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]. 

 
The author also alleges that the RED violates Article III2 which covers national treatment.  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. 

Finally, the author argues that the Directive, a de facto restriction, 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,  taxes  or  other  charges.  Further,  Article  XX4,  which  deals  with  the  GATT 
Exception, 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 Appellate Body of the WTO has shown this to be the case through its rulings. For the 
above  reasons  the  author  believes  the  RED  is  clear  violation  of  the  GATT  and  has  to  be  changed 
accordingly.  

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. It is differentiated from 
environmental protection which protects the environment effectively without distorting trade flow. In 
Europe, the RED’s adoption will protect its biodiesel industry, especially rapeseed oil market which has 
faced tougher competition with cheaper foreign products such as palm oil.  

Under the RED, it is expected that palm oil import to Europe will significantly decrease. The RED places 
the burden of proof on the companies or farmers to show that their products meet the criteria, mainly 
articulated  in  the  Article  175 of  it.  If  a  foreign  exporter  cannot  document  all  necessary  information  to 
prove  compliance,  they  will  not  be  eligible  to  receive  the  tax  exemption.  Further,  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.  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, regulations and requirements affecting their 
internal sale, offering for sale, purchase, transportation, distribution or use. 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. 

3
Article XI: General Elimination of Quantitative Restrictions

1.         No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export 
licences or other measures, 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.

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, nothing in this 
Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: [continues] 

 
5
 Please see AnnexI 
their  portfolio.  The  author    also  points  out  that  in  reality,  only  other  developed  countries  can  comply 
with  the  standards  without  having  to  compensate  their  economic  development,  since  it  lays  out  so 
many  technical  and  environmental  limitations  for  products.  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.  Between  the  year  of  2004  and  2008,  the  EU’s  palm  oil  import 
jumped  from  79  million  USD  to  273  million  USD6.  Indonesia  and  Malaysia  are  traditionally  two  big 
sources,  however,  Brazil  and  Colombia  are  rising  new  sources.  The  EU  imported  the  second  largest 
volume of palm oil from Colombia in 2007. Brazil has been one of the EU’s top 10 import source since 
2008 and is expected to rise above some other countries soon.  The Brazilian government just laid out 
plans to expand palm oil production in the Amazon.  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.  

The EU has also heavily invested in the industry domestically. In reliance of the ambitious objectives by 
the  EU  authorities,  the  investments  in  biodiesel  production  were  already  planned  before  2007  and 
despite the economic recession last couple of years, the number of biodiesel facilities between 2006 and 
2010  increased  from  185  to  245.  It  is  believed  that  with  the  existing  facilities  and  the  ones  under 
construction, the industry will be able to meet or ever beat the target by a few years8.  

With  increase  of  cheap  replacement  of  rapeseed  oil,  which  is  the  Europe’s  main  source  for  biodiesel, 
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.  So  will  labor  unions  who  want  to 
keep their employers from moving to the developing countries seeking for cheaper production cost. This 
motivation can be disguised as a good deed supported by environment group who are more visible than 
ever  in  policy  making  process.  Hiding  certain  information  on  palm‐oil’s  more  eco‐friendly  aspect  than 
rapeseed  oil,  they  can  argue  that  developing  countries  sacrifice  wetland  for  producing  palm  trees9.  In 
addition,  if  it  is  not  end‐products,  the  companies  would  have  difficulty  to  appeal  to  customers  their  
products as more environmentally friendly10 and actual protection measure through legislation would 
be needed. Therefore, we can have reasonable doubt on the real motivation of the RED.  

