ABSTRACT
The boom in steel demand in 1973 and 1974 masked the growing divergence in competitiveness between Japanese steelmakers and their American and European counterparts. The most direct explanation of the relentless rise in Japan's penetration of world steel markets can be found in a comparison of her cost efficiency in steel production with that of her major rivals. The major source of shifting competitive advantage has been the difference in labor-cost efficiency. In spite of the rapid deterioration of steel market conditions, the European Commission was not prepared at that point to pursue such drastic measures. Both internal and external policy considerations contributed to this decision. A consideration of the vulnerability of American steel producers points logically to the motives behind the ensuing protectionist sentiment. Elements of vulnerability also shed light upon the specific call among protectionist forces for quantitative restrictions.
