Argentina reduces biodiesel taxes to combat EU

Argentina is set to scale back some the taxes its charges biodiesel manufacturers for domestic fuel in a bid to provide a boost to the industry. The Argentine biodiesel sector has struggled after the EU imposed new anti-dumping measures, which has reduced the amount of exports coming from the country.

Argentine president, Cristina Fernandez, spoke to the country's congress last week (Monday April 21st) in a bid to have some of the taxes that biodiesel producers pay eliminated. This was in response to estimations that suggest the country's exports of the green fuel are likely to decrease by around 39 per cent throughout 2014, in comparison to last year.

A bill will now be sent to Congress by the government that will order taxes paid on biodiesel used in thermoelectric plants to be reduced by 22 per cent. Petroleum blends will also have a 19 per cent tax reduction. These cuts will only be in place for as long as the EU restrictions are imposed.

The EU placed duties upon Argentine biodiesel exports in 2013, claiming producers in the country are accessing raw materials for the fuel's production at prices that are kept artificially low. In order to combat the duties imposed, the country has requested that a panel be formed at the World Trade Organisation. Ms Fernandez has accused the EU of punishing Argentina for being highly competitive in a free market.

According to Ms Fernandez, the industry in Argentina creates around 1,600 jobs and has 33 processing plants. The country is the largest exporter of soybean oil and its derivatives, as well as the third largest exporter of corn and soybeans. The imposed EU restrictions have largely impacted the industries and those that are employed.

The policy shift is the latest performed by Ms Fernandez, who has also reduced heating gas subsidies and allowed an 18 per cent devaluation of the peso in the last three months.