EU probe finds no sign of US bioethanol dumping-documents

Fri Oct 5, 2012 10:11am EDT

* EU cannot find evidence of dumped prices or active subsidy

* U.S. ending subsidy has made investigation moot

By Ethan Bilby

BRUSSELS, Oct 5 (Reuters) - The European Union has closed investigations into whether the United States illegally subsidised and dumped bioethanol on the European market, finding no evidence of such moves, according to documents seen by Reuters.

The European Commission opened a case last November and in August began registering U.S. imports.

A document on the anti-subsidy proceedings seen by Reuters said because the United States had stopped the main subsidy scheme, the Commission had decided that any retaliatory measures "would not be appropriate at this stage".

"No more measures shall be imposed if the subsidy or subsidies have been withdrawn or it has been demonstrated that the subsidies no longer confer any benefit on the exporters concerned."

A source familiar with the case said that this meant the case would be dropped entirely unless the United States reintroduced the ethanol blender's tax credit over the next six months.

EU trade spokesman John Clancy said, "The investigations in both cases are still on-going and so no conclusions have been drawn yet."

U.S. companies, including CHS Inc., Patriot Renewable Fuels, and Valero Renewable Fuels export bioethanol to Europe.

The European Union used about 4.3 million tonnes of bioethanol in the year to October 2011, with about 20 percent imported from the United States, according to figures in the Commission documents.

The United States allowed a bioethanol blending subsidy to expire in 2012 after years of criticism by environmental and financial watchdogs.

The ethanol excise tax credit was a $0.45 credit applied to every gallon of corn ethanol blended with gasoline.

It totalled roughly $6 billion annually and cost taxpayers $30.5 billion over its lifetime, according to data cited by Oklahoma Senator Tom Coburn.

Any kind of subsidy to the bioethanol industry has generated extra controversy this year in the United States because record high grain (maize) prices caused by drought have raised concerns about the extent of bioethanol use.

Last November, the European Commission opened both an anti-subsidy and anti-dumping investigation.

Also dismissing the anti-dumping case, a separate document said there had not been enough data to establish at this stage whether U.S. exports of bioethanol had been "made at dumped prices".

The registration of bioethanol shipments begun in August was to protect against a possible reinstatement of the U.S. bioethanol tax credit.