The European Union will drop a threat to impose anti-subsidy tariffs on U.S. bioethanol, avoiding trade barriers for American producers such as Archer- Daniels-Midland Co. (ADM)
The European Commission gained support from EU governments to close an inquiry into whether U.S. bioethanol makers that also include Valero Energy Corp. (VLO) and Poet LLC receive trade- distorting government aid. The commission, the EU’s trade authority, opened a subsidy probe in November 2011 that could have led to five-year import levies on U.S. manufacturers.
At a meeting today in Brussels, ministers from the 27- nation EU didn’t object to a commission report “announcing the termination of the anti-subsidy proceeding.” The decision to end the investigation without imposing tariffs will take effect after being published in the EU Official Journal by Dec. 25.
Ethanol is a form of alcohol distilled from grain or sugar that boosts the oxygen content of fuel so it burns more thoroughly, reducing tailpipe emissions. The probe into alleged subsidies to U.S. bioethanol manufacturers stemmed from a complaint in October 2011 by the European bioethanol industry represented by the European Producers Union of Renewable Ethanol Association, or ePure.
At the time, the European association also filed a complaint alleging that U.S. bioethanol producers sold in the EU below cost, a practice known as dumping. That led the commission to open a parallel dumping probe, which involves a separate threat of duties. That inquiry continues and is due to end by Feb. 25.
The EU imposes anti-dumping duties and anti-subsidy duties on imports from the U.S. of biodiesel, a type of biofuel made from vegetable oils and animal fats for use in diesel engines. Those five-year levies were applied in 2009.
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