US could drop duty on Mexican cement

The United States could phase out a 55 per cent duty on Mexican cement under a plan that would establish a 3Mt annual import quota for three years, a US group said on Monday. Stephen Sandherr, chief executive of The Associated General Contractors of America, mentioned the possible agreement in a letter to US Commerce Secretary Carlos Gutierrez.

The constuction industry group blames the 15-year-old duty on Mexican cement for a cement shortage in two-third of the 50 US states. The industy has stepped up efforts to get the duty lifted in the aftermath of Hurricanes Katrina and Rita, which destroyed a huge swath of the US Gulf Coast.

Contractors and others in the construction industry "recognize that some temporary limitations on imports are necessary" to get the domestic cement industry to agree to drop the duty, Sandherr said in the letter. But he raised concerns about a detail of the plan that would allocate the import quota along regional lines.

"We think it is vital to allow a maximum of flexibility among regions and time periods in structuring the limit so as to keep the shortages from getting worse," Sandherr said. "As this year’s natural disasters show, it can be necessary to shift imports from one customs district ... to another."

A deal to eliminate the duty would also benefit Mexican cement maker Cemex, which already has a sizeable share of the US market. The proposed quota would allow Mexico to boost its exports about 30 to 40 per cent above current year levels, said Ken Simonson, chief economist for The Associated General Contractors of America.

A US Commerce Department spokeswoman confirmed U.S. and Mexican officials were meeting on Monday and Tuesday on the cement issues, but had no details on any proposals being discussed.