WASHINGTON, March 29, 2016 - Looking for a Trump-like “better deal,” nine House members are urging U.S. Trade Representative Michael Froman to pressure the European Union to end its tariffs on U.S. ethanol and biodiesel imports as part of finalizing the controversial Transatlantic Trade and Investment Partnership (T-TIP) agreement.
The five Republicans and four Democrats wrote Froman last week that USTR should use its “leverage” in the T-TIP negotiations “to reduce any tariffs on U.S. produced energy, including ethanol.” The bipartisan letter came from Republicans Rod Blum, Steve King and David Young of Iowa, Rodney Davis of Illinois and Tom Emmer of Minnesota, and Democrats Collin Peterson and Tim Walz of Minnesota, Brad Ashford of Nebraska and Dave Loebsack of Iowa.
The congressmen charge that the U.S. ethanol industry “has been unfairly targeted by the EU for increased duties which have subsequently eliminated U.S. share in the European market.” Following the imposition of an $83 per metric ton tariff in 2013, EU imports of U.S. ethanol plunged from the peak of 291 million gallons (mg) for 2011 to just 50 mg for 2014 and 37 mg for 2015. The result is that U.S. ethanol exports to the EU dropped from 25 percent of the total shipped by the U.S. to 6 percent of 2014’s 846 mg of total ethanol exports and to 4 percent of 2015’s 844 mg export total.
U.S. biodiesel exports to the EU have also suffered from Europe’s tariff barriers. While total U.S. biodiesel exports have averaged 114 million gallons per year over the past five years, Europe’s share of this total has dropped from 34 million gallons for 2011 to zero for 2015.
To recover lost export share, the lawmakers wrote Froman that “As T-TIP negotiations progress toward completion, we are confident you can leverage access to all domestic energy sources, such as U.S. natural gas, crude, and ethanol in order to achieve a favorable outcome for these industries and the reduction or elimination of trade obstacles to market access in Europe.”
Growth Energy CEO Tom Buis tells Agri-Pulse that “there is a lot of frustration” in the biofuels industry both because the EU has imposed unjustified anti-dumping tariffs and because the USTR’s office has failed to challenge the tariffs despite repeated requests. He adds that removing the tariffs is common sense because the U.S. has the capacity to supply the EU and the EU needs more biofuels in order to meet its carbon reduction goals. That need could double overnight, too, if the EU raised its ethanol blending requirement from the E5 (5 percent ethanol) blend currently mandated in most of the trading bloc to E10, he said.
Buis is hopeful that the congressmen’s letter will get USTR’s attention because the administration is seeking support for its two pending trade agreements with Asia and with the EU “so they’re probably looking for a lot of allies on Capitol Hill.” The USTR’s office did not respond to requests for comment on the lawmakers’ letter.
National Biodiesel Board spokesman Ben Evans shares Growth Energy’s frustration. “We have repeatedly challenged the EU tariffs and duties on biodiesel but have thus far not been successful with the European Commission, which appears intent on protecting the EU market,” he said. The commission is the executive arm of the EU.
Renewable Fuels Association (RFA) President and CEO Bob Dinneen tells Agri-Pulse he welcomes the congressmen’s “strong bipartisan message to the USTR.” He points out that USTR has so far failed to challenge the EU tariffs by filing a formal World Trade Organization complaint, “presumably for fear of unsettling T-TIP talks.”
To back up a still undecided legal complaint that RFA and Growth Energy filed with the EU’s General Court in 2013, Dinneen says “The U.S. needs to do something to remove these unjustified duties that are only hurting European consumers.”
After three years of T-TIP negotiations, U.S. and European trade officials remain hopeful they can finalize an agreement this year. Yet even if USTR doesn't add new issues like biofuels to the trade talks, completing the deal may not be possible in a presidential election year that features attacks on free trade agreements as job-destroying rather than job-creating.
Sen. Bernie Sanders of Vermont, who’s seeking the Democratic presidential nomination, has come out strongly against what he calls “disastrous trade agreements written by corporate America.” His opponent, former Secretary of State Hillary Clinton, rejects the administration’s proposed 12-nation Trans-Pacific Partnership (TPP) trade deal as not good enough, despite its initial promise. On the Republican side, Ohio Gov. John Kasich supports the TPP. But businessman Donald Trump and Sen. Ted Cruz of Texas both consider the TPP a deal that needs to be renegotiated by better negotiators.
Apart from the added election-year pressures, Froman acknowledged in Minnesota on March 7 that “trade votes are always very difficult, they’re always very close.” So biofuels advocates say T-TIP would have a better chance of winning support in Congress if USTR gives the nine congressman what they want – USTR pressure on Europe to stop blocking U.S. biofuels imports.
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