EU May Soon Slap Tariffs on US Biodiesel Imports

25 February 2009

The European Union is preparing to impose temporary anti-dumping and anti-subsidy duties on US biodiesel following repeated complaints from the European Biodiesel Board, which maintains that US subsidies for its domestic biodiesel producers unfairly undercut European competitors in their home market.
 
If the European Commission, the executive body of the EU, decides at its upcoming meeting on 3 March to impose the duties, the measures will take effect nine days later and will last six months, according to an EC document obtained by Dow Jones Newswire. At that point, the Commission will need to win the approval of EU national governments if it wishes to make the measures permanent.
 
The complaint is focused on a US subsidy that offers domestic producers a tax credit of US$ 1 per gallon of biodiesel produced. The European Biodiesel Board, or the EBB, argues that this support has triggered a flood of under-priced US imports into the EU and caused European producers to lose market share.
 
The European Commission appears to agree.
 
“The pressure exercised by the surge of low-priced dumped/subsidised imports on the [EU] market did not allow the [EU] industry to set its sales prices in line with market conditions and the increase in costs,” the Commission document said.
 
But the US biodiesel industry says that US exports are in fact doing no harm to European producers. In a 147-page report issued in September, the US-based National Biodiesel Board called the EBB’s injury claims “fatally deficient,” and said that the imposition of retaliatory tariffs on US biodiesel would be at odds with the EU’s stated goal of increasing the consumption of biofuels in its 27 member nations.
 
US President Barack Obama promised in a speech to Congress on Tuesday night to “end direct payments to large agribusinesses that don't need them,” but made no specific reference to biofuels producers. Indeed, Obama, a former farm-state senator, has signalled in the past that he wishes to continue to support domestic biofuels manufacturers.  
 
The anti-dumping duties that the Commission is considering would fall between 2 euros and 19 euros per 100 kilograms of biodiesel, while the anti-subsidy duties would range from 23 euros to 26 euros per 100 kilograms, Reuters reported.
 
‘Dumping,’ in trade parlance, refers to the practice of exporting goods at artificially low prices. WTO rules allow Member governments to place retaliatory duties on dumped goods, so long as they can prove that dumping is indeed taking place and that it is injuring the competing domestic industry.
 
The EU, by far the world’s largest consumer of biodiesel, has imported more than 1 million tonnes of biodiesel from the United States over the past year, up from 50,000 tonnes in 2006.
 
ICTSD reporting; “EU raises stakes in biodiesel battle with US,” THE FINANCIAL TIMES, 21 February 2009; “EU exec eyes dumping duty on US biodiesel: sources,” REUTERS, 19 February 2009; “Europe considers a tariff on biofuels,” THE NEW YORK TIMES, 24 February 2009; “UPDATE: EU to put temporary duties on US biodiesel imports – document,” DOW JONES, 19 February 2009. 

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