Talks on Chinese Exports Crumble

China and the United States failed Thursday to cut a deal to regulate China’s booming textile shipments, immediately prompting American manufacturers to seek curbs on imports of towels made in China.

With time running out for an agreement before year-end, the stalemate means that U.S. retailers will face uncertainty about just how much they will be able to import from China until the end of 2008, when curbs on its textile exports will lapse.

“We have not come to an agreement that meets the needs of our domestic manufacturers and retailers,” David Spooner, the special textile negotiator in the U.S. trade representative’s office, said in a statement after two days of talks.

It was the fourth round of meetings since a surge in Chinese exports unleashed by the end of global textile quotas Jan. 1 spread alarm in the U.S.

A spokesman for China’s Foreign Ministry, Kong Quan, said some friction was inevitable given fast-growing trade between the two countries.

“What is important is that China and the U.S. can take a calm, objective and forward-looking attitude to deal with and resolve their problems,” he told a regular news briefing.

China, with modern factories and cheap labor, has seen clothing and textile shipments to the U.S. jump 54% in the first eight months of this year to nearly $17.7 billion.

Under terms of China’s accession to the World Trade Organization in 2001, Washington can impose safeguards until the end of 2008 if China’s textiles are shown to be disrupting the U.S. market. These safeguards cap growth in exports at 7.5% a year.

The main sticking point in the talks was Beijing’s demand that new quotas increase 20% in 2007 and 30% in 2008, U.S. industry officials said. The U.S. offered 12.5% growth in 2007 and 14% in 2008, they said.

The U.S. has already imposed safeguard curbs on imports of Chinese shirts, trousers, bras, underwear, yarn and other textile and clothing products.

But to provide certainty for importers and domestic manufacturers, industry groups have pushed for a comprehensive deal similar to one negotiated by the European Union.

That agreement, reached in June and revised in September, limits annual growth in 10 categories of Chinese textile exports to the 25-nation EU to 8% to 12.5% a year from 2005 to 2007.

In exchange for a longer pact with the United States, China wanted more generous growth rates, industry officials said.

“At this round, China returned to its position of delay and no compromise by insisting on terms for a agreement that were impossible for the U.S. government to accept and that would have been extremely damaging to the U.S. industry and its workers,” Cass Johnson, president of the National Council of Textile Organizations, said.

As a result, Johnson said the textile industry had filed a petition with the U.S. government requesting safeguard curbs on imports of towels from China, which he said rose 224% in the first eight months of the year.

The two sides narrowed their differences in Washington last month, and U.S. industry officials had been confident before this week’s talks that a deal could finally be struck. U.S. Trade Representative Rob Portman had been ready to come to Beijing to close a deal, industry executives and diplomats said.

But Beijing demanded far higher growth ceilings than the U.S. could accept, U.S. lobbyists said.