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Europe: Commission Proposes Draft Regulation on Denatured Ethyl Alcohol Under CN 2207 20
Mar 04, 2014
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On Jan. 29, 2014, the European Renewable Ethanol Association (ePure) announced that it had filed a complaint with the European Commission on the circumvention of EU anti-dumping duties on fuel ethanol.

According to ePURE, following the anti-dumping duty levied on ethanol imports from the U.S. to the EU in 2013, U.S. exports to Norway have increased tenfold and now match the level of U.S. exports to Brazil. In conjunction, imports of E48 ethanol/gasoline blends to the EU from Norway have increased substantially and, according to ePURE’s complaint, “are significantly undercutting the price of EU fuel ethanol.”

The European Commission has issued a draft regulation with the intention of clarifying the scope of Combined Nomenclature (CN) 2207 20 relating to denatured ethyl alcohol.  It states that “CN 2207 20 should cover ethyl alcohol of an alcoholic strength by volume of 50% or higher, in particular ethyl alcohol-based mixtures used for the production of fuel for motor vehicles.” The proposed revision is as follows:

"12.   Subheading 2207 20 covers mixtures of ethyl alcohol used as raw material to produce fuels for motor vehicles of an alcoholic strength by volume of 50% or higher and denatured with one or more of the following substances:

(a)          automotive petrol (conforming to EN 228);

(b)          ethyltertbutylether (ETBE);

(c)          methyltertbutylether (MTBE);

(d)           tertiary butyl alcohol (TBA);

(e)          2-methyl-1-propanol (isobutanol);

(f)           2-propanol (isopropanol).

The denaturants referred to in points (e) and (f) of the first paragraph must be used in combination with at least one of the denaturants listed in points (a) to (d) of the first paragraph."

Background

Since 2009, there had been a steep increase of U.S. ethanol entering the EU. These products left the U.S. as denatured (CN 22072000) or undenatured ethanol (CN 22071000), but a lot of the exports entered the EU as a chemical compound (CN 38249097), which has a lower tariff. The problem with CN 38249097 is that the CN code does not clearly state what good is being classified; this meant that ethanol blends were being counted together with other goods. Hence, it was difficult to trace how much ethanol blend for the transportation sector had really been imported into the EU.

On March 13, 2012, the European Commission reclassified these bioethanol blends and subjected them to a higher tariff rate by implementing Regulation No. 211/2012, which classified a product composed of 70% ethyl alcohol and 30% gasoline as belonging under CN code 2207 20 00.

In addition, on Jan. 26, 2013, Regulation No. 70/2013 stipulated that imports of 90% ethyl alcohol and 10% ETBE would also be classified as denatured ethyl alcohol (CN 2207 20 00), which meant that it could no longer be classified as a chemical preparation under code CN 3824. As a result, it is subject to higher customs duty under code CN 2207 20 00.

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