However,  if  there  exists  a  high  cost  attached  to  implementing  such  a  measure  due  to  reciprocal 
principles of the GATT, it would be hard to be realized under the regime. Fortunately –or unfortunately‐, 
                                                            
6
 Eurostat 
7
 Brazil launches major push for sustainable palm oil in the Amazon,  Rhett A. Butler, mongabay.com , May 07, 2010 
(http://news.mongabay.com/2010/0507‐amazon_palm_oil.html) 
8
 Press Release, European Biodiesel Board, July 17, 2006 and July 22nd, 2010  
(http://www.ebb‐eu.org/EBBpressreleases/EBB%20press%20release%202009%20prod%202010_capacity%20FINAL.pdf). 
9
 For  years  Australian  green  groups  have  claimed  mass  deforestation  and  illegal  logging  are  occurring  in  the  developing  world,  especially  in 
China and Indonesia, and have run the campaigns to ask for imposing restrictions on imports from these countries. However, a recent report by 
Australian government identified that the imports from Asia representing only 0.32% of illegally logged material ‐ The New Green Protectionism, 
Bangkok Post Aug 9, 2010.  

 
10
 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’. 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.europa.eu/research/biosociety/pdf/eb_64_3_final_report_second_edition_july_06.pdf).  
 
the  measures  in  the  RED  would  not  be  affected  clearly  by  this  principle,  since  there  is  room  for 
manipulation.  

First of all, since it is about so‐called process and production methods, the governing rules relevant to 
the measure can be arbitrary. For example, ”likeness” in the GATT Article can be interpreted in different 
ways.    Some  scholars  have  the  opinion  that  emissions  that  each  different  biofuel  carries  different 
characteristics and, therefore, the final products should be treated as such11.  

Second, there is no harmonized trade and environmental standard. This concerns a bigger issue beyond 
the RED, since it can be seen as a global standard and other developed countries can also adopt similar 
regulation. 

Conclusion 

As  the  concern  for  the  environment  grows,  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.  Green  protectionism,  as  we  examined  above,  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.  There  is  no  denying  that  the 
environment  has  been  damaged  in  recent  years  and  that  we  all  have  the  responsibility  to  protect  it. 
However, we should also make it sure that it doesn’t give justification to green protectionism. Therefore, 
the  WTO,  in  cooperation  with  relevant  inter‐governmental  organizations,  should  define  green 
protectionism as illegitimate and set international standards to prevent arbitrary actions. 

                                                            
11
 The Consistency of the EU Renewable Energy Directive with the WTO Agreements, , Andrew D. Mitchell_ Christopher Tran, Georgetown Law 
Faculty Working Papers, Georgetown University Law Center 2009 
 
<Annex I> 

Article 17

Sustainability criteria for biofuels and bioliquids

1. Irrespective of whether the raw materials were cultivated inside or outside the territory of
the Community, energy from biofuels and bioliquids shall be taken into account for the
purposes referred to in points (a), (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;

(b) measuring compliance with renewable energy obligations;

(c) eligibility for financial support for the consumption of biofuels and bioliquids.

However, biofuels and bioliquids produced from waste and residues, other than agricultural,
aquaculture, fisheries and forestry residues, 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), (b)
and (c).

2. 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) of paragraph 1 shall be at least
35 %.

With effect from 1 January 2017, 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) of
paragraph 1 shall be at least 50 %. 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.

The greenhouse gas emission saving from the use of biofuels and bioliquids shall be calculated
in accordance with Article 19(1).

In the case of biofuels and bioliquids produced by installations that were in operation on 23
January 2008, the first subparagraph shall apply from 1 April 2013.

3. Biofuels and bioliquids taken into account for the purposes referred to in points (a), (b) and
(c) of paragraph 1 shall not be made from raw material obtained from land with high
biodiversity value, namely land that had one of the following statuses in or after January 2008,
whether or not the land continues to have that status:

(a) primary forest and other wooded land, namely forest and other wooded land of native
species, where there is no clearly visible indication of human activity and the ecological
processes are not significantly disturbed;

(b) areas designated:

(i) by law or by the relevant competent authority for nature protection purposes; or

(ii) for the protection of rare, 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, subject to their recognition in
accordance with the second subparagraph of Article 18(4);

unless evidence is provided that the production of that raw material did not interfere with
those nature protection purposes;

(c) highly biodiverse grassland that is:

(i) natural, namely grassland that would remain grassland in the absence of human
intervention and which maintains the natural species composition and ecological characteristics
and processes; or

(ii) non-natural, namely grassland that would cease to be grassland in the absence of human
intervention and which is species-rich and not degraded, unless evidence is provided that the
harvesting of the raw material is necessary to preserve its grassland status.

