Just three weeks before Secretary of State George P. Shultz's scheduled good-will visit here, sensitive Sino-American textile talks broke down in acrimony yesterday with China accusing the U.S. side of "lacking sincerity."
Chief U.S. negotiator Peter Murphy, charging that Peking was "still holding back" in the talks, told a news conference this morning that Washington would go ahead Saturday with plans to impose unilateral ceilings on imports of Chinese textiles. Shipments will be frozen at the $700 million level that they reached last year--a move that Peking has hinted could ignite a bitter trade war between the two nations.
"Should the U.S. side obstinately impose unilateral controls, the Chinese side will have to respond strongly," warned China's chief textile negotiator, Li Dengshan, whose remarks were carried last night by the official news agency.
U.S. diplomats here had hoped to sweep away the nagging trade dispute before Shultz's Feb. 2 arrival so he could focus on the larger strategic issues of common concern and restore lost momentum in Sino-American relations.
State Department spokesman John Hughes told reporters in Washington Thursday, "We believe that the Chinese might raise (the textile) issue with the secretary and the secretary will explain the U.S. position. However, we have no reason to believe that this issue should have an adverse effect on the visit."
At issue is a new agreement for limiting the types and amounts of products that China's rapidly expanding textile industry can export to the United States. The previous pact expired Dec. 31, but Washington agreed to extend it until Saturday to allow for a final round of negotiations.
"At the negotiating table, we have offered to give them higher rates of growth ," U.S. negotiator Murphy said, "but they want growth rates higher than our other major textile suppliers."
Chinese negotiator Li accused Washington of creating "an unfavorable atmosphere" for the final round by earlier threatening unilateral restrictions.
The uncompromising stance of U.S. negotiators, said Li, "showed clearly that the U.S. side did not want to solve the problem but was stepping up its trade discrimination and restrictions against the Chinese side."
Li failed to specify exactly how Peking would respond to unilateral curbs, but American businessmen here have been warned to expect cutbacks in Chinese imports of American corn, logs and wood products.
In Washington, the Office of the U.S. Trade Representative said the talks ended with a "significant. . . but not overwhelming gap" between the two sides. The American negotiators told the Chinese they preferred a mutually satisfactory agreement and offered to hold a fifth round of talks at a time satisfactory to both sides. The American trade office said it does not expect the quotas that take effect Saturday to derail efforts to reach an agreement.
Although China ranks fourth among U.S. textile suppliers, its exports have grown so fast--41 percent in 1980, 73 percent in 1981 and 32 percent in the first 10 months of 1982--that American textile industry officials now view it as the most serious long-term competitive threat.
After years of loose controls, Washington is now seeking to impose quotas on 33 types of Chinese textile exports and to bring their growth rates in line with the "Big Three" suppliers--Taiwan, Hong Kong and South Korea.
Peking originally opposed all protectionist limits, claiming they deprive it of the right to offset an overall trade balance that is in the United States' favor.
Li, however, said his government agreed in the spirit of compromise to discuss quotas on between 21 and 28 kinds of textile products "so as to continue developing Sino-U.S. trade as a whole."
He said Peking also made "fairly big concessions" on limiting annual growth. The U.S. proposal called for a ceiling of 2 percent annually for the controlled items.
Murphy, who left to return to Washington after his news conference, said that Peking stubbornly clung to its demand for annual export growth rates exceeding last year's level of 4.25 percent. The "Big Three" increase their exports at less than 2 percent annually.
"Their current proposals are nowhere near the range we can accept," Murphy said. "We have equity obligations to our other suppliers."
Li said: "The U.S. side made no response to some Chinese proposals, and on other issues it raised new and unacceptable demands after the Chinese side had made concessions."
"All this showed that the U.S. side bore the responsibilities for the failure to reach agreement," Li added.
When the Chinese side suggested postponing the Saturday deadline to continue negotiations, the Americans ignored the proposal, Li said.
"We are willing to continue negotiations," he said. "But it is meaningless and fruitless to ask only the Chinese side to make concessions while the U.S. side makes no substantial concessions."
In 1979, during the Carter administration, the United States imposed sanctions after an earlier textile agreement ended and negotiations to revise it failed. The Chinese subsequently returned to the bargaining table, and a new agreement eventually was reached.
Murphy said Washington was willing to continue talks once the Chinese side softens its position.