OMAHA (DTN) -- The European Union Commission has canceled an ethanol anti-dumping duty against imports from the United States in place since 2013, essentially reopening a market that collapsed.
The commission made the announcement on May 14, after launching a review of the duty on Feb. 20, 2018. The commission concluded that removing the duty would not increase the likelihood of dumping of U.S. ethanol on the EU market.
The 9.5% duty was put in place as a result of a complaint filed by the EU's largest ethanol producer group, ePure.
"In light of the above assessment on the likelihood of recurrence of dumping should measures be allowed to lapse, the commission concluded it unlikely that U.S. bioethanol producers would export significant quantities of bioethanol to the Union at dumped prices, should the measures be allowed to lapse," the EU commission said in its 14-page decision.
"The commission acknowledged that the U.S. market is much larger than the union market in terms of production, consumption, and export sales. Nevertheless, the applicant did not provide any evidence as to why the size of the U.S. industry should indicate a likelihood of recurrence of dumping."
In addition, the commission said it didn't find evidence that U.S. ethanol exports have increased because of lack of growing domestic demand and not because of growing demand in other countries.
"In fact, the investigation showed that the consumption of fuel ethanol in the three major U.S. export markets increased by 1.3 million tons, while the production in those countries grew by only 200,000 tons. Moreover, the investigation showed that not only the U.S. production and exports were growing but also the domestic consumption. In the period considered, the U.S. production increased by 4.8 million tons, the exports by 1.5 million tons, and the domestic consumption by 3.1 million tons. Therefore, this claim must be rejected."
According to data from the U.S. Census Bureau, USDA and the U.S. Department of Commerce, ethanol exports from the United States to the European Union stood at about 175 million gallons in 2012. After the EU implemented the anti-dumping duty on U.S. imports, exports collapsed to around 25 million gallons in 2013. Those exports fell to near zero by 2016.
U.S. exports to Brazil made up for the loss of the EU market, however, growing from about 50 million gallons in 2013 to about 450 million in 2016.
Because U.S. ethanol plants produce about 2.8 gallons per bushel of corn, export market restoration in the EU to 2012 levels would create a demand for about 62.5 million bushels of corn, or less than 1% of all corn produced in the United States.
The decision was met with encouragement from U.S. ethanol and agriculture interest groups.
"We welcome the European Commission's decision to open the market to free and fair competition," said Craig Willis, senior vice president of global markets for Growth Energy.
"By removing unjustified duties on U.S. ethanol, the commission is opening critical new opportunities for member states to take full advantage of affordable, low-carbon biofuels. It's a win-win for our EU trading partners, who will be better positioned to meet their environmental goals while holding down prices for European drivers."
Tom Sleight, president and CEO of the U.S. Grains Council, said the decision was timely for U.S. producers.
"The decision today in the EU to allow more open access for U.S. ethanol is very welcome by our industry and the members of the U.S. Grains Council," he said.
"We look forward to working with our customers and counterparts in the EU to fulfill the ethanol demanded by their biofuels policy and environment- and price-conscious consumers."
Renewable Fuels Association President and CEO Geoff Cooper said the penalties were "unjustified and unwarranted."
"The U.S. ethanol industry is looking forward to resuming more open trade relations with the European Union," he said.
"With today's removal of these duties, consumers in the EU will once again have unfettered access to clean, affordable, renewable fuels."
EU ethanol interest group ePure said the commission's decision puts Europe's biofuels industry at risk.
"The EU's decision to repeal anti-dumping duties on fuel ethanol imports originating in the United States risks having serious consequences for the entire value chain of the European renewable ethanol industry," the group said in a statement.
"The decision comes at a time when other key U.S. export markets, including Brazil, China, Peru and Colombia, have introduced or are considering measures to protect themselves from unfair U.S. ethanol exports. This increases the risk that U.S. exporters divert exports previously targeting these countries to the EU. Europe's renewable ethanol producers are already under pressure from misguided biofuel and agricultural policy decisions; now is not the time to subject them to unfair trade practices."
Todd Neeley can be reached at email@example.com
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