Description

On 24 July 2006, Pascal Lamy, the Director-General of the World Trade Organisation, announced a suspension of the Doha Round of multilateral trade negotiations which had been launched in 2001. Key to the differences among negotiators that led to the collapse of the talks is the issue of agriculture, in particular disagreement over reform of farm subsidies. Although agriculture accounts for only 8 percent of global trade, it is one of the most sensitive areas in the negotiations, with developed and developing countries strongly attached to positions too far apart to generate agreement.

At the invitation of Ted Turner, chairman of United Nations Foundation (UNF), a group of 40 leading global policy makers, business people, academics and civil society representatives met in Geneva on the 25th of September to discuss the issues of trade, agriculture, and poverty on the occasion of the World Trade Organization's Public Forum.

Hosted by the UN Foundation and the International Centre for Trade and Sustainable Development (ICTSD), this high-level gathering was an occasion for key decision-makers in the global public and private sectors to explore the opportunities and challenges of an agriculture-energy merger, which would contribute to creating a new dynamic in world agricultural production and trade, provide adequate incomes for the world's farmers without undue reliance on controversial agricultural subsidies, and offer new ways of supplying clean, decentralized and cost-effective sources of energy.

Participants discussed the opportunities and challenges of tapping the potential of biofuels as a source of energy as well as providing a partial solution to the problem of agriculture, subsidies and farmers' incomes.

Participants widely shared the view that biofuels, either through the production of crops such as sugar or corn that can serve as feedstock for biofuels or in the form of waste to energy (e.g. converting forest and agricultural waste into biofuels) can offer significant opportunities that are yet to be exploited. The experience of Brazil in promoting the use of ethanol for transportation, which is saving the country US$ 50 billion of oil imports annually, biogas generation in India and other successful trials in Africa and elsewhere are examples that warrant optimism. Among other issues, they discussed the role of the multilateral trade system, the rationale for a global agenda on biofuels, the need to build safeguards against potential risks to the environment and food security.

The WTO, agriculture and the biofuel agenda
While sharing the view that there is little room for a biofuel agenda as such to be infused into multilateral trade negotiations in the present context, participants agreed on the need to consider the merits and options of looking into how the multilateral trade system could be made more supportive of a sustainable energy transition that builds on the potential of biofuels. In particular, the potential contribution of biofuels to agricultural production and disciplines on subsidies was openly debated.

Clarifying the biofuel agenda - cheaper energy, clean energy, energy security or farmer's income?
Biofuels have come under the global microscope as gasoline and diesel prices continue to soar, energy security issues are prominent, and global trade negotiations are stalled over disagreements on agriculture. The biofuel agenda is being driven by numerous factors that are not providing a clear indication as to what the real motivation of its proponents is. Participants pointed to the need for clarifying the rationale for and parameters of a global policy agenda on biofuels.

Managing risks - environment and food security
The great potential of biofuels does not overshadow the risks associated with producing food crops for energy or the risk of further land clearance and deforestation to supply the world with bio-energy. Noting that replacing gasoline alone would require one third of the world's arable land, participants remained cautious of the need to focus on high-performing biofuels that would not lead to competition between production for food and energy in a world already filled with millions of malnourished children.

"Seeding" the dynamics without creating and perpetuating a distorted market for biofuels
Subsidies are not and cannot be an answer to the energy challenge. Nevertheless, participants agreed that a sustainable energy transition towards bio-energy is unlikely to be a natural process. Left alone, the market is unlikely to either create an adequate economic incentive structure, or provide the social and environment safeguards that ought to support such a transition. Governments and other interest groups would need to intervene to stimulate demand for biofuels and support supply before global transactions can be subjected to market forces.

"Fighting the next round": Reviving Doha and looking beyond Doha
Participants concluded the meeting with calls to foster further dialogue among all relevant stakeholders, both within the international trade system and other international and domestic fora, and to build on the momentum generated by earlier successful experiences around the world to promote an environmentally sustainable, economically sound and socially acceptable global energy transition agenda.