Europe is expected to join America in challenging Chinese export taxes on key raw materials, amid complaints that the tariffs threaten global economic growth.

Peter Mandelson, the European Trade Commissioner, will give warning today that China's actions mean that the world economy is under threat from a new wave of quotas and taxes on trade in vital commodities.

In a speech to industry leaders in Brussels, Mr Mandelson is expected to say that Europe will take legal action to enforce the commitments over export taxes made by China on its accession to the World Trade Organisation (WTO).

According to Mr Mandelson, export taxes “drive up world prices and cut off supplies of raw materials. Beggar-thy-neighbour export restrictions invite a cycle of retaliation that is as economically counter-productive as it is politically hard to resist.”

Through the WTO, the United States is preparing a legal challenge to Chinese taxes and restriction on exports of raw materials used in the steel industry, notably coking coal. Mr Mandelson will hint that the European Union is likely to support the Americans: “I certainly cannot rule out that the EU would use the WTO in the same way to enforce Chinese commitments. Countries that use export duties to subsidise domestic industries and subsequently dump products on European markets must also expect to attract the scrutiny of our trade defence system.”

The EU's concern extends to export restriction on certain steel products, where the European motor industry finds itself in competition for metal with new competitors in emerging markets. In less than a decade the United States and the EU have found themselves shifting from a concern about steel dumping by Asian countries to anxiety about access to steel.

“There are 240,000 jobs connected to steel production in Europe, but there are millions of jobs linked to the processing of steel,” a Commission spokesman said. Europe is dependent on trade in raw materials, according to Mr Mandelson. “Industrial self-sufficiency is simply not possible for a modern economy - the costs in inefficiency would be crippling,” he will say.

However, the growth in demand for raw material from emerging economies such as India and China is putting pressure on supplies of vital commodities, raising the risk that countries will introduce trade-distorting export tariffs or will exploit demand for raw materials with windfall taxes on exports.

The Trade Commissioner believes that the next phase of globalisation will be defined by pressure for access to basic resources. “We are in a race and I believe one of the biggest challenges we face at the global level is managing that race to mutual benefit. It will be, I believe, one of the two or three defining issues of our strategic long-term economic relationship with China.”

Resource nationalism is hindering Europe's access to commodities needed by its manufacturing industries. The politicisation and distortion of trade in metals, energy, timber and food is going hand in hand with the surge in commodity prices and harming the EU's competitiveness, according to the Commissioner.

Mr Mandelson argues that bilateral trade agreements with other nations should include commitments on free trade in raw materials and that the EU will challenge Russia's export taxes in the continuing negotiations over Russia's accession to the WTO. Russian export taxes on timber are causing the loss of thousands of jobs in the Finnish paper industry. The export curbs on Russian timber, Chinese coking coal and Indian iron ore are an attempt to boost the competitiveness of domestic manufacturers by ensuring a local supply of cheap raw materials, according to Mr Mandelson.

There are 450 export restrictions on commodities worldwide, the EU says, including a 50 per cent export tax on aluminium scrap from Russia and a 40 per cent export tax on hides and skins from Argentina.

In an effort to ensure cheap supplies of grain for local consumption, Argentina introduced export tariffs on wheat this year, worsening a worldwide surge in grain prices.

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