NEW YORK An import licensing regime enacted by Mexico has raised warning flags among steel traders.
The new system, first implemented in late January and subsequently revised, suffers from a lack of transparency, inconsistent execution and the potential to encourage "copycat" regulations in other countries, members of the Falls Church, Va.-based American Institute for International Steel (AIIS) said during a roundtable on the eve of the Steel Success Strategies XXIX conference in New York, sponsored by AMM and World Steel Dynamics Inc., Englewood Cliffs, N.J.
Traders have difficulty "knowing how the new regulations are being implemented," AIIS executive director Richard Chriss said, noting an "inconsistency" in applying the new rules since local Mexican officials at one border crossing might treat shipments differently than those at other locations.
Concerns were raised after reports of shipments being stopped at the Mexican border due to licensing questions, which could mean the added burden of "demurrages and other costs" for exporters, AIIS chairman John D. Foster said.
The AIIS has posted its comments on the new regulations in Spanish on a Mexican government website, Chriss said.
"That has been the public face of our involvement," he said.
The AIIS also has been working with the Office of the U.S. Trade Representative, which Chriss said has conveyed traders concerns "to the appropriate Mexican authorities."
However, Chriss stressed that the AIIS is not looking to spark an outright "trade dispute," and doesnt want a "tit-for-tat" response by the United States that could escalate tensions. Instead, the AIIS wants to see a "careful" and "calibrated" response, Chriss said.
Mexico characterized the new licensing regime as "automatic," which should mean that a license is routinely granted if a trader meets certain legitimate criteria, Chriss said.
"This is not an automatic licensing system," he said, claiming thatin practiceit means Mexico "might" award a license to traders meeting the criteria.
The AIIS also sees the potential impact of the licensing regime going beyond U.S.-Mexican steel trade, Chriss said. Other countries are watching the reaction to these programs, which use licensing mechanisms allowed by the World Trade Organization to facilitate trade, but which Chriss said could instead restrict trade if not applied properly. The AIIS is worried that their success could spawn the proliferation of similar "copycat" systems in other parts of the world.