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PARIS, Sept 27 (Reuters) - The European Commission has decided not to reinstate import tariffs for now on Argentine biodiesel, saying although it considers the fuel to be a subsidised import and a threat to industry, it wants more information.
The surprise decision, detailed in a document seen by Reuters, comes after an investigation requested by EU producers and is a major blow for the European industry which has suffered severely due to massive imports of low-priced Argentine biodiesel since the EU scrapped duties last year.
It should be welcome news in the Latin American country, however, where the threat of tariffs had stalled sales to the EU, the world's top producer of the renewable fuel, as it anticipated prohibitive barriers.
EU and Argentinian producers had been expecting the Commission to reinstate the tariffs.
"The Commission's preliminary conclusions are that the Argentinian imports of the product concerned into the Union are subsidised and that there appears to be a threat of material injury to the Union industry," the Commission said in the document.
"However, the Commission finds it necessary to collect further information on developments after the investigation period which could further confirm the Commission's preliminary findings in this investigation as well as shed more light on the Union interest," it said.
"In view of its findings, the Commission will continue the investigation without the imposition of provisional measures."
The European Union slashed import duties on Argentine biodiesel last September after Buenos Aires mounted a successful challenge at the World Trade Organization.
The European Biodiesel Board (EBB) complained about the decision and asked for an investigation into the alleged subsidies which was formally opened in January.
The EU's removal of duties on low-price biodiesel from Argentina and Indonesia created a surge in imports forcing European producers to cut production.
French biodiesel maker Saipol, the EU's largest producer, part of oilseed group Avril, had implemented a six-month plan to reduce production in March, blaming huge Argentine biodiesel imports for exacerbating poor market conditions.
Other major producers such as Bunge and Archer Daniels Midland Co announced they would cut output or close plants in the EU. (Reporting by Sybille de La Hamaide Editing by Gus Trompiz and Alexandra Hudson)