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In this paper, we use various trade indexes to examine competitiveness by products of Korea's steel industry against its regional major trade partners, Japan and China. The results suggest that Korea's steel industry can be compared to a "Nutcracker" as its competitiveness in high value-added products still lags behind Japan's, but that in medium or low value-added products is being eroded fast by China's. Hence, three strategies for improving competitiveness in Korea's steel industry and thus helping it escape from a nutcracker are put forward: i) increasing efficiency in production through structural reform like M&As between firms ii) developing new technology in production process and more high value-added products and iii) scaling up the size of steel-distribution industry and improving its service