The Trump administration’s decision in April to slap tariffs on Argentine soybean products came as a blessing for Bob Morton.
Free of competition from the soybean-product giant, Morton etched out a plan to increase capacity at his Rhode Island biodiesel plant by more than 40 percent and hired 10 more people.
Now, those expansion plans are in jeopardy after the administration shocked the local biodiesel industry by announcing a review of the tariffs after Argentina made tax changes. Morton and other U.S. producers are hoping President Donald Trump’s long-running friendship with his counterpart in Argentina, Mauricio Macri, won’t factor into the review.
The relationship goes back three decades when a then 24-year-old Macri was sent by his construction-magnate father to negotiate a real-estate deal with Trump. While the transaction never happened, the two maintained contact over the years, playing the occasional game of golf. And when visiting Argentina, Trump would stay at Macri’s home.
The relationship soured after Macri backed Hillary Clinton in the 2016 presidential election. The men had to rekindle ties when Trump took office. But that didn’t take long, with Trump eschewing the tradition of meeting the leaders of Mexico and Brazil before their Latin American counterparts when he received Macri in the White House in April 2017.
“It’s possible that the Trump-Macri relationship will have an influence on what happens with biodiesel,” Marcelo Elizondo, director of international trade consulting firm Desarrollo de Negocios Internacionales, said by telephone from Buenos Aires. “In an administration like Donald Trump’s, his personal considerations are a big influence, often displacing institutions.”
A White House spokesman didn’t respond to a request for comment.
‘Left Field’
In remarks at the American Farm Bureau Federation’s conference in New Orleans last week, Trump offered a glimpse of the tit-for-tat nature of trade with Macri. “We just opened Argentina to American pork exports,” he said. “They needed something. I said, ‘You have to open it up to pork’. ”
Still, Elizondo said Trump and the Commerce Department’s preferences are not the only factors at play given the power of the biodiesel lobby in Washington.
“We’re still trying to figure out who might have been behind this,” said Kurt Kovarik, vice president of federal affairs at the National Biodiesel Board in Washington. “It seems to be out of left field for an administration that’s willing to go to the mat to get better trade deals” for farmers and other industries.
Not Unprecedented
“U.S. law specifically permits the Department to initiate a changed circumstances review within 24 months following a final determination if ‘good cause’ is shown,” a Commerce Department spokesman said by emailed. “While rare, such a review is not unprecedented and is warranted in this case based on evidence submitted by the government of Argentina that it has altered fundamentally the export tax regime that was the subject of the underlying investigations.”
The “U.S. industry will have full procedural rights to review and comment on this evidence,” the statement said. “We continue our commitment to strict and energetic enforcement of our trade laws in a fair and transparent manner.”
The decision to reconsider duties on Argentina’s imports could be seen as well-founded after the nation raised an export tax on biodiesel to bring it more in line with the levy on soy oil. Soy-based biodiesel is now taxed at just three percentage points less than soy oil. When the first preliminary duties came into force in September 2017 the difference was much higher, at about 27 percent.
Argentina’s biodiesel exports to the U.S. were worth more than $1 billion a year before the anti-dumping and anti-subsidy duties locked them out of the market.
Balance Sheet Boost
Restoring access to the U.S. market could help Argentina’s trade balance, which in turn would contribute to cutting a current account — a key indicator for investors — that’s $7.6 billion in the red.
Macri needs sentiment to pick up after the peso lost half of its value and bonds tanked in 2018 because of concerns over the fiscal deficit. He turned to the International Monetary Fund for a record $56 billion credit line and committed to balancing the budget. While the devaluation led to a spike in inflation, a weaker currency is now beginning to spur exports.
Giving relief to Argentina would be cold comfort to Morton, the Rhode Island biodiesel producer. “That would be a huge problem for us,”’ he said.
Share This: