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Steel makers refute EU subsidy allegations

By Song Shengxia (Global Times)

10:31, January 16, 2013

A Chinese industrial association and domestic steel makers denied Tuesday that Chinese manufacturers are receiving illegal State subsidies for their coated steel products, following a report that the EU has decided the sector is receiving government assistance.

"China's steel market is a free market where companies compete fully with no need for government subsidies. The charge that the Chinese government subsidizes its coated steel makers is only the EU's excuse for protecting its own manufacturers amid a bad economy," Qu Xiuli, deputy secretary-general of the China Iron and Steel Association (CISA), told the Global Times.

"My company has never received government subsidies nor dumped coated steel in the EU," Sun Zhichao, a member of staff in charge of legal affairs at International Economic & Trading Corporation under Wuhan Iron and Steel (Group) Corp, told the Global Times Tuesday.

"The allegation is unreasonable and unfair as the EU does not recognize China's status as a market economy but launched countervailing investigations into Chinese companies on top of its anti-dumping charges, in violation of WTO rules," said Sun.

According to Sun, the EU's investigation into Chinese manufacturers has lasted for about one year, greatly affecting the company's exports to the European market.

The company has already reduced exports to the EU in response to the uncertainties brought by the investigation, Sun said.

The European Commission has concluded that the Chinese government is providing unfair State subsidies to its organic coated steel makers, the Financial Times (FT) reported Tuesday, citing a report obtained by the paper.

The report alleged that China provided subsidies mainly through export restrictions that artificially reduced prices of rolled steel, a key ingredient in making coated steel, for domestic manufacturers, the FT said.

The commission also concluded that Chinese coated steel makers benefit from subsidized land, water, electricity and loans and the report recommended imposing countervailing duties of up to 50 percent on coated steel imports from China, according to the FT.

In February 2012, the EU launched an investigation into Chinese coated steel makers to determine whether they were receiving illegal State subsidies, following complaints from the European Steel Federation.

In a statement e-mailed to the Global Times Tuesday, the European Commission said it would not comment on the issue, as the investigation is still continuing.

The results of the investigation will be published on March 22, the statement said.

"Mounting trade wars launched by the EU against China can only harm the EU's vulnerable economy as there is no end in sight to the debt crisis," Zhao Yongsheng, a visiting scholar with the Institute of European Studies at the Chinese Academy of Social Sciences, told the Global Times.

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