Officials had expected a deal to be made along the same lines as the one China struck with the EU in June, capping growth for quotas in certain categories of goods until 2008, following progress made at the third round of talks at the end of September.
But China stuck to its demands for increases in exports across 21 clothing categories to 20% in 2007 and 30% in 2008, well in excess of America's final offer of 12.5% and 14.5% respectively.
As it stands, the safeguards that are currently in place, together with additional cases filed by the US industry, cover 43% of China's textile and clothing imports to the US – worth US$15.4 billion in the first eight months of this year.
Without an agreement, Beijing can expect to see annual increases of just 7.5% for the next three years across the 19 clothing categories already covered by the safeguards. Central to the US argument for continued restrictions on China is a trade deficit with the Asian country that increased US$800 million to US$18.5 billion in August.
While China's overall trade surplus did fall to US$7.6 billion in September, the August figure of US$10 billion was the third biggest on record.
The surplus for the first eight months of 2005, US$60.2 billion, was nearly double that posted by the same point in 2004, and the Ministry of Commerce last month predicted that China was on course for a surplus of US$90-100 billion for the year as whole.
Indeed, US industry is not alone in feeling the strain of competition from the cut-price China market. Brazil is also considering taking measures to protect its industrial sector, having seen its trade surplus with China more than halve this year due to rising imports.
Following the collapse of talks at the end of September on voluntary quotas for key products such as textiles, footwear, toys and auto parts, President Luiz Inacio Lula da Silva authorized the country's trade ministry to investigate whether Brazilian industries have been damaged by alleged unfair competition from China.
This could lead to the imposition of trade tariffs and import quotas on Chinese goods.
US: China short on WTO commitments
The US Chamber of Commerce criticized China for failing to meet its WTO commitments, saying that in some cases China's policies towards foreign companies had in fact grown more restrictive, the Financial Times reported. The Chamber said China had increased its restrictions in construction, engineering services and express delivery services. It also warned of "epidemic levels" of piracy in China, in comments referring to the film and music industry. Australia and China war over lemons Australia has made a request to the WTO for sanctions on China following the country's refusal to allow Australian citrus products into its market. Australia's federal agricultural minister Peter McGauran said his government had failed to persuade China to open its citrus market through diplomatic channels and was therefore looking to the WTO.
AFL-CIO urges actions against China
AFL-CIO, America's largest labor federation, called on Washington to step up its challenge of China's unfair trade advantages that result from what it views as an artificially undervalued currency, the illegal subsidies given by the country's government to businesses, and the violation of workers rights.