EU launches investigation of U.S. biodiesel industry

Web exclusive posted June 24, 2008 at 1:50 p.m. CST

On June 13, the European Union launched antisubsidy and antidumping investigations on U.S. biodiesel imports after a European Commission examination of complaints filed April 29 by the European Biodiesel Board found sufficient evidence of the U.S. biodiesel sector garnering subsidies and dumping biodiesel in the European market. The complaints stated that these factors have adversely affected the European biodiesel industry. The commission's investigation will determine if placing tariffs on biodiesel imports is justified under EU trade rules.

A press release issued by the EBB on April 25 details these complaints, explaining that U.S. biodiesel producers claiming maximum U.S. subsidies for B99 can then export the fuel to Europe, where it may also be eligible for European subsidies. The EBB claims that since 2007, the result of these measures has been a dramatic surge in U.S. biodiesel exports to the EU, severely injuring the European biodiesel industry by disrupting the margins of European producers and putting most of them out of business. Consequently, EU biodiesel production capacity remained largely unutilized in 2007 and increased at a much lower rate than in previous years. An EBB press release from Oct. 16 stated that B99 blends were being sold in the European market at a substantial discount-in some cases at prices lower than that of feedstocks purchased by the EU industry. The EBB claims that subsidized B99 exports are a trade practice that breaches World Trade Organization rules and threatens the concept of international trade in biodiesel, undermining the potential of biodiesel to fight climate change. "We have always said that the EU will not tolerate unfair trade practices and will pursue vigorously any well-founded complaint," said Peter Power, EU spokesman for trade. "The commission will leave no stone unturned in these investigations and will act in accordance with the findings."

The commission's examination of the complaints found that the initiation of further proceedings is warranted. The complaints provided sufficient evidence of subsidies to the biodiesel sector in the United States, including federal excise and income tax credits, a federal grant program to finance increased production capacity, and various state subsidy programs. In regard to the antidumping complaint, the complainant provided sufficient evidence of biodiesel dumping on the EU market.

In response to the commission's decision to initiate these investigations, National Biodiesel Board Vice President Manning Faraci issued a statement calling the EBB's claims baseless. "The European biodiesel industry is not being harmed by U.S. competition," Faraci said. "High feedstock costs, changes to EU member policies and, in some cases,��� poor business practices are the true issues facing European biodiesel producers. It is unfortunate that the European Biodiesel Board has found it politically expedient to blame the U.S. biodiesel industry instead of focusing its efforts on the true challenges facing its membership. The allegations made by the EBB are unfounded, and the NBB will not only vigorously defend the interests of the U.S. biodiesel industry, but will employ every tool available to challenge existing EU trade barriers that provide preferential treatment to European biodiesel producers."

The commission will make its provisional findings by March 13 and present the findings to EU member states. If measures are considered justified, they would be in the form of specific duties imposed on biodiesel, called "countervailing duties" in the case of subsidies, and "antidumping duties" in the case of biodiesel dumping.

Notices in the June 13 issue of the Official Journal of the European Union describe the procedures that will be taken for each of the investigations. A review of these announcements suggests that samples of U.S. exporters and producers, EU importers and European producers will be used to gather information used in the investigation. The commission is requesting company contact information, the turnover in local currency, and the sales volume of biodiesel bought or sold in both the U.S. and EU markets, as well as various other pieces of relevant company information.

Imports of biodiesel into the EU market come mainly from the United States, with imports from other countries accounting for a minor share of the market. Imports of biodiesel from the United States have increased from an estimated 7,000 metric tons in 2005 to approximately 1 million metric tons in 2007, according to the EU.