The Hindu Business Line : US taken to task on biofuel subsidisation, dumping complaints

New Delhi, June 20 The high world food price of recent months is attributed in part to the diversion of crop land for bio-fuel purposes in the subsidy-soaked advanced countries’ farming.

In an irony of sorts, one of the activists of bio-fuel production, the US, is being questioned by the European Commission (EC) on anti-subsidy and anti-dumping investigations.

A communiqué issued in Brussels by the European Trade Commission late last week said anti-subsidy and anti-dumping complaints concerning imports of bio-diesel from the US were lodged with the EC by the European Bio diesel Board, representing the interest of a major proportion of EU producers of bio diesel towards the end of April 2008.

The alleged subsidies doled out by the US include federal excise and income tax credits as well as a federal programme of grants to finance increased production capacity, besides the plethora of subsidy programmes at the State level. On anti-dumping, the complainant has provided sufficient evidence of dumping bio diesel on the EU market by the US.

Impact of performance

EU said the effect of the subsidisation and dumping on the part of the US, as per the complainant’s case, is the deterioration in the prices charged and market share held by the Community industry, which has led to substantial adverse effects on the overall performance and the financial situation of the industry.

Incidentally, imports of bio diesel into the EU market come mainly from the US, with other imports accounting for a minor share of the market. Imports of bio diesel from the US have increased from about 7,000 tonnes in 2005 to about one million tonnes in 2007. The Commission would investigate the allegations in the complaints and make its provisional findings by the middle of March 2009.

The latest launch of investigation into US bio diesel imports comes close on the heels of the 2008 EU-US Summit held on June 10, 2008 in Brdo, Slovenia where a declaration was issued at the end, claiming success in the Framework for Advancing Transatlantic Economic Integration which both the EU and the US signed in April 2007 summit.

transatlantic commerce

The Transatlantic Economic Council, an institutionalised arrangement, is “committed to removing barriers to transatlantic commerce and to rationalising, reforming and where appropriate, reducing regulations to empower the private sector.”

Interestingly, at the trade policy review meeting of the US in the WTO held on June 9-11 in Geneva, the EC Ambassador at the WTO, Mr Eckart Guth, highlighted the inter-dependence of the two, stating that the US is “our biggest trading and investment partner. In figures, trade flows across the Atlantic are to the tune of €1.7 billion a day.”

Even as both the EU and the US are accused of lavishing their farmers with dollop of subsidies which remain a bone of contention in arriving at a convergence on the modalities for negotiations on agriculture talks under WTO, the EC Ambassador said the expiration of the 2002 Farm Bill presented a significant opportunity for the US and for the wider WTO memberships to secure a more reform-oriented US agricultural policy.

2008 Farm Bill

But this has been missed and the recently enacted 2008 Farm Bill has even aggravated the trade-distorting character of the former Farm Bill, in a number of sectors such as cereals, cotton, sugar and dairy products.

The EC Ambassador also said some “of the import measures applied on security grounds could be used as a disguised form of protectionism”.

With the EU and the US, the world trade majors, locking horns on issues that affect their bilateral trade, despite maintaining the façade of amiability, the glacial pace of Doha Round of trade negotiations would only turn worse if the so-called bastions of free and fair trade keep launching internecine tirade and trade rows to the embarrassment of the rest of the WTO membership, trade policy analysts contend.

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