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U.S.-China Talks Make Advance

Chinese and American negotiators wrapped up three days of talks with progress reported but no comprehensive quota deal struck.

WASHINGTON — A U.S.-China apparel and textile trade accord remained out of reach after three days of negotiations here, although progress was made and the two sides will meet again next month.

The talks to regulate Chinese imports, which ended Wednesday night, made headway on what kinds of apparel and textile imports would be covered and how much those imports could grow. No specifics were given.

“Our preference is to seek a longer-term solution that will permit the orderly development of textile and apparel trade,” David Spooner, special textile negotiator in the U.S. Trade Representative’s office, said in a statement. “But the United States will have no hesitation in walking away from a bad deal.”

The length of any agreement hasn’t been determined — the U.S. has pushed for the close of 2008 and China is looking for 2007 — nor has it been settled if safeguard quotas might still be imposed on goods not covered by the arrangement.

Safeguard quotas, which China agreed to when it joined the World Trade Organization, can be renewed through 2008 and were intended as a method of controlling import surges after a wider system of quotas was eliminated in January.

The Bush administration invoked the special safeguard provision twice this year, holding $1.9 billion worth of Chinese imports to 7.5 percent growth. The U.S. textile industry wants the flexibility for imposition of broad restrictions on Chinese imports.

Bush administration decisions on 23 safeguard petitions, from renewing the cotton trouser safeguard to unrestricted categories such as cotton and man-made fiber dressing gowns, are due at various times through January.

“If China is not willing to include all of these products in a comprehensive agreement, we would urge the U.S. government to impose safeguards on any categories where safeguard petitions have been filed, but were not covered by the deal,” Karl Spilhaus, president of the National Textile Association, said in a statement.

Trade specialists said the progress made was substantial enough to justify the next round of talks, likely to be in Beijing.

“The Chinese came into this negotiation looking to deal,” said Jonathan Gold, vice president of global supply chain policy for the Retail Industry Leaders Association, which counts chains such as Wal-Mart and Target among its members.

“The fact that the Chinese stuck around for an extra day to actually talk sends a positive signal that they want to get something done, but at the end of the day, the devil is in the details,” Gold said.

Safeguard quotas can fill up unpredictably and catch importers, especially those that pushed orders until the last minute, off guard. Companies selling goods made overseas would prefer unfettered trade, but are for the most part in favor of a deal for the sake of a more stable production environment.

“There is a much greater likelihood that they’re going to conclude this than was the case at the beginning of the week,” said Erik Autor, vice president and international trade counsel for the National Retail Federation, representing Federated Department Stores, Sears and J.C. Penney, among other retailers.

Talks between the U.S. and China have gone through several rounds, including meetings in San Francisco and Beijing. An eventual resolution is not a forgone conclusion, especially since the U.S. can fall back on safeguards and administration officials also have stated they would not sign a “bad deal,” though it is unclear exactly what that would entail.

“A bad deal is basically one they can’t sell on the [Capitol] Hill,” Autor said.

The importing community argues that safeguards do not protect the domestic producers since restricting China only drives orders to other low-cost countries such as India and not back to the U.S. Domestic textile groups have countered that China, through a series of unfair trade practices such as an undervalued currency, has a damaging competitive advantage.