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Cement deal should end national shortages, builders say.

An accord signed this week by the U.S. and Mexico that will drastically lower duties on Mexican cement imports and eventually result in free trade between the two nations will help to increase much-needed supplies of Mexican cement to the U.S. market, according to the nation's home builders.

"More than 30 states reported shortages of cement in 2005. This agreement is vital to meet consumer demand, which will only grow in the coming year as the Gulf Coast rebuilding effort moves into high gear following last year's devastating hurricane season," said David Pressly, president of the National Association of Home Builders (NAHB) and a home builder from Statesville, N.C.

Under the terms of the agreement, which settles a 16-year dispute on anti-dumping duties on Mexican cement imports, the U.S. will reduce duties on Mexican cement from $26 to $3 per ton, and Mexican imports will be permitted to grow to 3 million metric tons annually, up from last year s level of approximately 2 million tons. After three years, the quotas and duties will be entirely eliminated.

The accord is structured so that Florida and the Gulf region, areas facing cement shortages, will be able to significantly increase their imports of Mexican cement. The negotiated framework also provides the flexibility to allow the President to direct an additional 200,000 metric tons of cement to areas hit by natural disasters.

With domestic cement production running at full capacity last year, the U.S. still had to import 25 percent of its cement supply in order to meet demand. High anti-dumping tariffs that have been in place since 1990 have limited supply from Mexico, which has excess capacity. Because of its close proximity to the U.S., it takes only four days to import cement from Mexico, compared with 40 days from Asia.

During the past year, NAHB has held several discussions with Commerce Department officials--including Secretary Carlos Gutierrez--urging the Administration to overturn the costly tariffs and outlining how cement shortages have led to construction delays and harmed housing affordability by increasing the cost of building projects. Data was also provided on states and geographic areas that have been most affected by the shortages.

"Commerce Secretary Gutierrez heeded our concerns, and showed a willingness to work with our industry and consider the needs of American consumers," said Pressly. "Throughout the process, builders have been pushing to resolve this dispute in a manner that leads to free trade, and we are pleased that this trade agreement will ultimately lead to this favorable outcome."
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Publication:Real Estate Weekly
Date:Mar 15, 2006
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