Editorial in Krenlandian Newspaper: Krenland’s steelmakers are losing

Dear Nevernevergiveup,

I'm happy to respond. This entire argument is more than little bit reminiscent of the situation involving Chinese steel and its impact on the US steel industry. Even when the GMAT CR uses fictional places, there's often a strong connection to currents in the real-world market.

The prompt is interesting. The first two sentences highlight clear and reasonable threats to Krenland’s steel industry. Then, the prompt argument throws in this sly wrinkle:
Therefore, it would protect not only steel companies but also industrial employment in Krenland if our government took measures to reduce cheap steel imports.
Wait a moment! Clearly, the cheap imported steel hurts the Krenland’s steel industry, because it's a direct competitor, but why would it hurt employment in other industries? Might it be that other industries are benefitting from cheap steel? The last line of the argument slipped something in that was not part of the preceding argument.

There's a color phrase in American culture that you do NOT need to know for the GMAT: to slip [someone] a Mickey. A "Mickey" or "Mickey Finn" is an old slang term for an alcohol drink that has been laced with some kind drug. Metaphorically, slipping someone a Mickey means surreptitiously throwing in some small but potent detail that actually changes the whole situation. That's precisely what this prompt argument does to us. This prompt argument slips us a Mickey!

A. Because steel from Krenland is rarely competitive in international markets, only a very small portion of Krenlandian steelmakers’ revenue comes from exports.
This argument is about domestic sales, so sales in the international market are irrelevant. This is incorrect.

B. The international treaties that some governments are violating by giving subsidies to steelmakers do not specify any penalties for such violations.
This may be unfortunate, but if the treaties themselves provide no disincentives for those foreign companies, that's all the more reason that Krenland should take measures to reduce the cheap steel imports. This could be a strengthener, so it's definitely not a weakener. This is incorrect.

C. For many Krenlandian manufacturers who face severe international competition in both domestic and export markets, steel constitutes a significant part of their raw material costs.
Aha! This picks up on that subtle wrinkle in the final sentence. What if the cheap imported steel is bad for Krenland’s steel industry but good for many of Krenland’s other industries? It could be that by eliminating the cheap imported steel, a few jobs would be saved in Krenland’s steel industry, but many more jobs would be lost in other industries! This choice suggests exactly what: many Krenlandian manufacturers who are already in a precarious position depend on the cheap imported steel, because steel is a huge supply cost for these companies. If we eliminate the cheap imported steel, so that these companies would be forced to buy the more expensive domestic steel from Krenland’s steel industry, then many of this other companies might fold in the face of steep competition. A win for Krenland’s steel industry but a loss for all the other companies! That's not a win for Krenland as a whole! This is a very promising choice.

D. Because of advances in order-taking, shipping, and inventory systems, the cost of shipping steel from foreign producers to Krenland has fallen considerably in recent years.
This simply explains why the imported steel is so cheap now. This provides no justification for the proposed action. This is incorrect.

E. Wages paid to workers in the steel industry in Krenland differ significantly from wages paid to workers in many of the countries that export steel to Krenland.
This may be true, and may in fact explain part of the difference in steel price. (Ironically, I believe this is also the case between Chinese & US steel workers!) Like (D), this explains the problem but does nothing to solve it. This is incorrect.

The only possible answer is (C).

Does this make sense?
Mike