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Builders Seek End to Tariffs on Cement

With a shortage of supplies, some want to lift the anti-dumping duties against Mexico.

August 12, 2004|Annette Haddad and Evelyn Iritani | Times Staff Writers

Add cement to the mix of American trade disputes.

The U.S. construction industry, saying a cement shortage is raising building costs and delaying projects, asked the Bush administration Wednesday to end anti-dumping tariffs on Mexican cement.

Builders say unusually high demand at home and abroad is crimping supplies of the key ingredient in concrete used in foundations, driveways and patios. In particular, they say, China's enormous appetite for the commodity has curtailed imports from Asia, and American producers lack capacity to meet domestic needs.

To relieve the strain, the National Assn. of Home Builders called for dropping the tariffs, which would allow for greater supplies of Mexican cement. The duties were slapped on Mexican imports in 1990 after that nation's industry was found to be selling cement below the cost of production -- a practice known as "dumping."

Mexico is the most logical cement source outside of Asia because delivery from south of the border takes far less time than from across the Pacific, the Washington-based builders group said.

"With global shipping capacity strained, the ability to import cement from Asia and Europe to meet this shortfall has been significantly reduced," said Jerry Howard, head of the builders group. "Therefore, it makes sense to rescind the costly anti-dumping duties on Mexican cement that are preventing a stable and reliable supply of imports to U.S. consumers."

However, the Commerce Department said Wednesday that it could not end the duties unless requested to do so by the U.S. companies that originally petitioned for the tariffs.

And those companies, which include U.S. cement producers, oppose lifting the duties. They fear that a surge in Mexican supplies would lead to a surplus and drive down prices. They say the flow of imports is being stifled by transportation bottlenecks that will soon be relieved.

"Supply is tight, I won't deny that," said Donald Unmacht, president of Encino-based National Cement Co. of California, a French-owned company that operates a cement plant in Gorman. "I don't see a critical shortage in California. We are meeting most of our needs."

The cement dispute is the latest of a series of significant trade battles that have embroiled home builders in recent years.

The construction industry saw prices of lumber soar after domestic producers successfully petitioned for protection from low-cost Canadian imports.

The industry also was hurt when the Bush administration imposed tariffs on foreign steel producers. Those sanctions were lifted last year after protests by steel consumers, including the construction industry.

Under current law, the U.S. government reviews anti-dumping orders every five years, but it is still relatively easy for domestic producers to get the penalties renewed, said Daniel Griswold, director of the trade policy program at the Washington-based Cato Institute, a conservative think tank. He said this renewal policy has led to anti-dumping duties remaining in place long after they are justified, resulting in higher prices.

Griswold and other free-trade advocates have unsuccessfully pushed for a change in the law that would allow the U.S. government to lift anti-dumping orders when the targeted products are in short supply.

"Cement and lumber are both very important commodities to one of the strongest, most important sectors in our economic recovery," Griswold said. "This just shows how these anti-dumping laws are working at cross-purposes to the general interests of the American people."

The home builders trade group said many of its members were reporting shortages of cement, wallboard, steel framing and other materials, adding $5,000 to $7,000 to the cost of building an average new home.

John Hagan, president of San Diego-based Pac West Development, is one developer who has seen his cement costs rise nearly 40% in the last year. Also a cement contractor, Hagan said he has turned away business because he can't meet customers' needs.

"This is by far the biggest shortage I've seen," said Hagan, a member of the national builders group.

California uses about 15 million tons of cement a year, about a third of which is imported. Other states, such as Florida, rely on a higher percentage of imports.

"There is less coming in and more being demanded -- both are happening at the same time," said Larry Maes, director of products education for the Southern California Ready Mixed Concrete Assn. "Any improvement in any of those factors would help."

The biggest beneficiary of lifting the cement duties would be Mexico's Cemex, the world's third-largest cement producer. Earlier this year, it urged the U.S. to ease cement tariffs.

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