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US, China No Closer to Textile Trade Deal

U.S. and Chinese negotiators have made little progress during two days of textile trade talks, despite efforts to reach an agreement before the Chinese president visits the United States next week.

Neither the U.S. nor China had any progress to report Wednesday at the end of a second day of negotiations over U.S. limits on surging Chinese textile imports.

U.S. sources confirmed their negotiating team was due to return home as scheduled on Thursday.

Negotiators had hoped to reach an agreement ahead of Chinese President Hu Jintao's visit to the United States next week.

Lai Hongyi of the National University of Singapore conducts research on China's trade policies. He says the failure to reach a deal will be a setback for U.S.-China trade relations.

"There will be losers on both sides," he said. "On the China side definitely will be the textile producers. But, then on the U.S. side the loser will probably be the consumers and the merchants that work on behalf of the consumers - primarily the retail stores -and the importers of the textile products from China."

Mr. Lai says an ongoing textile dispute could spill over into other areas of trade between the two countries.

Chinese textile exports rose sharply when global quotas ended on January 1. The United States reacted by placing temporary import caps of 7.5 percent growth a year on some Chinese textiles in May.

Beijing wants to see those caps lifted or at least relaxed so more Chinese textiles reach the United States. Chinese officials argue that U.S. manufacturers had years to prepare for the end of the global trade quotas.

However, U.S. textile producers want even tighter restrictions on Chinese imports, which they say have cost American jobs and threaten their industry.

Trade is a defining element in the U.S.-China relationship, but it is also a sensitive issue. The U.S. trade deficit with China last year hit $162 billion and many politicians and voters want the government to reduce Chinese imports.

On the other hand China, eager to sustain economic growth, is dependent on maintaining export levels. The Chinese textile industry also provides 19 million jobs, which the government is under pressure to protect.