Thursday, May 28, 2020

ECONOMY | 11-09-2017 11:39

Argentina wins access to EU biodiesel market

Barely a week after the US imposed steep duties on local biodiesel, government can celebrate favourable decision from Europe.

D espite an unresolved deadlock with the United States on the biodiesel front, Argentina obtained some joy this week as it  regained access to the European Union after a successful challenge of Europe’s anti-dumping duties, upheld by the World Trade Organisation (WTO) last year.

On Thursday, EU member states voted to sharply downscale by the end of this month the tariffs slapped on Argentine biodiesel  in late 2013. They accepted a European Commission proposal to reduce the tariffs from a 2013 range of 22-25.7 percent to  4.5-8.1 percent. Prior to 2013 Argentina had been the main supplier of biodiesel to the EU and its production had become a  major growth industry tapping bumper soy and other crops, thus enriching the big players in this sector such as Bunge, Cargill, Louis Dreyfus and Molinos Río de la Plata.

At the time the Argentine government promptly appealed these “protectionist” tariffs to the WTO, arguing that they cost the  country almost US$1.6 billion annually in lost sales per year, but the international commercial tribunal did not rule until last  October when it upheld Argentina’s complaint.

The EU based its dumping case on the export duties levied by Argentina on soybeans (35 percent back in 2013 and still 30   percent today). These served to discourage overeas sales and thus depress domestic prices, thus allowing biofuel producers to  “dump” their exports at unfairly low prices.

Representatives of Argentina’s biodiesel industry celebrated the likely return to the EU market while expressing caution about  potential volumes. The good news from Europe came just a few weeks after the United States, hitherto the destination of 90  percent of Argentina’s biodiesel exports, had imposed countervailing duties of up to 64.17 percent and averaging 57 percent on  the fuel, thus halting all US-bound shipments dead in their tracks. An appeal to the WTO is also in progress among other  counter-measures but with scant result until now.

Argentina obtained a better deal than Indonesia, the other main target of EU anti-dumping duties on biofuel, which will still face  tariffs of 8.8-20.5 percent when exporting to the EU.

Indonesia, which uses palm oil rather than soy to make its biodiesel, has also appealed to the WTO but since there has not yet  been any ruling, the European Commission sees no need to propose lower import duties.

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