Anyone familiar with the international steel industry should be amused. The Japan Development Bank is now the largest lender to both NKK Corp. and Sumitomo Metal Industries. Japanese steelmakers also were heavy users of employment subsidies, government funds that enable manufacturers to maintain more workers than warranted by economic conditions. In Europe during the 1990, steel subsidies were massive. European steel producers also benefit from aid to the coal industry, which reduces raw material costs, and handouts to the ship-building industry, a major steel user.
Cartels also distort steel markets in Europe and Japan.
In Japan, an arrangement among the five major steelmakers kept their domestic market shares virtually unchanged from 1978 to 1999. In November 2000, the commission raided Italian steelmakers on suspicion of colluding. Not surprisingly, there has been very little bilateral steel trade between the EU and Japan, even though the two are major steel exporters to other markets. Brazil, India, Indonesia, South Korea and Thailand have jumped on the bandwagon. The major steel producer in Korea was privatized only recently, and politically inspired lending to other steel producers was, a proximate cause of the bankruptcies that culminated in Korea's economic crisis in 1997.