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Looking to support their struggling biodiesel producers, European governments voted Tuesday to impose temporary anti-dumping and anti-subsidy tariffs on imports of US biodiesel. The vote follows repeated complaints from the European Biodiesel Board (EBB) over US subsidies for its domestic biodiesel producers, which the Board says unfairly undercut European competitors in their home market.
Inside US Trade reported that 20 of the 27 EU governments that took part in the informal vote on Tuesday supported the anti-subsidy duties, while 17 governments voted in favour of the anti-dumping tariffs. Only Belgium, Denmark and Sweden voted against the anti-subsidy duties; other countries abstained from the votes.
“It went through with no problem,” a source close to the meeting told Reuters.
Cheap imports flooding EU market: EBB
At the heart of the issue is a US subsidy that offers domestic producers a tax credit of US$ 1 per gallon of biodiesel produced. 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,” a Commission document obtained by Dow Jones Newswire says.
But the US biodiesel industry maintains 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.
Obama’s position on biofuels support unclear
US President Barack Obama promised in a speech to Congress on 24 February to “end direct payments to large agribusinesses that don’t need them,” but made no specific reference to biofuels producers.
Obama, a former farm-state senator, has signalled in the past that he wishes to continue to support domestic biofuels manufacturers. And the new administration’s economic stimulus package appears to support this position.
The American Recovery and Reinvestment Act includes several provisions to help the country’s struggling biofuels industry. Initiatives include extending the production tax credit for biomass energy to 2013 and the provision of as much as US$ 18.5 billion for energy efficiency and renewable energy projects.
Biofuel projects using technologies that are in the ‘pilot’ or ‘demonstration’ stage would be eligible for the new initiative if these technologies are determined to be bound for commercial success (see Bridges Trade BioRes, 6 February 2009, http://ictsd.net/i/news/biores/40102/).
Duties could become permanent after six month trial
Starting 13 March, imports of US biodiesel will be slapped with anti-dumping tariffs ranging from €26 to €41 per 100 kilograms.
‘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.
Once the duties have been in place for six months, the European Commission can propose that the tariffs be made permanent. Such a move would have to be approved by EU governments.
The approval of the import duties was welcomed by EU biodiesel producers, who claim that the support the US provides to its biofuels industry has made their products much less competitive in the European market.
“This will re-establish a level playing field and put an end to unacceptable and artificial prices created by US biodiesel producers,” said EBB Secretary General Raffaello Garofalo. “Whatever the action of the United States will be - even in front of the WTO - our complaint and our case is well grounded.”
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 slaps duties on US biodiesel imports - sources,” REUTERS, 3 March 2009; “EU clears way for antidumping, antisubsidy duties on US biodiesel,” INSIDE US TRADE, 3 March 2009; “”EU backs plan to impose tariffs on US biodiesel,” INTERNATIONAL HERALD TRIBUNE, 3 March 2009; “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; “EU to put temporary duties on US biodiesel imports - document,” DOW JONES, 19 February 2009.
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The stated aim of the US Goverment, recent and current, is to reduce their reliance on imported fuel to imrove their balance of payments, and to reduce their carbon emissions by using less unmodified fossil fuel. They have not achieved either aim, so how can they justify dumping the biodiesel they produce instead of consuming it ? They can’t dump either, if the EU doesn’t buy it. Unlike oil and water, Politics and Profit do mix!..Sincerely. John T.