Scrapping taxes on cement exports to US ‘little local effect’

Scrapping taxes on cement exports to US ‘little local effect’
Published: 06 April 2009

The announcement made by Mexico’s economy ministry (SE) that domestic cement companies will not be subject to export quotas for the US market will not have a significant local effect, cement industry analyst with local financial group Vector, Carlos Hermosillo, told BNamericas. 

SE also announced the elimination of dumping compensation quotas and import permits for US-bound cement products, as the Mexico-US cement trade agreement drew to a close. 
In addition to regulating trade, the agreement solved several legal disputes over dumping practices between both countries, some of which dragged on for 15 years.  
"Benefits will be minimal. Before the agreement, cement imports to the US had to pay 30-40% in taxes," Hermosillo said. 

"However, right before the SE announcement, taxes were down to US$3/t of cement, which amounts to only 3% of the final price. This is a very small figure," he said. 

Hermosillo added that while the measure does help the local industry, it does not imply a significant variation in the pattern of Mexican cement exports to the US. 

"This marks the end of the cement trade agreement. Maybe the only novelty here is that by agreeing to the permanent elimination of anti-dumping prices, a new tax is unlikely to be put in place," he said. 
The analyst added the most important thing to do to help the national cement industry is to accelerate projects under the US$50bn/y national infrastructure program PNI.

"This is a job for the government. In this sense the launch of the tender for the Farac 2 highway re-concession package is a good sign," Hermosillo said. 

Farac 2, also known as Paquete del Pacífico, includes the construction and operation of 400km of new roads, as well as the maintenance of 370km of existing highways, under a 30-year concession.

Source: BN Americas