Argentina Challenges Spanish Biofuel Import Barriers

by Mike Godfrey, Tax-News.com, Washington

23 August 2012

Argentina has initiated proceedings at the World Trade Organization (WTO) against Spanish import rules which are said to effectively block imports of biofuels from foreign producers in contravention of international trade rules.

Argentina, one of the world's largest biofuels producers, announced that it had launched consultations with the European Union on the matter, which will negotiate on behalf of Spain. The commencement of these proceedings will set a 60 day timeframe to allow for the negotiation of an amicable resolution after which the WTO may establish a panel to mediate in the matter.

Spain's decision to effectively prohibit imports of biofuels comes amid a grievance with Argentina in relation to the administration's decision to seize control of Spanish oil company YPF, and nationalize the company.

Earlier in the month, Argentina announced its decision to hike the rate of duty it levies on exports of biofuels from 20% to 32% in line with the export duty rate imposed on soy-oil, one of two components used to produce Argentina's biofuel. In addition, the government has authorized the import of these inputs, to allow idle biofuel plants to resume their operations. The decision has been taken ahead of government plans to increase the use of biofuel in environmentally-friendly diesel blends, from 7% to 10%.

The two measures present considerable challenges for Argentina's biofuel industry, which last year exported around 70% of its produce. Losses projected by the biofuels industry from the Spanish measures have been put at USD1bn annually.