EU likely to lose Argentine biofuels dispute at WTO

The European Union has little hope of winning a dispute over Argentina’s biodiesel exports to Spain once the case goes for adjudication by the World Trade Organization (WTO), an expert from a Geneva-based think-tank said. Argentina launched a complaint to the WTO about Spain’s new biodiesel import rules in August, arguing that they were discriminatory and effectively excluded non-EU biodiesel from a market that was worth more than US$1 billion to Argentina in 2011. The complaint cited the fact that Spain’s import restrictions were announced in April, less than a week after Argentina said it would nationalize oil company YPF, controlled by Spain’s Repsol, which did not sit well with EU politicians.
 
A month later, the EU filed a WTO complaint over Argentine import restrictions, as the United States and Mexico quickly followed suit in August, prompting an immediate challenge from Argentina over U.S. rules on lemon and beef imports. The EU represents Spain at the WTO; several trade experts in Geneva have intimated that Spain’s new restrictions appeared to clearly break WTO rules.
 
At the Kingsman biofuels conference in Geneva, Malena Sell, senior program officer for environment and natural resources at the International Centre for Trade and Sustainable Development (ICTSD), said, “The sense from ICTSD’s point of view is that hopefully this will be solved politically. If not, Spain and the EU have a very, very low chance of actually winning this type of case.”
Under WTO rules, the EU has 60 days to try to resolve the problem. After that period, which ends in late October, Argentina is free to ask the WTO to adjudicate, escalating the dispute into the litigation phase, which could force a change in Spain’s law. Sell said Indonesia, another major biodiesel exporter, would consider joining the case should it escalate to arbitration. The EU has said it suspects both countries of dumping, or selling their biodiesel on the EU market at an unfairly low price to damage European competitors.
Argentina, the world’s top producer of biodiesel, encouraged exports last month by promising to cut export taxes by 5 percentage points; the EU is still investigating, but it could levy provisional anti-dumping duties within nine months, potentially opening up a second front in the trade battle. Despite the dispute and the import restrictions, Spain has continued to buy Argentine biofuel, which is much cheaper than EU-produced biodiesel. (October 5, 2012)