Wilbur Ross, Commerce Secretary Chris Kleponis/Pool/GettyImages

Commerce rules biodiesel subsidies in Argentina, Indonesia violate trade rules

Biodiesel imports from Indonesia and Argentina have surged.

The Commerce Department has determined that Argentina and Indonesia provide subsidies to their biodiesel producers in violation of international trade rules. Commerce also determined that critical circumstances exist, allowing for collection of duties back to May 2017.

“The Commerce Department has recognized what this industry has known all along—that foreign biodiesel producers have benefited from massive subsidies that have severely injured U.S. biodiesel producers. We’re grateful that the Commerce Department has taken preliminary steps that will allow our industry to compete on a level playing field,” said Doug Whitehead, chief operating officer of the National Biodiesel Board, which filed the petition.

“The U.S. values its relationships with Argentina and Indonesia, but even friendly nations must play by the rules,” said Secretary Ross. “The subsidization of goods by foreign governments is something that the Trump administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”

As a result of the ruling, importers of Argentinian and Indonesian biodiesel will be required to pay cash deposits on biodiesel imported from those countries. The cash deposit rates range from 50.29% to 64.17% for biodiesel from Argentina, and 41.06% to 68.28% for biodiesel from Indonesia, depending on the particular foreign producer/exporter involved. Cash deposit requirements will be imposed when this preliminary determination is published in the Federal Register sometime next week. In addition, based on Commerce’s “critical circumstances” finding, these rates for Argentina will apply retroactively 90 days from the date of the Federal Register notice.

The NBB Fair Trade Coalition filed these petitions to address a flood of subsidized and dumped imports from Argentina and Indonesia that has resulted in market share losses and depressed prices for domestic producers. Biodiesel imports from Argentina and Indonesia surged by 464% from 2014 to 2016, taking 18.3 percentage points of market share from U.S. manufacturers. Imports of biodiesel from Argentina again jumped 144.5% following the filing of the petitions. These surging, low-priced imports prevented producers from earning adequate returns on their substantial investments and caused U.S. producers to pull back on further investments to serve a growing market.

In 2016, imports of biodiesel from Argentina and Indonesia were valued at an estimated $1.2 billion and $268 million, respectively. 

Between the preliminary and final determinations, the Commerce Department will audit the foreign producers and governments to confirm the accuracy of their data submissions. Parties will file briefs on issues arising from the agency’s preliminary countervailing duty determinations, and the Commerce Department will hold a hearing. Preliminary determinations in the companion antidumping investigations are due to be issued in October. Final Commerce determinations will be issued later this year, or in early 2018, with a final determination by the International Trade Commission soon thereafter. 

Countervailing duty laws provide U.S. businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair subsidization of imports into the United States. Commerce currently maintains 404 antidumping and countervailing duty orders which provide relief to American companies and industries impacted by unfair trade.

Source: National Biodiesel Board, U.S. Commerce Department

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