Tuesday, March 3, 2009

EU biofuel trade war is brewing

March 4, 2009

Europe Backs Tariffs on U.S. Biofuel Imports

BRUSSELS — Seeking to protect their beleaguered biodiesel industry, European governments on Tuesday backed a plan to impose provisional tariffs on American biodiesel producers
like Cargill and Archer Daniels Midland, European Union diplomats said.

Both the European Union and the United States subsidize their
biodiesel industries. But European producers have complained to trade
regulators that their counterparts in the United States benefit twice:
from subsidies by the United States government to produce biodiesel,
and from subsidies granted by European governments when the fuel is
sold on the Continent.

Moves by the European Union to impose tariffs come as concerns are growing
that protectionism by governments during the current downturn could
spiral out of control. But representatives of the European biodiesel
industry said the measures being undertaken by European officials were
necessary and justified under World Trade Organization rules.

“Whatever the action of the United States will be — even in front of
the W.T.O. — our complaint and our case is well grounded,” said
Raffaelo Garofalo, the secretary general of the European Biodiesel
Board, an industry group. “There is no logical explanation for why
biodiesel sold in Europe could be cheaper than its raw materials.”

European diplomats spoke on condition of anonymity because a final determination on the levels of duties remained with the European Commission, which is not expected to publish its decision until next week.

Under European rules, the commission is entitled to impose
provisional duties lasting six months. Any definitive measures, lasting
five years, would need approval by European governments before the

“We are not commenting on expected decisions and instead will wait
for official action to be taken by the commission,” said an American
trade official, who spoke on condition of anonymity because a formal
decision had not yet been made.

To counter what it calls unfair subsidies to the American industry,
the commission is poised to impose tariffs of 261 to 407 euros, or $328
to $511, on a ton of American biodiesel, the diplomats said. Dozens of
companies would be affected, the diplomats said.

The level of tariffs would be tailored to individual companies to
reflect the types and amounts of the fuel they produce, and the amount
of subsidies and other support they receive from American authorities,
the diplomats said. Commission officials have visited United States as
part of an investigation since beginning formal proceedings last year,
they said.