  as  an  arbitrary  and  unjustifiable  discrimination.The author also alleges that the RED violates Article III2 which covers national treatment. In  Europe.         No prohibitions or restrictions other than duties.  the  use  of  the  imported  biofuel  cannot  be  part  of  the  national  obligations  to  increase  the  share  of  biofuel  energy  in                                                               2  Article III: National Treatment on Internal Taxation and Regulation 4. import or export  licences or other measures. a de facto restriction. regulations and requirements affecting their  internal sale. The RED places  the burden of proof on the companies or farmers to show that their products meet the criteria. it is expected that palm oil import to Europe will significantly decrease.   Under the RED. It is differentiated from  environmental protection which protects the environment effectively without distorting trade flow.  taxes  or  other  charges.

 However.   With  increase  of  cheap  replacement  of  rapeseed  oil.  the  investments  in  biodiesel  production  were  already  planned  before  2007  and  despite the economic recession last couple of years.     10 9 (http://www.  So  will  labor  unions  who  want  to  keep their employers from moving to the developing countries seeking for cheaper production cost.ebb‐eu. the industry will be able to meet or ever beat the target by a few years8.  especially  in  China and Indonesia.  however. July 17.  which  is  the  Europe’s  main  source  for  biodiesel. In reliance of the ambitious objectives by  the  EU  authorities. European Biodiesel Board.mongabay.  if  it  is  not  end‐products.org/EBBpressreleases/EBB%20press%20release%202009%20prod%202010_capacity%20FINAL.their  portfolio. mongabay. May 07.  They estimate that shifting from cassava or acai to  palm could increase average monthly income for a families in the area as much as five times7.32% of illegally logged material ‐ The New Green Protectionism.eu/research/biosociety/pdf/eb_64_3_final_report_second_edition_july_06.  The  EU  imported  the  second  largest  volume of palm oil from Colombia in 2007. the number of biodiesel facilities between 2006 and  2010  increased  from  185  to  245.  Brazil  and  Colombia  are  rising  new  sources.   The EU has also heavily invested in the industry domestically. a recent report by  Australian government identified that the imports from Asia representing only 0.  only  other  developed  countries  can  comply  with  the  standards  without  having  to  compensate  their  economic  development.com .html)  8  Press Release. Therefore.  The  author    also  points  out  that  in  reality.  if  there  exists  a  high  cost  attached  to  implementing  such  a  measure  due  to  reciprocal  principles of the GATT.  Hiding  certain  information  on  palm‐oil’s  more  eco‐friendly  aspect  than  rapeseed  oil.  and overcapacity in its own production. many firms will not be able to operate with a profit and certainly  welcome  any  sort  of  effective  protection  from  foreign  competitors.  they  can  argue  that  developing  countries  sacrifice  wetland  for  producing  palm  trees9.  since  it  lays  out  so  many  technical  and  environmental  limitations  for  products.  the  EU’s  palm  oil  import  jumped  from  79  million  USD  to  273  million  USD6.  the  companies  would  have  difficulty  to  appeal  to  customers  their   products as more environmentally friendly10 and actual protection measure through legislation would  be needed. A clear majority (68 per cent) would choose bio‐fuels over ordinary fuels in their regular purchases provided they incurred no extra  cost(http://ec.pdf). 2010  (http://news.  6 7                                                               Eurostat   Brazil launches major push for sustainable palm oil in the Amazon.   71 per cent of Europeans would be in favour of giving the bio‐fuels industry ‘tax incentives to allow it to compete with the oil  industry’.europa.  Between  the  year  of  2004  and  2008. we can have reasonable doubt on the real motivation of the RED. This  motivation can be disguised as a good deed supported by environment group who are more visible than  ever  in  policy  making  process. and have run the campaigns to ask for imposing restrictions on imports from these countries. 2010.pdf). 2010    For  years  Australian  green  groups  have  claimed  mass  deforestation  and  illegal  logging  are  occurring  in  the  developing  world.  Rhett A.  This  has  critical  economic  implications  to  certain  developing  countries  which  have  invested  in  its  palm  oil  industry  in  anticipation  of  growing  demand  of  biofuel  in  the  EU  market.  It  is  believed  that  with  the  existing  facilities  and  the  ones  under  construction.  Bangkok Post Aug 9.com/2010/0507‐amazon_palm_oil.  In  addition. Brazil has been one of the EU’s top 10 import source since  2008 and is expected to rise above some other countries soon.     . Butler. Fortunately –or unfortunately‐.   However. 2006 and July 22nd.  The Brazilian government just laid out  plans to expand palm oil production in the Amazon. it would be hard to be realized under the regime.  Indonesia  and  Malaysia  are  traditionally  two  big  sources.

