WASHINGTON, July 16, 2014 – The European Union is looking at extending its five-year-old imposition of countervailing duties against biodiesel from the United States, maintaining the biofuel made from soybeans and animal fat is supported by U.S. and state government subsidies and is “dumped” at lower than market costs, threatening the European biodiesel industry.
The European Commission’s decision to look into extending the duties came in response to a “B99” expiration review request lodged in April by the European Biodiesel Board (EBB), a trade group representing about members across 21 member-states that produce some 75 percent of the biodiesel in Europe. The commission announced its plans to review the duties the day before they were set to expire.
First imposed in 2009, the duties aimed at subsidized and below-price – or “dumped” - biodiesel imports currently run from $290 to $555 per metric ton – penalties that add anywhere from 20 to nearly 40 percent to the cost of biodiesel from the U.S. The penalizing tariffs virtually shut down a $1 billion market for U.S. biodiesel producers.
The countervailing duties were later imposed against biodiesel imports from Canada, with European producers claiming their American counterparts were moving U.S. biodiesel to Europe through Canadian exporters. And late last year, the EU imposed similarly severe anti-dumping penalties on biodiesel from Argentina and Indonesia. However, the EU declined to impose anti-subsidy levies on biodiesel imports from the two countries.
The tariffs levied by the EU against U.S. interests vary with the company targeted, with Archer Daniels Midland (ADM) and Cargill being the principal U.S. exporters at the time the countervailing duties were imposed. An ADM spokesman said his company has no comment on the latest EU announcement, and a request to Cargill for comment went unanswered.
However, Anne Steckel, vice president of federal affairs at the U.S. National Biodiesel Board (NBB), said her trade group was “not surprised by the protectionist approach being pursued by the European Biodiesel Board.”
The EU says its inquiries will determine whether the expiration of the tariffs would likely lead to a “continuation or recurrence” of subsidization and dumping and “injure” EU producers.
But Steckel said the biodiesel trade market is dramatically different now than it was in 2009, when the U.S. biodiesel program was just getting started.
“In 2013, the U.S. marketplace for biodiesel was nearly 1.8 billion gallons; in Europe it was more than 3 billion gallons," she told Agri-Pulse. "Today, European biodiesel producers are sending biodiesel to the United States, taking away domestic markets from U.S. producers and receiving the same benefits under the [federal Renewable Fuel Standard – a biofuel blending mandate for U.S. transportation fuels] and tax credit program that U.S. biodiesel producers receive, while at the same time the punitive tariffs that were put in place against U.S. producers in 2009 have all but eliminated U.S. biodiesel trade opportunities with Europe.”
Steckel said the NBB will “vigorously oppose” the reinstatement of tariffs by the European Commission and expect that at the end of the commission's 12-15 month review process, the body “will better understand that the U.S. tax credit ($1 per gallon produced), which was the principal reason the duties were initially imposed in 2009, has actually expired (as of Dec. 31, 2013), and that biodiesel consumers in Europe would like access to duty-free biodiesel from the United States.”
The likelihood that the EU will renew the tariffs comes even with the continued pursuit in Europe of a target set in 2008 that would require at least 10 percent of the transportation fuel in each member country to come from renewable sources, including biodiesel, by 2020. The transport fuel goal is part of a larger effort to address climate change by doubling the renewable share of all energy used in the region to an average 20 percent.
Despite Steckel's insistence that the biodiesel market has changed over the past five years, the European Biodiesel Board says EU authorities are expected to announce at the end of their investigation “whether they will extend the duties, at the same level, for another 5 years, as our industry - based on clear evidence - requests.” The board says the EU action is "an important step towards preventing the recurrence of flows of cheap U.S. biodiesel to the EU market, and maintaining a fair and balanced global trading system.”
Raffaello Garofalo, the EBB's secretary general, said that if the anti-dumping and countervailing duties cease to apply, “the EU biodiesel industry would certainly witness the recurrence of the situation from 5 years ago. Back then, the heavily-subsidized US biodiesel flooded the EU, causing severe financial damage to our domestic producers, thus strangling the European market’s competitiveness.”
He said the European Commission's decision to look at the situation again “confirms that there is still a persistent threat to the EU biodiesel market in place. It is the EU authorities' duty not to let unfair competition resume and nullify the efforts made over the last years to develop an efficient European biodiesel industry able to compete on the global market.”
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