Pence Should Put American Producers First in Indonesia

Pence Should Put American Producers First in Indonesia
AP Photo/Lee Jin-man

This week, Vice President Mike Pence heads to Indonesia. There, he will discuss the U.S.-Indonesia Strategic Partnership to advance cooperation between the world’s second and third largest democracies, to deepen economic engagement and to more aggressively fight terrorism. Because tackling difficult subjects is an important part of diplomacy, a productive visit by the vice president must also include a discussion of the illegal trading and importation of Indonesian biodiesel into the United States. For the record, biodiesel produced in America is a clean, renewable alternative to petroleum diesel made from a variety of animal fats and vegetable oils, including used cooking, soybean and canola oils.

Indonesia is currently violating international trade laws by flooding the U.S. market with dumped and subsidized biodiesel being sold at prices substantially below the costs of production. According to the U.S. Department of Commerce, there is evidence that dumping margins could be as high as 28.11 percent for Indonesia. (The dumping margin is the difference between the price, or cost, in the foreign market and the price in the U.S. market.) As a result, imported biodiesel from Indonesia (and Argentina) surged by 464 percent from 2014 to 2016. By selling their biodiesel at such low costs, the Indonesian government is materially harming America’s domestic biodiesel industry. 

NBB’s research also found that imports primarily from Indonesia and Argentina have taken 18.3 percentage points of market share from U.S. manufacturers. This is not an insignificant statistic that can just be ignored—especially considering the size, scope and impact of the domestic biodiesel industry on our nation. Just last year in the United States, we saw record markets – 2.9 billion gallons of biodiesel and renewable diesel. That outpaced the previous record by almost 40 percent, supporting more than 50,000 U.S. jobs and $11.42 billion in economic benefits.

Vice President Pence’s visit to Indonesia also coincides with an antidumping and countervailing duty petition filed in late March with the U.S. Department of Commerce and the U.S. International Trade Commission (ITC). The petition was filed by the National Biodiesel Board Fair Trade Coalition, which is made up of the NBB and domestic biodiesel producers. Both agencies will review the claims made by the NBB Fair Trade Coalition during the next several months.

This is not the first time that Indonesian biodiesel producers have been charged with violating international trade laws. In 2013, the European Union imposed 8.8 to 23.3 percent duties on Indonesia. As a result, exporters in Indonesia have focused their attention on the United States, which is now the most attractive biodiesel market in the world for Indonesian producers. Clearly, this is an ongoing problem that must be addressed. 

Ultimately, the NBB Fair Trade Coalition was forced to bring Indonesia’s unfair biodiesel dumping strategies before the ITC and the Commerce Department because Indonesia’s policies are costing American jobs and putting our nation at an unfair competitive disadvantage. The loss of market share has left the domestic industry with substantial unused capacity totaling in the millions (potentially billions) of gallons a year. Simply put, the artificially low prices at which these Indonesian imports are sold leave American biodiesel producers unable to get a fair return for their product. This is not a reasonable situation for the United States, and something has to be done.

President Donald Trump said: “I believe strongly in free trade, but it also has to be fair trade.” NBB and the U.S. biodiesel industry could not agree more. We are committed to fair trade, and we support the right of producers and workers to compete on a level playing field. Right now, Indonesian companies are getting advantages that cheat U.S. trade laws and are counter to fair competition. Domestic biodiesel producers are counting on the vice president to bring this issue up with Indonesia’s leaders and to stand up for American workers.

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