Federal Industry Minister Kim Carr has called an end to the practice of exporting ore to China and, in return, purchasing the finished steel product.


"There's not enough local contracts being awarded. We need to ensure that there are more," Senator Carr said.


Senator Carr's calls come as the Federal Government refused to conduct an inquiry into the state of manufacturing in Australia, citing fears that a move to protect the industry would threaten Australia's reputation as an open market economy with little sovereign intervention.


The announcement comes after extensive meetings between the Australian Workers' Union (AWU), the Australian Manufacturers Workers' Union (AMWU), the Australian Industry Group (AWG) and the Federal Government.


Senator Carr announced the Government's decision, saying that the Federal Government refused to establish another inquiry.


The decision has already caused stress in Labor's ranks, with former AMWU boss and current Senator Dougie Cameron deriding the decision as 'economically irresponsible'.


"I think an ideological obsession with free trade is counter-productive and it's supreme arrogance to think that free trade has all the answers," Senator Cameron told ABC radio.


Senator Carr admitted that the sector faced a difficult future.


"There's no doubt that the increase in the dollar of some 45 per cent in the space of two years has very serious implications for manufacturing," Senator Carr said in an interview with ABC radio.