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RPT-UPDATE 3-EU states back biodiesel duties on Argentina, Indonesia

Wednesday, 23 Oct 2013 | 4:49 AM ET

* Provisional duties already in place

* Final duties to be in place from end-November

* Argentina plans to challenge decision at WTO

* Indonesia expects industry to appeal against EU duties

BRUSSELS, Oct 23 (Reuters) - European Union member states agreed to impose punitive duties on biodiesel imported from Argentina and Indonesia, which are accused of selling it into the bloc at unfairly low prices, according to diplomats.

A majority of the EU members on Tuesday backed the European Commission's view that producers in the two countries were dumping - selling at below fair market or cost price.

The European Commission has proposed duties of between 217 and 246 euros ($300-$340) per tonne on biodiesel imports from Argentina and of between 122 to 179 euros a tonne on imports from Indonesia, figures seen by Reuters showed.

Imports are already subject to provisional tariffs, imposed in May. The definitive duties, which are slightly higher, should be in place by the end of November after further procedural steps.

Argentina is the world's biggest biodiesel exporter, and the two countries represent 90 percent of EU biodiesel imports. Their share of the EU market rose to 22 percent in 2011 from 9 percent in 2009.

Biodiesel is mostly made from rapeseed oil in Europe. Palm oil is favoured in Asia and soybean oil in the Americas.

The companies set to be hit by the duties on exports from Argentina include agribusinesses Bunge Ltd and Louis Dreyfus Commodities, which face duties of 217 and 239 euros per tonne, respectively.

"Finally this unjust measure, which arises from an erroneous calculation, becomes definitive. The only thing this does is cause harm to Argentina and the European consumer, who is going to pay for more expensive fuel," Luis Zubizarreta, president of Argentina's Biofuels Chamber (Carbio), told Reuters.

In order to calculate the cost of producing the biofuel, the EU incorrectly used international prices for soy oil, the main ingredient for the fuel in Argentina, instead of using local prices which are much lower, according to Zubizarreta.

In a recent statement, Carbio said the duties would cost Argentina more than $1 billion in lost sales to the EU this year.

Argentina is preparing to take the European Union to the World Trade Organisation to challenge the punitive duties, say people familiar with the matter.

Argentina has already launched a WTO challenge against EU rules for importing biodiesel, and the EU went to the Geneva-based trade body last December to claim that Argentine import restrictions are illegal.

Indonesia's biodiesel companies were likely to appeal against the EU imposing permanent duties, said trade ministry official Oke Nurwan, and the government would help them.

"The government will facilitate and assist the biodiesel companies in any effort to drop the duty," said Nurwan. "If the EU definitely imposes dumping duties for Indonesian biodiesel then the Indonesian producers will appeal to the European Court.

"If they fail to get fair treatment at the European Court, then we will take the case to the WTO."

About 90 percent of Indonesia's biodiesel exports of 1.5 million kl last year went to the European Union.

Industry body the Indonesian Biofuel Producers' Association could not be reached for comment on Wednesday, but has previously said any subsidies received were only for domestic use and not exports.