In response to reported U.S. and Mexican government officials' discussion of cement imports, Associated General Contractors of America CEO Steve Sandherr noted in a letter recently sent to Commerce Secretary Carlos Guiterrez that an agreement to end antidumping duties “would be a major step toward resolving a problem that threatens to impede recovery from the hurricanes and economic growth nationwide.”

An agreement based on a 3 million-mtpy quota would potentially end in three years a 55% duty the U.S. imposes on Mexican cement imports, and spur a lower rate in the interim, according to a Dec. 5 AGC announcement. “While we recognize that some temporary limitations on imports are necessary as an incentive to get the complainants to accept an end to the duty, we believe 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 noted in his letter to Sec. Guiterrez. “This year's natural disasters show that it can be necessary to shift imports from one customs district (e.g., New Orleans or Houston-Galveston) to another (e.g., Tampa or Miami).”

AGC has been an outspoken critic of the antidumping duties since mid-2004, when contractors saw spot cement shortages in certain markets, and attendant concrete price spikes. The duties were effected in 1990 when the Commerce Department's International Trade Administration ruled on a complaint U.S. producers had brought against their Mexican counterparts. Operating as the Southern Tier Cement Committee, domestic producers contended that powder from south of the border was being sold at less than production cost. The duties have been increasingly subject to criticism in light of high domestic cement capacity utilization rates (>95%) and tight powder supplies in 2004 and 2005.

Since June 2004, AGC has enlisted the National Association of Home Builders, National Precast Concrete Association, and Precast/Prestressed Concrete Institute in appeals for duty relief to the Commerce Department. AGC's campaign apparently caught the eye of The Wall Street Journal, which in a November 15, 2005, editorial titled “Concrete for Brains” accused U.S. producers of rallying to keeping Mexican cement out to drive up cement prices. “Washington politicians who purport to be worried about ‘price gouging’ in other industries might notice that it is really taking place in cement, thanks to official government policy,” the Journal piece stated.

The Mexican cement import duty case has coincided with a similar dispute involving Canadian softwood lumber shipments to the U.S. In late November, the Commerce Department indicated that the U.S. would comply with an order by a U.S.-Canadian dispute settlement system established by the North American Free Trade Agreement.

The Mexican cement import duty case has coincided with a similar dispute involving Canadian softwood lumber shipments to the U.S. In late November, the Commerce Department indicated that the U.S. would comply with an order which NAHB claims will pave the way for elimination of antidumping duties on Canadian lumber imports. That order was issued in August 2005 by a U.S.-Canadian dispute settlement panel, assembled under North American Free Trade Agreement provisions. A Washington group representing U.S. companies, Coalition for Fair Lumber Imports, challenged the panel's action as unconstitutional.

In a terse statement issued shortly after the panel ruling, the Southern Tier Cement Committee also weighed in: “The binational panel dispute settlement system set up by Chapter 19 of NAFTA is deeply flawed and contrary to the U.S. Constitution,” said Joe Dorn, STCC's Washington-based counsel. “It was intended to provide a process for timely appeals of agency decisions in antidumping and countervailing duty cases based on fairly applying the same law and standard of review as a national court. Instead, Chapter 19 is being manipulated in a biased manner, and U.S. producers have no real recourse. Thus, we support the legal action filed by the Coalition for Fair Lumber Imports, which seeks to strike down Chapter 19 as unconstitutional.”

In last month's announcement on the Commerce Department's review of duties, Sec. Guiterrez noted, “We have serious concerns about the panel's decision. However, consistent with our NAFTA obligations, we have complied with the panel's instructions. We will continue to enforce our trade laws to ensure that U.S. industry receives relief from unfair imports and we are reviewing all options to do so.”