Global Steel Trade; Structural Problems and Future Solutions

line pipe markets, the European and Japanese producers set up a cartel, which they called the ‘Europe Japan club.’
The cartel restricted competition in the common market by requiring that the domestic markets of the different
producers (i.e., the German, French, Italian, UK, and Japanese markets) should be respected.”
64. Source: Information provided to Commerce Department by U.S. steel producers.
65. Id.
66. Id.
67. Id.
68. Korea’s exports of finished steel to the EU increased by 2187 percent from 1997 to 1998. This was an increase
of 1,549,045 tons. World Trade Atlas: Korea CD–ROM (June 1999).
69. Interview with Masanari Iketani, November 1999.
70. Merrill Lynch, “Steel Industry, Moving Toward Realignment of Production Facilities, Steel Mills and
Companies,” Japan Steel In-depth Report, (June 3, 1998), 4.
71. Korea-Japan import levels, and the alleged market arrangement, were referenced by industry officials and
academics in interviews both in the U.S. and Japan.
72. All data on Gross Domestic Product, including components, calculated from statistics compiled by Japan’s
Economic Planning Agency available from http://www.epa.go.jp/e-e/menu.html; Internet (Note all figures are for the
calendar year and are rounded.) Japanese real GDP in 1998 was ¥480.6 trillion, down 2.5 percent from ¥493.0 trillion in
1997. Real GDP (annualized rate) in 1Q97 was ¥499.2 trillion versus ¥475.6 trillion in 4Q98, a difference of 4.7 percent.
73. Supporting endnotes for this text box:
See MITI, Interim Report of the Forum on Structural Problems Related to the Basic Materials Industries (June
1999) , Introduction, Section 2.3. See also Peter F. Marcus and Karlis M. Kirsis, World Steel Dynamics, Core Report
NNN (January 2000), 3–25. Based on apparent consumption. See also Japan Iron and Steel Federation (JISF), Monthly
Report of the Iron and Steel Statistics, (Tokyo, December 1999), Vol.42. No.12. (Ordinary steel sales to the
construction sector fell from 18.5 million tons in 1990 to 12.9 million tons in 1998. Ordinary steel sales to the
automobile sector fell from 12.2 million tons in 1990 to 8.3 million tons in 1998.)
See also Katz, 197–198. “Japan’s cartelized economy is so distorted that it suffers from a kind of ‘economic
anorexia.’ In other words, private domestic demand is chronically too deficient to consume all that Japan produces.”;
“Protection of steel required protection of autos and machinery. Protection of cement required protection of
construction. All these layers of protection padded profits up and down the line. They also made consumer prices so
high that consumers simply could not afford to pay them all; they consumed less..” Ibid., 210.
See also MITI Interim Report, Chapter 1, Section 1.1
See also MITI Interim Report, Chapter 1, Section 1.3. See also, “Nippon Steel’s Blast Furnace Capability Will
Increase by 10 Percent,” Nihon Keizai Shimbun, April 16, 1999, “Currently, demand for crude steel is as low as the
level 30 years ago and it is considered that 20 million tons of production capacity is excess against Japanese
domestic crude steel production capacity (assumed as slightly less than 120 million tons).” See lso, Greg Mastel and
Andrew Szamosszegi, Economic Strategy Institute, Leveling the playing Field: Antidumping and the U.S. Steel
Industry (Washington D.C., February 1999) Lists Japanese ‘excess steel production’ in the 20–25 million ton range for
1996–99 (citing OECD Steel Committee, 1998). See also, Peter F. Marcus and Michael A. Organek, World Steel
Dynamics, Price Track 62, (June 28, 1999), 8.
Regarding historic industry-wide capacity figures including the 140 million ton capacity figures for the early
1980s, see the following World Steel Dynamics Core Reports. All figures effective capacity. 1960-1996: Peter F.
Marcus and Karlis M. Kirsis, World Steel Dynamics, Core Report III, (October, 1998), 2-34; 1997-1999: Peter F. Marcus
and Karlis M. Kirsis, World Steel Dynamics, Core Report MMM, (September, 1999), 1-6, 2-2. Regarding the capacity
build-up period and the government’s role in fostering steelmaking capacity during this time, see Patricia O’Brien,
Harvard Business School Case Study, The Development of the Japanese Steel Industry, (Boston, 1987). Regarding
the overcapacity that has characterized steel and other basic materials industries since the early 1970s, see Katz, 168.
Long-term overcapacity in the Japanese steel industry through the late 1990s was also routinely acknowledged by
steel experts in interviews for this report.
74. In 1996, Japan’s real GDP was ¥485.2 trillion, an increase of nearly 5.1 percent from ¥461.9 trillion in 1995.
Public demand dropped nearly ¥4 trillion between 1996 and 1997, or more than 0.8 percent of real GDP in 1997.
Between the 2Q97 and 4Q98, Japanese exports fell from almost ¥68.1 trillion to ¥64.3 trillion, a difference of 5.6
percent. Data calculated from statistics compiled by Japan’s Economic Planning Agency available from http://
www.epa.go.jp/e-e/menu.html; Internet .
75. The collapse of Hokkaido-Takushoku Bank (Takugin) in November 1997 marked the first time any major city
bank had failed in the past 50 years. Within the same month, Yamaichi Securities, one of Japan’s Big Four brokerages,
Notes 207