US Secretary of Commerce Wilbur Ross announced that his department found Argentine biodiesel exporters to the US to have sold merchandise at “dumping margins” of between 54.36 percent and 70.05 percent. The announcement comes after his department’s investigation into Argentine biodiesel that found the country’s producers have been subsidized by between 50.29 percent and 64.17 percent.
This means that the US will collect tariffs between 54.36 percent and 70.05 percent on Argentine biodiesel, an increase from the US Department of Commerce’s August announcement of 57 percent. Prior to the increases, the tariff was 4.5 percent. “This is an absurdity, something unjustified,” a source in Argentina’s biofuel industry told La Nación.
Argentina has requested negotiations aimed at suspending the anti-dumping duties, while the US Department of Commerce said is “working with interested parties on possible suspension agreements.” “The Trump Administration is committed to both free and fair trade and will defend American workers against unfair trade practices,” said Secretary Ross. “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 US Department of Commerce’s announcement comes after an August 22 preliminary determination, one that occurred after Vice President Pence visited President Mauricio Macri. Ironically, the US vice-president lauded Macri for his free market reforms and seemed positive about the prospect of warmer bilateral trade ties. “We believe that Argentina’s turn toward free market principles – re-entering global capital markets and bringing about the kind of reforms that President Macri is advancing – will support jobs and opportunities in the United States, and it will invite more foreign direct investment from our country here,” Pence said.
In August, Macri sent a message to US Vice President Mike Pence to express his dismay at the new tariff and to appeal for a reduction. Although the text of Macri’s message to Pence was not public, the government said that it would “look to revert this decision in order to defend the interests of Argentina, evaluate all of the available options, and reserve the right to take legal action.” According to La Nación, the tariff issue has “created the first diplomatic crisis between President Mauricio Macri’s administration and that of his friend, Donald Trump.”
The investigation determined a 70.05 dumping rate for the following Argentine companies: Vicentin S.A.I.C., Renova S.A., Oleaginosa Moreno Hermanos S.A., Molinos Agro S.A., Patagonia Energia S.A., VFG Inversiones y Actividades Especiales S.A., Vicentin S.A.I.C. Sucursal Uy, Trading Company X, and Molinos Overseas Commodities S.A. The US Department of Commerce also calculated a preliminary dumping rate of 54.36 percent for LDC Argentina S.A, and a rate of 63 percent for all other Argentine biodiesel exporters.
The National Biodiesel Fair Trade Coalition, an organization that includes 15 US producers of biodiesel, as well as the National Biodiesel board, issued the petition to the US Department of Commerce that catalyzed the investigations. The organization will likely continue to appeal if the anti-dumping duties are not implemented permanently. The US Department of Commerce will announce its final determination “on or about January 3, 2018, unless the statutory deadline is extended.”
As The Bubble reported in August, the tariff imposition could have immense consequences for Argentine exporters. Exports to the US from Argentina have exploded since 2014, a year when Argentina exported 156,497 metric tons of biofuel worth US $136.03 million. In 2016, Argentina exported 1.48 million metric tons worth US $1.2 Billion. Since biodiesel exports represent 25 percent of all Argentine exports to the US, the imminent negotiations will be critical for Argentina.
Argentina may take its case to the WTO in order to remedy the producers’ losses. The WTO has ruled favorably on such cases before and in fact ruled in favor of Argentina in an anti-dumping dispute against the EU last year. Although Argentina’s dispute with the US is far different in terms of volume and the players involved, if Argentina is unable to get the US government to change its stance without mediation, it will likely make use of the WTO.