Friday, January 06, 2006
Up Against the Cement Wall
Yet another Byrd distortion of the marketplace ...
Fortune Magazine via CNN Money
This year's hurricanes were strong enough to knock out levees, flatten buildings, and flood cities along the Gulf Coast. But they couldn't blow away the high trade barriers that are keeping Mexican cement out of the U.S. And that could make efforts to rebuild New Orleans and other devastated areas much more expensive, as contractors scramble to find supplies.
Home builders, general contractors, and concrete mixers in the U.S. have been complaining about a shortage of cement for the past two years. Mexico has an excess capacity of more than eight million tons, but a 55% tariff on cement imported from America's neighbor to the south has effectively kept the product out. The tariff was imposed in 1990, after Mexican manufacturers started selling cement in the U.S. for as little as half as much as they charged in Mexico. In purely economic terms, that made sense: Mexican producers had excess capacity, and the U.S. had excess demand. But in international trade terms, selling products for cheap abroad is considered dumping, which is grounds for levying tariffs. A group of cement suppliers with plants in southern states from Georgia to California petitioned U.S. trade authorities and were rewarded with the biggest tariff ever imposed in an anti-dumping case.
Insiders say that so long as the Byrd Amendment promises money to the winner of an anti-dumping case, the Southern Tier has no reason to allow the Department of Commerce to negotiate away the right to impose tariffs. "I feel like Charlie Brown trying to kick the football," says Ken Simonson, chief economist for the Association of General Contractors, which wants the cement tariffs suspended. "There will always be another meeting."
Fortune Magazine via CNN Money
This year's hurricanes were strong enough to knock out levees, flatten buildings, and flood cities along the Gulf Coast. But they couldn't blow away the high trade barriers that are keeping Mexican cement out of the U.S. And that could make efforts to rebuild New Orleans and other devastated areas much more expensive, as contractors scramble to find supplies.
Home builders, general contractors, and concrete mixers in the U.S. have been complaining about a shortage of cement for the past two years. Mexico has an excess capacity of more than eight million tons, but a 55% tariff on cement imported from America's neighbor to the south has effectively kept the product out. The tariff was imposed in 1990, after Mexican manufacturers started selling cement in the U.S. for as little as half as much as they charged in Mexico. In purely economic terms, that made sense: Mexican producers had excess capacity, and the U.S. had excess demand. But in international trade terms, selling products for cheap abroad is considered dumping, which is grounds for levying tariffs. A group of cement suppliers with plants in southern states from Georgia to California petitioned U.S. trade authorities and were rewarded with the biggest tariff ever imposed in an anti-dumping case.
Insiders say that so long as the Byrd Amendment promises money to the winner of an anti-dumping case, the Southern Tier has no reason to allow the Department of Commerce to negotiate away the right to impose tariffs. "I feel like Charlie Brown trying to kick the football," says Ken Simonson, chief economist for the Association of General Contractors, which wants the cement tariffs suspended. "There will always be another meeting."
