A three year transition time has been agreed by the Mexican and US governments to end current restrictions on cement imports into the United States from its southern neighbour, leading to a complete elimination of such duties and any restrictions on volume by the early part of 2009.
Following on from this deal, unliquidated historical duties related to the anti-dumping order will be shared between the US and Mexican cement industries. The impact of this on Cemex, the top Mexican producer and a leading cement producer in the United States is strongly positive, as it will receive around US$100m in cash, and liabilities of some US$65m will be eliminated. The impact on Holcim, which has not been exporting cement from Mexico, where it is the second largest producer, to the USA, will be considerably less, as the group will only be receiving money in its capacity as a US producer.
In the first year of the deal, 3Mt of Mexican cement will be allowed into the United States, allocated on the basis of regional quotas, and the transitional tariff will fall from around US$26 per short ton to just US$3/ton. This represents an increase over current levels and should help eliminate local supply shortages and reduce transport costs. These quantities will be permitted to rise in line with US cement consumption during the second and third year of the agreement, subject to an annual cap of 4.5 per cent. As a result of the agreement, proceedings against the US government under both NAFTA and GATT, in the latter case a ruling was imminent, will be suspended.