UPDATE 2-EU finds US evasion of biodiesel tax -sources

* EU executive says U.S. biodiesel was shipped via Canada

* Duties could apply to all U.S. biodiesel blends

* Plan highlights global race for renewable energy market

(Recasts, updates with attempts to reach U.S. industry for
comment)

By Juliane von Reppert-Bismarck

BRUSSELS, March 25 (Reuters) – The European Union executive
plans to widen punitive import taxes on U.S. biodiesel and
extend them to Canada, citing evidence of illegal tariff
evasion, people familiar with the case said on Friday.

Certain biodiesel blends entering the EU from Canada and
all U.S. blends will face tariffs of up to more than 400 euros
($566.4) per tonne of biodiesel according to initial European
Commission plans, the sources told Reuters.

The plan, which needs approval from EU governments,
highlights the intensifying battle to clinch a slice of a
renewable energy market that has been growing amid global
efforts to fight climate change.

It follows a year of investigations and seizures of
biodiesel shipments suspected as originating from the United
States but labelled as coming from other countries’ ports.

The EU imposed tariffs on U.S. diesel blends containing at
least one in four parts of biodiesel in 2009, after it found
U.S. exporters benefited from illegal subsidies and sold their
blends to Europe at below cost, hurting EU producers.

The Commission now says it has evidence of illegal
transshipments via Canada and that U.S. exporters switched to
weaker biodiesel blends, hurting EU producers, according to the
sources.

If endorsed by EU governments, the Commission’s plan could
result in extended duties launching in November 2011 and
staying in place until 2014.

U.S. exports to the EU plummeted in 2009 to less than
400,000 tonnes from 1.5 million tonnes in 2008. At the same
time, EU data shows Canadian sales to the EU soared to more
than 140,000 tonnes in 2009, from about 1,700 tonnes in 2008 –
a move Canada has attributed to growing EU demand and a supply
gap left by the United States.

Singapore, which had also been investigated as a potential
transhipment port for U.S. biodiesel, will be exempt from
duties under the plan, the sources said.

Canadian exporters BIOX Corp (BX.TO: Quote, Profile, Research) and Rothsay Biodiesel,
affiliated to Maple Leaf Foods Inc (MFI.TO: Quote, Profile, Research), are to be exempted
under the plan, the sources said.

“The Commission found the two companies were able to prove
they were not involved in circumvention,” said one source.

Yet the inclusion of Canadian exports is likely to sour
talks for a multi-billion dollar trade deal between the EU and
Canada already troubled by EU environmental standards.

The plan — on which EU industry, U.S. and Canadian
exporters and later EU governments must comment — is likely
also to open debate on the EU’s strategy for sourcing fuel from
renewable sources and questions on what measures are allowed
under EU law to battle circumvention.

U.S. and Canadian biodiesel industry groups could not be
reached for comment.
(Editing by James Jukwey and David Gregorio)

UPDATE 2-EU finds US evasion of biodiesel tax -sources