Mexico, Us Reach Agreement on Cement Tariffs, Potentially Ending 16-Year Conflict

Article excerpt

The protracted battle between the US and Mexico regarding trade in cement appears finally to be coming to a conclusion. In mid-January, officials from the two countries reached an agreement by which the US would gradually eliminate its anti-dumping tariffs on Mexican cement. In exchange, Mexico agreed to drop its complaint against the US for unfair trade practices on imports of Mexican cement.

The two sides have been at odds on this issue since 1990, when the US government imposed a countervailing duty of 55% against several Mexican cement companies on the premise that they were selling surplus cement in the US at below-market prices.

The US had made the countervailing duty subject to review on an annual basis, but there has been no move to remove the tariff in the past 16 years (see SourceMex, 1994-08-10, 2000-10-11, and 2002-02-26).

Mexico brought the issue before the World Trade Organization (WTO), which agreed in 2003 to form a dispute-resolutions panel (see SourceMex, 2003-02-12 and 2003-09-03). The WTO panel had not issued a ruling as of late 2005.

The US and Mexican governments revisited the issue in December 2005 at the meeting of the Doha Round of WTO talks in Hong Kong. At that meeting, led by US Trade Representative Robert Portman and Mexican Economy Secretary Sergio Garcia de Alba, the two sides committed to find a negotiated solution to the problem.

A month later, the US and Mexico announced the agreement, by which the US would initially reduce the tariff on Mexican cement imports to 42.26%. At the same time, Mexico agreed to drop the dispute that had been under consideration by the WTO dispute-resolution panel.

Garcia de Alba said the two sides are expected to continue negotiations in the coming months as part of an effort to eliminate the duties entirely.

The US cement industry, which had pushed the US government to impose the tariffs in the first place, said it had no problem with the tariff reductions. "We understand that progress is being made and wish the negotiators good luck on both sides," said attorney Joe Dorn, whose company King and Spalding represents a coalition of 23 US cement companies known as the Southern Tier Cement Committee.

The Camara Nacional del Cemento (CANACEM) said a reduction in tariffs would allow companies like CEMEX and Grupo Cementos Chihuahua to expand their production and boost exports to the US. Some companies, like Holcim Apasco, which previously had little presence in the US, will now be able to gain a share of the US market, said CANACEM.

CEMEX currently exports about 5 million metric tons of cement to the US annually, but much of it is shipped from plants in Asia to avoid the duties that had been in place for Mexican cement. Even with the duties, CEMEX was shipping about 1 million MT of cement to the US directly from Mexico. …