With oil prices hovering near $40 a barrel, issues related to international trade in biofuels are rapidly coming to the fore. Key decisions in the next 12–18 months could set the tone for policies in Europe, the U.S., and Japan, with significant long-term implications for future trade flows of ethanol and biodiesel. The possibility of opening biofuels markets in Europe and the U.S. to greater international trade is already stirring local political opposition, since support for biofuels has traditionally come from farm sector and rural development interests. Nonetheless, significant policy shifts are possible as concerns about achieving energy security and environmental objectives gain greater attention and pressures to liberalize agricultural trade intensify within the WTO.