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EU biodiesel industry opposes proposal to lower anti-dumping duties

The EU Member States are to decide on the European Commission’s proposal to radically lower the anti-dumping duties on Argentinian and Indonesian biodiesel imports. The European Biodiesel Board (EBB) warns of the dramatic impact that this decision if approved may have on thousands of jobs as it would bring an end to any European biodiesel production.

The rapid growth of biofuels in Sweden in recent years is mainly attributed to the increased use of hydrotreated vegetable oil (HVO) diesel, a renewable diesel made from different bio-based raw materials. Sweden has also an extensive use of rapeseed-derived biodiesel (RME).

According to the European Biodiesel Board (EBB) EU produced biodiesel such as rape methyl-ester (RME) is under threat if the Commission prevails with its proposal to lower anti-dumping duties on biodiesel imports from Argentina and Indonesia.

The European Commission (EC) intends to bring the European Union (EU) anti-dumping duties on Argentinian biodiesel imports in conformity with the October 2016 World Trade Organisation (WTO) Appellate Body’s report by August 10. At the beginning of July, the Commission issued a General Disclosure Document, according to which it plans to bring the anti-dumping duties down to provisional levels or even lower.

According to the European Biodiesel Board (EBB), an industry association that represents around 75 percent of European biodiesel production, the “extremely low level” of the proposed duties will be unable to counter the “distortive” impact of dumping.

Additionally, since the result of the WTO panel on EU duties against Indonesia is still uncertain, it appears as “completely illogical” that the Commission already intends to drop the existing measures on Indonesian imports.

There is no reason for the EU to act now. The Commission has agreed with Argentina to do so by August 10 but there are numerous precedents of parties seeking and agreeing to postpone the adoption of measures for a multitude of reasons (technical, political etc.). The EU should ask for an extension of a few months. It is logical at least to see what comes out of the Indonesia panel in September, we expect something positive there, said Raffaello Garofalo, Secretary General of EBB.

The EBB warns that the negative economic impact would be high, thousands of jobs would be lost, most of which are in EU agricultural activities, for no convincing reason.

Should the Commission prevail and decide to include Indonesia already now, the industry is very likely to take this to the European Court. If industry wins and obtains compensation, this will be at the expense of the EU budget, i.e. at the expense of the Member States. Which of course would be unacceptable, Garofalo concluded.

Furthermore, EBB point out that in the light of the current discussions on the new methodology for calculating dumping margins and on China’s Market Economy Status (MES), the acceptance of the disclosure document by the Member States would entail even wider systemic consequences for all future anti-dumping cases and in perspective of China MES.

The proposed levels of duties would, EBB say, open the door to massive imports of Argentinian and Indonesian biodiesel. Both countries have continued to expand their production capacities in recent years. Indonesia has now reached over 7 million tonnes per-annum of operational capacity, of which 4 million tonnes are available for export. Argentina can produce over 5 million tonnes annually, of which 4 million tonnes could be exported.

EBB says that it is “extremely worried” that “EU’s excellence and worldwide leadership” in biodiesel would be irretrievably lost to Argentina and Indonesia, whose “unfair practices” are well proven – to the extent that other countries such as Peru and the US have recently adopted or are in the process of imposing anti-dumping and anti-subsidy duties against biodiesel imports from these countries.

Background

Argentina and Indonesia apply a tax on exports of the raw materials (soybean and palm oil), which largely exceeds the tax on exports of final processed biodiesel, discouraging exports of raw materials in favour of exports of biodiesel. This allows the domestic biodiesel industry to benefit from raw materials at significantly and artificially reduced prices, reducing its costs of production and conferring its domestic industries of biodiesel with a substantial – and unfair – advantage in relation to their competitors abroad.

Following a legal complaint lodged by EBB in 2012, the definitive anti-dumping measures against unfair biodiesel imports from Argentina and Indonesia have been imposed for a period of 5 years via EU Regulation 1194/2013, published on November 26th, 2013. Argentina lodged a complaint at the WTO already in December 2013. Following the WTO Appellate Body’s report issued in October 2016, the European Commission has been given time till August 10th, 2017 to bring the EU duties in conformity with the WTO Appellate Body’s report. The Indonesian government has lodged a similar complaint at WTO in June 2014. The case is, however, still under litigation. The industry is awaiting the ruling of the Panel.

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