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U.S.-UK trade deal removed UK tariffs on U.S. ethanol

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AB Foods' bioethanol plant in Hull already under threat

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Says UK government's tariff move causing "great anxiety"

By James Davey

LONDON, May 9 (Reuters) - The removal of UK tariffs on

U.S. ethanol in the U.S.-UK trade deal could sound the death

knell for Associated British Foods' ( ASBFF ) loss-making

bioethanol plant at Hull, northern England, following a warning

last month that its future was uncertain.

The trade deal, announced on Thursday, will reduce Britain's

19% tariffs on U.S. ethanol to zero through a 1.4 billion-litre

(370 million gallon) quota that far exceeds U.S. exports to the

UK last year.

AB Foods' CEO George Weston told Reuters on April 29 that

the group's ethanol business had faced "significant problems"

with "effectively subsidised imports".

The group, which also owns Primark and a host of grocery

brands including Twinings and Ovaltine, said the way in which UK

regulations were being applied to bioethanol was undermining the

commercial viability of its Vivergo plant in Hull which produces

bioethanol fuel for cars and animal feed.

AB Foods is calling for changes to UK bioethanol regulations

regarding imports. It warned that unless talks with government

"improve the position" it could mothball or close the plant,

putting about 150 jobs at risk.

"We're very clear what we need to do with the ethanol

business - that's a regulatory issue that we need government

support on."

However, the opening up of the UK ethanol market to U.S.

producers means the business now faces a new challenge.

"The government's last-minute decision to allow tariff-free

ethanol imports from the U.S. into the UK is causing great

anxiety to many people in the northeast of England, not least to

the many employees and suppliers and farmers involved in the UK

bioethanol industry," an AB Foods spokesperson said on Friday.

They added that the company was working through the detail

and "the implications" with the government.

Britain's National Farmers' Union warned on Thursday the

ethanol measure could mean the loss of a profitable outlet for

arable growers which supply the industry.

The Renewable Energy Association warned that the deal could

enable U.S. producers, supported by U.S. tax credits, to sell

into Britain at a cheaper rate than domestic suppliers can

match.

INEOS closed its ethanol plant at its

Grangemouth site in Scotland in January, blaming a reduction in

demand for ethanol in Europe combined with increasing pressure

from imports of ethanol from other regions.

Britain's concession on ethanol and beef was made in return

for the U.S. removal of 25% additional tariffs on steel and

aluminium, and a quota of 100,000 cars at a duty of 10%.

Remaining tariffs were unchanged.

British Prime Minister Keir Starmer said the deal would save

jobs in the car and steel industries.