BIOFUELS TRADE WAR BREWING

EU slaps 5-year import duties on US biofuel
Aoife White, July 7, 2009 (AP via Forbes)

"The European Union [the world's biggest user and producer of crop-based fuels] extended import fees on U.S. biodiesel…to protect European producers from unfair American subsidies [to Archer Daniels Midland Co., Cargill Inc. and several others] and below-cost selling…

"The EU's 27 nations said in a joint statement that they were extending for five years temporary fees they imposed in March… after a trade investigation said that U.S. producers sold biodiesel to Europe far below the real costs of production [even lower price than the vegetable oil raw materials purchased by the EU industry] and received federal tax credits and state subsidies."

They call it "splash and dash." (click to enlarge)

"EU officials said this helped U.S. exporters increase their share of the EU market for biodiesel from 0.4 percent in 2005 to more than 17 percent from April 2007 to March 2008…The United States is the EU's biggest foreign supplier of biodiesel, providing euro700 million ($976 million) worth of fuel to a total market worth euro5 billion.

"The European Biodiesel Board said the new import fees would help re-establish a level playing field for European producers, claiming unfair U.S. competition [for more than two years] has already caused some companies to go bankrupt or to quit biodiesel production…Biodiesel is usually mixed with mineral fuel to power diesel cars, trucks, buses and trains. It can also be used as a heating fuel."

But why? (click to enlarge)

"The EU plans to use far more biofuels in the coming years, setting a target to replace 10 percent of transport oil with biofuel by 2020 - or 33 million metric tons of oil…EU biofuel output in 2006 was 6 million metric tons and it will likely have to increase output rapidly and import far more to meet its goals…

"This biofuel target has come under fire from environmentalists and others who claim that it will see land taken away from food production and put pressure on natural reserves - especially in developing countries."