U.S.-East Asian Trade Friction: Exit and Voice in the Steel Trade Regime

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T he steel industry remains one of the major industrial sectors for Japan, South Korea, Taiwan, and China. Japan became the primary country of steel production in the late 1960s. South Korea followed Japan in the 1980s with the success of Poland Iron and Steel Company (POSCO), which became the world's largest steel producer in 1998. In the 1990s, China developed its steel industry to become the primary producer country of crude steel in 1996. The steel industry is an important topic of discussion in international trade. The industry continues to be a source of trade friction centered on the U.S. market. The United States has imposed some form of restriction on steel imports since the late 1960s. More recently, in 1998, the U.S. steel industry lodged antidumping complaints against imports of a wide range of steel products. Because of the U.S. steel industry's seemingly arbitrary use of antidumping measures, the topic of amending the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement) has stayed on the agenda at World Trade Organization (WTO) ministerial meetings. Although a number of studies discuss the economic implications of protectionist trade measures in the U.S. steel industry,' few have highlighted the impact of U.S. protectionist measures on other countries' governmental policies. This study seeks to fill the gap in research by examining the influence of protectionist measures in the U.S. steel industry on East Asian governments' policies and behavior. In particular, this study explores how the Japanese and Korean governments have responded to U.S. trade measures involving the steel industry. I argue that successive U.S. antidumping measures encouraged the Japanese and Korean