U.S. Biodiesel Said to Face European Union Tariffs by March 13

By Jonathan Stearns

Feb. 23 (Bloomberg) -- The European Union plans to impose tariffs on U.S. biodiesel to protect EU producers from American subsidies and price undercutting, said two people familiar with a case that threatens to heighten trans-Atlantic trade tensions.

The duties are to punish U.S. manufacturers of biodiesel, a type of biofuel made from vegetable oils and animal fats for use in diesel engines, for receiving government aid and selling in the EU below cost, said the people. They requested anonymity because the European Commission, the EU’s executive arm, must consult governments about its plan, which comes as warnings are issued that protectionism may worsen the global economic slump.

EU imports of biodiesel from the U.S. were worth about 700 million euros ($901 million) in 2007. The trade protection, due by March 13, will last four to six months and may be prolonged for five years.

“In the current economic climate, we need a rise in these kinds of duties like we need a hole in the head,” said Philip Whyte, a senior research fellow and trade analyst at the Centre for European Reform in London. “There are huge protectionist pressures mounting within Europe.”

The biodiesel import taxes follow criticism in Europe of a “buy-American” clause in U.S. economic-stimulus legislation, World Trade Organization pledges to guard against a resurgence in protectionism and warnings from experts that such a trend would deepen the worst crisis since World War II.

Two Probes

The planned biodiesel trade protection is the preliminary outcome of two EU probes opened last June at the request of the European Biodiesel Board, which represents about 60 companies including Germany’s Verbio AG and Finland’s Neste Oil Oyj. The duties to counter subsidies will be as much as 24 euros per 100 kilograms (220 pounds) and the levies to fight below-cost, or “dumped,” imports will be up to 20 euros per 100 kilograms, according to one of the people.

The cases highlight tensions accompanying EU and U.S. efforts to expand global trade in biofuels. Biofuels, which also include ethanol, are a renewable energy from crops such as rapeseed, corn, wheat and sugar.

The EU decided last year to require at least 10 percent of land-transport energy in each member country to come from renewable sources led by biofuels beginning in 2020. This is part of a broader goal of more than doubling the overall share of renewable energy in the EU to an average 20 percent.

Under EU trade practices, the Brussels-based commission has nine months from the start of an investigation to decide on provisional measures. EU governments have 13 months from the beginning of an inquiry to impose “definitive” five-year anti- subsidy duties and 15 months to impose definitive anti-dumping measures.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net