• by Emilio Godoy (mexico city)
• Friday, April 09, 2010
• Inter Press Service

In spite of all the talk about free market policies, the U.S. and Mexican governments have imposed anti-dumping penalties on each other in attempts to protect their metal working and steel industries.

The U.S. Department of Commerce's International Trade Commission (ITC) is about to complete an investigation of Mexican manufacturers of seamless refined copper pipe and tube, at the request of U.S. companies, and will determine additional import duties to be paid by the Mexican firms.

In a preliminary decision in December 2009, the ITC ruled that two Mexican manufacturers were selling copper tube in the United States at below Mexico's market price.

The ITC decided to impose a temporary 48 percent anti-dumping duty on Mueller Comercial de México and Ternium México, which belongs to the Argentine company Techint.

Due to their refusal to cooperate by providing the ITC with information during the investigation, the highest possible anti-dumping duty was slapped on both companies.

In May 2009, Mueller Comercial, a subsidiary of the U.S. Mueller Industries that is based in the state of Nuevo León, north of the Mexican capital, informed the Department of Commerce that it would not cooperate with the investigation, and predicted that its finances would not be affected by the examination.

Protectionist measures of this kind in the steel industry are nothing new in the bilateral trade relations between Mexico and the United States. For instance, the number of measures in 2008 was no higher than usual. 'Most of the measures were a continuation of previous decisions,' Sergio Gómez, head of the consulting firm Inteligencia Comercial, told IPS.

The first U.S. investigation into Mexican steel took place in October 1991. In September 1992, Washington imposed an anti-dumping duty of 33 percent on several Mexican steel exporters.

However, two can play the same game. The Mexican Economy Ministry decided in January to maintain anti-dumping tariffs on steel products from China and the United Kingdom for a further five years, after a similar investigation to that carried out by the United States, in order to protect its domestic industry.

Mexico did, nevertheless, lower the anti-dumping duty to be collected. In China's case it was reduced from 0.72 dollars to 0.50 dollars per kilo of steel chain, and in the case of the U.K., from 8.42 percent to 5.91 percent of the value of carbon tubing. Mexico argued that to eliminate the duty outright would harm its industry and threaten returns on the investments it has made in the sector.

In response to a government invitation, two Mexican companies said in 2009 they wanted the Economy Ministry to maintain anti-dumping duty on these products.

Meanwhile, ThyssenKrupp Mexinox won its legal case last November against the anti-dumping duty charged by Washington on steel sheets made in Mexico, and the distribution of the tariffs to U.S. manufacturers.

The duties were in breach of the North American Free Trade Agreement (NAFTA), in force since 1995 between Canada, the United States and Mexico, according to the three-page sentence handed down by Judge Donald Pogue of the U.S. Court of International Trade.

In July 2006, ThyssenKrupp Mexinox, a subsidiary of the German transnational company ThyssenKrupp AG, argued that the U.S. Customs and Borders Protection agency had illegally applied the Byrd amendment to anti-dumping duties on stainless steel sheets imported from Mexico.

The tariffs levied were transferred to U.S. producers, such as AK Steel Corporation, Allegheny Ludlum Corporation and North American Stainless.

The U.S. Court of International Trade verdict refers to the Continued Dumping and Subsidy Offset Act of 2000, known as the Byrd amendment after its author, U.S. Senator Robert Byrd.

The Act specifies that the funds raised from anti-dumping fines are to be distributed to the U.S. companies that filed the pricing complaints against foreign goods.

In November 2004, the World Trade Organisation (WTO) authorised the European Union and six other countries, including Mexico, to adopt trade sanctions against the United States worth up to 150 million dollars, in reprisal for the U.S. continuing to enforce the Byrd amendment which the WTO had declared illegal in September 2002.

The legal victory 'is only a small part of the issue, there is still a lot to sort out, and it will take years,' an executive with ThyssenKrupp Mexinox, based in the central Mexican state of San Luis Potosí, told IPS.

Washington's anti-dumping measures since 1992, which increase the prices of Mexican export products and jeopardise future sales, have seriously damaged the Mexican steel industry. In 1993, Mexican sales to the United States dropped by 90 percent.

Since 1999, however, steel exports began to recover. In 2008, Mexican producers sold 58 million dollars' worth of standard pipes and tubing to the United States, an increase of 11 percent on the value of the previous year's exports. But then last May, the global economic recession caused sales to fall by 30 percent.

© Inter Press Service (2010) — All Rights Reserved. Original source: Inter Press Service

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