U.S., Mexico 'cement' trade deal
U.S., Mexico Strike Accord On Cement Imports


SAN FRANCISCO (Dow Jones) - Mexican and U.S. trade officials announced a tentative agreement Thursday that would nearly double Mexico's cement sales to the U.S., giving a big boost to reconstruction efforts on the hurricane-battered Gulf Coast.

The agreement in principle is a major move toward lifting an anti-dumping order slapped on Mexican cement imports in 1990.

"The agreement is a positive step toward resolving a sixteen-year dispute between the U.S. and Mexico ," U.S. Commerce Secretary Carlos Gutierrez said in a statement.

"The agreement will help ensure that Gulf Coast communities have the resources to rebuild and it will also help U.S. cement producers access the Mexican market ... We will continue to work with our counterparts to finalize the text of the agreement in order to ensure that outstanding issues are resolved," he added.

Origins of the dispute go back to claims by the Southern Tier Cement Committee that CEMEX S.A. (CX), based in Monterrey, Mexico, was dumping gray portland cement in the U.S. market at non-competitive prices, taking market share away from U.S. producers.

Meanwhile, cement prices have soared on strong demand around the world, especially in booming Asian economies like China, creating supply shortfalls in the U.S.

According to the Commerce Department, domestic cement production stood last year at 111 million metric tons while the trade restrictions capped imports from Mexico at 1.6 million tons.

Under the terms of the tentative accord, Mexico would be allowed to nearly double its U.S. sales to 3 million tons, though deliveries would be limited to states in the South and Southwest.

Shipments from Mexico would continue to carry an anti-dumping duty of $3 per ton, down sharply from $26 currently, but be phased out altogether by 2009.

The agreement includes a special "disaster" clause that would allow the White House to let an additional 200,000 tons of Mexican cement into the country to help rebuild after natural disasters like hurricanes or earthquakes.

CEMEX, one of the world's biggest cement companies, said it stands to gain about $100 million in cash from the deal as unliquidated antidumping duties gathered over the years are shared between U.S. and Mexican producers.

The company said the agreement would also eliminate about $65 million worth of liabilities it currently carries.

CEMEX, which operates in 50 countries, has an annual cement production capacity of about 97 million metric tons.

The U.S. construction industry applauded the agreement as an important step toward easing the nation's growing reliance on foreign suppliers. Cement imports accounted for 20% of the domestic market in 2003. By 2005, that number had jumped to 27%.

"Initially, it means more certainty of supply," said Ken Simonson, chief economist for the Associated General Contractors of America, a trade group based in Arlington, Va. "This will enable importers to bring it in in a day, rather than long voyages across the Pacific or Atlantic."

At the same time, Simonson said the ultimate solution to the nation's cement shortage is to expand production at home, something U.S. producers have been slow to do because of cost concerns and strong local opposition for environmental reasons. (END) Dow Jones Newswires 01-20-06 0445ET Copyright (c) 2006 Dow Jones & Company, Inc. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.