EU raises stakes for US in biodiesel battle

By Joshua Chaffin in Brussels and Alan Beattie in Washington
 
The European Union is gearing up to slap duties on imported US biodiesel inthe latest sign of rising trade tensions as world economies slump intorecession.
 
The so-called “anti-dumping” and “countervailing” duties, levied againstimports deemed to be priced unfairly low and receiving government subsidy,will be proposed by the European Commission at a meeting early next month.
 
The Commission’s preliminary findings suggest that the subsidies are pushingdown prices by between 89-99 US cents per gallon and that US companies areunderpricing by 10-82 cents a gallon, according to people involved in thecase. Biodiesel is currently about $2 per gallon. Duties to offset thesemargins would initially be imposed for a four-month period before theCommission made a final ruling on whether the subsidies contravened WTOrules.
 
The Commission launched in investigation in June after a complaint waslodged by the European Biodiesel Board, a trade group. It declined tocomment on the matter on Friday, beyond saying that its deadline to render ajudgment was March 13.
 
But the US National Biodiesel Board, which is trying to get the USadministration to launch a case against the EU at the WTO, said the onlyEuropean biodiesel companies suffering were those that had made bad businessdecisions.
 
“The European biodiesel industry is not being hurt by US competition,” saidManning Feraci, the board’s vice-president for federal affairs. “There areEuropean companies doing quite well, and the data on record in front of theCommission bear that out. We hope the true facts will be reflected in thefinal determination in this case.”
 
The complaint centres on a US law that grants domestic producers a $1 pergallon tax credit. European producers claim that results in a $250 per tonnecost advantage for US biodiesel – an advantage that was further increasedlast year by the weak dollar.
 
They have also complained about the so-called “splash-and-dash” trade –producers from Malaysia and elsewhere claiming the credit by adding aminimal amount of US biodiesel on the way to Europe.
 
US biodiesel exports to Europe have surged to more than 1m tonnes over thepast year, up from just 50,000 tonnes in 2006. They account for about €600m($770m) of the €5bn European market.
 
The US biodiesel industry says that small European producers far from portsare suffering because of high costs and inefficiencies, while some largercompanies are thriving.
Copyright The Financial Times Limited 2009