EU Eyes Ethanol Restrictions In Scrutiny Of Surging Imports

By Asher Stockler
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Law360 (November 4, 2020, 2:40 PM EST) -- The European Union will monitor imports of bioethanol as the global economic crisis has spurred an influx of the renewable fuel "at low prices," the European Commission announced Wednesday.

The commission said in a statement that it would be introducing an import surveillance system for one year, allowing Europe to collect more effective data on the amount of product sold to the bloc, and the value of each sale, before it is actually imported.

The preemptive action is used in situations where "imports threaten to cause injury to EU producers," according to the European Parliament.

The commission added that the move to surveil bioethanol imports was triggered by a French request "on behalf of the European bioethanol industry," which had indicated a recent increase in bioethanol imports could threaten European suppliers.

But the coronavirus-inspired glut appears to follow a pattern of surging bioethanol imports that predates the current pandemic.

According to France, bioethanol imports increased by 512% from 2017 to 2019, reaching 536,200 metric tons, at the same time as domestic prices fell by 15%.

The European Commission has expressed concerns that because the global production of bioethanol is so large, any fluctuations in foreign supply could have outsize impacts on the European market. The bloc tossed anti-dumping duties on bioethanol in May 2019.

Further still, the European Commission warned that even a "slight overcapacity" of U.S. production could be directed to European markets.

"Our economies are still affected by the consequences of the pandemic and our recovery process should not be stalled by the distortive trade practices of third countries," the commission's executive vice president and commissioner for trade, Valdis Dombrovskis, said in a statement.

"This is why we must closely monitor any trade developments that potentially arise from unfair competition," Dombrovskis added. "This is the case with bioethanol today, but other industries may soon also require import surveillance so they can be better shielded from these unwelcome practices."

A trade group for U.S. bioethanol producers blasted the decision, seen as a precursor to more aggressive restrictions if warranted, though Europe may not be a key destination for U.S. exporters.

According to the Renewable Fuels Association, the majority of exported U.S. ethanol is sent to Brazil, Canada and India.

"Frankly, we are not surprised by this move. This is just more of the same from the European biofuel industry, which has chosen to advocate for a protectionist trade strategy to insulate its industry from global competition," Ed Hubbard, the group's general counsel, said in a statement.

--Editing by Daniel King.

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