Balancing trade and environment: insights from WTO disputes over sustainability requirements for biofuels

Abstract A central issue in the two disputes brought before the World Trade Organization (WTO) concerning EU measures affecting palm oil and palm crop-based biofuels was the methodology underlying the European Union’s (EU) emissions-saving criteria for biofuels. This article analyses the rulings in these disputes, with particular attention to the interpretation of WTO rules on sustainability standards for products, and considers their broader implications for future disputes at the intersection of trade and the environment. The analysis suggests that the rulings are especially relevant in light of the unfolding trade tensions over several other measures set out in the EU’s Fit for 55 legislative package. Although biofuel sustainability constitutes only one component of the EU Green Deal, the rejection of claims of disguised protectionism by the majority of the panel in these disputes adds to the credibility of the Union’s sustainability agenda. Moreover, the reaffirmation of the legitimacy of the EU’s climate policy objectives in relation to biofuel regulation may generate momentum for other governments to adopt trade measures for climate action.