EU to apply pressure on China over steel-Germany

BERLIN, Oct 8 (Reuters) The European Union will put pressure on China to end government subsidies for steel exporters, Germany's Economy Minister said on Monday.

Speaking at a steel conference in Berlin, Michael Glos said he understood why European steelmakers were concerned about the impact of cheap Chinese steel on business, and that the European Commission had agreed to investigate the matter.

''We need fair rules in world trade and you cannot expect the German and European steel industries to compete against government subsidies,'' Glos said. ''That is why the European Commission will apply pressure, supported by us''.

The European steel association EUROFER is preparing to file as early as this month an anti-dumping complaint against China with the Commission based on its allegations that the country's steelmakers are exporting at prices below production costs.

Asked what measures the EU could use to tackle the problem, Glos said that was a matter for the 27-nation bloc's industry commissioner, Guenter Verheugen.

Verheugen told the conference the EU was ready to take defensive measures to ensure fair competition, and was checking whether China was selling steel below production costs.

''We will continue to fight for free trade and open markets.

But we will defend our European interests in a strong and vigorous manner,'' Verheugen said.

He noted that if any competitors pursued ''unfair trade practices'' the bloc would use ''trade defence instruments''.

''(That) does not mean protectionism. It is a correct and normal use of our rights and is our obligation,'' he added.

MITTAL CONCERN Verheugen declined to say when the EU's investigation would conclude or what anti-dumping measures could be applied.

Lakshmi Mittal, President and CEO of ArcelorMittal, the world's largest steel group, said at the conference he was concerned about rising Chinese steel exports.

''That will always be a concern and we need to monitor the developments with the surge in exports,'' he said.

The International Iron and Steel Institute (IISI), which is staging the conference in Berlin, said on Monday it expected China's net 2007 steel exports to reach 50 to 55 million tonnes.

Asked whether he would support possible EU anti-dumping measures against Chinese steel imports, Mittal said, ''I cannot make a comment, the EU is looking into this matter.'' ''Everyone is seeing the amount of growth in exports from China,'' he added. ''Chinese imports have been reduced and our sales to China have also been reduced drastically.'' REUTERS MP RS1851