China and the US yesterday failed to solve the long-simmering textile dispute, an impasse described by industry experts as a "loss-loss" result which could see more categories of Chinese textiles facing restrictions.

The first sign of disagreement came when the two-day sixth round of talks in Beijing ended before noon previous rounds of talks continued till late into the night or were prolonged by a day.

An official from the Chinese Ministry of Commerce said the talks had failed, and that a statement which was not available till late last night was being drafted.

US textile negotiator David Spooner said in a statement issued by the US Trade Representative's Office that the trading partners had failed to reach an agreement that meets the needs of US manufacturers and retailers.

"Our overall goal ... is to reach a longer-term solution that will permit greater stability in textile and apparel trade," it said.

"The US has been using its right under China's World Trade Organization accession agreement to invoke safeguards in cases of market disruption or the threat of market disruption, and we will continue to do so as appropriate."

Neither the Chinese nor the US side gave any indication of whether they had made any progress or the reason for failing to reach an agreement. Nor did they say whether another round of talks was scheduled.

The failure surprised both Chinese and US industries which had expected a deal yesterday since there were positive signs at the last round of talks at the end of September.

"The US is sticking to a low rate in export growth which China cannot accept," said an industry insider close to the talks.

The agreement China inked with the EU in June is the bottom line for the country, but the US stand is too rigid, he said.

China and the EU reached an agreement limiting annual export growth in 10 types of textiles to 8-12.5 percent till the end of 2007.

Analysts believe that there would be no agreement soon and both Chinese manufacturers and US retailers and consumers would bear the brunt of the failure.

The Bush administration is expected to impose restrictions on a wider range of Chinese textile imports.

Before the latest round of talks, the US government announced that restrictions on Chinese curtains and drapery would be imposed from today if a comprehensive agreement were not reached.

Immediately after the talks broke down, the US organization of textile manufacturers said it would file petitions for fresh protection and seek to ensure that existing safeguards were rolled over seamlessly when they lapsed at the end of the year.

The value of Chinese exports to the US was down by at least US$2-3 billion since January, estimated Sun Huaibin, spokesman for the China National Textile and Apparel Council. "Since 27 categories of textiles are under restriction investigation compared to nine for which quotas have been set, the loss will be bigger," Sun said.

Xu Bing, a spokesman for the soon-to-be-held Chinese Export Commodities Fair, said textile orders at the country's largest foreign trade fair may be affected.

But the US is not the winner though its domestic textile producers will gain some protection in the short term, said Mei Xinyun, a trade expert at the Chinese Academy of International Trade and Economic Cooperation.

American cotton farmers, retailers and consumers benefit from low-cost Chinese imports; and they lose out if no deal is struck, Mei said.

Brian Cousins, president of Cloudveil Mountain Works Inc, a Wyoming-based outdoor apparel company, was quoted by the New York Times as saying: "We're looking right now at other alternatives, but there are just so few places outside of China to get these products made."

(China Daily October 14, 2005)