Can new legislation in importing countries represent new barriers to the development of an international ethanol market?

The use of ethanol as a fuel has been attracting increasing attention in countries that are interested in reducing their dependence on imported oil and lowering their greenhouse gas emissions. Despite this growing interest, the global ethanol market is still incipient because of the small number of producing countries, the lack of technical standardization and the existence of tariff and non-tariff trade barriers. New laws have taken effect in 2010 in the United States and the European Union imposing domestic requirements for sustainable production of ethanol. Although these are generally positive developments, they can create greater difficulties for the development of an international ethanol market. This work examines the technical barriers posed by these new laws and how they can be resolved under the auspices of the World Trade Organization. In addition, this work analyses the Brazilian and Caribbean cases discussing to what extent these new technical barriers will affect ethanol production and exports arising from these countries.

Research highlights
► We examine the ethanol market and the increase of technical barriers.
► Higher production costs will be associated with different environmental standards.
► The adoption of international standards is key to develop the ethanol market.
► A global agreement on biofuels will foster the development of its market.