The government of the United States has encouraged the production and use of ethanol as fuel without interruption for the last twenty years, notably through the provision of generous subsidies benefitting ethanol producers directly or indirectly through the obligation to blend ethanol with gasoline. The federal excise tax credit and the federal income tax credit represent only the most visible portion of a comprehensive subsidisation policy at all levels of government in the United States. As a result of this policy, the United States are, by far, the largest producer of fuel ethanol in the world.
The association of European renewable ethanol producers, ePURE, describes this policy as “legitimate”, but with a caveat: as long as it does not prejudice the development of ethanol for fuel use in other countries.
But US operators, which are faced with a domestic ethanol market that is nearing saturation, have chosen to allocate a growing share of their production to exports towards the European Union. From 2008 to 2010, US imports of fuel ethanol in Europe have surged by more than 500%. In 2011, these imports are expected to be twice as high as in 2010. This impressive trend is the direct result of US federal and sub federal subsidies, which allow US operators to adopt aggressive pricing practices on the European market.
According to ePURE; these very low prices have “a direct and negative impact on the EU industry,” especially as the European ethanol industry is very small in comparison to the US industry and a lot of ethanol producers are still in a take-off phase.
“Massive and sudden imports of US ethanol, combined with unfairly low prices over the last few years, have seriously damaged the economic situation of European producers” explains Rob Vierhout, Secretary General of ePURE. This situation is all the more critical as the market prospect for fuel ethanol in Europe is very bright, with a rapidly increasing consumption of renewable fuel in all EU countries.
“The unfair competition of US imports is simply depriving the EU industry from the benefit of this positive evolution on its own domestic market” Vierhout says.
ePURE has requested the European Commission to investigate US unfair trade practices and their impact on the EU industry. ePURE is confident that the Commission's investigation will confirm that these practices are causing a serious prejudice to European producers and will clearly establish the need to impose dissuasive du ties on US imports of fuel ethanol in order to restore fair conditions of competition as early as possible.
In the meantime, ePURE has also requested the European Commission to impose a registration of US imports so that du ties are imposed retroactively to take account of possible manipulation during the investigation period.
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