MercoPress. South Atlantic News Agency

Argentina accuses EU before WTO for restriction imposed on bio-fuel imports

Bio-fuel exports from Argentina reached two billion dollars in 2011

Argentina has taken the first steps toward formally accusing the European Union of violating World Trade Organization rules in a dispute over restrictions on bio-fuels exports to the EU from the Mercosur member country.

In a statement Saturday, Argentina's Foreign Ministry said the administration of President Cristina began the accusation process Friday. “Yesterday Argentina initiated the process to formally accuse the EU for its decision to impede accesses of Argentine bio-fuel, thus violating the WTO norms” said the release.

Last April the Spanish government had announced limitations on the imports of Argentine bio-fuel to protest the decision from the administration of President Cristina Fernandez of seizing control of 51% of Repsol YPF holdings.

According to Argentina the Spanish decision “established a ban on imports of bio-fuel from outside the EC, pushing aside the Argentine produce, which is leader in the world in efficiency and costs”. The Argentine government also recalled that the “main providers of bio-fuels to Spain and the EU are from developing countries”.

Last year Argentina, the world’s third exporter of soy oil, shipped 1.6 million tons of bio-fuels to other countries, equivalent to two billion dollars.

Last week the Argentine government announced it was opening its borders to soybean from Paraguay and Bolivia to fill the idle capacity of the domestic oil-seed crushing plants, almost 24% of the industry, according to Deputy Economy minister Axel Kicillof.

Earlier this year, Argentina lodged a protest with WTO committee on technical barriers to trade due to Spain's bio-diesel policy. But Argentina is currently the target of an EU complaint at the WTO due to its controversial import restrictions.

Argentina has intensified trade barriers this year to bolster its international reserves by trimming its import bill. Argentine companies have to file an online affidavit with the federal tax authority and receive approvals from several government agencies before they can import goods or pay for offshore services like music rights or legal consulting.

The foreign ministry said Argentina's trade measures are legitimate and aimed at protecting the country from the global crisis that has its origins in developed countries.

At the same time Argentina is fighting to open markets for its bio-fuels, the Cristina Fernandez administration recently hiked export taxes on the fuel in a move that some analysts say could hurt the industry.

Bio-diesel will now face the same 32% export tax as soy-oil, which is the main feedstock used to make the fuel. Previously, the bio-fuel export tax stood at about 20%.

In 2011, Argentina was the world's No.2 bio-fuels producer, with about two-thirds shipped abroad. Argentine bio-fuel exports totaled 2.4 million metric tons last year, up from 1.9 million tons in 2010, according the Latin American & Caribbean Council on Renewable Energy.