BEIJING, Sept. 30 -- The United States and China failed to reach a comprehensive textile agreement in a third round of talks this week but will resume negotiations in October, U.S. trade officials said on Thursday.

    "We were able to make progress, particularly with product coverage and quota levels, but we did not reach an agreement with the Chinese, "lead U.S. textile negotiator David Spooner said in a statement announcing that the talks ended Wednesday night.

    "We will be meeting with the Chinese again next month and will be consulting with them soon on the location and exact date of the next round of negotiations," Spooner said.

    According to insiders, the differences mainly focus on the duration of the pact, the base figure for determining exports and the growth rate.

    The United States wants to calculate annual growth based on the 2004 figure but China would not accept the proposal because textile trade that year was skewed under a regime of international quotas, said Zhou Shjian, an expert on WTO issues.

    China's textile exports to the United States totalled US$17.8 billion in 2004, while the figure was US$13.1 billion for the first six months of this year. The US also wants to restrain annual growth below 7.5 per cent while China wants significantly more, about 15 per cent, Zhou added.

    The United States wants a deal that runs through 2008 while China prefers an agreement that lasts through 2007, like the one reached with the European Union.

    "But they are narrowing their differences," Zhou said.

    Cass Johnson, president of the US National Council of Textile Organisations, was quoted by Reuters as saying: "I think they've made more progress on product coverage..."

    And analysts are upbeat about the next round of talks.

    "It will be critical, a make-or-break round," said Zhao Yumin, a foreign trade expert at the Chinese Academy of International Trade and Economic Co-operation, a think-tank of the Ministry of Commerce.

    "I hope they reach a compromise, as it will bring benefits to both sides," she said.

    Since the decades-old international system of quotas on textile and apparel trade ended on January 1, Chinese-made products have flooded into the United States, a situation which put increased pressure on the United States' already struggling domestic textile industry. While US industry lobbyists asked for more curbs, US retailers would like to see an increase in imports.

    In another development, the EU commissioner in charge of taxation and customs issues said yesterday that the European Union's new agreement to cap Chinese textile imports was the best deal possible.

    Europe renegotiated import limits with China this month. The new terms set in September adjust restrictions on Chinese clothing, and restrict China's planned export growth from 10 per cent to 5-7.5 per cent. "It was the maximum we could have extracted from China in terms of an agreed limitation of their exports," Laszlo Kovacs told the European Parliament.

    Kovacs said China was entitled to enjoy the benefits of the global economy in a way that avoided trade disruptions. 

    (Source: China Daily/Reuters)