Protectionism vs. Free Market

In Costa Rica, the government's decision to reject ArcelorMittal's request to raise the import tax on steel rods generated such a conflict that the company assured that "it has no incentive to keep its production in the country."

Tuesday, December 18, 2018

After concluding its investigation, the Ministry of Economy, Industry and Commerce (MEIC) decided to reject the request of the manufacturer ArcelorMittal to apply a safeguard measure on imports of alloy and non-alloy steel rods.

The attempt to raise the import tariff began more than a year ago, since on November 30, 2017, ArcelorMittal requested to the Ministry of Economy, Industry and Commerce (MEIC) the application of a safeguard measure on imports of steel rod, arguing that the massive increase in rod imports, because of a world over-supply, encouraged by excess installed capacity in international markets, generating a significant decrease in the international price of the product.

As a response to the request made by the company, on April 2nd of this year the MEIC began an investigation to determine the existence or not of elements that would justify the application of the requested measure, which concluded last December 2nd.

Among the conclusions of the investigation, it is noted that in the 2015 to 2017 period, the volume of imports of steel rods decreased and therefore no injury or threat of serious injury to the domestic industry of rods is identified.

After reaching such conclusions, MEIC informed that "... the investigation is concluded, without the application of safeguard duties, since it is verified that there are no elements justifying the imposition of the measure, as established in Articles 2.1. and 4 of the Agreement on Safeguard of the World Trade Organization (WTO)."

After being notified the decision of the authorities, ArcelorMittal stated that it has no incentive to keep its production in the country, since it does not play with the same rules that importers currently have.

The international trade of rods from China and Turkey, where part of the import of this product originated in Costa Rica, has been strongly punished worldwide, as they receive subsidies that turn it into dumping. Countries such as the United States, Mexico, Honduras, the Dominican Republic and many others have already applied anti-dumping and safeguard measures to avoid the disappearance of their domestic industries, explains the company.

On the other hand, Rodrigo Archer, General Manager of the company, considers that "... the resolution has a serious contradiction, since in the opening of the investigation process the MEIC confirmed the existence of a growth in the imports of steel rods and the existence of a threat of injury to the national industry, and now at the end of the process, it denies the existence of these requirements that were proven and accepted since the beginning of the investigation."

See Case History



More on this topic

Controversy Over Steel Rod Import Tariff Continues

November 2018

In Costa Rica, importing companies are against the ArcelorMittal proposal, which consists of raising the steel rod income tax from 1% to 15%.

On November 5th, a public audience was held in which importing companies and ArcelorMittal presented their arguments before the Ministry of Economy, Industry and Commerce (MEIC) regarding the proposal to raise the import tariff on steel rod by 14%.

Controversy Over Steel Rod Import Tariff

May 2018

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".

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.

No to Taxing Imports of Steel Rods

May 2018

In Costa Rica, the builders union has opposed the suggestion by Arcelor Mittal to establish a safeguard measure and charge a 15% import duty on rods.

Following the request by the company ArcelorMittal de Costa Rica S.A. in November 2017 to the Ministry of Economy, Industry and Commerce (MEIC), to impose a 15% tax on imports of used iron rods for construction, the Costa Rican Chamber of Construction (CCC) reported that since March 19, the MEIC started a process to evaluate whether or not to apply the measure.

Imposition of Safeguards on Steel Imports Being Considered

April 2018

The Ministry of Economy in Costa Rica, has started an investigation to determine if there are elements that allow application of a safeguard on imports of cylindrical rods made of alloy and non-alloy steel.

The trade union of industrialists in the Dominican Republic warned of the start of the investigation that the Ministry of Economy, Industry and Commerce (MEIC) initiated at the request of Arcelor Mittal Costa Rica, as indicated in the resolution published in the edition of March 19 in the official newspaper, La Gaceta.

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