Controversy Over Steel Rod Import Tariff

ArcelorMittal has requested the restoration of a 15% import duty on steel rods, arguing that "the vast majority of these imports enter the country without paying taxes, taking advantage of a legal loophole".

Thursday, May 3, 2018

After the reaction from the construction sector, the steel rod manufacturer in Costa Rica, ArcelorMittal, justified its decision to request an investigation from the Ministry of Economy, Industry and Commerce (MEIC) to decide if it will impose a safeguard measure and impose a 15% tariff on imports of the product.

In a statement, the company clarified that "... the safeguard requested seeks to protect employment and its contribution to the Costa Rican economy and does not seek to impede imports. Importers of steel rods are taking advantage of a legal loophole to not pay import duty on this product, and have not paid, approximately, US $2 million over the last 2 years."

"... The 15% tariff that is being requested would be equal to the one that exists for imports of the majority of products used for construction, such as cement, flooring, sanitary ware, roof sheets, among other things. In addition, it responds to the Central American tariff policy that has set the tariff for this product precisely at that percentage."

Lucrecia Brenes, legal advisor at ArcelorMittal, explained that "... what is sought is to defend national production and at no time prevent imports, as has been said, untruthfully, by some importers. According to Brenes, there is a double standard on the part of importers.  In the case of Gerdau Metaldom, the only manufacturer in the Dominican Republic, they imposed a 43% tariff on steel imports of Turkish and Chinese origin, but they bring in the product from those origins (Turkey) to Costa Rica with zero taxes."

"... In the case of Agro fertilizers, it is clear what the interest is in arguing against ArcelorMittal, as this company is the main importer of construction rods in Costa Rica, which come in without paying taxes and covers 72% of imports as corroborated by the MEIC, making purchases in high volumes transported by ship directly and taking advantage of the legal loophole. " 

For its part, in an official statement, the MEIC denied that "... that with the opening of the investigation on the matter of safeguarding imports of steel rod, tariffs are increasing."

In a statement, Geannina Dinarte, Minister of Economy, Industry and Commerce, explained that "... ' This is a totally technical investigation that requires the contribution of all interested parties, under the rules of the World Trade Organization (WTO);  therefore, an investigation was started on April 2, and is in the stage of gathering information and all the legitimated actors are being summoned so that they can show if there is any involvement or not on the industry. This information will be the basis for deciding on the application of a safeguard measure if necessary.
   
The term of the investigation is six months, which may be extended for a period of six additional months. 

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