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No Deal Reached, But Progress Made at Textile Talks

Progress has been made but no agreement was reached at the fifth round of Sino-US textile talks which ended yesterday in Washington.


To bridge the differences, the two sides will fix a date and venue for the next round of negotiations as soon as possible, said an official from the Ministry of Commerce.


He declined to give details on the differences, and no comments were forthcoming from US negotiators.


A sign that there was room for optimism was that the talks were prolonged for an extra day on Wednesday (local time) instead of ending on the second day, Tuesday, as scheduled.


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 totaled 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 Organizations, 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 Cooperation, 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.


(China Daily September 30, 2005)


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