INSIGHT: Argentina responds to EBB biodiesel accusations

22 January 2010 17:48  [Source: ICIS news]

By Judith Taylor

HOUSTON (ICIS news)--Argentina has proposed that an “open dialogue” begin with the European Biodiesel Board (EBB), responding to accusations raised by the board. 

Argentina’s burgeoning production had filled the export space left when the EU levied anti-dumping duties and tariffs on US biodiesel in April, sources said late last year.

US traders in October said as much as 120,000 tonnes/month of soy-based biodiesel had moved from Argentina into Europe during the second quarter, going mainly into Amsterdam-Rotterdam-Antwerp (ARA) and headed for further distribution across Europe.

In a 13-page document to the EBB, published this month, the Argentine Renewable Energies Chamber (CADER, by its Spanish initials) said Argentina’s biodiesel industry would like to establish a dialogue between the two groups to clarify misunderstandings and begin the ground-work toward increased trade opportunities.

Argentina’s proposal acknowledges that Europe is actively seeking solutions. CADER views that energetic dynamic as a positive framework upon which to build a foundation for increased ties between Europe and Argentina.

Comparing the EBB allegations mentioned in its most recent press release of 18 December correlated with responses from CADER: 

EBB: US biodiesel shipments were triangulating through Argentina to reach Europe and avoid penalty-high tariffs charged to American producers.

CADER: Argentina assumed there could be some truth to the allegation, considering such triangulations to be illegal.

As such, in August 2009 the Chamber undertook an analysis of biodiesel imports into Argentina and contacted the primary US organisation, The National Biodiesel Board (NBB), requesting this group also look into US biodiesel exports into Argentina.

Both analyses were completed, revealing that the only US biodiesel going into Argentina consisted of samples being flown into the country.

Argentina published the results in its September 2009 industry update and reported the findings to the EBB.

EBB: Argentina’s exports to the European Union (EU) have increased exponentially between 2008-2009, 1300%, and that such an increase could not be achieved through normal industry practices.

CADER: CADER’s responded that the EBB’s figures supporting this claim are inaccurate and entered the media realm without accuracy confirmation. CADER again cited its September 2009 industry update, showing a graph demonstrating 2008-2009 biodiesel production levels that refute the EBB figures.

In the current response, CADER acknowledged that virtually all of Argentina’s biodiesel was exported to Europe. CADER reported biodiesel exports totalling just less than one million tons in 2008 (refuting the 70,000 ton figure put out by the EBB).

EBB: Argentina’s system of Differential Export Taxes (DETs) presents a financial incentive for producing biodiesel from soybean oil rather than exporting the oil.

CADER: CADER responded that Argentina’s soybean exports are currently taxed at 35%. Argentina’s soy oil tax rate is 32%, while biodiesel’s tax rate is 20%, with a 2.5% reimbursement that reduces the net tax effect to 17.5% export tax.

CADER also pointed out that export tax information is available on the open website of the Argentine Federal Public Revenue Administration (AIFP).

However, CADER explained that differential export taxes (DETs) are export taxes on a processed product, such as wheat flour, and that the differential tax is lower than taxes on the unprocessed product. This is done in order to create downstream industry, according to CADER.

While supporting Argentina’s position on the DETs with various examples within the document sent to the EBB, CADER also said that the World Trade Organisation (WTO) does not specifically prohibit such taxes, and there is no obligation to inform the WTO about them, excepting that such export taxes be transparent in application.

According to CADER, the issue of biodiesel overcapacity in Europe is central to potential resolution of current misunderstandings.

CADER said Europe continues to expand its biodiesel industry, but has insufficient feedstock within the EU on which to operate its plants.

In its proposal to the EBB, CADER suggested that importing soy oil from Brazil and Argentina, respectively the world’s two largest exporters, offers steps toward a solution. However, it further stated that long distance transport of feedstock is becoming less economical, with regional production of biodiesel becoming more favoured.

CADER said Argentina also has increasing opportunities to send its biodiesel into China, the world’s largest emitter of greenhouse gases (GHG). China recently pledged to reduce its fossil fuel use by 40%, according to the trade association, and has been in contact with Argentina for potential biodiesel supply.

Establishing transparency and good business relations within the global biofuels community is a top priority for Argentina’s biodiesel community, as it strives to address its own challenges.

CADER said it seeks to work within a teamwork approach, asking the industry as a whole to act with integrity for the benefit of all.

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By: Judith Taylor
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