ABSTRACT
The drastic changes in the world steel market in the postwar period have challenged the established steel industries of the United States and the EC to adjust by modernizing, cutting costs, specializing in a more limited range of steel product lines, contracting and closing down marginal, uncompetitive steel capacity. Despite the evidence that the market system in steel trade poses no threat to the welfare of advanced industrial countries, policies of protectionism have prevailed since the late 1960s. Such policies have allowed firms to delay the process of market-driven adjustment by extracting from consumers an implicit subsidy in the form of price increases, which the trade restrictions have transferred to both domestic and foreign steel producers. The most serious implication of official intervention in the EC steel market for international trade policy, however, is that of subsidization. Steel protectionism therefore represents, indeed, a special case in international trade policy.
