EU Slaps Penalties on Argentine, Indonesian Biodiesel

The big news in the world of international biodiesel today is that the European Union has slapped biodiesel imported from Argentina and Indonesia with a penalty, which effectively makes biodiesel from these countries more expensive to purchase in the EU. Since biodiesel from Argentina and Indonesia accounts for 90 percent of the biodiesel imported into the EU, this significantly shifts the economic paradigm of biodiesel sales in Europe in favor of biodiesel produced within the EU itself.
The penalty, known as antidumping duties, was imposed by the European Commission in Brussels after the European Biodiesel Board filed a complaint on behalf of European producers that account for more than 60 percent of EU production, claiming that the biodiesel imported from Argentina and Indonesia was being sold in the EU at artificially depressed prices—prices with which European producers simply could not compete.

The EC is the regulatory body in the EU that is responsible for investigating allegations of non-EU manufacturers dumping their products into the EU at artificially depressed prices. As a result of its investigation of the EBB’s complaint, the EC last month imposed antidumping duties of between 6.8 and 10.6 percent on biodiesel imported from Argentina and between 1 and 9.6 percent on biodiesel imported from Indonesia, concluding that EU biodiesel producers had been harmed by the imports and needed the duties in order to regain the European market share that they had lost to Argentine and Indonesian biodiesel companies.

In arriving at its conclusion, the EC conducted the following analysis:

1. A company is dumping its products into the EU if it is exporting its products to the EU at prices lower than the normal value of the products in its own domestic market. The EC determined that Argentine and Indonesian biodiesel companies were selling their products in the EU below the cost at which these companies actually produced the biodiesel in an attempt to gain EU market share. The EC concluded that as a result of dumping their biodiesel into the EU, the Argentine and Indonesian companies had increased their share of the EU biodiesel market from 9.1 to 18.8 percent in a period of three years.

2. The EC noted that both Argentina and Indonesia had imposed an export tariff on the exportation of raw materials such as palm oil and soybean oil, but not finished products such as biodiesel, thereby making it more expensive for European companies to produce biodiesel from these raw materials. The lack of these raw materials in the EU from which to produce biodiesel, coupled with inexpensive biodiesel imported from Argentina and Indonesia, the EC concluded, caused material economic injury to the European biodiesel industry. As support for its conclusion, the EC indicated that during the period in which the market share for Argentine and Indonesian biodiesel had increased from 9.1 to 18.8 percent, the market share for European biodiesel had decreased by 5.5 percent.

3. The EC concluded that in order to relieve the material economic injury suffered by European biodiesel companies as a result of the biodiesel dumped into the EU from Argentina and Indonesia, it would impose provisional antidumping duties on biodiesel imported from these countries, beginning May 28, and continuing for a period of six months.

The governments of the 27 countries that make up the EU must now decide before the end of November whether to turn these provisional duties into definitive duties against biodiesel imported from Argentina and Indonesia, which would typically be imposed for a period of five years.

The biodiesel trade war between the EU and Argentina and Indonesia is just starting to heat up. Argentina has threatened to fight back against the antidumping sanctions by filing a complaint against the EU with the World Trade Organization. Stay tuned for more fireworks in the months to come.

Author: Richard Weiner
Vice President, Fredrikson & Byron
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