Lakshimi Mittal, owner of the world's largest steelmaker ArcelorMittal, has urged Europe to erect trade barriers to protect its manufacturers, claiming the future of the European Union manufacturing depended on politicians helping the industry face what he said was unfair competition from China, reported the Financial Times on Sunday.

Speaking to the Financial Times, Mittal accused Chinese producers of overproducing despite weak market demand, lowering the price of the metal globally.

Lending his support to trade protectionism, Mittal said Brussels should consider applying higher tariffs on Chinese-produced steel, similar to the ones to be imposed on solar panels made in China.

"There should be increased tariffs for imports, or there should be a surcharge on the steel coming to Europe from countries where environmental standards are very low," he said.

European steelmakers have been hit hard by the eurozone sovereign debt crisis as the economic slowdown affected many of their traditionally biggest clients such as automobile companies and heavy equipment makers.

At the same time, Mittal also hit out at Europe's austerity drive despite weak or negative growth in the region.

"If Europe continues only with the austerity programme without spending money on growth for infrastructure, things will never improve. We can clearly see that austerity is not helping economies to come out of recession," he said. "They [policy makers] have to save European manufacturing, whatever you may call it, what I want is actions to save the domestic manufacturing, including steel."

The $500-billion-a-year steel industry, a gauge of the global economy, has been hit hard by a drop in demand from austerity-hit Europe and a weak global economic recovery.

In March, the steelmaker said it expects global steel consumption to rise 3 percent to 3.5 percent this year, with the strongest markets remaining in the U.S. and China.

The European steel industry, however, remains highly uncompetitive with high energy and labour costs. According to ArcelorMittal, European steel demand was almost 30 percent below peak 2007 levels and set to fall further in 2013.

Economy Watch