U.S. and Chinese trade negotiators ended two days of talks here yesterday without an agreement resolving the dispute over widening volumes...
BEIJING — U.S. and Chinese trade negotiators ended two days of talks here yesterday without an agreement resolving the dispute over widening volumes of Chinese-made textiles reaching the United States, a key source of friction between the two countries.
Sources briefed on the talks said the two sides made little if any progress, with both governments unwilling to yield. China has demanded that the Bush administration lift emergency caps it imposed in May on eight categories of clothing and textiles.
The United States has signaled it would do so only if Beijing agrees to accept slightly looser limits that would apply to a broader range of products. The United States has pushed for a deal that would run through 2008; China has called for a shorter pact.
The failure to compromise ensures that textiles will remain a primary irritant between the two countries.
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It also ensures that trade groups in the United States will intensify their campaign to restrict Chinese imports, leaving the textile industry in confusion: Major U.S. retailers are now reluctant to place too many clothing orders with Chinese factories lest their shipments get ensnared in trade politics.
“We’d like to see a quick resolution to this,” said Andrew Tsuei, managing director of global procurement for Wal-Mart, speaking in a telephone interview before the end of the talks. “The uncertainty is really challenging to our business. It just makes it hard to plan.”
Heading in to the talks, many analysts assumed that China was keen for a resolution and would compromise to get one, fearing that it would otherwise shed business to competing apparel producers in India and Mexico. That perception was fueled by the scheduled visit to the United States next week by China’s President Hu Jintao, who intends to assure Americans that his country’s growing stature in the world economy poses no threat.
Textiles are a high-stakes venue for this feud. The industry employs about 18 million people in China and is seen as a major source of jobs at a time when millions of peasants are moving to cities in search of work.
When China joined the World Trade Organization (WTO) four years ago, opening its previously protected domestic markets to foreign competitors, it banked on gaining access to the world’s most lucrative textile markets. China poured investment into new factories in anticipation of a milestone this year: The expiration of an old system of global quotas that for three decades limited how much clothing and textiles could enter the United States and Europe from any single country.
As part of the 2001 agreement that brought China into the WTO, Beijing assented to giving the United States and Europe the right to impose so-called safeguard quotas on some Chinese textiles and clothing during the first three years after the old system expired. Under the terms, Washington, D.C., and Brussels, Belgium, have the right to limit to 7.5 percent the annual growth of any category of clothing or textiles if a surge of imports disrupts their markets.
The safeguard provision was crucial to gaining the blessing of the U.S. textile lobby for China’s entry to the WTO. Bush administration officials have said that it was always a virtual certainty that the limits would be imposed.
During the first few months of this year, some volumes of Chinese goods reaching the United States such as cotton shirts and pants increased by more than 1,000 percent, prompting Washington, D.C., to respond with safeguards.
But China argues that the United States is abusing its rights, imposing the emergency quotas without proving a market disruption. In the months since, China has angrily denounced the safeguard limits as a violation of the spirit of WTO while seeking a negotiated compromise. The talks here were the fourth round.
China’s textile industry complains that it is losing orders and business is being impaired by the uncertainty surrounding the trade.
“We just feel helpless,” said Zhang Chao, manager of Zhejiang ZhongDa International Trade, a major exporter of clothing based in the city of Hangzhou. “There is no way to predict this.”
The U.S. textile lobby has seized the initiative with a flurry of petitions for new emergency limits. As the talks failed here yesterday, U.S. trade associations praised the Bush administration for maintaining a hard line.
“If China isn’t moving, then the right thing to do is go home,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
Special correspondent Eva Woo contributed to this report.