The EU-Argentinean Trade Dispute on Biodiesel: An Economic Assessment

Abstract

Argentina has a long record of taxing agricultural exports. In 2013, the European Commission started to impose antidumping duties on exports of Argentinean biodiesel. They were considered being dumped due to reduced export taxes compared to those applied to soybean oil exports. The objective of this paper is to analyze the economic consequences of these Argentinean differential taxes on the European biodiesel and related sectors. Thanks to an original model simulating the world markets of main arable crops, we first analyze the results of an increase of the export tax on biodiesel only. We then simulate the consequences of a reduction of export taxes on soybean products. Finally, we assess the impacts of the overall Argentinean policy of differentiated taxation of agricultural exports. One main conclusion is that European biodiesel producers are relatively more penalized than biodiesel producers in other countries by the current Argentinean policy, due to a relatively greater production of rapeseed. US and Brazilian producers suffer from welfare losses in all scenarios due to the indirect effects on soybean markets. The welfare impacts on consumers and taxpayers are often opposite to the welfare impacts on producers, leading to small global welfare effects.