EU to investigate claims of US biodiesel ‘dumping’

13 June 2008 10:57  [Source: ICIS news]

PARIS (ICIS news)--EU competition authorities are to investigate imports of biodiesel from the US following claims that they are receiving illegal subsidies, the European Commission (EC) said on Friday.

The EC said that it had decided to start a full investigation following claims by several European biodiesel producers - represented by the European Biodiesel Board (EBB) - that the market was being flooded by cheaper imports from the US.

The EBB welcomed the EC’s decision to investigate and said she hoped that the it would move quickly to impose duties on the US imports.

“The maximum amount of time allowed under EU rules for such an investigation is 13 months, so a decision will have to be taken by March next year,” a spokeswoman said.

“Obviously we hope it will happen quicker than that, but it is not going to take two weeks.”

US rules from 2004 allow biodiesel blended with mineral diesel to benefit from subsidies of up to $264/cubic metre ($300/tonne or approximately €200/tonne), regardless of where the fuel is finally sold.

But since there is no limit on the amount of mineral diesel that need be used, the EBB claims that the B99 imported to the EU is almost pure biodiesel with just a “drop” of mineral diesel.

When exported to Europe the blend is eligible for European subsidy schemes - allowing it to further undercut European biodiesel.

As the EU subsidies, in the form of tax rebates, are only eligible when the product is released for consumption in Europe, EU exports to the US are at a further disadvantage, the EBB said.

The EBB spokeswoman declined to comment on the financial impact that the cheaper imports from the US had had on the European biodiesel market, saying that this was still “confidential” as it was part of the investigation.

But she pointed out that production of biodiesel in the EU last year was 5.7m tonnes compared with total production capacity of more than 50m tonnes, making it clear that the subsidised imports had clearly “hampered” European growth.

“For more than a year, B99 blends have been sold in the European market as ‘pure biodiesel’ and at a substantial discount [over €120-180/tonne], in some cases at a lower price than the raw materials purchased by the EU industry for producing biodiesel.”

The EBB added that it considered B99 subsidised exports as “a trade practice clearly breaching World Trade Organization rules and threatening the concept of international trade in biodiesel”.

According to the EC, the US is the main source of biodiesel imports into the EU, with sales rising from 7,000 tonnes in 2005 to around 1m tonnes in 2007.

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By: Chris Jones
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