Commerce Department Moves On Converging Cement, Lumber Antidumping Duty Debates

In response to reported U.S. and Mexican government officials’ discussion of cement imports, Associated General Contractors of America CEO Steve Sandherr


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 late-2005 letter 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 metric ton/year quota would potentially end in three years a 55 percent 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 [cement] 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 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 fair value in the U.S. The duties have been increasingly criticized in light of high domestic cement capacity utilization rates (>95 percent) and tight powder supplies in 2004 and 2005.

Since June 2004, AGC has enlisted the National Association of Home Builders (NAHB), National Precast Concrete Association, and Precast/Prestressed Concrete Institute in appeals for duty relief to the Commerce Department. AGC’s campaign also reached The Wall Street Journal, which in a Nov. 15, 2005, editorial titled Concrete for Brains characterized the duties as a border tax and suggested they were creating a condition of price gouging.

The Mexican cement import duty case has coincided with a similar dispute involving Canadian softwood lumber shipments to the U.S., which by NAHB figures account for one-third of the lumber used in domestic home building. On Dec. 6, the Commerce Department announced a reduction in combined antidumping and countervailing (aimed at offsetting government subsidies) duties on imported lumber from 20.2 percent to 10.8 percent. That action followed department officials’ indication that the U.S. would comply with an order which NAHB claims will pave the way for the duties’ elimination. That order was issued in August 2005 by a U.S.-Canadian dispute settlement panel, assembled under North American Free Trade Agreement provisions.

In last month’s announcement on the Commerce Department’s review of lumber 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.

A Washington group representing U.S. companies, Coalition for Fair Lumber Imports, challenged the NAFTA panel’s action as unconstitutional. Briefings on the challenge are scheduled for January-March 2006 in the U.S. Appeals Court for the District of Columbia. Sharing the coalition’s views is the Southern Tier Cement Committee, whose Washington-based counsel Joe Dorn notes, The binational panel dispute settlement system set up by Chapter 19 of NAFTA is flawed and contrary to the U.S. Constitution. 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.