SUBSIDY WATCH BLOG

A jump in fuel prices is never welcome by the general populace. Yet in Nigeria, where fuel prices are regulated, the government has recently allowed the price of refined petroleum products' to rise, and is prepared to continue doing so. The Nigerian government routinely imports petroleum and sells these imports at below cost on the domestic market to keep price levels down.

United States farm subsidy programs are again proving to be a major obstacle to expanding international trade opportunities at Geneva meetings aimed at reviving the Doha round of trade negotiations. Opponents of farm subsidy reform may be applauding this impasse, but there is be no reason for glee from the public at large. U.S. farm subsidy programs are broken and need to be fixed.

Call it is one of the unknown Indian ironies. Over many years, the Indian state, through its public irrigation agencies, has systematically taken over the management of surface water systems. It has taken over the job of building irrigation systems-dams, reservoirs and canals-then maintaining these and supplying water.

Fuel prices, fuel taxation and subsidies for petrol and diesel fuel rank high on the world's political agenda, particularly after the spectacular increases in world market prices for crude oil (up to USD 75 a barrel in August 2006) and the subsequent slide in price to around USD 54 a barrel in January 2007.

With the progressive dismantling of formal trade barriers as a result of many rounds of global trade negotiations, subsidies have become increasingly important as a way for governments to regulate economic activity within their territories.

The World Trade Organization's rotating group of five independent subsidy experts - the so-called Permanent Group of Experts (PGE) - is unique. It cannot, however, be considered a roaring success. This obscure group of trade lawyers and academics, "highly qualified in the field of subsidies and trade relations," has no counterpart at the World Trade Organization (WTO).

In a recent article ("A New Agenda for Global Warming"), Joseph Stiglitz, Nobel laureate in economics and former Chief Economist at the World Bank, suggests that Japan, Europe, and the other signatories of Kyoto should immediately bring a WTO subsidy case against the United States for not ratifying the Kyoto Convention and for not taxing adequately CO2 emissions by US firms.

The recent surge in international energy prices has placed energy subsidies at the forefront of the economic policy agenda in many countries, particularly where government interventions are intended to keep prices low to households and industry, or to protect indigenous energy industries from foreign competition.

People invariably ask, given we have only recently started in this business, why did we choose to work on biofuels? In deciding research priorities we have several criteria. One is that we would not try to duplicate the work of others. Another is that when we look into subsidies to a particular sector, the sector should be one that is subsidized by many countries.

The last round of World Trade Organization (WTO) trade talks, the Uruguay Round, broke new ground by broadening the scope of world trade rules to cover areas never before subject to multilateral disciplines, and the services sector was without doubt where such broadening was most significant in economic terms.

Ethanol and other biofuels allow us to use solar energy (collected by plants or even salvaged from trash) instead of fossil fuels just by mixing them with the gasoline and diesel we already use. There is a lot to be said for them, and the government (U.S.) is right to encourage their use.

Asian governments are caught between an ever-increasing demand for cheap energy to fuel development and an unabating rise in global oil prices. A few South-east Asian governments are feeling the financial pain of costly fuel subsidies and are looking elsewhere for energy sources. The hunt for alternative energy sources has led Asian nations to explore biofuel technology, among others.

The World Trade Organization (WTO) negotiations aimed at eliminating subsidies that drive overfishing are a rare species within the Doha Round of global trade talks. Although discussed side by side with core trade issues such as "antidumping", the topic is recognized as something new and different.