Cement imports from Mexico

Cement imports from Mexico
Published: 23 December 2005

Cement imports from Mexico

US contractors and readymix producers in the US have been complaining about a shortage of cement for the past two years. Mexico has an excess capacity of more than8Mt, but a 55 per cent tariff on cement imported from America’s neighbor to the south has effectively kept the product out (says Asian Fortune magazine). Negotiations to do away with the tariff have been going on since 2000, when the Bush administration made it a priority to settle the issue. But although the stakes are relatively small compared with the US-Canadian war over tariffs on softwood lumber--about US$500m has been collected from Mexican exporters, compared with US$4 billion in lumber levies--the cement dispute has proved both intractable and harmful to cross-border relations. As Mexican trade official Hector Marquez puts it: "This issue has created a lot of problems."

The two sides are still far apart. Both countries agree that a three-year quota on cement exports is an acceptable compromise. But the US wants to maintain the right to reinstate a tariff if dumping resumes, and Mexico doesn’t want that. There’s also money at stake. Under a US law called the Byrd Amendment, all fees that have been collected by US Customs since 1990 will go to the injured party--in this case, the coalition that initiated the action, the Southern Tier--once legal challenges are settled. (There are currently ten investigations pending under the North American Free Trade Agreement and one case before the World Trade Organization.) Mexico wants at least some of the money returned to its cement manufacturers.

All that could change if the Southern Tier drops its complaint. Cemex argues that the association should no longer fear its exports. Company executives say that the 2000 purchase of Southdown, the Southern Tier’s largest member, gives it a stake in the US market. "We would do nothing to harm ourselves," says Gilberto Perez, president of Cemex’s US subsidiary, which is no longer a member of the Southern Tier.

But Joseph Dorn, Southern Tier’s lawyer, isn’t convinced that conditions have changed that much. Yes, cement is in short supply, he says, but only in a few isolated regions, all of which could get plenty of imports from other countries at fair prices. And Mexico , he says, isn’t an open market. Cemex, he argues, has an untouchable monopoly in northern Mexico, and no foreign company can realistically enter the market. Perez points out that Mexico has no tariffs or quotas on cement from foreign countries but says, "We are fierce competitors. We are not going to welcome with open arms everybody into Mexico."