The European Union has imposed temporary duties on US biodiesel imports following a series of complaints from European biodiesel producers that they were being put at a disadvantage by US subsidies of US$1 per gallon. This move to impose tariffs comes amid growing concerns that protectionism by governments during the current economic downturn could spiral out of control.

EU companies have accused US producers of being involved in a “splash and dash” scheme, whereby they import cheaper biodiesel from countries such as Brazil and add less than 5 per cent of US biodiesel. These US producers then qualify for a subsidy from the US Government before exporting the biodiesel to Europe. As a result, US exports to Europe have grown from just 60,000 tonnes in 2006 to more than 1.5 million tonnes in 2008. At least 15 European producers have declared bankruptcy in that period.

US companies exporting biodiesel into the European Union will be expected to pay additional tariffs ranging from EUR 29 to EUR 41 per 100 kg for an initial period of six months. The final determination on the levels of the duties will be confirmed next week by the European Commission. The level of tariffs will be tailored to individual companies to reflect the types and amounts of the fuel they produce and the amount of subsidies and other support they receive from US authorities.