 therefore. ”likeness” in the GATT Article can be interpreted in different  ways.  in  cooperation  with  relevant  inter‐governmental  organizations.                                                                                   11  The Consistency of the EU Renewable Energy Directive with the WTO Agreements. Therefore.  can  not  only  undermine  economic  development in the developing countries but also result in trade distortion where the consumers in the  nations  with  such  a  regulation  will  suffer  from  increasing  price. Georgetown Law  Faculty Working Papers.  the  WTO. since it can be seen as a global standard and other developed countries can also adopt similar  regulation.  There  is  no  denying  that  the  environment  has  been  damaged  in  recent  years  and  that  we  all  have  the  responsibility  to  protect  it. This concerns a bigger issue beyond  the RED. we should also make it sure that it doesn’t give justification to green protectionism. there is no harmonized trade and environmental standard. Georgetown University Law Center 2009    . Andrew D.  should  define  green  protectionism as illegitimate and set international standards to prevent arbitrary actions. Mitchell_ Christopher Tran. .  as  we  examined  above.  there  is  good  chance  that  the  motivation  for  protecting  domestic industry from competitive imported goods can be disguised as something necessary to protect  the  environment. the final products should be treated as such11.   Second.    Some  scholars  have  the  opinion  that  emissions  that  each  different  biofuel  carries  different  characteristics and.  However. since it is about so‐called process and production methods. For example.  Green  protectionism.   First of all. the governing rules relevant to  the measure can be arbitrary.  Conclusion  As  the  concern  for  the  environment  grows.  since  there  is  room  for  manipulation.the  measures  in  the  RED  would  not  be  affected  clearly  by  this  principle.

threatened or endangered ecosystems or species recognised by international agreements or included in lists drawn up by intergovernmental organisations or the International Union for the Conservation of Nature. (b) and (c) of paragraph 1 shall not be made from raw material obtained from land with high biodiversity value. The greenhouse gas emission saving from the use of biofuels and bioliquids shall be calculated in accordance with Article 19(1). (c) eligibility for financial support for the consumption of biofuels and bioliquids. (b) and (c) only if they fulfil the sustainability criteria set out in paragraphs 2 to 6: (a) measuring compliance with the requirements of this Directive concerning national targets. The greenhouse gas emission saving from the use of biofuels and bioliquids taken into account for the purposes referred to in points (a). where there is no clearly visible indication of human activity and the ecological processes are not significantly disturbed. biofuels and bioliquids produced from waste and residues. (c) highly biodiverse grassland that is: . namely forest and other wooded land of native species. need only fulfil the sustainability criteria set out in paragraph 2 in order to be taken into account for the purposes referred to in points (a). subject to their recognition in accordance with the second subparagraph of Article 18(4). the greenhouse gas emission saving from the use of biofuels and bioliquids taken into account for the purposes referred to in points (a). (b) and (c). (b) measuring compliance with renewable energy obligations. namely land that had one of the following statuses in or after January 2008. (b) and (c) of paragraph 1 shall be at least 50 %. (b) areas designated: (i) by law or by the relevant competent authority for nature protection purposes. However. With effect from 1 January 2017. or (ii) for the protection of rare.<Annex I>  Article 17 Sustainability criteria for biofuels and bioliquids 1. the first subparagraph shall apply from 1 April 2013. From 1 January 2018 that greenhouse gas emission saving shall be at least 60 % for biofuels and bioliquids produced in installations in which production started on or after 1 January 2017. Biofuels and bioliquids taken into account for the purposes referred to in points (a). unless evidence is provided that the production of that raw material did not interfere with those nature protection purposes. 3. Irrespective of whether the raw materials were cultivated inside or outside the territory of the Community. (b) and (c) of paragraph 1 shall be at least 35 %. whether or not the land continues to have that status: (a) primary forest and other wooded land. energy from biofuels and bioliquids shall be taken into account for the purposes referred to in points (a). In the case of biofuels and bioliquids produced by installations that were in operation on 23 January 2008. fisheries and forestry residues. other than agricultural. aquaculture. 2.

