Gerdau Corsa and Mexico’s Growing Concern Over Steel Dumping
Gerdau Corsa, the Mexican unit of the renowned Brazilian steel company Gerdau, has initiated steps to file an antidumping case against Vietnam. This case is specifically focused on steel beams, a vital component in construction and infrastructure, which have been flooding the Mexican market in recent years at prices far below local production costs. The company’s executive revealed the intention to approach Mexico’s Ministry of Economy with this complaint during a meeting with other members of the National Confederation of Steel Distributors (Conadiac) in November.
The decision to take legal action comes as Mexico’s steel industry has faced a surge in cheap steel imports from countries like Vietnam and Malaysia. These imports are often sold at significantly lower prices than Mexican-produced steel, a phenomenon known as dumping. This practice, according to industry experts, distorts the market, undermines local steelmakers, and threatens the viability of domestic production in Mexico.
Surge in Steel Imports: A Concern for Local Industry
The issue of dumping steel beams, particularly from Vietnam, has become a growing concern for Mexican steel manufacturers. Salvador Quesada, the director of Canacero, the national steel association, highlighted some shocking statistics regarding imports into Mexico. Imports of steel from Vietnam and Malaysia have risen by up to 4,000% from Vietnam and 3,000% from Malaysia. These extreme increases in imports raise alarms about unfair trade practices and their impact on local industries.
The problem extends beyond mere price undercutting. In some instances, long steel products arriving in Mexico are marked with the names of mills that do not exist in the countries from which they are purportedly exported. This is widely believed to be a tactic used by Chinese manufacturers. While the steel products are officially listed as originating from countries like Vietnam or Malaysia, these nations are acting as intermediaries. The products are produced in China, but by routing them through these countries, they can take advantage of trade agreements, such as the Trans-Pacific Partnership Agreement, which grants them tariff benefits for exports to Mexico.
This practice is particularly troubling because, under the TPP, countries like Vietnam and Malaysia benefit from reduced or eliminated tariffs when exporting goods to Mexico. By mislabeling the origin of the steel products, these countries, often with indirect backing from China, are able to bypass tariffs and flood the Mexican market with cheap steel, further harming domestic producers like Gerdau Corsa.
Antidumping Measures and Their Impact on Mexican Steel Industry
The rise of steel imports from countries like Vietnam and Malaysia has not gone unnoticed by the Mexican government. The Mexican Ministry of Economy has already imposed antidumping duties on some steel products from these countries, including coated flat steel, microwire for welding, and cold-rolled sheets. These measures are designed to counteract the damaging effects of dumped imports by raising the cost of unfairly priced products, leveling the playing field for local producers.
However, the case for steel beams remains unresolved. Gerdau Corsa, supported by Canacero, is pushing for stronger antidumping measures specifically targeting steel beams from Vietnam. The steel beams in question fall under the Harmonized Tariff Schedule of Mexico as I and H beams (7216.32.01 and 7216.33.01). As of now, antidumping duties exist on steel beams only from certain European countries, Germany, Spain, and the United Kingdom. However, no such measures have been applied to imports from Vietnam, which Gerdau Corsa argues are being unfairly traded.
The challenge with these imports lies not only in the extreme price differences but also in the indirect support these countries receive from China, whose steel production capacity and subsidies are well-documented. By using countries like Vietnam and Malaysia as intermediaries, Chinese manufacturers exploit tariff advantages under the TPP and other trade agreements to gain access to the Mexican market without facing the usual restrictions.
