Special and Differential Treatment (SDT) and the “infant industry argument”

Special and Differential Treatment (SDT) had its origins in a view of trade and development that questioned the desirability of developing countries’ liberalising border measures at the same pace as industrialised countries. It emphasises graduation of trade liberalisation according to the development level of the country Involved.

There is a considerable gap between those countries already exporting biofuels and those that are just starting to produce them. Disparities exist both in terms of the development of their biofuel industries and the development level of the countries themselves. There are those countries that are at the forefront of the development of these industries, such as Brazil, the US and the EU and those that, despite having a significant amount of feedstock, still have some way to go in the development of the technology. Many developing and least developed countries can be found within the latter group. These countries may possess significant advantages for biofuel production and trade but need the right incentives for the industry to develop. Many of these countries are those in which the impacts of biofuels, especially in terms of social and economic development, are likely to be felt most strongly.

The countries that today have well developed biofuel industries owe their progress to a set of economic incentives and domestic policies that have fostered the development of their biofuel industries.

The trading system should recognise these differences and allow sufficient policy space for coherent domestic policy mechanisms to allow the development of the biofuel industry in the poorest countries above all. Policies also need to implement measures that support climate change issues.

From the mix of policy tools available to support industry development, it is necessary to identify those that are the most effective but also the least trade distorting, or to create new tools if those available are insufficient.