Argentina has starting shipping biodiesel supplies to the European Union, returning to what was once its biggest market after a four-year legal battle over import tariffs, buoying expectations of export growth, an industry representative said Wednesday.
“We have begun exporting biodiesel to Europe very gradually,” Claudio Molina, executive director of the Argentina Association of Biofuels and Hydrogen, an industry group, said in an email.
Exports to the EU likely will “reach a volume like the one that existed in 2013,” he said, without specifying how long this could take.
Argentina exported a total of 1.1 million mt of supplies in 2013, most of it to the EU, according to Energy Ministry data.
In November 2013, however, the EU imposed duties of 22%-25.7% on Argentinian biodiesel after allegations that exporters from that country were dumping the product in its market, or selling at below cost. Argentina took the case to the World Trade Organization, WTO, which ruled in its favor last October that the EU must cut the duties. Early this month, the EU said it will sharply lower the duties by September 28, likely to less than 10%.
Molina said the duties “should be totally eliminated,” given that the Argentinian supplies are not being dumped or subsidized.
He added that the Superior Court of Justice in Luxembourg has ruled in favor of an elimination of the tariffs, a decision that the European Commission is appealing.
With the tariffs, while lower, Argentina’s biodiesel industry is having to “reduce its profit margins too much to be able to sell”‘ he said.
While exports to the EU are poised to gain, total shipments likely will remain lower than a record 1.65 million mt in 2011, which was almost met again in 2016.
To reach those levels, the big challenge is to negotiate lower import duties in the US, which became the major export market after the loss of the EU.
Exports have plunged to the US this year, as the US opened investigations into alleged dumping. Last month the US imposed an average 57% duty on Argentinian biodiesel.
Molina said the countries could seek a “suspension agreement” on the duties by negotiating a quota of tax-free exports at a minimum reference price. But if the negotiations do not pan out, the US likely will confirm a higher import duty in November or December, he said.
Even if the duty is reduced below the 57%, Argentina likely will take the case to the WTO like it did with the EU, Molina added.
While this could bring a similar solution for Argentina, “the times are very long and the consequent losses of exports are enormous,” Molina said.
Argentina exported 741,485 mt of biodiesel supplies in the first half of 2017, up 25.7% from 589,695 mt in the year-earlier period, led by sales to the US early in the year, according to Energy Ministry data. Over the same period, production rose 27.3% to 1.4 million mt from 1.1 million mt, the data show.
–Charles Newbery, [email protected]
–Edited by Derek Sands, [email protected]