E.U. Commission Decides to Extend Tariffs on U.S. Biodiesel until 2026
Believing that American gas companies can benefit greatly from the no-tariff policy, the EU took strong action by imposing a five-year extension on biodiesel tariff. Learn more about the union's decision with our blog.
One expectation for the new U.S. president Joe Biden was a revival of transatlantic trade relations. Under the Trump administration, the U.S. and the European Union (E.U.) have fought over several trade disputes and introduced tariffs on certain goods and services. But there were already many taxes before the Trump era, one of which is on biodiesel.
However, it's not like a new president means tariffs are suddenly a relic of the past. The E.U. had already decided to retain its tariffs on U.S. biodiesel for another five years, dating back to 2009.
Protecting Domestic Prices
The E.U. placed tariffs on the fuel because removing them would likely cause a surge of imports at artificially low prices. Before extending them for another five years, the European Commission reviewed the case and concluded that American producers could increase to full capacity if there were no tariffs.
Another reason is that lifting the taxes would divert some U.S. exports from less profitable markets to the E.U., which is the world's largest market for biodiesel. Today, U.S. producers are selling to third world countries at prices below those in the country. Lifting tariffs would thus make the E.U. market much more attractive.
According to the E.U. commission, American gas companies benefit from subsidies such as tax credits, grants, and loan guarantees. They fear a tariff-free policy would put domestic producers in a position where they have to compete with subsidized competitors, giving them a disadvantage in their home market.
Satisfying Home Companies
The anti-dumping duties span from zero to 198.0 euros ($235.36) per tonne, and any tariff related to subsidies ranges from 211.2 to 237.0 euros per tonne. As these charges are not cumulative, the higher rate of the two forms of duties applies.
The E.U. will continue to impose these duties on various companies such as Archer Daniels Midlands Co and Cargill. The European Biodiesel Board brought the case on behalf of EU-based producers, including Saipol from France and Verbio from Germany.
"If existing measures were allowed to lapse, the [E.U.] industry will most certainly be faced with increased unfair competition from the U.S. biodiesel producers most likely putting an abrupt halt to the on-going recovery of the [E.U.] industry," the Commission said in a statement.
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