The European Commission has concluded China illegally subsidizes steel producers and wants EU members to back punitive tariffs, which could anger the bloc's second largest trading partner, trade sources said.
The conclusion would address blame at China itself, rather than Chinese companies. China has in the past accused the European Union of protectionism and has filed its own complaints against the bloc with the World Trade Organization.
The Commission, the EU's executive arm, is ending its investigation into alleged subsidies for and dumping of organic coated steel, which is painted or plastic-covered steel principally used in construction for walls and roofs.
In September, it imposed provisional duties of between 13.2 and 57.8 per cent on the prices of imported products after it found Chinese manufacturers were selling at below-market prices.
Now it says duties of up to 52 per cent would be needed to counter state subsidies given to Chinese producers, according to trade sources who have seen the Commission's latest proposals, on which EU member states will vote.
The finding would not increase the proposed tariffs beyond the level of provisional duties already imposed because they are already at the maximum level allowed.
The Commission will put its proposal to EU member states on Jan. 30, with a vote due by mid-March. The states will determine whether to impose definitive duties, which typically last for five years.
EU steel makers made 4.3 million tonnes of organic coated steel in 2011. Producers with EU operations include ArcelorMittal, ThyssenKrupp AG and Tata Steel Ltd.
The Commission puts imports of the product from China at €563-million ($752.5-million U.S.) during its investigation period, the year commencing on Oct 1, 2010. Chinese exporters' share of the EU market rose to 13.6 per cent.
The Commission is investigating 37 dumping and subsidy cases, 21 of them involving China. The European Union is China's biggest trading partner while for the EU, China is second only to the United States.
The investigations include a study of the alleged dumping of €21-billion of solar panels and components by Chinese producers, the Commission's largest investigation to date.