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Japan Iron and Steel
Iron and steel had been a leading industry in Japan and
had
been considered critical to economic growth by the
Japanese
government in the 1950s. This attitude, exemplified by
government
loans offered at favorable rates, led to rapid
modernization and
expansion of the domestic industry. By 1970 iron and steel
were the
leading exports from Japan, accounting for over US$2.8
billion, or
14.7 percent, of total exports. This export share peaked
in 1974,
at 19 percent. Because of both the domestic industry's
strength and
import barriers, imports of iron and steel represented a
minimal
US$276 million in 1974. Japan's success in this industry,
however,
generated large imports of raw materials--iron ore and
concentrates, and coking coal. Iron and steel were a
classic case
of a processing trade, with Japan importing raw materials,
building
state-of-the-art, integrated steel plants at harborside,
and
exporting part of the output to the rest of the world.
Iron and steel products were the object of major trade
disputes
in the 1970s. The United States steel industry alleged
that Japan
engaged in dumping to increase its market share in the
United
States. These disputes led to various responses. In 1978
the United
States government instituted the "trigger price
mechanism": when
iron and steel imports reached a certain low price, the
United
States would initiate dumping investigations, effectively
setting
a minimum price for imports. These prices were based on
estimates
of Japanese production costs, because the Japanese were
assumed to
be the lowest-cost producer in the world. This system
lasted until
the early 1980s and was replaced in 1984 by a set of
voluntary
export restraints negotiated separately with major
suppliers of
iron and steel to the United States. Japan's shipments to
the
United States remained subject to these restraints for the
rest of
the decade.
Despite the emphasis placed on the iron and steel
industry in
the Japanese economy and its export success, the industry
proved to
be mature and declining in the 1980s. Its share of total
Japanese
exports slipped to only 5.8 percent by 1988. Imports of
iron and
steel to Japan rose rapidly in the 1980s, reaching US$4.6
billion,
or 2.5 percent, of total imports. South Korea, for
example, was
rapidly moving into certain parts of the industry and
managed to
penetrate Japanese markets despite opposition from the
Japanese
industry. As a leader in steelmaking technology by the
late 1970s,
Japan had also become an important source of technology
for South
Korea, China, and other developing nations building their
own steel
industries.
Data as of January 1994
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