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U.S. RENEWS TARIFfS ON MEXICAN CEMENT IMPORTS.

The US and Mexico continue embroiled in a long-standing dispute on anti-dumping tariffs imposed by the US Department of Commerce on imports of Mexican cement. In March of this year, the Department of Commerce renewed an anti-dumping tariff of 51% against imports of Mexican gray portland cement, a binding agent used to manufacture concrete. The Commerce decision, based on data collected between August 1999 and July 2000, primarily affects Mexico's giant cement manufacturer CEMEX.

The US first imposed anti-dumping tariffs on Mexico in 1990 and has conducted annual reviews on cement imports since then. In every case, the tariff has been renewed, although the rate has varied between 37% and 109%.

The tariff has created strong trade tensions between the US and Mexico, which believes the tariff is unwarranted (see SourceMex, 1994-08-10 and 2000-10-11).

Mexico has been unable to force the US to drop the tariff, even through a dispute-resolution panel formed under the auspices of the North American Free Trade Agreement (NAFTA) in 1996 (see SourceMex, 1996-09-18).

Mexico threatens to bring issue to World Trade Organization

The NAFTA panel's negative decision in 1996 does not preclude the Mexican government from requesting a dispute- resolution panel at the World Trade Organization (WTO) or again under NAFTA. Mexican Economy Secretary Luis Ernesto Derbez said President Vicente Fox's administration will attempt to negotiate a solution with the US over the next three months before considering requesting a new panel. "If we are unable to negotiate an equitable solution on the cement dispute, we will request a panel within the framework of NAFTA or the WTO," said Derbez.

Among the demands that Mexico will make in negotiations with the US will be the return of all or most of the tariffs on Mexican cement collected by the US government since 1990. Derbez was noncommittal about the reimbursement that Mexico is seeking. "It will be a high percentage," he told reporters.

US Commerce Secretary Donald Evans would not comment on the US position in the negotiations, but said he would respect the Mexican government's decision to bring the matter before the WTO. "When trade controversies arise, it is important to use the established procedures to find a solution to solve the disputes," said Evans. "This is one of the objectives of the WTO."

Until a resolution is reached on the cement dispute, CEMEX is obligated to pay US$15.9 million in anti-dumping duties over the next year. But some analysts said CEMEX may eventually be exporting little, if any, cement from its Mexican facilities to the US, thus making the tariff question a moot point. CEMEX could potentially supply US sources from its California plant, which it acquired with the purchase of US cement manufacturer Southdown Cement in late 2000 (see SourceMex, 2000-10-11).

The Mexican cement giant, the world's third-largest cement producer, also continues to expand its global reach. In June of this year, CEMEX announced plans to acquire Trinidad Cement Limited (TCL), based in Trinidad and Tobago but with plants also in Jamaica and Barbados. CEMEX would pay US$413 million for TCL, including the assumption of US$104 million in debt.

TCL has annual production capacity of 1.85 million metric tons of cement. The company sold 1.54 million MT on the domestic market in Trinidad and Tobago in 2001 and exported the balance to other countries in the Caribbean.

In recent years, CEMEX has expanded most aggressively in Asia, acquiring controlling or partial interest in companies in Indonesia, Thailand, the Philippines, and India. The company has also expanded in northern Africa and Latin America (see SourceMex, 1999-10-06 and 2001-10-03). [Sources: Mexican Intelligence Report, 03/02; La Cronica de Hoy, 06/19/02; CNI en Linea, 06/18/02, 06/20/02; Reuters, Notimex, La Jornada, 06/20/02; Novedades, 03/15/02, 06/21/02; Milenio Diario, 03/15/02, 06/19/02, 06/21/02; Reforma, 06/20/02, 06/21/02; El Universal, 06/19/02, 06/21/02, 06/25/02; The News, 06/26/02)
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Publication:SourceMex Economic News & Analysis on Mexico
Date:Jun 26, 2002
Words:670
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