EU member states are to decide on the European Commission’s proposal to radically lower the antidumping duties on Argentinian and Indonesian biodiesel imports. The European biodiesel industry warns of the dramatic impact that this decision may have on 120,000 jobs and on the efficiency of the overall future of EU trade defense. It is critical for the EU and national authorities to realize that, if approved, the current commission proposal would bring to an end any European biodiesel production.

The European Commission intends to bring the EU antidumping duties on Argentinian biodiesel imports in conformity with the October 2016 World Trade Organization Appellate Body’s report by Aug. 10. At the beginning of July, the commission issued a general disclosure document, according to which it plans to bring the antidumping duties down to provisional levels or even lower.

The extremely low level of new proposed duties will be unable to counter the distortive impact of dumping. Additionally, since the result of the WTO panel on EU duties against Indonesia is still uncertain, it appears as completely illogical that the commission already intends to drop the existing measures on Indonesian imports. The negative economic impact would be high, thousands of jobs (120,000, mostly in related EU agricultural activities) would be lost, for no convincing reason.

“There is no reason for the EU to act now,” said Raffaello Garofalo, secretary general of the European Biodiesel Board. “The commission has agreed with Argentina to do so by Aug. 10 but there are numerous precedents of parties seeking and agreeing to postpone the adoption of measures for a multitude of reasons,” including technical and political ones. “The EU should ask for an extension of a few months. It is logical at least to see what comes out of the Indonesia panel in September, we expect something positive there. Should the commission prevail and decide to include Indonesia already now, industry is very likely to take this to the European Court. If industry wins and obtains compensation, this will be at the expense of the EU budget, in other words, at the expense of the member states, which, of course, would be unacceptable.”

In the light of the current discussions on the new methodology for calculating dumping margins and on China’s Market Economy Status, the acceptance of the disclosure document by member states would entail even wider systemic consequences for all future antidumping cases and in perspective of China MES.

The proposed levels of duties would open the door to massive imports of Argentinian and Indonesian biodiesel. It is crucial to understand that, over the past years, both countries have continued to expand their production capacities. Indonesia has now reached more than 7 million metric tons per year of operational capacity, of which 4 million tons are available for export. Argentina can produce more than 5 million tons a year, of which 4 million tons could be exported.

The EBB is extremely worried that EU’s excellence and worldwide leadership in biodiesel would be forever lost at the advantage of two countries, Argentina and Indonesia, whose unfair practices are well proven—to the extent that other countries such as Peru and the U.S. have recently adopted or are in the process of imposing antidumping and antisubsidy duties against these countries’ biodiesel imports.

Background

Argentina and Indonesia apply a tax on exports of the raw materials (soybean and palm oil), which largely exceeds the tax on exports of final processed biodiesel, discouraging exports of raw materials in favor of exports of biodiesel. This allows the domestic biodiesel industry to benefit from raw materials at significantly and artificially reduced prices, reducing its costs of production and conferring its domestic industries of biodiesel with a substantial advantage in relation to their competitors abroad. Following a legal complaint lodged by EBB in 2012, the definitive antidumping measures against unfair biodiesel imports from Argentina and Indonesia have been imposed for a period of five years via EU Regulation 1194/2013, published on Nov. 26, 2013. Argentina lodged a complaint at the WTO in December 2013. Following the WTO Appellate Body’s report issued in October 2016, the European Commission has been given until Aug. 10 to bring the EU duties in conformity with the WTO Appellate Body’s report. The Indonesian government has lodged a similar complaint at WTO in June 2014. The case is, however, still under litigation. The industry is awaiting the ruling of the panel.