Mexico, U.S. in Talks on Cement Tax

Hurricane Katrina may help end a 15-year trade dispute between the U.S. and Mexico over cement, as the massive rebuilding effort in the Gulf Coast could put pressure on US officials to allow more imports into a market beset with shortages and high prices.

US and Mexican officials met Tuesday in Washington to discuss lowering or dismantling punitive tariffs on Mexican cement, which currently run as high as 62 per cent. The U.S. Commerce Department imposed the penalties in 1990 after a group of 31 US-based cement makers brought a successful anti-dumping case against Mexican producers that were selling their products at prices far below what they were charging in Mexico.

Trade negotiators from both nations were unavailable to comment on Tuesday’s proceedings, which a Commerce Department spokeswoman said were planned before Hurricane Katrina. The talks have dragged on for years, and more are scheduled for later this month. But construction industry experts say the hurricane’s aftermath could bring urgency to the negotiations.

Cement was pricey and in short supply throughout much of the United States before the Category 4 hurricane blasted the Gulf Coast. With US cement plants already running at full tilt, analysts say more imports will be needed to satisfy the anticipated jump in demand.

Stung by criticism of its slow response to the worst natural disaster in U.S. history, the Bush administration may be motivated to remove or lower the tariffs to help prevent any bottlenecks in the rebuilding phase, experts say.

"I suspect that the administration is looking at all avenues to make sure that enough building materials can flow into the area," said Ed Sullivan, chief economist of the Skokie, Ill.-based Portland Cement Assn. "You are not going to start any significant construction until the second quarter of next year. But you’ve got to get your ducks in order…. The market is incredibly tight."