The Politics Of Trade In Steel

The Politics of Trade in Steel

1. Does the World Trade Organization in this case represent a loss of U.S. national sovereignty? Why do you think the WTO sided with the European Union?

I don't think the Work Trade Organization represents a loss of U.S. national sovereignty. The WTO in this case is simply doing its job – overseeing international trade and enforcing the agreement that all the WTO member nations including the United States signed.

I think the World Trade Organization might have sided with the European Union because they felt that the U.S. had gone too far with the tariffs. They probably thought that if they did allow the EU to impose counter tariffs on the U.S. that could ultimately damage trade between the two countries and start a trade war, the U.S. might come to their senses. I believe that this was an attempt on the World Trade Organization's part to bring a truce between the two countries.

2. If all the tariffs on international trade in steel were removed, and subsidies to steel exporters around the world were banned, who would this benefit? Who would lose from such action?

The net beneficiary of such a move would be steel consumers worldwide. They would enjoy the most competitive prices industry can offer.

There are two potential losers from such action. First, all domestic producers who are not competitive would lose because they would be out-competed by low-cost import. Second, all exporters who previously enjoyed local subsidies would lose because their governments cannot subsidize their production.

3. Research where / now.

a. Are there any big changes in steel industry?

b. Is it a big change to support what's going to happen to steel industry in the future?

Basically, there are 2 major things happening in steel industry: globalization and consolidation between steelmakers. China as a leading consumer of steel also heavily influences the industry. The recent article from The Economist below actually answers both questions and gives great examples :

As recently as six years ago, while investors were still in thrall to a dotcom bubble that had yet to burst, steel was derided as one of the last bastions of the "old" economy. Many firms in the industry were state-owned or heavily protected by governments keen to preserve assets deemed vital to national interests. Globalization had left the steel business behind. It is a measure of the changes that have swept the business since the internet bubble popped that last week Arcelor, a company created through a 2001 merger of the top French, Spanish and Luxembourg steelmakers, made a hostile bid of C$4.