March 4 2009 @FT.com

EU slaps tariffs on US biodiesel

US biodiesel exporters face additional tariffs after the European Union yesterday announced temporary anti-dumping and anti-subsidy duties .

A European Commission trade committee has imposed tariffs ranging from Euro29 ($32.88) to Euro41 per 100 kg for an initial period of six months, according to people familiar with the matter.

The move is the latest in a series of transatlantic trade spats and comes at a time of rising fears over protectionism. It highlights the perilous state of an industry that is suffering overcapacity and thin margins.

European producers blame their woes almost entirely on imports of US biodiesel, which benefit from a $1 per gallon government subsidy. Those subsidies, they claim, have helped US exports to Europe grow from just 60,000 tonnes in 2006 to more than 1.5m tonnes last year.

At least 15 European producers have declared bankruptcy in the past two years, according to the European Biodiesel Board, an industry trade group, with dozens more cutting production.

The EBB estimates that after investing heavily in recent years to build 16m tonnes in annual production capacity, European output is running at less than 40 per cent. US biodiesel producers say their smaller European competitors suffer from inefficient operations and poor geographical locations.

The Commission is due to publish a formal decision on the extra tariffs and duties on March 12, which would come into force the next day. After four months, those provisional duties could be extended for up to five years.

Sean Sutcliffe, chairman of Biofuels Corporation Trading, which built and is operating the UK's largest biodiesel plant, said: "All we have ever asked for was a level playing field."