(Bloomberg) -- The U.S. moved to impose more import duties on biodiesel from Argentina and Indonesia, after finding the fuel is being sold below fair market value.
The U.S. Commerce Department set preliminary import duties of as much as 70.05 percent on Argentine imports and set a 50.71 percent rate on biodiesel from Indonesia.
At the same time, the agency said in a news release that the government of Argentina had requested negotiations to suspend the duties and it would work "with interested parties" on a possible agreement.
“The Trump administration is committed to both free and fair trade and will defend American workers against unfair trade practices,” Commerce Secretary Wilbur Ross said in a statement. "Still, we are thankful to the government of Argentina for their proactive approach to solving this issue, and remain optimistic that a negotiated solution can be reached both with Argentina and with Indonesia.”
The decision Monday came in response to a complaint from the National Biodiesel Board Fair Trade Coalition, which argues the fuel is illegally subsidized and being dumped in the U.S. at prices below production costs. The group represents two of the largest U.S. biodiesel producers, Renewable Energy Group Inc. and World Energy Group.
Imports of biodiesel from Argentina rose to $1.2 billion in 2016, while those from Indonesia were $268 million. The U.S. industry had asked for duties of 23.3 percent on Argentina and 34 percent on Indonesia to counter dumping from those nations.
Indonesia will contest the dumping allegation and present its own import duty calculations, Oke Nurwan, director general of foreign trade at the Trade Ministry, said in a text message. “We are going to discuss with stakeholders on follow-up actions,” Nurwan said. “We are considering requesting a special hearing" with the Commerce Department, he said.
Monday’s decision is one of several steps in the U.S. government review of the National Biodiesel Board’s complaint. The Commerce Department is scheduled to announce on Nov. 7 if it will finalize separate duties proposed in August to counter government subsidies to biodiesel producers in those two nations. The independent U.S. International Trade Commission must also rule on both complaints before the duties will get finalized. The commission is scheduled to make a final decision on that next year.
The trade case is being fought by the Advanced Biofuels Association, an industry trade group representing some foreign producers, including Neste Oyj, Wilmar International Ltd., and Louis Dreyfus Co. Court documents show that Cargill Inc. also opposes duties.
For Argentina duties will range from 54.36 percent to 70.05 percent. The U.S. will now begin to collect cash deposits, it said. It is scheduled to decide on the final rates in January.
The biodiesel trade dispute is already spilling over into debates about U.S. renewable fuel policy and the federal program forcing refiners to use alternative fuel. The Environmental Protection Agency is set to finalize 2018 quotas for traditional renewable fuel and a 2019 target for biodiesel by the end of next month.
Compliance with the law, commonly known as the Renewable Fuel Standard, is tracked with credits called Renewable Identification Numbers, or RINs. Prices have fluctuated throughout the year amid regulatory uncertainty.
“Applying these duties would ultimately lower the available domestic supply of biodiesel and renewable diesel moving forward, raising the cost of the RINs for obligated parties to comply with the RFS and increasing consumers’ price at the pump,” Michael McAdams, president of the Advanced Biofuels Association, said in a statement.
Concerns about imports being used to fulfill those mandates helped drive an EPA notice last month opening the door to possible reductions in biodiesel quotas. EPA Administrator Scott Pruitt has expressed worry that imported biofuels undermine the spirit of those domestic quotas, while undercutting U.S. energy independence. But, after criticism from farm-state lawmakers, he pledged Thursday to back off that idea.
©2017 Bloomberg L.P.