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EU to Register U.S. Bioethanol, Indicating Tariff Threat

The European Union ordered its customs officials to register imports of U.S. bioethanol, underscoring the threat of EU tariffs on the shipments.

The step, part of an inquiry into whether U.S. bioethanol producers such as Archer-Daniels-Midland Co., Valero Energy Corp. and Poet LLC receive trade-distorting government aid, would allow the EU to impose duties retroactively.

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.

“Imports of the product concerned shall be made subject to registration so that, eventually, measures may retroactively be applied against those imports from the date of such registration,” the European Commission, the 27-nation EU’s trade authority in Brussels, said today in the Official Journal.

Nine months ago, the EU opened a probe into whether U.S. bioethanol manufacturers receive government subsidies that harm European competitors. The bloc also began a separate investigation into whether American producers sell bioethanol in the EU below cost, a practice known as dumping.

EU governments must decide by Dec. 25 whether to impose anti-subsidy duties on U.S. bioethanol for five years and by Feb. 25, 2013, whether to apply anti-dumping levies for the same length of time. Tomorrow is the deadline for the commission to impose provisional duties -- a step it said it would refrain from taking.

Causing Injury

In its decision ordering the registration of American bioethanol, the commission said it found evidence that U.S. subsidies to domestic producers caused “material injury” to the EU industry during an investigation period covering the 12 months through September 2011.

The commission said it opted not to introduce provisional anti-subsidy -- or “countervailing” -- duties because the primary subsidy program in force during this period had ceased.

“However, there is evidence that the U.S. might reinstate the main subsidy scheme found to be countervailable in the coming months with retroactive effects,” the commission said. “In that event, the commission considers that it would have been entitled to adopt (and eventually collect) provisional countervailing duties in the present investigation.”

The EU already imposes anti-subsidy and anti-dumping 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.

The inquiries into alleged subsidies to U.S. bioethanol makers and dumping by them stem from complaints last October by the European bioethanol industry represented by the European Producers Union of Renewable Ethanol Association, or ePure.

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