Restore free trade in Mexican cement

With continuing debate over US cement shortages, some domestic US observers are now beginning to challenge the wisdom of a US Department of Commerce ruling which has effectively stopped large volumes of Mexican cement imports from crossing the border into the United States and thus helping to alleviate what many see as significant cement shortages in many US states.

Regrettably, this discussion is, however, something of a red herring. Although it is commonly perceived that Mexican cement imports have been effectively banned by the imposition of high import tariffs by the US authorities, in effect, all that has been enforced are high customs tariffs on shipments of cement from Mexico that are being dumped on the US market at prices below “fair value” in accordance with US law.

There are, apparently, no restrictions on Mexican cement shipments into the US and indeed a sizeable flow of cement from Mexico already exists. As Joseph Dorn, legal council to the Southern tier Cement Committee points out: “As long as Mexican producers price their exports at or above fair value in accordance with US law and WTO rules (or their importers pay duties to offset any dumping) Mexico may ship unlimited quantities of cement into the United States”.

Furthermore, Mexican producers have limited additional quantities of cement to sell into the US at present, especially as their own domestic markets are performing extremely well and local prices there remain high. Continuing gains in US cement prices may temp a company such as Cemex or Holcim’s Apasco to divert some sales into the US market but these would only be of limited amounts, or stop-gap sales, especially as both have good access to other competitively priced foreign cement supplies within their own extensive worldwide trading networks.

Realistically, both Cemex, Holcim, and in fact, all US producers, have clearly not been averse to rising domestic US cement prices this year, a trend that  is unlikely to be reversed, even when the domestic US cement market stabilises, as expected, in early 2005. Mexican cement will therefore provide neither a short, nor a longer-term solution to such US pricing developments or market shortages.