Yes, we do not live in Utopia.
And as you say particularly with reference to steel making, it is no secret that China virtually ignores energy pollution in its production, nor does it follow similar policies other western civilized countries do with respect to employment.
Free trade is absolutely fantastic among nations that share similar standards of living, living costs and labor rates. A similar legal system also helps.
That said, I don't know why a free trade zone among the anglosphere countries does not exist. The Canada-USA FTA was a fantastic success. NAFTA is not so good for countries north of the Mexican border because the junior partner does not have similar standards of living, living costs and labor rates. It will always be so.