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WTO panel to examine EU duties on Argentine biodiesel

By International Centre for Trade and Sustainable Development | April 30, 2014

The dispute (DS473) between Argentina and the EU over the latter’s imposition of antidumping duties on biodiesel imports from the South American economy has advanced to the panel stage at the global trade arbiter, after Buenos Aires presented its second panel request to the WTO’s Dispute Settlement Body last Friday.

The duties in question were confirmed by the 28-member bloc last November, following a European Commission investigation into claims that Argentina and Indonesia—the world’s top exporters of biofuels—were selling their energy product to EU member states below its normal value, a practice known as “dumping” in trade parlance.

Notably, third parties expressing interest in the WTO case do not currently include Indonesia, on whom Brussels has also imposed biodiesel antidumping duties.

Friday’s development came within days of Argentine President Cristina Fernández de Kirchner forwarding a request to Congress to eliminate certain domestic taxes paid by biodiesel manufacturers, slated as an effort to support the country’s industry in the face of the EU measures. The proposal suggested the tax concessions would run as long as the duties remained in place.

Argentina and Indonesia together make up 90 percent of the EU’s biodiesel imports and capture over one-fifth of the bloc’s market share. Brussels alleges that the duties are necessary to level the playing field for its own domestic producers.

In its complaint, Buenos Aires contends that Brussels incorrectly calculated the final duties by failing to take into account records kept by the exporters or producers under investigation; did not determine production costs in the country of origin; and also included costs not associated with the production of the goods in question.

In addition, according to Argentina, the EU failed to conduct an objective examination of the elements such as volume and price effect of the purportedly dumped imports in its determination of injury to the EU domestic industry. Argentina is also questioning the objectivity of the EU’s examination of the causal relationship between the alleged dumping and injury.

For its part, the EU has stressed that its measures are in keeping with international trade law and it will seek to defend them. In the lead up to the panel establishment, Argentina has fired shots at the trading bloc suggesting that the European biofuels industry is too large, and does not have sufficient adequate raw materials capacity or vertical integration to be competitive.

The dispute joins a growing list of trade irritants between the South American country and the EU over biodiesel trade policies in the last two years.

For its part, Argentina has lodged two separate cases before the global trade arbiter. In a case (DS443) put forward in 2012, Buenos Aires objected to Spain’s decision to implement a part of the EU’s Renewable Energy Directive by favouring biofuels producing within the trading bloc.

Although Argentina opted to put that dispute on hold following Spain’s modification of the rules involved under scrutiny, another hit came in May 2013, when the country filed a separate complaint (DS459) this time specifically in relation to EU support schemes offered to the domestic biodiesel sector.

The bitter biofuels confrontations come even as the EU and South American customs union Mercosur—of which Argentina is a member—are engaged in a long-running struggle to negotiate a comprehensive trade deal. Although currently going through a turbulent period, the troubled Argentine economy remains one of the largest in South America, making the country a critical player in the embattled talks.

 

 

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