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Argentina Criticized For Biodiesel Export Tax Distortions

by Ulrika Lomas,, Brussels

24 December 2009

The European Biodiesel Board (EBB) has highlighted the need to take action against the tax distortions that have caused Argentine exports of biodiesel to the EU to increase dramatically from less than 5,000 tons in July 2008 to almost 100,000 tons per month in July 2009 – a twenty-fold increase.

According to the EBB, Argentine exports are expected to overstep the one million metric tons threshold for 2009 as a whole, compared to only 70,000 tons the previous year.

The Argentine biodiesel exports to the EU are driven by a regime of differentiated export taxes (DETs), which creates an artificial incentive for the production and export of the finished product biodiesel rather than its raw material (soybean oil).

The differential between the 32% export tax on soybean oil and the 20% export tax on biodiesel creates a clear financial incentive to process soybean oil into biodiesel. The EBB believes that the tax differential is in reality even greater – in the region of 20%, due to a number of "ad hoc implementing rules."

The EBB reviewed all the possible legal and political options to address the growing imports from Argentina under the distorting DETs export regime. Such options include investigating possible dumping practices and the legality of Argentine DETs under World Trade Organization rules.

The EBB said it has always been in favor of an open EU biodiesel market in order to promote the EU’s objective of 10% renewable energy in transport by 2020. It says that Argentine biodiesel continues to enjoy a duty-free access to the EU biodiesel market as a developing country, whereas Argentina levies a 14% customs duty on biodiesel from Europe and other countries.

“EBB takes very seriously the challenge of Argentine biodiesel exports to [the] EU," said Raffaello Garofalo, EBB Secretary-General. "We stand ready to defend our interests, as we already did successfully against subsidized imports from the United States.”

In the EBB's view, the Argentinean authorities should remove forthwith the DETs regime currently applied on soybean products and biodiesel.

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