Editorial in Krenlandian Newspaper: Krenland’s steelmakers are losing

Question

Editorial in Krenlandian Newspaper:

Krenland’s steelmakers are losing domestic sales because of lower-priced imports, in many cases because foreign governments subsidize their steel industries in ways that are banned by international treaties. But whatever the cause, the cost is ultimately going to be jobs in Krenland’s steel industry. Therefore, it would protect not only steel companies but also industrial employment in Krenland if our government took measures to reduce cheap steel imports.

Which of the following, if true, most seriously weakens the editorial’s argument?

(A) Because steel from Krenland is rarely competitive in international markets, only a very small portion of Krenlandian steelmakers’ revenue comes from exports.

(B) The international treaties that some governments are violating by giving subsidies to steelmakers do not specify any penalties for such violations.

(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.

(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.

(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.

mikemcgarry · Accepted Answer

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 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 :-)

turbojet · Answer

Great explanation found from the net:

Answer : C

The author says that there are 2 reasons why the Govt should take measure to cut cheap steel imports. The 2 reasons cite that Krenland’s steelmakers are suffering because of the imports.

Now, to weaken this, the answer choice should show that there is some advantage to Krenland’s steelmakers because of the imports. This advantage is given in choice C.
Othere choices can safely be considered 'out of scope'.

Choice C says that for many Krenlandian manufacturers, steel is a significant part of their raw material costs. It means that having cheap steel imports actually helps these (many) Krenlandian manufacturers because they are getting steel (a significant part for them) at a cheaper cost. Now, if these imports are banned, then it will be a disadvantage for them - they probably might have to get steel from some other source at a higher cost.

gmatnub · Answer

C

with the current situation, only the domestic steel industry is harmed. But if restrict steel import, everybody will be harmed. Other manufacturing industries will not be competitive, and they will go bankrupt, therefore no more customers for the domestic steel makers.

mymba99 · Answer

Great discussion. OA is C. Thanks

reducing cheap steel imports( cause ) --- > protects steel companies & employment in Krenland. ( Effect )

To weaken either find a different cause or find opposite effect.
C is saying for the same cause there is an opposite effect.

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. (  Now if govt reduces steel imports, these manufacturers cannot keep up with 'severe international competition'. So this will hurt them .) ( opposite effect ).

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.(So now foreign steel is  cheaper . This means it will hurt manufacturers. If govt reduces imports , it will  not hurt  manufacturers. Implies, 
reducing cheap steel imports --- > protects steel companies & employment in Krenland. 
So D is strengthens.

vituz · Answer

I go for 'C'.
To weaken we have to attack conclusion . Argument's conclusion is 'Therefore, it  would protect  not only steel companies  but also industrial employment in Krenland  if our government took measures to reduce cheap steel imports.' Imported steel is low-priced and will allow industrial employment in Krenland to remain competitive in international competition in both domestic and export markets. Thus cheap imported steel benefits industrial employment and weaken conclusion.
What is the official answer?

NiravUmaretiya · Answer

It is very important to keep an eye on the ultimate objective of choosing an answer option. Here we are asked to  weaken  the argument of editorial. The editor suggests that the government should take steps to stop the imports of steel at cheap prices. 
We need to prove that govt. should do no such thing, and in fact, keep the situation as it prevails.

(A) Because steel from Krenland is rarely competitive in international markets, only a very small portion of Krenlandian steelmakers’ revenue comes from exports.
The argument is about importing, not exporting.

(B) The international treaties that some governments are violating by giving subsidies to steelmakers do not specify any penalties for such violations.
The argument does not talk about penalizing foreign government at all. So this one is out of scope.

(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.
 Correct. Do not assume that 'Krenlandian manufacturers' are 'Steel manufacturers'. This option provides ground to oppose the editor of the newspaper by suggesting that the editor's views are narrowed only to the steel industry. Because other than the steel industry in the nation, many Krenlandian manufacturers are benefitting from cheap steel imports.
 
(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.
The objective is not to find the reason why Steel has gone cheaper. We are here to suggest that the editor's reasoning is wrong in what govt should do, not the editor's assessment about whether prices have fallen.

(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. 
Same as (D)

luzitao630 · Answer

I regard the sentense that "a very small portion of Krenlandian steelmakers revenue comes from exports" as the sentense that "a large number of Krenlandian manufacturers rely heavily on the steel export." Is something wrong in what I paraphased？I feel a bit comfuse. What I reasoned is that since a large number of K manufacturers highly rely on imported steel, if the K government limited importing steels, then a lot of the steel factories and companies may cut the number of their employees, and consequently, the employment will not be improved.

gmatimothy · Answer

Raman109 · Answer

Understanding the argument -
The argument concludes that if our government took measures to reduce cheap steel imports, it would protect not only steel companies but also industrial employment in Krenland. We have to weaken the conclusion.

Can we think of possible scenarios? One could be that the cheap steel imports are an input for the large segment of the industry in Kernland which finally sells the finished products. If they don't get cheap imports, they need to resort to more expensive sources, which will make their end products expensive, hurting sales and jobs.

Option Elimination -

(A) Because steel from Krenland is rarely competitive in international markets, only a very small portion of Krenlandian steelmakers’ revenue comes from exports. It doesn't talk about the domestic market. Out of scope.

(B) The international treaties that some governments are violating by giving subsidies to steelmakers do not specify any penalties for such violations. In a way, it can be a strengthener because if the international treaties do not specify penalties then the government has to take the steps. But we are looking for a weakener.

(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. ok. In line with our pre-thinking.

(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. - It provides another reason for low cost. But the argument says, that "whatever the cause ...." so it doesn't matter. Distortion.

(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 difference is out of scope.

sriramsundaram91 · Answer

It took me 10 minutes to realise this but I got it right

If you "critically" read the answer choice, it says Krenlandian Manufacturers not to be confused with Krenlandian SteelMakers, Krenlandian Manufacturers could be - automotive, construction based and other product manufacturers.

So if local manufacturer's (other than steelmakers) profits or operation depends on the cost of steel as raw material "significantly" and if Krenland stops giving them cheap steel. Manufacturers will shift to another country with cheaper steel available, therefore Krenland will have the worst impact of losing jobs + shutting down steelmakers in Krenland as steelmakers entirely depend on domestic sales.

Editorial in Krenlandian Newspaper: Krenland’s steelmakers are losing

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Editorial in Krenlandian Newspaper: Krenland’s steelmakers are losing

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