After
Biodiesel, EU Cracks Down on US Bioethanol
Anti-dumping, Anti Subsidy Investigations Launched
On Friday 25 November, the European
Commission announced that it had begun anti-dumping and countervailing duty proceedings
for US bioethanol imports. The Commission’s investigations - informed by
applicable WTO agreements - follow a formal complaint that was filed by the EU
bioethanol industry association, ePure, last month.
“The
EU has initiated anti-subsidy and anti-dumping investigations into imports of
bioethanol from the USA to establish if US imports of bioethanol have an
adverse effect on the European bioethanol industry,” EU trade spokesman John
Clancy said in a statement.
According
to sources in Brussels, the case has been in the works for a long time. Most
analysts there believe that sufficient evidence will be found to justify the
imposition of countervailing duties.
In
its original complaint, ePure - also known as the
European Producers Union of Renewable Energy Association - alleged that US tax
credits allowed American exporters to cut their EU selling price by about 40 percent, thereby illegally dumping into the EU market.
The
industry association also claimed that this led to a 500 percent
rise in US exports to the EU between 2008 and 2010. ePure expects that these imports will, in 2011 alone,
have doubled from their 2010 levels.
“This
impressive trend is the direct result of US federal and sub federal subsidies,
which allow US operators to adopt aggressive pricing practices on the European
market,” the industry group argued.
While
the ethanol aid is set to expire at the end of this year, US import share is
expected to rise even further as the 27-member EU bloc faces higher production
costs and production shortfalls.
ePure,
whose members produce 80 percent of Europe’s
bioethanol, explained in their statement that the subsidisation policy has
allowed the US to become the world’s largest ethanol producer. The unfairly low
prices that the producers can adopt as a consequence have had a direct and
negative impact on the EU industry, the association argued.
The
ePure claims led to a strong rejection from its US
counterpart, the US Renewable Fuels Association (RFA). “RFA has neither
discovered nor been provided any evidence by the EU that such ethanol trades are occurring,” the group said in a 2 November statement.
The US group further argued that the EU complaint was
misguided, since “domestic ethanol producers are not eligible for the tax
incentive referenced by the Europeans.”
RFA added that the “tax incentive is specifically made
available to gasoline blenders, marketers and other end users. Therefore, US
ethanol producers cannot nor should be the focus of any European action.”
Nonetheless, the US industry group responded to the EU
ethanol investigation by guaranteeing co-operation between US producers and the
EU - an important requirement under the WTO anti-dumping agreement.
This requirement means to ensure that responding exporters -
in this case, US manufacturers - cannot keep investigations hostage by refusing
to submit relevant information for the investigations. Otherwise, the
investigating authorities may have to rely on incomplete information, which
could work to the disadvantage of the exporters.
Brazil, a main ethanol producer and exporter, is expected to
welcome the move. Lately the South American country has lost much of its EU
market-share to the powerful US industry.
The European Commission’s announcement comes at a time where
the EU has repeatedly found itself under fire for its biofuels import policy.
The EU Renewable Energy Directive, in particular the incorporated
sustainability standards, are considered discriminatory and unfair by a number
of biofuel-producing countries.
These standards qualify which biofuels may be considered
“sustainable,” taking into account greenhouse gas emission savings and
biodiversity conservation achievements. Only the sustainable fuels are
considered renewable energy, making them eligible for certain financial support
by EU member states.
Countries’ individual threshold commitments for the overall
share of renewable energy that has to come from renewable sources- the highest
being 49 percent in Sweden - also provide a strong
incentive to only use sustainable biofuels. Moreover, for some biofuels
imported from outside the EU, the Commission has not provided a default value,
putting them at a disadvantage with EU produced like-products.
The
European Commission now has 15 months to address the complaint of “material
injury” to European producers. Provisional findings are due by 24 August 2012.
According to WTO rules, after a preliminary determination
deems that the imports are causing an injury and that countermeasures would be necessary
to prevent further damage during the course of the investigations, provisional
anti-dumping and countervailing duties can be applied for six and four months,
respectively.
The investigation could result in the imposition of five-year
taxes on US bioethanol producers. Back in 2008, the EU imposed five-year duties
on imports of biodiesel from the US; in the following year, Brussels extended
these duties to Canada.