SEVILLE, May 13 (Reuters) - Punitive duties on U.S. biofuel imports to the European Union requested by European producers would have to be compatible with World Trade Organisation rules, a senior European legislator said on Tuesday.

The European Biodiesel Board (EBB) last month requested anti-subsidy and anti-dumping duties as it said companies in the European Union were going out of business because of unfair U.S. subsidies.

Josep Borrell, chairman of the European Parliament's Development Committee, said U.S. ethanol was already subject to EU duties.

"If there is a duty on (U.S.) ethanol, then I don't see any reason why there shouldn't also be one for biodiesel," Borrell told Reuters in an interview. "It remains to be seen whether it is WTO-compatible."

Speaking on the sidelines of a biofuels industry convention in the southern Spanish city of Seville, Borrell added that WTO compatibility would depend on whether a product were deemed of agricultural or chemical origin.

The European industry has long complained that U.S. subsidies for so-called "B99" biodiesel, blended with small amounts of mineral diesel, break WTO rules.

The U.S. National Biodiesel Board has pledged to fight vigorously any duties on U.S. biodiesel.

The EU has set itself a target of blending transport fuel with 10 percent of biofuel by 2020 as the world seeks ways to fight climate change.

BIOFUELS NOT A SCAPEGOAT

Borrell, a former Spanish public works minister, said soaring world food prices could not be blamed on demand for grain by the biofuel industry, as this accounted for just 3 percent of the total.

"The biofuels industry cannot be a scapegoat for such brutal price rises," he said.

He drew attention to rice prices, which rose by 76 percent between December 2007 and April 2008, according to the U.N. Food and Agriculture Organisation.

"When you have that kind of rise, there is no amount of biofuel or Chinese demand that can explain it," Borrell said. "It's one of the excesses of deregulated markets.".

Many speakers at the Seville convention sought to mount a counter-attack on what they saw as a media campaign to discredit the biofuel industry by blaming it for world hunger amid fears plant-based fuel will compete with food for farming land.

Last week, an adviser to United Nations Secretary-General Ban Ki-moon urged the U.S. and Europe to cut back on biofuels production, saying it squeezed food supply just as prices were rising.

 

(Reporting by Martin Roberts; editing by Chris Johnson)

Reuters, Tuesday May 13 2008

By Martin Roberts

Source: www.guardian.co.uk