Dow Jones Business News reported that the European Commission and European Union member states should take steps to enforce trade laws against China, based on evidence from a report by the European federation of steelmakers that shows Chinese government actions are distorting the global steel market. The European federation of steelmakers EUROFER recently published a report that reveals that Chinese steel producers aren't operating in a competitive based market environment. Rather, Chinese steelmakers uphold very close relations to government agencies on local, provincial as well as central levels, that lead to steel price and production cost distortions. said the Chinese government has encouraged domestic steelmakers to export by providing value-added tax rebates, export taxes and export quotas on materials such as coke, which may be coupled with income tax reductions, preferential export credits and guarantee schemes provided by the China Export Import Bank, and other state-owned financial institutions. The Chinese government also provided cheap financing and relaxed environment and labor laws that helped fuel the country's massive steel capacity expansion. China is now the world's largest steel exporter with a 21% share of the global steel trade in 2007, only a year after it became a net steel exporter. The huge expansion has put strains on global supplies of coking coal and iron ore, raw materials used in steelmaking. China is the world's largest iron ore producer but still depends on imports of higher quality iron ore to keep its mills running. EUROFER said Chinese steel shipments to the EU grew much faster than exports to other destinations during 2006 and 2007 even though Chinese steel exports to Europe incurred higher costs than those that arose to European producers supplying the local markets. It added that China's share of total EU steel imports rose to almost 30% in 2007 from only 2% in 2003 with a growing share in the area of higher value-added flat products. Mr Gordon Moffat Director General of EUROFER said "Based on the results of this important report, any further dialogue with China must have the objective of securing a level playing field for European steel makers. This is even more important in order to reduce the impact of the current economic crisis over the next years."
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