4. report to the European Parliament and the Council on the impact on social sustainability in the Community and in third countries of increased demand for biofuel. on national measures taken to respect the sustainability criteria set out in paragraphs 2 to 5 and for soil. report to the European Parliament and the Council. or trees able to reach those thresholds in situ. The Commission shall. 7. unless evidence is provided that the cultivation and harvesting of that raw material does not involve drainage of previously undrained soil. in respect of both third countries and Member States that are a significant source of biofuels or of raw material for biofuels consumed within the Community. at the time the raw material was obtained. Biofuels and bioliquids taken into account for the purposes referred to in points (a). the land had the same status as it had in January 2008. and wider development issues. or trees able to reach those thresholds in situ. both . 6. The Commission shall establish the criteria and geographic ranges to determine which grassland shall be covered by point (c) of the first subparagraph. designed to amend non-essential elements of this Directive. every two years. (b) continuously forested areas. in particular for people living in developing countries. Reports shall address the respect of land-use rights. The provisions of this paragraph shall not apply if. the conditions laid down in paragraph 2 of this Article would be fulfilled. The Commission shall. when the methodology laid down in part C of Annex V is applied. namely land that had one of the following statuses in January 2008 and no longer has that status: (a) wetlands. (c) land spanning more than one hectare with trees higher than five metres and a canopy cover of between 10 % and 30 %. Those measures. (b) and (c) of paragraph 1 shall not be made from raw material obtained from land with high carbon stock. by supplementing it shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 25(4). (b) and (c) of paragraph 1 shall not be made from raw material obtained from land that was peatland in January 2008. unless evidence is provided that the harvesting of the raw material is necessary to preserve its grassland status. Agricultural raw materials cultivated in the Community and used for the production of biofuels and bioliquids taken into account for the purposes referred to in points (a). 5.(i) natural. water and air protection. namely grassland that would cease to be grassland in the absence of human intervention and which is species-rich and not degraded. Biofuels and bioliquids taken into account for the purposes referred to in points (a). or (ii) non-natural. The first report shall be submitted in 2012. unless evidence is provided that the carbon stock of the area before and after conversion is such that. on the impact of Community biofuel policy on the availability of foodstuffs at affordable prices. namely land spanning more than one hectare with trees higher than five metres and a canopy cover of more than 30 %. namely land that is covered with or saturated by water permanently or for a significant part of the year. namely grassland that would remain grassland in the absence of human intervention and which maintains the natural species composition and ecological characteristics and processes. every two years. They shall state. (b) and (c) of paragraph 1 shall be obtained in accordance with the requirements and standards under the provisions referred to under the heading "Environment" in part A and in point 9 of Annex II to Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers [22] and in accordance with the minimum requirements for good agricultural and environmental condition defined pursuant to Article 6(1) of that Regulation.

Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour (No 182). biofuels and bioliquids obtained in compliance with this Article. propose corrective action. . on other sustainability grounds. That report and any proposals contained therein shall be based on the best available scientific evidence. in the calculation methodology in Annex V or in the sustainability criteria relating to carbon stocks applied to biofuels and bioliquids. . make proposals to the European Parliament and Council at the same time in this regard.the Convention on International Trade in Endangered Species of Wild Fauna and Flora. other than biofuels and bioliquids. The Commission shall report on requirements for a sustainability scheme for energy uses of biomass. . (b) and (c) of paragraph 1. For the purposes referred to in points (a). Those reports shall state. . in particular if evidence shows that biofuel production has a significant impact on food prices. whether the country has ratified and implemented each of the following Conventions of the International Labour Organisation: . taking into account new developments in innovative processes. by 31 December 2009.Convention concerning Minimum Age for Admission to Employment (No 138). the Commission shall. That report shall be accompanied.the Cartagena Protocol on Biosafety. The Commission shall. . . 8.Convention concerning the Abolition of Forced Labour (No 105). . Member States shall not refuse to take into account. if appropriate. If the analysis done for that purpose demonstrates that it would be appropriate to introduce amendments.Convention concerning Forced or Compulsory Labour (No 29). where appropriate. to the European Parliament and the Council. by proposals for a sustainability scheme for other energy uses of biomass. .Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively (No 98). in relation to forest biomass. whether the country has ratified and implemented: . where appropriate. both for third countries and Member States that are a significant source of raw material for biofuel consumed within the Community.           .for third countries and Member States that are a significant source of raw material for biofuel consumed within the Community.Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value (No 100). The first report shall be submitted in 2012. 9.Convention concerning Discrimination in Respect of Employment and Occupation (No 111).Convention concerning Freedom of Association and Protection of the Right to Organise (No 87).

 European Center for International Political Economy  Published as ECIPE Occasional Paper No.org).Title:  Green  Protectionism  in  the  European  Union:  How  Europe’s  Biofuels  Policy  and  the  Renewable  Energy Directive Violates WTO Commitments  Author: Fredrik Erixon (Fredrik@erixon@ecipe. director and co‐founder of ECIPE  Publisher: ECIPE.1/2009  .

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