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article imageUK government accused of prioritising China ties over steel jobs

By Katherine Haddon (AFP)     Apr 1, 2016 in Business

Is a new special relationship threatening an old staple of British industry? Prime Minister David Cameron's government faced damaging claims Friday that its push for closer ties with China is holding back efforts to save 15,000 steel jobs.

The row has spiralled since Wednesday, when India's Tata Steel said it was selling its UK assets. This threatens the Port Talbot steel works, Wales's biggest single employer located in an area already hit hard by the decline of heavy industry.

A glut of cheap Chinese imports is a major reason why world steel prices have plunged in recent years -- and why Port Talbot is now reportedly losing about £1 million (1.3 million euros, $1.4 million) a day.

The Tata Steel plant at Port Talbot  south Wales
The Tata Steel plant at Port Talbot, south Wales
Geoff Caddick, AFP

Cameron's government faces accusations that it has blocked higher EU tariffs on Chinese steel as anger grows that an iconic British industry dating back to the 19th century that once provided 40 percent of the world's supply is now at risk.

Charles de Lusigan, a spokesman for the European Steel Association which represents European steelmakers, said Britain had opposed a European Union plan to bolster defences against cheap Chinese imports.

"They thought that if they blocked the changing and the modernisation of the trade defence instruments, that would give them favours with China," he told AFP.

The body's head, Axel Eggert, told Friday's Financial Times that Britain was "the ringleader in a blocking minority of member states" over the EU plan to ignore a key regulation when setting anti-dumping tariffs.

A steel worker outside the Tata Steel plant in Port Talbot  south Wales  on April 1  2016
A steel worker outside the Tata Steel plant in Port Talbot, south Wales, on April 1, 2016
Geoff Caddick, AFP

EU import tariffs on Chinese steel products are low, particularly compared to the United States. The EU duty on Chinese cold-rolled steel currently stands at 16 percent, compared to 236 percent in the US.

Nick Clegg, Cameron's deputy prime minister in a coalition government until last year, said finance minister George Osborne, architect of closer relations with China and Cameron's right hand man, had "put his special relationship with China above the UK's best interests."

- 'Faustian pact' with China? -

Britain rolled out the red carpet for President Xi Jinping on a state visit last year which included a banquet hosted by Queen Elizabeth II.

British Prime Minister David Cameron (right) drinks a pint of beer with Chinese President Xi Jinping...
British Prime Minister David Cameron (right) drinks a pint of beer with Chinese President Xi Jinping near Chequers, northwest of London, on October 22, 2015
Kirsty Wigglesworth, Pool/AFP/File

This yielded trade deals worth £40 billion, including China taking a one-third stake in the troubled project to build Britain's first nuclear plant in decades at Hinkley Point in southwest England.

Osborne says he wants Britain to be China's "best partner in the West" but the alliance has long sounded alarms bells for some, over human rights as well as the economy.

"It is hard to pin down the exact moment when George Osborne's love affair with China turned into a Faustian pact," Ambrose Evans-Pritchard, the Daily Telegraph's international business editor, wrote Thursday.

While ministers have ruled out renationalising the steel industry -- privatised under Margaret Thatcher's Conservative government in 1988 -- they say they will do everything possible to support finding a new buyer.

Osborne said Friday that Britain was "leading the way" in Europe in trying to make the steel industry competitive.

"Both at home, where we are cutting taxes on energy and internationally, where we are working with others to make sure there are tariffs on unfairly cheap steel, you have got a government doing everything it can to help the steel industry," he told the BBC.

Business Secretary Sajid Javid was visiting Port Talbot Friday to try and reassure workers after returning early from a trip to Australia.

But trade unions representing the workers also say they are not impressed by the government's approach.

"So far all they have received is tea and sympathy from afar with no real concrete solutions for the industrial crisis facing the nation," said Andy Richards, Welsh secretary of Unite, Britain's biggest trade union.

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