The Commission shall establish the criteria and geographic ranges to determine which
grassland shall be covered by point (c) of the first subparagraph. Those measures, designed to
amend non-essential elements of this Directive, by supplementing it shall be adopted in
accordance with the regulatory procedure with scrutiny referred to in Article 25(4).

4. Biofuels and bioliquids taken into account for the purposes referred to in points (a), (b) and
(c) of paragraph 1 shall not be made from raw material obtained from land with high carbon
stock, namely land that had one of the following statuses in January 2008 and no longer has
that status:

(a) wetlands, namely land that is covered with or saturated by water permanently or for a
significant part of the year;

(b) continuously forested areas, namely land spanning more than one hectare with trees
higher than five metres and a canopy cover of more than 30 %, or trees able to reach those
thresholds in situ;

(c) land spanning more than one hectare with trees higher than five metres and a canopy
cover of between 10 % and 30 %, or trees able to reach those thresholds in situ, unless
evidence is provided that the carbon stock of the area before and after conversion is such that,
when the methodology laid down in part C of Annex V is applied, the conditions laid down in
paragraph 2 of this Article would be fulfilled.

The provisions of this paragraph shall not apply if, at the time the raw material was obtained,
the land had the same status as it had in January 2008.

5. Biofuels and bioliquids taken into account for the purposes referred to in points (a), (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 cultivation and harvesting of that raw
material does not involve drainage of previously undrained soil.

6. 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), (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.

7. The Commission shall, every two years, report to the European Parliament and the Council,
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, on national measures taken to
respect the sustainability criteria set out in paragraphs 2 to 5 and for soil, water and air
protection. The first report shall be submitted in 2012.

The Commission shall, every two years, 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 the impact of Community biofuel policy on the availability of foodstuffs
at affordable prices, in particular for people living in developing countries, and wider
development issues. Reports shall address the respect of land-use rights. They shall state, both
 for third countries and Member States that are a significant source of raw material for biofuel
consumed within the Community, whether the country has ratified and implemented each of
the following Conventions of the International Labour Organisation:

- Convention concerning Forced or Compulsory Labour (No 29),

- Convention concerning Freedom of Association and Protection of the Right to Organise (No
87),

- Convention concerning the Application of the Principles of the Right to Organise and to
Bargain Collectively (No 98),

- Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal
Value (No 100),

- Convention concerning the Abolition of Forced Labour (No 105),

- Convention concerning Discrimination in Respect of Employment and Occupation (No 111),

- Convention concerning Minimum Age for Admission to Employment (No 138),

- Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst
Forms of Child Labour (No 182).

Those reports shall state, both for third countries and Member States that are a significant
source of raw material for biofuel consumed within the Community, whether the country has
ratified and implemented:

- the Cartagena Protocol on Biosafety,

- the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

The first report shall be submitted in 2012. The Commission shall, if appropriate, propose
corrective action, in particular if evidence shows that biofuel production has a significant
impact on food prices.

8. For the purposes referred to in points (a), (b) and (c) of paragraph 1, Member States shall
not refuse to take into account, on other sustainability grounds, biofuels and bioliquids
obtained in compliance with this Article.

9. The Commission shall report on requirements for a sustainability scheme for energy uses of
biomass, other than biofuels and bioliquids, by 31 December 2009. That report shall be
accompanied, where appropriate, by proposals for a sustainability scheme for other energy
uses of biomass, to the European Parliament and the Council. That report and any proposals
contained therein shall be based on the best available scientific evidence, taking into account
new developments in innovative processes. If the analysis done for that purpose demonstrates
that it would be appropriate to introduce amendments, in relation to forest biomass, in the
calculation methodology in Annex V or in the sustainability criteria relating to carbon stocks
applied to biofuels and bioliquids, the Commission shall, where appropriate, make proposals to
the European Parliament and Council at the same time in this regard.

 
 

 
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.org), director and co‐founder of ECIPE 

Publisher: ECIPE, European Center for International Political Economy 

Published as ECIPE Occasional Paper No.1/2009