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'Frank' talks fail to iron out textile row with Washington

China and the United States have failed to reach an agreement after a second round of talks to resolve their quarrel over the surge in Chinese textile exports to the US since the start of the year.

But 'the technical-level consultations' on Friday were frank and pragmatic, and both sides have agreed to 'keep the channel of communication open' and seek more talks soon, the Ministry of Commerce said.

The two sides discussed the limits to be placed on textile exports to the US and by how much they should be allowed to increase.

'Both sides agreed to continue the consultations to find an appropriate way to solve the textile issue,' Xinhua quoted the ministry as saying.

An industry analyst said it would take much more time and effort for China and the US to hammer out a textile deal than it took to negotiate an agreement between China and the European Union.

'The US will ask for more than the EU did ... they have a bigger appetite and the negotiations will be more clouded by political factors than the Sino-EU talks,' said Tang Yihong , a foreign-trade professor at the Beijing-based University of International Business and Economics.

China and the EU avoided a trade war last month when they agreed to limit the annual growth of 10 Chinese textile product exports to the EU to between 8.5 and 12.5 per cent until the end of 2007.

The US in May slapped caps on seven Chinese textile products that rose dramatically after a global textile tariff system expired in January.

Officials from both sides have since been trying to reach a compromise on the burgeoning textile exports, holding an initial round of technical-level consultations in the middle of last month to discuss the issue.

'They will eventually strike some deal because a trade war would hurt the interests of both sides but the in-between process is not going to be very pretty,' Professor Tang said.

A US delegation, including Trade Representative Rob Portman, Secretary of Commerce Carlos Gutierrez and Secretary of Agriculture Mike Johanns is in Beiing to take part in the annual meeting of the US-China Joint Commission on Commerce and Trade tomorrow.

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